Vermont ACO Receives $620M to Lead Healthcare Reform Efforts

January 04, 2018 - Vermont’s healthcare reform group, Green Mountain Care Board, recently approved a budget of $620 million for OneCare Vermont, an accountable care organization (ACO) working with Medicare, Medicaid, and private payers, local news sources reported.

OneCare Vermont’s funding set the state on a five-year healthcare reform experiment in which policymakers and providers aim to pay for and deliver preventative and wellness care in lieu of fee-for-service care.

“It's a very big step because healthcare nationally is growing at a faster rate than economic growth,” Green Mountain Care Board’s Chairman Kevin Mullin told Burlington Free Press. “We're not doing well compared to other developed countries as far as our per capita cost for healthcare, so this is important to try to move away from what I consider to be a failed system of fee-for-service.”

The ACO will serve as the vehicle for Vermont’s shift away from fee-for-service. The University of Vermont Medical Center and Dartmouth-Hitchcock Hospital formed the ACO and grew the organization to a ten-hospital system. The organization also includes hundreds of primary and specialty care physicians, advanced practice providers, federally qualified health centers, and rural health clinics.

OneCare Vermont will provide care to 122,000 individuals, or about one in five Vermont residents, starting this January.

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The ACO’s structure is unique because Medicare, Medicaid, and private payer revenue will be combined to pay ACO providers. The budget approval marked the first time a state has allocated funds from the federal Medicare program to a system that combines funding from other sources, such as Medicaid and Blue Cross Blue Shield of Vermont, VT Digger reported.

Under the OneCare Vermont structure, providers at participating hospitals will receive fixed monthly payments for patients they see. Primary care providers will earn $3.25 per patient per month and providers caring for the sickest patients will receive an additional $15 to $25 each month.

The ACO also includes downside financial risk. If hospitals incur actual care costs lower than the spending target, providers will share in the savings.

However, hospitals will have to repay financial losses if providers exceed the budget. The organizations will be responsible for a total of $21.5 million in financial risk.

Participating hospitals will also have the opportunity to earn quality performance bonuses. Organizations that perform well on quality measures will receive a $4.3 million bonus, with the majority of the incentive payment going to primary care providers.

READ MORE: The Future of Accountable Care Organizations Involves Risk

Vermont’s policymakers intend for the ACO structure to incentivize providers to deliver preventative care. Providers will have more flexibility than under a fee-for-service structure to provide care that would not typically be reimbursable under the traditional payment method.

For example, the ACO aims to incentivize providers to spend more time with their patients during office visits and address health concerns outside of an appointment.

Through preventative care, the organization intends to reduce overall healthcare costs while improving care quality and patient outcomes.

But some stakeholders are skeptical that OneCare Vermont will actually reduce healthcare costs and unnecessary utilization. A recent survey by the Green Mountain Care Board found that Vermont providers are uncertain that ACOs are the method for improving care value, the VT Digger reported.

The state previously used a $45 million State Innovation Model grant from CMS from 2013 to establish three ACOs, including OneCare Vermont. The three organizations worked together under Vermont Care Organization, which has since disbanded. OneCare Vermont was the only organization to continue with the healthcare reform efforts.

READ MORE: Characteristics of Successful Accountable Care Organizations

But the survey uncovered that 90 percent of the 325 providers thought the state’s latest healthcare reform efforts have not changed the quality or their services, have made quality worse, or don’t know.

Another 94 percent stated that the efforts have either not reduced healthcare costs, have made costs worse, or they don’t know whether the reform efforts can help to decrease healthcare costs.

“This plan is not designed to do one thing to advance universal healthcare, nor provide more coverage to uninsured people,” former Deputy Secretary of Vermont’s Agency of Human Services Patrick Flood recently told the local news source. “Nor will it address the real reasons why healthcare costs are so high and continuing to grow.”

The funding to OneCare Vermont may also create a “virtual monopoly,” he stated. The ACO would control about 70 percent of Vermont’s healthcare system.

While critics were not shy voicing their concerns, OneCare Vermont CEO Todd Moore explained that the state and its providers should be able to assess if the healthcare reform effort works to improve care value by 2019. If the ACO initiative works, annual growth in healthcare expenditures would be reduced by half, saving millions over five years and reducing insurance premiums for residents.

“A lot of work has gone into getting ready for this,” Moore said to the Burlington Free Press. “Now we're going to start a multi-year effort to execute well. There are going to be things we didn't anticipate, but the objectives are so valuable and important that it's worth doing.”