As fixes for Obamacare begin, meet the hopelessly confusing ‘all-payer model’

As fixes for Obamacare begin, meet the hopelessly confusing ‘all-payer model’

While Donald Trump talks of repealing and replacing Obamacare and Hillary Clinton talks of reopening the conversation about the public option, the state of Vermont has begun dealing its own personal health care crisis by invoking something called the “all-payer model.”

The Green Mountain Care Board on Wednesday voted to approve this methodology for paying for health care, but understanding what that means requires reading the fine print of the agreement.

By approving the all-payer model agreement, Vermont Gov. Peter Shumlin seeks to align incentives across Medicare, Medicaid and private insurance so health care providers are paid for keeping patients healthy, not for providing individual services and procedures.

The board’s approval makes Vermont the first state to pursue an all-payer model statewide.

In a statement sent from the governor’s office, Shumlin thanked President Barack Obama and U.S. Health and Human Services Secretary Sylvia Burwell for negotiating the agreement with the state, and he said the model would control health care costs and reward doctors for a more preventive approach to care.

“Vermont will now become the first state in America to ensure that your doctor can focus on keeping you healthy, rather than running tests or procedures,” Shumlin said, adding:

By shifting the focus away from the current fee-for-service system to one that rewards primary care and prevention, we will help Vermonters lead healthier lives and more effectively manage chronic diseases, allow doctors to better treat their patients and identify health issues before they become severe, and reduce costs in a health care system that, if left unchecked, will bankrupt our state and Vermont families.

Green Mountain Care Board Chair Al Gobeille called the event “an important next step in provider-led health care reform,” adding that the program will save Vermont $10 billion over the next decade.

However, the board’s action did little to address concerns raised by the Joint Fiscal Office. In a report released Friday, the JFO weighed the supposed benefits of the new system against a list of critiques and uncertainties. Among the uncertainties are the administrative costs of the program, as well as where funding will come from.

The JFO report also notes that the next governor could refuse to go forward with the program. Republican gubernatorial candidate Phil Scott has said he does not support the program.

In a statement sent to local media, State House Minority Leader Rep. Don Turner, criticized the plan.

“The proposal raises many important, but unanswered, questions regarding the ability to cap healthcare cost growth, the use of the ACO model … and the competency of the Shumlin Administration to successfully run another complex regulatory system given its dismal record with Vermont Health Connect,” he said.

Darcie Johnston, director of Vermonters for Health Care Freedom, said she was shocked at the speed with which the board approved the draft. “Our legislators made a huge mistake in giving the GMCB so much power — the power to enter into contracts to further destroy our health care system.”

Amy Cooper, executive director of HealthFirst, an independent practice association representing over 250 medical professionals, told Vermont Watchdog she believes “the concept could be a good one” but nevertheless is “nervous about the State’s ability to implement it, especially with such a short timeline of reviewing the details that were only released a month ago.”

Shumlin will sign the revised draft document at 2 p.m. Thursday in his ceremonial office in Montpelier.

Over the past month, health care officials held public forums to explain Vermont’s 44-page draft agreement with Centers for Medicare and Medicaid Services. Still, many doctors and patients feel unsure of what the “all-payer model” will mean for them, in part because of the program’s many complexities.

For starters, despite the administration’s talk of an “all-payer waiver,” the draft document contains a waiver only for Medicare, not Medicaid or commercial insurance — the other two “payers” in Vermont’s health care system. Instead, the document gives state health care officials permission to operate accountable care organizations, or ACOs, under a restructured payment system.

For health care providers, the new payment system will start to replace current fee-for-service payments with a state-run global budget, the goal of which is to reward positive outcomes and overall population health.

Once the agreement is finalized, Vermont will start using its state-approved ACO, called the Vermont Care Organization. That network of health care providers is comprised of representatives from existing ACOs, including OneCare, HealthFirst and Community Health Accountable Care.

The smaller ACOs have not yet committed to being managed by the Vermont Care Organization. They have until 2018 to decide whether to remain as fee-for-service operators or transition to global budgeting within the Vermont Care Organization, as overseen by the Green Mountain Care Board.

Dr. Paul Reiss, chief medical officer at HealthFirst, told Watchdog his ACO is not recommending that physicians sign on with the Vermont Care Organization until details of the offer are known.

“There’s no proposal to change the way physicians are paid under Medicare in 2017,” Reiss said. “We’ll recommend signing on when there are actually offers on the table.”

At recent public forums, both Gov. Peter Shumlin and Al Gobeille, chair of the Green Mountain Care Board, said the Vermont Care Organization would be “risk bearing.” That means the umbrella ACO network, not individual providers, will absorb losses if providers exceed their budget for the year.

While the risk-bearing stipulation may allay providers’ worries about going over budget, page 8 of the agreement states that the ACO is responsible for “at minimum 30 percent” of shared losses. Put another way, providers in some cases will be responsible for paying up to 70 percent of the cost of exceeding the state-determined budget.

Delivering care under a global budget worries some doctors, who may not be able to survive under a budget cap and offer effective care at the same time.

When an audience member at the Norwich public forum asked what impact failing practices might have on the system, Shumlin replied, “You cannot be refused care. … It’s the ACO’s problem to deal with the bankruptcy. … It would not affect care in any way. It might not be the same provider, because they would be out of business theoretically, but someone would have an interest in caring for you.”

Gobeille agreed that private practices might face bankruptcy “because they couldn’t make it work in the independent practice world.” He added that such practices could be absorbed into the hospital system.

Since the draft agreement was announced, some physicians have criticized the plan on the grounds that hospitals may continue getting reimbursed for services at a higher rate, because of their bargaining advantage with insurance companies and the Green Mountain Care Board.

While it’s generally expected that the all-payer model will fix the payment reimbursement differential between Medicare, Medicaid and commercial insurers, Reiss said he’s skeptical.

“There are no [plans] currently diagrammed on any drawing board to make that happen,” Reiss told Watchdog.

In fact, the draft agreement doesn’t fix the reimbursement differential. Instead, it says by 2020 the state must deliver “a report on options to narrow the Payer Differential between payers.”

The long delay could disappoint independent physicians, who have been told they don’t have to join the state-run ACO if they don’t want. That freedom of choice may be illusory at best, since financial pressure cited in the agreement could coerce doctors to join the network or face financial consequences.

Specifically, the draft agreement says the state will “encourage” providers and beneficiaries to participate. One “encouragement” includes a potential Medicare payment reduction for practices that remain outside of the ACO.

However, in an Oct.19 email exchange obtained by Vermont Watchdog, state Sen. Tim Ashe, told Burlington psychiatrist Robert Emmons that he contacted Ena Backus, health policy chief at the Green Mountain Care Board, and the financial penalty is now removed from the updated agreement.

Funding to help Vermont abandon a fee-for-service model includes a one-time payment of $9.5 million dollars from Medicare. The state also has a verbal agreement with Medicaid for $200 million — likely $110 million in federal money and $90 million in state funds.

It’s unclear where this money, and the administrative expense of Vermont Care Organization, will come from.

On Tuesday, Johnston unsuccessfully called for the board to delay its vote until outstanding questions are answered.

“We believe that doctors and patients have significant concerns, and that the delivery of health care to Vermonters could be significantly impacted. We are concerned about the rationing of care,” the Vermonters for Healthcare Freedom director said in a statement. “…There are too many questions that deserve answers before the Green Mountain Care Board should agree to support such a risky venture.”

Other concerns of Johnston’s include a lack of transparency and the model’s impact on Vermont’s doctor shortage.

A timeline of key events reveals the long road ahead for the all-payer health care model.


Cross-posted from and  

LU Staff

LU Staff

Promoting and defending liberty, as defined by the nation’s founders, requires both facts and philosophical thought, transcending all elements of our culture, from partisan politics to social issues, the workings of government, and entertainment and off-duty interests. Liberty Unyielding is committed to bringing together voices that will fuel the flame of liberty, with a dialogue that is lively and informative.


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