MONTPELIER — Gov. Peter Shumlin says the state’s preliminary application for an all-payer waiver to level reimbursements to health care providers among all payers will be submitted by the end of June.
A universal, publicly-financed health care system is off the table. And Shumlin’s grand plan to pump additional funds into Medicaid through a $90 million payroll tax was ignored by lawmakers. But the administration has been making steady progress on another major reform in health care — changing the payment structure.
An all-payer waiver will allow the state to move forward with an ambitious plan to eliminate the current fee-for-service payment model that pays providers for each procedure and replace it with a system that pays providers on the quality of care they provide and the health outcomes of their patients.
“This is taking Medicare, Medicaid, private pay, in other words our entire payment system, and moving it to one where we literally pay our providers for keeping us healthy and giving them skin in the game,” Shumlin said in a recent interview. “It’s a revolution in the way we pay for health care. They get paid for keeping you healthy not for the number of things they do to you.”
State officials say if Vermont obtains the waiver from the federal Centers for Medicare and Medicaid Services, all insurance plans will pay the same amount and providers will have an incentive to work collectively to have the best health outcome that is not paid for based on the number of tests and procedures performed.
Currently, Maryland is the only state operating under an all-payer waiver, and has been doing so since the late 1970s. But Maryland’s system only sets Medicaid rates for hospitals. In Vermont, the goal is to take it further and include primary care providers and specialists as well as hospitals.
“What we’re talking about in Vermont is doing it with everybody, including Medicare, which is, of course, where the bulk of our money is,” Shumlin said. “It really is a very, very significant conversation.”
Officials with CMS will visit Vermont in the next couple of weeks to work with state officials on its application. The process requires rolling at least two waivers into one document that the state and federal government can agree on. Shumlin said his administration will have the document completed by the end of June, and the state should have an idea this fall whether the project is feasible.
Vermont currently has a Medicaid waiver to spend federal matching dollars outside of more rigid federal regulations. That waiver, known as the global commitment waiver, has been around since the administration of former Republican Gov. James Douglas, but it expires at the end of 2016.
The state’s application will also include a Medicare waiver that will allow it to spend Medicare funds outside the current regulations. However, “In no way does the state take control of Medicare money,” says Al Gobeille, chairman of the Green Mountain Care Board, the state’s health regulatory body.
“They are such substantially different waivers. What Medicare would be willing to do is relax its payment rules so we could tell them ahead of time how we’re going to do our rules and set our standards of care to meet their measures,” he said.
Completing the state’s preliminary application will only begin a long process of reforming the health care payment system in Vermont, Gobeille said. Once the state and federal governments come to terms, physicians will also have to buy in. Gobeille said the will take its plan to providers and ask them, “What do you think?”
“That begins a whole process of making sure that this is a good idea,” he said.
There are plenty of ways the project could crumble, though, both Shumlin and Gobeille said.
“My take is we’re going to negotiate with the federal government. There’s a possible chance that we could walk away and then maybe next year we try again. I’ve been clear with the governor and the legislature that if we don’t get something that’s a good idea … for both sides then we should exercise caution,” Gobeille said. “I don’t know if this is a good idea or bad idea yet until I know what the federal government is willing to do.”
Shumlin said he is worried about the ability to level out payments from all payers in a way that is fair.
“It could fall apart … at any time because it’s all fine to have everybody sitting around and agreeing that the current system is broken and we’ve got to fix it. The fight’s going to come when start talking about who gets paid what,” he said.
The state’s health care systems — hospitals and their subsidiaries — have varying interests based on their size and location. Shumlin said balanced those interests will be difficult.
“Here’s where this thing could fall apart — who is the person or people that controls the money? Let’s be honest, if it’s the big hospitals you lose all of the little folks. If it’s the little folks, the big people distrust. So, we have a huge project ahead to find an objective, transparent, trustworthy process that everyone can believe in or it will never work,” the governor said.
Reforming the payment system is crucial, though, to bending the cost curve in health care, he said.
“We’re all dead if we don’t get this one right because it will bankrupt us,” Shumlin said.