Departing Vermont Governor Imposes ‘All-Payer’ Health Care System

Published December 5, 2016

Vermont’s election of Phil Scott (R) as governor in November 2016 could indefinitely suspend implementation of departing Gov. Peter Shumlin’s (D) statewide “all-payer” health care system, scheduled to begin in January 2017.

If implemented, the All-Payer Model would change how private health insurers, Medicare, and Medicaid reimburse physicians. To receive compensation from one of these “payers,” a provider would have to participate in an accountable care organization (ACO), usually a conglomeration of doctors, hospitals, and clinics.

Private and government insurers would pay the ACO, which would disburse monthly reimbursements to participating health care providers.

Reimbursement amounts would be based on the outcomes of patients treated by the ACO, a sharp change from the fee-for-service model predominant in Vermont and nationwide, in which insurers and government payers reimburse providers for each service performed.

Last-Minute Approval

The Green Mountain Care Board, a panel overseeing the state’s health care system, approved an agreement between Shumlin and the federal Centers for Medicare and Medicaid Services (CMS) on October 26 allowing Vermont to include Medicare in the all-payer system and granting Vermont $9.5 million to implement the statewide model.

In an effort to slow the growth of medical costs, the agreement “establishes a 3.5 percent aggregate per-capita cost growth target across all payers” over the program’s first five years, according to the board’s explanation of the agreement.

Scott has criticized Shumlin and the board for inadequately and infrequently explaining the all-payer model to the public, especially residents of southern Vermont, according to an October 4 press release by Scott’s campaign. The agreement with CMS allows Vermont to withdraw support for the model with 180 days’ written notice to CMS.

All-Payer vs. Single-Payer

The all-payer model is Shumlin’s alternative to his signature single-payer model, which Vermont scrapped in 2014 because of insufficient funding, in a move Shumlin called “the greatest disappointment of my political life.”

John McClaughry, vice president of the Ethan Allen Institute, says single-payer systems make government the sole payer of health care providers, whereas all-payer systems make government the arbiter of how, and how much, providers are paid.

“Single-payer means that the government terminates all private insurance, replaces premiums with tax dollars, and gives the government regulatory board direct control over all public and private providers and channels all tax dollars to the providers who comply,” McClaughry said.

“All-payer allows different payers, including commercial insurance, but requires each of them to make government-specified per-capita payments to the accountable care organization to cover its patient population,” McClaughry said.

Quality or Quantity?

Assessing ACOs’ performance and quality of patient care is central in determining reimbursement rates in the all-payer model.

McClaughry says the Green Mountain Care Board will use ill-defined criteria in judging ACOs’ performance.

“The first two quality indices are hospital readmission rates and hospital infection rates,” McClaughry said. “After that, the board will rely on patient satisfaction surveys and other vaguely specified metrics.”

The board will pay extra to ACOs whose patient care costs come in under budget, McClaughry says.

“The government board will rate the ACO on how well it meets these criteria,” McClaughry said. “If it does so satisfactorily while spending less than the budgeted per-capita amount on the patient population, providers can theoretically win as much as a 9 percent bonus.”

Political Parachute

Darcie Johnston, executive director of Vermonters for Health Care Freedom (VHCF), says Shumlin is forcing the All-Payer Model on Vermont in a bid to shore up his legacy as governor.

“Clearly, too little planning has occurred,” Johnston said. “The rush to put this agreement in place leads VHCF to conclude that an all-payer waiver agreement seeks to meet a political goal of an outgoing governor but not the health care needs of Vermont.”

Uncertainty over how the All-Payer Model would function in practice could drive doctors out of the system, Johnston says.

“Vermonters are already facing a shortage of doctors, and with a little digging, one can quickly learn that this problem is only getting worse,” Johnston said. “Without a plan for funding streams and processes, transparency, and improving direct primary care, it is premature to consider the All-Payer Model.”

Josh Thomas ([email protected]) writes from Dayton, Ohio.

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