Vermont proposes all-payer health care model

MONTPELIER — Vermont has taken the first step toward a radical change in the way health care providers are paid for their services.

On Monday, state officials submitted a proposal to the federal government that would see doctors paid for the health outcomes of their patients, rather than for the services they provide.

Gov. Peter Shumlin discusses the all-payer model.

Josh O'Gorman / VPB

Gov. Peter Shumlin discusses the all-payer model.

“I think anyone in the health care industry knows that fee-for-service results in duplication and inefficiency,” said Gov. Peter Shumlin, a statement he has made in one form or another during his five years in office.

Rather than pay for every visit to the doctor’s office or every test a patient takes, the proposed all-payer model would allow Medicare, Medicaid and private insurers to pay health care providers based upon the heath outcomes of their patients.

The Shumlin Administration submitted its proposal Monday to the federal Centers for Medicare and Medicaid Services, seeking permission to employ an all-payer model in Vermont for five years, beginning in January 2017 and continuing through December 2021.

The proposed all-payer model would seek to limit annual increases in health costs to 3.5 percent, and cap the increases at 4.3 percent. Officials chose the 4.3-percent figure because it is 1 percent higher than the 3.3-percent average growth in the gross state product during the past 15 years.

Al Gobeille, right, discusses the all-payer model.


Al Gobeille, right, discusses the all-payer model. (VPB/Josh O’Gorman)

Al Gobeille, chairman of the Green Mountain Care Board, the state’s health care regulatory body,  said provider participation in the all-payer model would be voluntary and the state could stop employing the model prior to 2021 if officials find it isn’t working as intended.

“We don’t need to do this for five years if it turns out to be a bad thing,” Gobeille said.

If it receives federal approval, Vermont would be the first state in the country to employ an all-payer reimbursement model for all heath care providers. Maryland currently employs an all-payer model for hospitals.

Shumlin said that, due to the upcoming change in administration following the 2016 presidential election, it is imperative to get the go-ahead to implement the all-payer model before January 2017.

While the all-payer model is looking to change the way doctors are paid, it doesn’t address the so-called “cost shift,” in which private insurers are forced to pick up the difference when Medicaid reimburses doctors 60 cents for every dollar of service provided, and Medicare reimburses at a rate of 80 cents for every dollar of service.

During his budget address last week, Shumlin proposed an assessment fee currently levied on hospitals and nursing homes to include doctors and dentists as a way to raise Medicaid reimbursements, a proposal he described Monday as “a band-aid on a broken fee-for-service system.”

“My hope is this system will be redesigned so there isn’t an incentive for doctors to take one patient over another based on payment,” Shumlin continued.

Lt. Gov. Phil Scott offered his thoughts on the proposed all-payer model.

“The Green Mountain Care Board is undoubtedly aware that Vermonters are justifiably skeptical about state government’s ability to make and implement substantial policy decisions of this magnitude,” Scott said. “The single-payer discussion went on for far too long, Vermont’s health care exchange is still dysfunctional and plans are still unaffordable for too many.”

Read documents released by the Shumlin administration regarding the all-payer model below:


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