Big health care change is still in the air

MONTPELIER — The quest for a single-payer health care system was sidelined, at least for now, by Gov. Peter Shumlin, late last year. But another effort to dramatically transform the state’s health care system remains very much alive.

Shumlin, a third-term Democrat, shelved his own long-sought proposal for a publicly financed health care system in December, saying it was too expensive at this time. But he is continuing to push for a parallel goal to change the way health care services are paid for in Vermont.

His administration is seeking an all-payer waiver from the federal government that will eliminate the current fee-for-service payment model that pays providers for each procedure.

In Vermont, like all states except for Maryland, government health programs like Medicaid and Medicare pay vastly different amounts than private insurance does for medical procedures. Shumlin hopes to obtain a waiver from the federal government that will allow the state to set the same rates for all insurance plans within individual health systems.

It’s a monumental undertaking that is at the opening stages.

“We’re at the beginning,” said Lawrence Miller, chief of health care reform. “We’ve had conversations with CMS (the Centers for Medicare and Medicaid Services). We’re really just beginning the formal process.”

Miller said the current health system rewards providers for performing more procedures. But the procedures are not always in line with the best health outcomes for patients.

“They’ve got to have a certain amount of service to get a certain amount of fee. Otherwise they can’t keep the lights on,” Miller said.

“So much of health care, the way we deliver it, is a fixed cost,” he said. “You’ve got a building. You’ve got people in so many hours a week. The fact that you’ve got 35 versus 40 patients in a week doesn’t really change your costs. It has a major impact on your revenue.”

If Vermont obtains the waiver from the CMS, all insurance plans will pay the same amount and providers will be 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, Miller said.

“They’ve got a real combined interest to drive to best outcomes for people and avoidance of acute care, because then, overall, it does save money,” he said.

Maryland is the only state currently operating under an all-payer waiver and has been doing so since the late 1970s. Results there have been promising, Miller said.

Other states in recent decades experimented with the model, but those efforts were largely abandoned as private insurance companies embraced health maintenance organizations, or HMOs, according to Miller. HMOs provide managed care for patients within health systems, similar to the way an all-payer model would.

But Medicaid and Medicare were not part of that push.

“If you were to have put Medicare and Medicaid patients into the same HMOs you could have gotten to the same place, but that’s not what they were doing,” he said.

Maryland’s system sets rates for hospitals. In Vermont, the goal is to take it further and include primary care providers and specialists as well as hospitals.

“We do think that it would be beneficial to be broader than just the hospitals, but we do need to have conversations with our federal partners to determine whether that’s viable and would actually be better for Vermont,” Miller said.

Ena Backus is the deputy executive director of the Green Mountain Care Board, which is responsible for regulating health care in Vermont. She serves as the all-payer waiver project leader and is working with Miller to obtain the waiver.

Backus said obtaining it and altering the payment model will create more certainty in the state’s health care system and promote innovation. And, she said, it would be helpful with controlling the rate of growth in total health care costs, making it more consistent with the growth of the economy. That would happen as the GMCB and CMS work together to set target growth rates for health care spending, she said.

Backus said the effort will take extraordinary coordination between myriad interests in order to be successful.

“Our process will include a lot of us working together here in Vermont to agree on what this model would be that can slow the growth of health care in our state,” she said. “Various parts of state government, providers and payers, and most importantly, Vermonters, have to be in the mix, too. We need to have certainty that this model will benefit Vermonters.”

CMS is pushing for such a payment transformation. It announced late last month that for the first time it is setting targets to meet. By the end of 2016, it hopes to have 30 percent of Medicare payments transition from the traditional fee-for-service to alternative payment models.

By the end of 2018, CMS hopes to have 90 percent of all Medicare payments to providers tied to payment models that pay providers based on “quality or value.”

“Whether you are a patient, provider, a business, a health plan or a taxpayer, it is in our common interest to build a health care system that delivers better care, spends health care dollars more wisely and results in healthier people,” said U.S. Health and Human Services Secretary Sylvia Burwell. “We believe these goals can drive transformative change, help us manage and track progress and create accountability for measurable improvement.”

Miller said efforts at the federal level will help the state’s cause.

“It’s instructive to know that we’re not just on this whack-a-doodle, Vermont-being-weird thing in this case,” he said.

Some detractors believe an all-payer model is a slippery slope to a single-payer health care system. Under the latter, the government provides the sole health plan that residents must use. Under the former, private insurance plans remain, but rates are set at the same level as government-sponsored plans.

Darcie Johnston of Vermonters For Health Care Freedom was the most vocal opponent of Shumlin’s single-payer plan. She promises to fight just as hard against an all-payer waiver.

“Absolutely, if it goes that far,” she said. “My view is this is the governor’s backdoor way to single payer.”

Johnston said she believes the 0.7 percent payroll tax the governor recently proposed to help boost Medicaid reimbursement rates to doctors is a major necessity if Vermont is to obtain an all-payer waiver. That tax will raise about $90 million annually from Vermont businesses and draw down about $100 million in federal funding.

Johnson said she believes CMS is unlikely to grant the waiver unless that additional funding for Medicaid is secured to help pay reasonable rates under an all-payer model. But Johnston said the tax is likely to grow in future years as the cost of health care rises and is not likely to help reduce private rates, as the governor has promised.

She is steadfastly opposed to the all-payer model, believing it will impact the care that seniors receive from Medicare.

“We’re very worried that those seniors will find that they are unable to find the care here in Vermont because the all-payer waiver and the payment reform the state continues to push for will drive out physicians and they won’t be able to find the care,” she said. “Yes, the cost curve will be bent, but it will be bent because rationing will exist because individuals can’t find care.”

The success experienced in Maryland cannot be counted on in Vermont, Johnston argues, because of demographic differences.

“I don’t think it should be done and it’s incredibly dangerous to do it. I don’t think you could say that anything working there could be translated here,” Johnston said. “To view them as equal or the same, I think, is foolish.”

“We’re going to continue to watch and be aggressive and keep our coalition educated and informed, but we’re not going to waste any resources until it’s evident that this is likely to happen, because right now it doesn’t appear that it’s going to have a very long life up here,” she added.

Miller said Vermonters won’t see any changes to their benefits, regardless of the type of insurance they have, under the all-payer model.

“It doesn’t change Medicare benefits. It doesn’t change Medicaid benefits. It doesn’t change primary care benefits or commercial pay benefits. It changes the way the back office works,” he said.

An all-payer model would have been sought under a single-payer system, and it continues to be sought now, Miller said, because it may help improve health outcomes and contain costs.

“It’s a component of what we were relying on for improved cost-containment while also improving outcomes. So, it’s really important that there’s a triple aim that you have to hit,” he said. “You’re improving outcomes for people, you’re reducing incidents and you’re saving costs. If you’re not making people’s lives better then the savings, the cost, isn’t really going to fly.”

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