CMS Launches VT All-Payer Accountable Care Organization Model

October 27, 2016 - Starting in January 2017, Vermont will implement the first voluntary all-payer accountable care organization (ACO) model that will align ACO design across Medicare, Medicaid, and commercial payers, according to a recent CMS announcement.

With the recent approval of Vermont’s healthcare regulatory body, CMS plans to test if payers can incentivize quality improvements by reimbursing a majority of Vermont providers under the same payment structure. While ACOs will continue with payer-specific benchmarks and financial settlement determinations, the model will align quality measures, financial risk structures, payment mechanisms, and beneficiary alignment methodologies.

“CMS and Vermont aim for broad ACO participation throughout the state, across all the significant payers and the majority of the care delivery system, to make redesigning the entire care delivery system a rational business strategy for Vermont providers and payers,” the federal agency stated. “CMS and Vermont additionally aim for this Model to deliver meaningful improvements in the health of a state’s population by transforming the relationships between and amongst care delivery and public health systems across Vermont.”

The six-year model is scheduled to launch next year with a transitional performance year. During that time, CMS plans to provide Vermont with $9.5 million to help providers fund care coordination improvements, collaborations with community-based providers, and practice transformations. Some of the funding is expected to go towards existing Blueprint for Health and Supports and Services at Home programs.

By 2018, eligible ACOs can join the Vermont All-Payer ACO model and the state will be accountable for statewide ACO scale, financial, and patient outcome targets. As one of its targets, Vermont aims for 70 percent of all insured residents, including 90 percent of state Medicare beneficiaries, to be attributed to an ACO by the end of the model.

The state also anticipates reducing overall healthcare costs and Medicare spending through the model. Vermont will limit annual per capita healthcare spending growth by 3.5 percent for all major payers and cap Medicare spending growth for Vermont Medicare beneficiaries to at least 0.1 to 0.2 percentage points below that of estimated national Medicare spending growth.

In addition, Vermont set explicit patient outcome and quality of care targets under the model. The model is to focus on four priority areas, including substance use disorder, suicides, chronic conditions, and access to care. The state, alongside ACOs, will be accountable for the following three categories of measures for each priority area:

• Population-level health outcomes measures and goals that apply to all Vermont populations regardless of whether the population is treated by providers in ACOs

• Healthcare delivery system performance measures and goals

• Process milestones that show population-level and healthcare delivery system improvement

“By establishing state and ACO-level accountability for health outcomes for a state’s entire population, the Model will incentivize the collaboration between the care delivery and public health systems that is necessary to achieve these outcomes,” CMS stated.

CMS also plans to offer Vermont ACOs the opportunity to join a state-tailored Medicare ACO initiative under the model. The initiative will start as a modified version of the Next Generation ACO model and participants will be considered Next Generation ACOs in the first non-transitional performance year.

However, Vermont’s Green Mountain Care Board, an independent organization responsible for overseeing the establishment, implementation, and evaluation of care delivery system and healthcare payment reform in the state, is expected to develop initiative-specific benchmarks.

The federal agency added that the Vermont Medicare ACO initiative will qualify as an Advanced Alternative Payment Model under the Quality Payment Program. Participants would qualify for value-based incentive payments.

Additionally, CMS approved a five-year extension of Vermont’s section 1115(a) Medicaid demonstration to allow the public payer to join the Vermont All-Payer ACO model. The section allows Vermont Medicaid to participate in ACO arrangements that demonstrate design alignment with other healthcare payers.

CMS noted that the Vermont model builds on the Maryland All-Payer Model that CMS has supported since 2014. Maryland’s model was designed to shift hospital payments to global budgets that are linked to value, but the Vermont model will expand the state model to include more than just hospital payments.

The model is expected to “provide valuable insight for other opportunities for CMS to participate in state-driven all-payer payment and care delivery transformation efforts.”

In response, Vermont Governor Peter Shumlin commended the Obama administration, the Department of Health and Human Services, and Green Mountain Care Board for developing and approving the model.

According to a statement on his website, Shumlin said:

“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. 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.”

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