State tried to contain health care costs

March 19, 2007
MIDDLEBURY — A few short years ago, state officials were forecasting the doom-and-gloom scenario that Vermont’s Medicaid budget would be $500 million in the red within five years.
While the news today still isn’t great, it’s a lot better than it could have been, according to Vermont Agency of Human Services (AHS) Secretary Cynthia D. LaWare. Thanks to a special waiver that allows Vermont to oversee the spending of its federal Medicaid dollars, along with recently implemented health care programs that stress preventative care over acute care, state officials have readjusted their Medicaid deficit projection to $100 million.
Medicaid was just one of several health care issues discussed by LaWare during a far-ranging interview at the Addison Independent on Thursday.
“To the extent we can diagnose and treat illnesses early on, it can have a dramatic affect on acute care costs,” LaWare said of her agency’s current strategy.
LaWare is around a year into her job as head of the AHS, the largest agency in state government. With an annual budget of around $2 billion and roughly 3,500 employees, the AHS presides over the state’s Department of Corrections; Department of Children and Families; Department of Disabilities, Aging and Independent Living; Department of Health; and Office of Vermont Health Access.
“Obviously, it’s very diverse,” LaWare said of the services her agency delivers. “It’s almost cradle to grave, with every stop in between.”
LaWare hailed Vermont’s “Global Commitment Program” for giving her agency more latitude in spending federal Medicaid dollars on state health care programs.
The federal Centers on Medicare and Medicaid Services approved Vermont’s Global Commitment program last year, authorizing disbursement of up to $4.7 billion in federal funds to the state for federal fiscal years 2006-2010. State officials estimated Medicaid spending would reach only $4.2 billion during that period, partly because the cap amount assumes a 9 percent administrative allowance, which is substantially higher than the state projected administrative costs of 3 percent to 5 percent. State officials have hoped to use these savings to cut expenses and plow more money into preventative health care programs.
“It has focused us on what we need to do on case management and intervention … so we can begin to bend the curve on the ever-expanding costs of health care,” LaWare said.
Savings derived from the Global Commitment plan have allowed Gov. James Douglas to recommend higher levels of Medicaid reimbursement for the state’s health care providers in fiscal year 2008, according to LaWare. The governor’s budget recommends an additional $2 million in reimbursement for physicians; $2 million more for in-patient (hospital) providers; $400,000 more for home health professionals; and another $637,862 for dentists.
Douglas has also requested roughly $12.5 million for the Catamount Health plan. Scheduled for implementation this October, Catamount Health will make basic health care services available to an estimated 35,000 Vermonters who are currently uninsured. The departments of Health and Labor are currently reaching out to employers and employees who will be affected by the new plan. State assessments for this new Catamount Health program will begin April 1.
Businesses that don’t currently offer health benefits, or that offer benefits but have employees who aren’t covered by any plan,  will face an assessment based on full-time equivalent employees (FTEs) at the rate of $91.25 per quarter ($365 per year), exempting eight FTEs in fiscal years 2007 and 2008, six FTEs in 2009, and four FTEs in 2010 and thereafter.
Employees will also be assessed a premium, based on their ability to pay.
LaWare said the MVP and Blue Cross-Blue Shield insurance companies have agreed to offer Catamount Health insurance policies. She hopes Cigna will also sign up.
Marketing the program will be key, according to LaWare.
“We need to try to get to that 20-year-old who thinks he or she is invincible and would rather purchase a season’s pass to Stowe, ” LaWare said of a typical profile of someone who may fall through the cracks.
LaWare hopes Catamount Health will be as successful as other state initiatives she said are making a difference in patient outcomes and on the ledger books.
She credited the state’s “Blueprint for Health” program for promoting healthier lifestyles and leading to earlier diagnoses of chronic illnesses, such as diabetes, arthritis and high blood pressure.
“To the extent we can diagnose and treat these illnesses early on, it can have a dramatic affect on acute costs,” LaWare said. “In Vermont, 50 percent of the population has at least one chronic condition. And 70 percent of our health care dollars go to fund chronic care costs.”
LaWare noted the AHS is recommending the state establish a new dental program, with the goal of diagnosing medical problems in patients before they blossom into more acute, expensive health crises.
The program — which would be financed through $1 million in state funds and a federal match — would ensure all children have access to preventative dental care, would feature higher reimbursement rates for dentists, and would offer loan forgiveness to dentists who agree to work within the state after they finish their studies.
“There’s no question that good oral health supports good physical health,” LaWare said.
She also noted the state’s efforts in enhancing health care choices for seniors while reducing stress on Vermont’s nursing homes. The new program “Choices for Care” allows Medicaid-eligible seniors to opt for long-term care at home — delivered by the caregiver of their choice — rather than in a nursing home setting.
Choices for Care has thus far served 4,004 individuals, according to AHS spokeswoman Heidi Tringe. She said the program cut the number of people using nursing homes last year by 156 patients, and resulted in 205 additional people using community-based/residential care.
LaWare noted it costs around $40,000 per year to serve someone in a nursing home, compared to around $20,000 per year to have the person cared for at home. Prior to the Choices for Care program, Medicaid-eligible seniors did not have a home-based care option for long term care, LaWare noted.
“It’s created jobs,” LaWare said of Choices for Care, referring to the compensation for home-based providers.
LaWare stressed, however, that the state does not want Choices for Care to weaken the state’s nursing home system, which has already been under tremendous financial pressure.
“There is a balancing act we need to be concerned about,” LaWare said.
Porter Medical Center spokesman Ron Hallman acknowledged the recent health care changes at the state level. Some of those changes — such as higher reimbursements rates — would definitely provide a shot in the arm to hospitals like Porter, he said.
“At this point, we are appreciative there have been some steps forward,” Hallman said. “We hope the increase in (Medicaid) reimbursement will stay in place once the budget is finalized.”

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