Community Forum, Dr. Fred Kniffin: The all payer model — Vermont’s most confusing and best kept secret
This week’s Community Forum is by Dr. Fred Kniffin, President/CEO UVM Health Network—Porter Medical Center.
While health care reform is in the national news week after week, Vermont and Vermont providers continue to chart our own course of meaningful reform, and UVMHN-PMC is an active participant in this progress. In 2017, we “put a toe in the water”, receiving about five percent of our revenue through the new all payer model. It may be a coincidence that FY 2017 was our best financial performance in years, but certainly our participation in the all payer model did not derail our financials.
In fiscal year 2018 we will be going “all in” with this model involving payments to Porter from Medicare, Medicaid, and Blue Cross all coming through the all payer model. This is about a quarter of our total patient revenue. Given the magnitude of this decision for our organization and our community, I would like to explain why we are participating in this innovative approach to payment reform and how it works.
The why is simple: the all payer model aligns with our mission and values and, more important, the priorities of the community we serve. We want a system of care whose foundation is primary care. We want a healthy community, not a sick community. We want an integrated system of care, not fragmented care. We believe that coordination of care will produce better outcomes. Excellent access is essential and affordability is a must. The all payer model supports all of these priorities.
We have been paying for health care in the “fee for service” model since the beginning of time. At our recent budget presentation to the Green Mountain Care Board I said “fee for service has been good to us but it is unsustainable.” Everybody in the room agreed. Most healthcare finance experts agree. We cannot, as a society, continue to pay ever-increasing sums of money for adequate health care.
The fundamental flaw in fee for service is that revenue is generated through the treatment of sickness; the sicker the community, the more money the local health care system makes. This approach disincentivizes the health care system from working with its community to promote wellness. Patients get sick, see providers, pay bills for the service, and it goes on and on. That is the status quo, and it simply cannot continue.
The secret sauce of all payer is that it rewards wellness and aligns the incentive of the patient with the provider — we all win. The patient wants to be well and the health care system will be rewarded if it provides great care and supports the wellness of the patient.
The operational key to the all payer model is the capitated or “block payments” to providers to manage a defined “population” of patients. When you provide a lump sum of money to a health care system and charge the system with caring for a group of patients, you align the patients and the system — everyone wins when the patients are healthy. Also, when the patients are healthy they use less expensive health care services. This results in less expense to the system and the end result is, again, alignment. This is our goal, this is our future.
It is actually a bit more complicated than what I describe here, but this is the essence of all payer. Our mission at UVMHN-PMC is:
“To improve the health of our community, one patient at a time.”
We are moving forward with payment reform in a way that supports our mission.
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