Legislative Update on the All Payer Model

Legislative Update on Health Care Payment Reform: the All Payer Model

Rep. Anne Donahue

October 27, 2016

There is so much discussion and focus on the agreement that Vermont has just signed with the federal government for an “All Payer Model” for health care reform that – having sat through a lot of testimony before the House Health Care Committee – I thought I should share some comment and clarification.

For those who followed my legislative updates last spring, this is not something being sprung on the public out of nowhere, and it has not happened without involvement of the legislature.

That doesn’t mean it is good, or will work as intended; it just means that there was some process behind it.

So here are the clarifying points:

In terms of Medicare, Act 113, as passed by the legislature last spring, says that a condition of the authority of the Green Mountain Care Board and governor to sign was that the agreement cannot reduce Medicare covered services, increase Medicare patient cost sharing, or alter Medicare appeals processes.

In terms of the money, the language is that there can be no “conversion, appropriation, or aggregation” of Medicare money by the State of Vermont – Medicare money still must go directly to providers or provider organizations (Accountable Care Organizations), as it does now.

These organizations were created by the federal government, already exist and will continue to exist regardless of the “All Payer Model.” What the state is doing is including the ability for Medicaid and private insurance to come under an ACO.

We will end up with only one ACO because of the size of our state. An ACO takes on the risk of losing money, and a smaller pool of providers cannot take on that risk. The federal government recognizes that, which is why the agreement requires working to recruit the majority of doctors in the state to participate (and ergo, their patients.)

Having only one ACO does not mean (as some are saying) that the ACO is going to be controlled by UVM or the hospitals. The governance of the new ACO was negotiated over many months, includes community partners, and gives non-hospital members veto powers.

The legislature vetted the All Payer Model proposal in a number of committee hearings. Act 113 allowed for the process to move forward (and for it to be signed, once negotiated) only if it met a number of conditions, and with a long list of requirements for how it would be implemented.

If the “only if” terms are not met by the agreement, it is not legally binding, because the GMCB and governor do not have the authority to sign it.

All of the stakeholders who testified supported the wording of the detailed requirements that are a condition of implementation. The legislature passed Act 113 on an overwhelming, tri-partisan vote (quarto-partisan, if you include independents.)  

The consumer protection part of the bill was originally introduced by the Democratic Chair and Progressive Vice-Chair of our Health Care Committee. A separate bill that created conditions for any All Payer Model was introduced by the Independent on the committee jointly with the Republican raking member (me). The two were merged into the final bill.

The “devil of the details” will need to be developed through compliance with Act 113 and its oversight mechanisms. Unfortunately, there was very little news media coverage of Act 113 last spring, thus little public awareness of these discussions and requirements.

So is this new model – the idea of making the federal Medicare ACO plan much bigger, and including a majority of the state -- a good thing or a bad thing?

We don’t know. It has risks.

That worries a lot of people, legitimately, and is why the legislature placed so many restrictions on it, including requirements for ACO investments into primary care and community health care partners, and much more patient involvement in care decisions. (You can see the whole list by going to http://legislature.vermont.gov/, clicking on “bills and resolutions,” and looking up Act 113.)

I think that there are two big risks – first, of loss of quality, and second, of raising costs instead of saving costs.

 There is a fear that care will be rationed because of the incentive for doctors to provide fewer services, since they will get the same payments for patients whether there is a lot, or much less, care given.

The “counter” is that the system will be motivated to do more prevention (such as annual check-ups) and community-based care (such as home health) to prevent higher end costs when patients get sick from things that would have been preventable. This is because doctors would no longer be getting added reimbursement for those added costs.

The second major risk is that the whole new bureaucratic layer of the ACO will cost more than any of the savings. The savings theoretically come from better care outcomes, and the reduced bureaucratic burdens of answering differently to different payers.

My own opinion has been, and remains, that this whole thing is being over-sold on BOTH the potential benefits and the potential risks. I don’t think it is going to produce major change.

It assumes that the big cost drivers are unnecessary tests and unnecessary care being done just to make more money under “fee for service”, and I don’t think Vermont doctors do much of that.  It also assumes that we are losing a lot of money from bad care coordination, and I think that though far from perfect, we’ve already made a lot of progress on that.

There are many, much bigger cost drivers that will not be touched by these changes.

But I also think the risks are being over-stated. I don’t think our doctors will tolerate restriction on giving what they think is best patient care. I also don’t think we/ the state will tolerate this experiment if the administrative costs start skyrocketing.

There are not a lot of solid, viable alternatives being offered. The cost of doing nothing is placing a huge burden on all of us, including the tax burden of Medicaid, the economic burden on businesses paying for health care, and the burden of unaffordable premiums for individuals.

So with some reluctance, and some trepidation, I think it is appropriate to proceed, continuing one step at a time. Signing the agreement is just the first step.

But we can’t put our health reform eggs all in this basket. We need to be doing much more. My biggest single fear is that in portraying this as a big “solution,” we will avoid tackling other key issues, and that will contribute to the risk of failure.