How Vermont’s All-Payer ACO Model Paves the Way for Value-Based Care

October 03, 2023 - As its name states, the Vermont All-Payer Accountable Care Organization (ACO) Model is an arrangement that incorporates patients with both private and public healthcare coverage, but what makes this model so appealing to providers? Is this system finally the solution to moving more healthcare stakeholders away from traditional fee-for-service and toward value-based care?

The model’s impacts on spending and quality point towards yes and the importance of boosting participation in ACOs and APMs not only in Vermont but across the whole country.

The model uses an ACO structure to align financial incentives across payers through risk-based payments tied to provider performance. With the goal of rewarding quality over quantity, healthcare stakeholders see the model as a promising path to value-based care.

In the following article, RevCycleIntelligence breaks down how the Vermont All-Payer ACO Model was developed, how the model impacted healthcare quality and spending, the strategies behind the model’s success, and the challenges encountered by the sole participating ACO.

Where the model started

Most payment models are designed to serve just one type of healthcare payer. However, the Vermont All-Payer Model reimburses providers through Medicare, Medicaid, and commercial health plans across the state. The model is currently in its sixth performance year.

All-payer models essentially have the same goals as value-based care models: lower healthcare costs and improve care quality. By agreeing to pay the same or similar rates for healthcare services, payers are actively moving against the fee-for-service system. What’s more, this method can simplify billing and reimbursement processes for healthcare providers, minimizing administrative burden.

Vermont took its all-payer model a step further and incorporated an ACO into the mix. The model shares the financial risk of caring for patients through the risk-bearing ACO OneCare Vermont. Payments from the different payers move through the ACO, which then distributes the payments to providers based on their attributed patients.

ACOs are made up of healthcare providers who help promote value by agreeing to coordinate care for patients and accepting responsibility for the cost and quality of that care.

The Green Mountain Care Board is a principal player in spearheading the model. Vermont established the group in 2011 to oversee the development, implementation, and effectiveness of healthcare payment and delivery system reforms in the state. Along with former Vermont Governor Peter Shumlin, leaders at the Vermont Agency of Human Services, and OneCare Vermont, Green Mountain Care Board has been involved in the model since the beginning.

Governor Shumlin’s agenda was to get a single-payer plan through the Vermont legislature that prioritized cost containment. However, he understood that systemwide adjustments would only happen by incentivizing healthcare providers to be the agents of change—a mindset that opened the door to the possibility of an all-payer ACO model.

Collaborative leadership and a state innovation model testing grant from CMS helped Vermont achieve this goal and establish the all-payer model. Following negotiations with the federal government, Governor Shumlin, the Secretary of the Agency of Human Services, and the Chair of Green Mountain Care Board signed the model agreement in 2016.

The model builds on prior payment and delivery system reform initiatives in Vermont, including the state’s Global Commitment to Health Section 1115 Waiver, Blueprint for Health, and a multi-payer ACO Shared Savings Program pilot, a CMS spokesperson shared with RevCycleIntelligence via email.

Key model impacts

The Vermont All-Payer ACO Model significantly impacted healthcare spending, quality, providers, and value-based payment participation. The third evaluation report of the model, conducted by NORC at the University of Chicago for CMS, analyzed the model’s effects during the first four performance years from 2018 to 2021.

Over these years, the model reduced gross Medicare spending by $686.40 per beneficiary per year, or 6.2 percent, for ACO-attributed beneficiaries. For Medicare beneficiaries statewide, the model reduced per beneficiary per year gross spending by $1,177, or 9.9 percent.

The model also influenced healthcare utilization among patients. In performance year four (2021), acute care utilization decreased among ACO-attributed beneficiaries (-10.0 percent) and statewide beneficiaries (18.7 percent).

At both the ACO and the state levels, there was a reduction in specialty care E/M visits and an increase in primary care E/M visits.

“The short news is we’ve lowered costs, driven down the need for hospitalizations, and improved patient care in terms of opportunities for the future,” Abe Berman, CEO of OneCare Vermont, told RevCycleIntelligence.

The model has also impacted quality measurement, despite a lack of concrete statistics.

“OneCare has created a statewide infrastructure for evaluating quality,” Anya Rader Wallack, former chair of the Green Mountain Care Board and current board chair of OneCare Vermont, told RevCycleIntelligence.

“Whether we’ve had a dramatic impact on any particular indicator or not, this infrastructure allows providers to talk about quality and learn about their own quality, which is still a work in progress. We are changing our vendor as we speak to get better analytics to help our providers understand the quality of their care and improve upon it.”

This newfound insight into quality of care has led providers to alter how they deliver value-based care to patients.

“There was alignment around some key areas of quality measurement and, therefore, care delivery transformation,” explained Pat Jones, interim director of health care reform at the Vermont Agency of Human Services. “We have focused on mental health and substance use disorder treatment and chronic illness prevalence and treatment. The third [area] was access to primary care.”

The model’s framework held the state responsible for population health indicators like reducing deaths from suicide and drug overdose and reducing the prevalence of chronic illness.

Additionally, OneCare Vermont received positive feedback from providers about how the model and the ACO influenced their workflow, according to Berman. Support from the ACO provided the bandwidth, infrastructure, and personnel that providers needed to succeed.

The Vermont All-Payer ACO Model increased value-based payment participation, a particularly notable feat as participation in APMs like the Medicare Shared Savings Program (MSSP) has been falling.

“Because of the model, there has been widespread participation in a value-based payment model in every region of the state, across the care continuum, and across provider types,” the CMS spokesperson offered.

“Hospitals and practitioners appreciated the fixed prospective payment in the Medicaid ACO initiative, which provided predictability and reliable income and supported population health management. Medicaid officials noted that having the Model State Agreement in place increased momentum for other Medicaid payment reform initiatives.”

Encouraging more providers to participate in APMs is a top priority for CMS and organizations like the National Association of ACOs (NAACOS) and the American Medical Association (AMA). MSSP participation has waned since 2020, prompting these groups to push for additional efforts from CMS.

In 2020, 517 ACOs representing 11.2 million beneficiaries were in the MSSP. The number of ACOs fell in 2021 to 477 before rising slightly to 483 in 2022. However, participation declined again in 2023 with 456 ACOs participating in the program, representing 10.9 million beneficiaries.

Factors behind the success

Understanding the factors that contributed to the Vermont All-Payer ACO Model’s success can help inform policy decisions in other states that are looking to implement similar care delivery models.

Focusing on primary care is essential for any ACO to achieve value-based care success.

A significant challenge of the American healthcare system is managing patients who have multiple chronic diseases over a long period of time, according to Sean Cavanaugh, chief policy officer of Aledade, a company that works with independent primary care practices to establish and lead ACOs.

“[Primary care physicians] are most likely to have a longitudinal relationship with patients. They’re the people who know the communities and have known the patients their whole lives, so they’re designed to succeed in managing chronic disease,” Cavanaugh indicated.

“If [primary care physicians] are attuned to try and provide better care at lower cost, they are well situated to influence a lot of what happens downstream in the healthcare system, even though they don’t run hospitals or specialty clinics. They can keep you out of the hospital when you don’t need to be there.”

From a revenue perspective, investing in primary care services can help keep these practices independent, which may ultimately save providers and patients money. Additionally, involving primary care practices in ACOs can help them pursue innovative strategies that they otherwise wouldn’t be able to if they were tied to a fee-for-service system, Cavanaugh said.

“People have been thinking about primary care investments as separate from ACOs and Total Cost of Care models, when we should be thinking about them as complementary models and as part of one larger model. I think that’s where we’re headed and it’s exciting; Vermont is a good example of that,” Cavanaugh noted.

Similarly, Maryland’s Total Cost of Care Model includes a primary care program that incentivizes primary care practices and federally qualified health centers (FQHCs) in Maryland to offer advanced primary care services to patients.

NAACOS has several members participating in Maryland’s model.

“What we’ve found from our members is the primary care aspect of the Maryland model helps them succeed more in Medicare ACOs. It’s a place where there’s some meaningful interaction between the two approaches,” Aisha Pittman, MPH, senior vice president of Government Affairs at NAACOS, told RevCycleIntelligence.

As Jones mentioned, primary care is one of the model’s main focus areas for care transformation. Hospitals are the primary risk-bearing entities in OneCare Vermont, but the ACO established a primary care accountability pool in 2021 that shared downside risk with hospital-based and non-hospital-based primary care practices.

Primary care practices participating in risk-based programs were required to contribute $1.50 per beneficiary per month to the accountability pool. If no losses were owed, practices would be refunded their contributions and earn up to an additional $1.50 per beneficiary per month in shared savings.

“One of the main functions of OneCare is to redistribute money to primary care. If OneCare hadn’t been there for the last 10 or 12 years, the primary care infrastructure in Vermont would be much weaker,” Wallack said.

The primary care success that OneCare has achieved through the all-payer model has allowed the ACO to implement additional primary care initiatives that have helped create a smooth care delivery environment for providers. For example, the ACO’s Comprehensive Payment Reform (CPR) program is a payer-blended fixed payment model for independent primary care practices.

“Programs like our CPR program provide revenue stability through events like we experienced during the pandemic when, under a fee-for-service system, providers likely would have had financial distress; it provided the necessary smoothness,” Berman shared.

“It also allowed them to approach care differently by hiring care managers and folks who assist with mental health and substance abuse at physician practices and contribute to whole-person health, as opposed to just treating one specific medical condition,” he continued.

The ACO’s emphasis on primary care combined with the CPR model was particularly influential. OneCare funded initiatives that support care coordination, primary care, integration of primary and specialty care, and pilot programs for innovations in care delivery and payment reforms.

The CPR program was designed to allow independent primary care practices to receive per-member per-month payments instead of fee-for-service payments for all attributed beneficiaries. Practices are eligible to participate if they have at least 500 attributed beneficiaries and are in a health service area that participates in the Medicare, Medicaid, and commercial ACO initiatives.

Challenges of VT’s Model

The Vermont All-Payer ACO Model’s success did not come without challenges. In a system that aims to incorporate all healthcare payers, it can be tricky to align the different reimbursement models.

“Medicare can’t change their operations beyond a certain degree, so even though we’re talking about changing the reimbursement world, we’re still stuck in that world to a great degree,” Wallack pointed out. “The clearest manifestation of that with OneCare has been that we’re still reconciled to a fee-for-service reimbursement model.”

Jones also shared that there were operational challenges with aligning across payers and working with multiple providers. Setting reasonable expectations for things like care delivery was difficult at times.

“Care delivery transformation is incredibly complex when dealing with a healthcare system like Vermont’s, where there’s not a lot of horizontal and vertical integration,” she explained.

“It’s largely a rural state with a rural provider system. We have primary care, specialty care, hospitals, home health, mental health and substance use providers, and community-based organizations that are meeting people’s social needs as well as their healthcare needs,” she continued. “In that kind of diffuse environment, albeit one where these folks are used to working together, it can be challenging to do care transformation.”

In addition, Wallack mentioned there was some complexity in governing the model, given that several regulators and organizations had leadership roles.

Like most care delivery and payment models crafted around a value-based framework, the Vermont model is working toward long-term care transformation, which requires patience from stakeholders.

“Trying to focus on that longer view, have the patience for it, and have people be able to hang in there for this longer-term transformation can be a challenge given the pressures that people are dealing with on a day-to-day basis,” Jones said.

Additionally, according to CMS, hospital participation in the Medicare ACO initiative of the model has been limited.

“Smaller hospitals and critical access hospitals report that [they] perceived the financial risk as too high to participate. CMS is evaluating this issue and potential ways to address it,” the spokesperson said.

Expanding the use of all-payer models

As value-based care becomes the destination for healthcare delivery models, increasing participation in ACOs and expanding all-payer models to more states can help accelerate this transition.

In a way, ACOs are like a bridge between fee-for-service and advanced APMs—models that require downside risk, like Vermont’s Medicare ACO initiative. Participating in ACOs can help providers gradually transition from fee-for-service to value-based payments, and eventually to advanced APMs once they have more experience. Thus, increased participation in ACOs is likely to be positively correlated with a greater prevalence of advanced APMs.

To qualify as an advanced APM, ACO models must tie payment to quality, include two-sided risk, and require at least 50 percent of Medicare-enrolled clinicians to use certified EHR functions. Boosting ACO participation would result in more healthcare payments under value-based arrangements.

Incentives—financial and non-financial—are a key component to increasing consistent ACO participation, Pittman emphasized. A significant financial driver is the advanced APM incentive payment established under the Medicare Access and CHIP Reauthorization Act (MACRA).

“Giving that extra 5 percent bonus—3.5 percent for this year—really helps,” Pittman said. “It goes directly to clinician practices that are in ACOs or other advanced APMs and they can use those funds to reinvest in their overall practice and their care approach.”

CMS should extend the APM bonuses for at least two years and rethink the long-term incentive payment structure to ensure payments do not incentivize clinicians to remain in the Merit-Based Incentive Payment System (MIPS), according to Pittman.

Non-financial incentives like waivers can also encourage ACO participation by reducing burden and offering providers more flexibility in APMs. For example, the MSSP has a waiver that eliminates the three-day stay requirement before a skilled nursing facility (SNF) stay.

Many waivers tied to the COVID-19 PHE were rooted in value-based care and ended in May 2023, but incorporating these waivers into ACO programs would allow providers to continue benefitting from them. Additionally, CMS should have a process where ACOs can submit ideas for waivers, Pittman mentioned.

The agency has set a goal to have all traditional Medicare beneficiaries in an accountable care relationship by 2030. Testing more models within the MSSP, specifically those that revolve around primary care, can help CMS and ACOs understand what kind of investments improve care for beneficiaries in the long run, according to Cavanaugh.

In their accountable care journeys, the best thing a state can do is consider implementing an all-payer model. Aligning payers under a common framework can make it easier to implement value-based payment models. Additionally, all-payer models tend to have data-sharing requirements, meaning providers can improve the tracking of patient outcomes, costs, and performance metrics.

Although more commercial payers joined Vermont’s model in the fourth performance year, a lack of payer participation still led to fee-for-service remaining the dominant model, NAACOS wrote in a blog post.

Payer participation should be a top priority for improving the Vermont model and for expanding all-payer models to other states. Collaboration between model leaders and providers is also essential.

“One of the keys to success has been a Vermont ethos of working together to solve problems,” Berman stated. “A second element that’s important is providing the right tools.”

ACOs must have proper resources available to analyze data and convert that data into actionable information.

Both Jones and Wallack contended that, given Vermont’s small population, the area may not be an attractive market for more ACOs to join the all-payer model. In addition, the provider community is more collaborative than competitive.

“When you’re dealing with the rurality that we deal with here in Vermont, I’m not sure how many more [ACOs] we could support given our size, but that’s certainly not true in other states,” said Jones.

States will be looking to CMS to see where the agency is going with their payment models, particularly at models that impact Medicare reimbursement, as the public program often sets the stage for reimbursement methods in all-payer arrangements.

Multi-state agreements are another potential pathway to value. But CMS must ensure there is enough flexibility within models to meet the needs of different states and encourage providers and payers to participate, Jones pointed out.