Policy and Regulation News

Vermont’s All-Payer Model Limits Medical Spending Growth

The state of Vermont will begin an all-payer model that emphasizes accountable care on January 1, 2017.

By Vera Gruessner

Vermont has been working on regulatory actions that would reform healthcare payment throughout the state specifically through an all-payer model. Last week, the Centers for Medicare & Medicaid Services (CMS) announced in a press release the creation of the Vermont All-Payer Accountable Care Organization Model.

Accountable Care Organizations

The Vermont all-payer model seeks to bring all providers and public or private payers within the state under the same payment structure including keeping prices for the same services consistent among all payers or third parties within a hospital network. The all-payer model is also expected to expand value-based care reimbursement and reduce healthcare costs altogether.

CMS also extended Vermont’s Medicaid demonstration, which enables Medicaid to become a full partner  in the all-payer model, the release states. In order to further reform the state’s healthcare system, the new model seeks to expand ACO participation.

CMS has also been working to change healthcare delivery reform in other states. For instance, the Maryland All-Payer Model has transitioned hospital reimbursement toward global budgets that focus on value 0f services instead of volume.

“This model is historic in terms of its scope, aiming to include almost all providers and people throughout the state in an all-payer ACO model to drive improved quality, better care coordination, healthier people, and smarter spending,” said Patrick Conway, M.D., CMS Principal Deputy Administrator and Chief Medical Officer. “This model may also allow eligible physicians and other clinicians in Vermont to qualify for Advanced Alternative Payment Model bonus payments from the Quality Payment Program given their commitment to be accountable and improve care for patients.”

Private payers in states using an all-payer model will see their healthcare spending potentially decrease depending on price negotiations. The costs of services for insurers will remain stable. In Vermont, private payers will be encouraged to pursue value-based care and participate in accountable care organizations in order to get the most out of the all-payer model.

CMS is also putting forward $9.5 million in start-up funding for providers looking to take part in accountable care organizations and strengthen care coordination among multiple facilities. The funding will be available in 2017.

Population health management among Vermont’s healthcare delivery systems will be emphasized in the new all-payer model, CMS outlines on its website. The Green Mountain Care Board, a state agency established in 2011, will play a key role in managing the Vermont All-Payer ACO Model. The program will begin on January 1, 2017 and end on December 31, 2022, which will include six performance years for ACOs operating in the state.

The Vermont all-payer model will also enable the state’s Medicaid program to participate in ACO arrangements in order to achieve targeted health outcomes and financial goals.

“Medicaid is a critical health care payer in the Vermont All-Payer ACO Model. CMS approved a five-year extension of Vermont’s section 1115(a) Medicaid demonstration, which enables Medicaid to be a full partner in the Vermont All-Payer ACO Model,” The CMS website states. “Specifically, section the 1115(a) Medicaid demonstration promotes delivery system and payment reform by allowing Vermont Medicaid to enter into ACO arrangements that align in design with that of other health care payers in support of the Vermont All-Payer ACO Model.”

CMS is also looking for public input on ways the agency can transform healthcare payment with other states. The Center for Medicare and Medicaid Innovation works to further expand new payment and healthcare delivery systems throughout the nation.

The program set up specific targets in the areas of scaling accountable care organizations, keeping costs low, and improving quality of care. Annual health spending growth will be limited to 3.5 percent for all major payers in the state. Also, the program set a goal of having 70 percent of all insured residents receiving medical services through an ACO. The all-payer model will also focus on improving treatment for substance use disorder, suicide risk, and chronic conditions while increasing healthcare access.

“ACOs will continue to have payer-specific benchmarks and financial settlement calculations, but the ACO design (e.g., quality measures, risk arrangement, payment mechanisms, and beneficiary alignment methodology) will be closely aligned across payers. The Model will contribute to the Administration’s goals of having 50 percent of all Medicare fee-for-service payments made via alternative payment models by 2018,” according to the CMS website.

As previously reported, in earlier years, Vermont Governor Peter Shumlin was looking to transition his state to a single-payer system in which the federal government would cover all healthcare costs for the state instead of private insurers. However, by 2014, Shumlin realized that other reforms like value-based care reimbursement could also reduce medical spending for the state.

The all-payer model is expected to restrict the growth of healthcare spending for specific services covered by private and public payers. Lawmakers, stakeholders, and health insurers in other states may need to consider the benefits of an all-payer system when attempting to keep costs from rising.

 

Dig Deeper:

What Are the Benefits of Accountable Care Organizations?

How Medicare, Medicaid, and CHIP Guide the Health Payer Industry