Legislative Report by Rep. Fred Baser: Paying for health care in Vermont
In December of 2014 Gov. Shumlin halted his single-payer health insurance effort. Since then, health care and its funding have left prime time. Yet, behind the scenes, much is still going on. There are two stories that deserve attention. The first is the state’s effort to move to an all-payer model, which would set up a health services payment system that would replace the current fee-for-service system. The second concerns our Medicaid guidelines and their impact on providers and the state’s finances.
So what is the all-payer model and what is going on to create this system? The state, through the Green Mountain Health Care Board, has a request in to the federal government to create an all-payer waiver. If approved, this all-payer waiver would allow the state to move the reimbursement of Medicaid claims, and potentially Medicare claims, to a plan that pays on a fixed population versus the fee-for-service basis.
These payments would be made to Accountable Care Organizations (ACOs), of which there are three currently operating in state. An ACO is a bundle of hospitals, doctors and other health care providers that are able to provide a wide range of medical services. The new system, called the all-payer model, is a little like an HMO that pays on a capitated basis (per person enrolled) versus paying for services as they are rendered. Unlike an HMO, the all-payer model has quality measures.
Also ACOs have financial risk. If their costs exceed the capitated payments, they have to eat them. So in the all-payer model, third-party payers like Blue Cross, United Health Care, Medicaid, etc., are instructed to pay a set amount of money per enrollee. The state’s goal is to have a system that encourages wellness and rewards for good medical outcomes. The Green Mountain Health Care Board would like this all-payer model to replace the current fee-for-service system on all health insurance plans.
All of this is being discussed with few Vermonters even knowing about the plan and even fewer understanding its implications. The concept is intriguing. It could work. But Vermonters need to be involved in the conversation. Questions abound, such as
• How do we implement the waiver and set up these ACOs?
• What if your physician doesn’t join?
• Who sets the rates for reimbursement?
• On what basis are rates amended?
• Who pays for the new system?
• Is there experience from existing models we can learn from?
• Will it save us money and improve outcomes?
• Should we start out slowly with just Medicaid to see how things go?
These are important questions, ones Vermonters should be allowed to ask. The House recently passed H.812, a bill that creates some oversight and standards for ACOs. I supported this bill as it is a good first step in addressing this huge effort by the Green Mountain Care Board.
Medicaid is a social health care program for families and individuals with low incomes and limited resources. The program is funded by Vermont and federal tax dollars. The federal government gives each state broad authority to determine Medicaid eligibility.
Our administration has chosen to have liberal qualification standards for full Medicaid benefits and health insurance subsides. The state’s spending on Medicaid has grown from $1.1 billion in 2008 to $1.7 billion in 2015, about 32 percent of the state’s budget. Only the education fund comes close, at $1.5 billion.
Medicaid enrollment in Vermont was 22 percent of the state’s population in 2009. It is now about 32 percent of the state’s population. This year’s budget deficit and next year’s projected shortfall are due in large part to unanticipated Medicaid spending.
Medicaid reimbursement to health care providers is very low. As a result, we have seen an exit of some doctors, and recruiting is difficult. The state has also admitted that they do not have a good enrollment system in place to requalify people during their annual sign-up. This makes us vulnerable to oversubscription. The state has not done its due diligence in addressing the consequences of the liberalized Medicaid standards. The financial ramifications become more and more overwhelming over time.
The health care payment and reimbursement issue is very complex and equitable solutions are not easy to come by. I am fearful we may not fully vet the possible consequences of getting an all-payer waiver and instituting the all-payer model with their ACOs. Our physicians do an excellent job of caring for us. We have made health insurance coverage accessible to all. Let’s get the financial delivery system right.
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