This week’s writer is Hamilton E. Davis, a journalist and policy analyst for more than 50 years; he has served as a state representative, ran the Vermont Hospital Data Council in the 1980s and worked for Fletcher Allen Health Care, now UVM Medical Center.
On the eve of its debut after five years of gestation, the Vermont health care reform project has slid into a strange sort of limbo: technically it’s on track, but there appears to be no political leadership behind it at all. A major reason for that, of course, is that the father of the reform effort, former Gov. Peter Shumlin, a Democrat, is gone and the new governor, the Republican Phil Scott, is just now getting his new administration into operation.
Still, Scott has been extraordinarily disengaged about the reform project, especially given that it is the only credible route available to him to plug the single biggest hole in his state budget — Medicaid, the federal-state program that covers low income people. It is true that Scott is permitting reform to go forward, when his national party and a significant chunk of Republicans in Vermont want no part of it. So, anything positive that Scott does is a plus.
Still, there is no public indication yet that Scott really understands it, nor that he will do anything to support it. That is particularly disturbing, given that the reform project has been under construction since 2011 and is now underway. The inaugural step in the process was the contract between OneCare Vermont, a group of Vermont hospitals and doctors, to deliver care for 30,000 Medicaid recipients for an agreed-upon price per person.
That shift, from paying for each episode of care (fee-for-service) to a per-person price (capitation) is the health policy community’s consensus answer to the 50-year-old problem of out-of-control costs in the American health care system. It works basically like this: The hospitals involved are the University of Vermont Medical Center in Burlington, Central Vermont Medical Center in Berlin, Northwestern Vermont Medical Center in St. Albans and Porter Medical Center in Middlebury. Also participating are a number of independent primary care doctors, as well as some stand-alone specialists.
Each month, the state Medicaid agency will write a check for a month’s worth of care for the target population. The number for each provider can change over time, primarily because more or fewer Medicaid recipients will become eligible. There are some other operating details involved, but the essence is clear from the following example: On Feb. 3, the state Medicaid agency wrote a check for $5,057,828.05 to OneCare Vermont for February’s services to the target 30,000 recipients (roughly a fifth of the total Medicaid population of 151,000).
Of that amount, OneCare wrote checks in the amount of $4,796,639 to the four hospitals. The individual hospital figures were as follows: UVM Medical Center $2,724,008; Central Vermont Medical Center $938,797; Northwestern Vermont Medical Center $794,140; Porter Medical Center $339,694.
 The single most important fact about health care reform in Vermont is this: The amounts listed above are all the money that the hospitals will get for that work. There won’t be any more money. That has never happened before in Vermont, or in the U.S. In a press conference shortly after taking office, Scott talked about this effort as though it was some kind of minor project he had inherited. It’s just a pilot, he said several times. We’ll look at it for a year and if we don’t like it we’ll just dump it.
Well, that posture doesn’t begin to make sense, except politically. In the first place, we’ll get to the go-forward point on the whole deal by mid-fall of this year. That will be when OneCare Vermont begins to finalize its 2018 pricing proposals for a broad expansion of the Medicaid project, as well as preparing to extend risk contracts with the federal government for Medicare — the federally financed program to cover the elderly.
At that point, there will be roughly seven months of data available, nowhere near 12 months. And even 12 months is nowhere near time enough to begin to evaluate the project; it will take at least two to three years to do that. The most important factor, however, is that the only real alternative to the current path is to stick with what we have now. That structure has driven costs into the stratosphere over the last 40 years.
So, the Scott posture appears far short of the political effort to keep reform moving. It isn’t possible, however, to be sure where he will go over the next several months. And there is a critical test coming up. The Green Mountain Care Board, which has done an excellent job holding back the cost tide for the last several years, is now at a critical junction. The five-member body has two vacancies, the most important of which is the chairmanship.
The Board has had extraordinary leadership in the six years since its inception in 2011. The first chair was Anya Rader Wallack, a national class policy analyst who drew up the blueprints for the project. The second was Al Gobeille, a Burlington businessman who was named to the original Board as a member and who ascended to the chairmanship when Wallack left. Gobeille is still a major player, but his role now is as Secretary of the Agency of Human Services.
The problem now is that the Board, the key manager in the whole health care reform project, is completely rudderless. Gobeille has been gone for two months, so no chair over that period. Plus, a second Board member, Betty Rambur, has also left. Scott has taken an inexcusably long time to move on this problem. The proximate cause was the need to fill a number of vacant positions on the nominating committee that must submit a list of nominees for Board positions to the Governor.
The legislature got its nominees to the committee in a reasonable time, but Scott’s three members weren’t even named till a couple of weeks ago. The group held its organizational meeting on March 6. But with more than 40 applications for the two Board openings, it is likely to be at least another two months or more before the new members are in place. That fact places very heavy pressure on the Board as it transitions from pure regulation to both regulating hospital and overseeing the rebuilding of the delivery system itself.
A system that runs basically on capitated financing functions very differently from one running on fee-for-service reimbursement. For example, the Board currently regulates individual hospital budgets, but it now will have to also regulate the budget of OneCare Vermont, the Accountable Care Organization that includes several of those hospitals. And just for good measure, it is necessary to factor in the retirement of Mike Davis, the finance chief of the Board, whose experience in health care financing extends back to the late 1980s…
Having said all of that, Scott could recover much of the lost momentum if he can find — and persuade to serve — a highly credible chair for the Board. The only names that have floated through the political ether over the last few months are Paul Harrington, the head of the Vermont State Medical Society, and Shap Smith, the recently retired Speaker of the Vermont House.
Harrington has told friends recently that he will not seek the post. Smith probably would take the job, and he would certainly be credible; but he is a Democrat and there is no way to tell how Scott would look at that fact. One key question is whether there might be a credible Republican for the job, but finding one would be hard.
And even then the Governor will have to deal with the fact that the whole health care reform project is adrift in the Legislature, where there is already some talk about dumping the Board altogether and sending its functions back to the Department of Financial Regulation. A move like that would be extraordinarily stupid. If the reform project fails, the Legislature would lose the best chance it will ever have to get health care costs under control. In the current environment, however, who can rule out stupidity?