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VT All-Payer Model Aligns Costs for Public, Private Insurers

Vermont has begun the process of implementing an all-payer model that would align prices of healthcare services for both public and private payers.

By Vera Gruessner

The state of Vermont is moving forward with establishing an all-payer model that uses accountable care organizations and ensures a provider is reimbursed by an equal amount among all healthcare payers for a particular service. The Vermont government and the Centers for Medicare and Medicaid Innovation released a draft agreement outlining the basics of how the all-payer accountable care organization model will be operated.

Accountable Care Organizations

Commercial payers as well as Medicaid and Medicare programs will pay a given hospital or provider the same amount for certain medical services under the all-payer model. The agreement between the state of Vermont and the Centers for Medicare and Medicaid Innovation would theoretically last for six years beginning on January 1, 2017 and ending on December 31, 2022. In the meantime, the draft agreement is undergoing legal review by the State of Vermont and the Green Mountain Care Board.

This new payment model is meant to tie reimbursement with quality and patient health outcomes instead of the current fee-for-service payment system that reimburses every medical procedure.

The all-payer model is meant to move the healthcare industry in Vermont toward value-based care reimbursement and expand the use of accountable care organizations. Vermont payers will need to move away from fee-for-service reimbursement and embrace value-based care payments instead. This is expected to decrease spending and improve outcomes.

“Through the Vermont All-Payer ACO Model, CMS will test whether the health of, and care delivery for, Vermont residents improve and healthcare expenditures for beneficiaries across payers (including Medicare FFS, Vermont Medicaid, Vermont Commercial Plans, and Vermont Self-insured Plans) decrease if the aforementioned payers offer Vermont ACOs aligned risk-based arrangements tied to health outcomes and healthcare expenditures; the majority of Vermont providers and/or suppliers enter into such risk-based arrangements; and the majority of Vermont residents across payers are aligned to an ACO bound by such arrangements,” the draft agreement states.

A summary of the all-payer model draft agreement states the major issues affecting the patient community and health payers in Vermont. The rising costs of medical care is becoming unaffordable and inaccessible for many people in this state.

The government is looking to improve primary care access as well as the quality of treatment for substance abuse, mental health, and chronic disease management. The draft agreement summarizes goals of reducing deaths from suicide and drug overdose and decreasing the rates of chronic disease.

The goal of the Vermont all-payer model is to keep healthcare cost growth to no more than 3.5 percent across all insurers. Additionally, the state is looking to improve primary care access and patient health outcomes.

Within the draft agreement summary, hospitals and providers will not be required to join an accountable care organization in order to participate in the all-payer model. However, providers and payers are encouraged to design new payment strategies to operate in the value-based care ecosystem.

As previously reported, Vermont’s all-payer model is expected to stabilize and even decrease the rate of healthcare cost growth. The program would set the same prices among all public and private payers for services at a particular hospital, which would give the state government more control over medical costs. However, it would be far from a universal healthcare system where the single-payer model would ensure a government agency pays for all medical care instead of relying on private payers.

One report from Vermont Legal Aid also emphasized the need for provider-led healthcare reforms when implementing new payment models like the all-payer system.

“Implementation of an all-payer model in Vermont will give the state the opportunity to improve its health care system and provide better care to patients while controlling the growth of health care costs,” the report stated.

“However, for the model to achieve these goals its risks must be mitigated and the consumer perspective must be taken into account. Health care reform in Vermont is often referred to as ‘provider-led.’ While health care provider input and investment are essential to the success of health care reform, the changes that an all-payer model promises will have significant impacts on patients, the care they receive, and how that care is paid for.”

Commercial insurers located in Vermont may need to align with the all-payer model and invest in partnering with accountable care organizations as well as pursue value-based care reimbursement.


Dig Deeper:

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

What Are the Benefits of Accountable Care Organizations?


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