Legislative Update, January 19, 2020

After just two weeks, it feels as though a month has gone by in the legislature and that there is only a month to go before the close of the biennium. It’s not far from true: there are only six weeks before “crossover” – the deadline for bills to be finished in one body if the other is to take it up this session. Unlike last year, when unfinished work could be picked up this year, all bills in progress die at the end of a biennium.

That makes it particularly surprising to see such a huge volume of new bills still being introduced by individual legislators. Although the media picks out some of them for headlines about what the legislature is “considering,” that isn’t accurate. Most will not get considered at all.

Our agenda (like most committees) is packed with ongoing state public policy priorities, follow-up on issues we tackled last year, the need to review the health care sections of the governor’s budget proposals, and the review of bills passed by other committees that have health care impacts.

After crossover, more and more time will be taken up with House floor action, and the scattered bits of committee time will be needed to review bills the Senate sent over.

In these first two weeks, part of our committee time was taken up by reviewing health care issues in the budget adjustment bill: that’s the bill every January that adjusts the current year budget based on actual expenditures and revenues.

We also needed to be brought up to speed on the newly exploding issue of the Brattleboro Retreat’s urgent request for additional state funds (and threat of closing without them) and the administration’s refusal to add more to the two increases already provided in the past year unless there were fiscal reforms there.

We heard an overview of the recommendations of the Rural Health Care Task Force we established last year, and a primary care work group. Both underscored our urgent need to address the losses in the health care work force at a time when our needs – as an aging population – will be increasing.

We attended a presentation by primary care health care experts before the Green Mountain Care Board, It was heartening to see members of the Commerce Committee also in attendance. This is a joint challenge.

We also heard reports about our health care insurance market, and whether there were opportunities to address cost burdens by changes in how it is organized – another report we requested last year.

We spent two mornings hearing from OneCare, the Vermont Accountable Care Organization that is implementing our All Payer Model for reforming how providers are paid.

Next week we will be getting updated on our pharmaceutical cost initiatives and where they stand: the cost transparency law, and our effort to help create a multi-state importation buying pool.

We will also be hearing the plan that has been created – on our directive from last year – on how to educate Vermonters about their rights under the health care information database.

There are several other major reports pending on mental health integration with health care and the needs for community-based residential services.

Each of those lead to a need for a “deeper dive” if we are going to try to address the challenges they raise. By the end of next week, and knocking off at least one week for budget work, that leaves four weeks for those deeper dives, which makes it clear that we cannot expect to be able to try to address all of them.

Here’s a review of a few of the key issues:

OneCare and BAA

The budget adjustment proposals from the governor brought OneCare to the forefront in the first week. The recommendation was to add money for half of the new projects OneCare asked to fund for the current year, for 3.9 million (1.8 in state funds and the rest in federal match.)

Lots of folks have been getting pretty antsy over whether the All Payer Model is going to pay off or not. It certainly hasn’t yet, but it is very early. When and how will we know whether to cut our losses and try something different?

The history matters. Several years back, the federal administration made the decision to change the way Medicare pays the providers who deliver care. Instead of paying for each service that a beneficiary receives, Medicare is shifting to paying based on the value of services received.

One of the mechanisms for doing that is through accountable care organizations. These are providers who get together and agree to be responsible for all the care a person needs for one set price. If they save money, they keep some of it, but they also take the risk of losing money.

The idea is to increase the incentive to focus on keeping people healthy instead of just paying for services after they are sick. Obviously, quality of care needs to be closely monitored, so that the savings don’t come by cutting corners on care when people do get sick.

Because of the financial risks, these provider organizations tend to be headed up by hospitals, which have more ability to absorb it than a medical practice would.

In Vermont, given our small size, we have only one accountable care organization that survived the initial federal trial years, and although it has broad provider membership, our biggest hospital network has the biggest part of running it.

All of this is still only a discussion of federal policy regarding Medicare.

About five years ago, Vermont looked at this emerging new federal plan and asked, wouldn’t it create greater efficiency and bring payment reform about more comprehensively if accountable care organizations took on state-run Medicaid and commercial insurers as well?

That would enable those payers to take advantage of the provider network that was assuming an “all care” payment instead of a fee for each separate service.

That required agreement by the federal government, since some of the standard Medicare rules would need to be more flexibility in order to pay for things that Vermont wanted to add. This agreement is the “All Payer Model.” All payer means available to all types of payers (insurers).

The federal agreement included the addition of extra federal money made available for start-up costs, which include new data analysis systems for the ACO (OneCare) finances and quality measures, creating the systems for managing the care of patients, and trying out new projects that stress prevention.

Although I have been chomping at the bit as much as anyone to see whether these investments are actually going to meet the promise of reducing cost and improving quality, we were reminded this week that we are just starting the third year of a rather momentous changeover in how health care is paid for. We can’t expect a quick turnaround. The data review for year one – 2018 – is not yet out, though it should be shortly.

Although there have been headlines about the huge increases in the OneCare budget, most of it is because they are taking responsibility for more patients and paying for their care. That isn’t a cost increase; it’s a shift in where the money is being funneled.

The OneCare administrative overhead costs have been going down each year on a per person basis (as well they should, based on economies of scale.)

Its year three budget does not show cost savings in health care delivery, but that is based on the investment money being put into creating the new systems. In addition, there are the costs of paddling two canoes with one foot in each.

If health costs were being paid “the old way” the costs of care for everyone OneCare is responsible for this year (250,000 Vermonters) would be $1.363 billion. The actual cost budgeted by OneCare is $1.425 billion. So there is a way to go.

The $62 million difference is in OneCare administration ($7 million) and the reform investments ($55 million.)

There is a chicken-and-egg element. Overall savings are not likely until getting to full scale – in other words, most people in Vermont receiving care coordinated by OneCare. But that takes enough health care providers agreeing to be paid this way, and health care buyers (the insurers) agreeing to pay for their members’ care this way. Both take on risk.

So far, providers have been joining more rapidly. By this year, every hospital (with all of their provider networks) will be participating. Commercial insurers have been more cautious. The vast majority of private insurance in Vermont is sold to large employer groups, and those groups, not the insurance company, make the decisions (sometimes through a bargaining agreement with their employees.)

In order to get to full scale, those groups will have to be convinced that it is in their interest to participate.

All this comes full circle back to the budget adjustment question of new state funds to help support OneCare projects on behalf of the state’s Medicaid members. Right now, Vermont provider hospitals are paying about 74 percent of delivery system reform investments, the feds are paying $16 percent, and the state is paying 10.5 percent.

In the usual course of Medicaid budgeting, the legislature does a careful review of new program proposals before funding them.

The $3.9 million in projects OneCare is proposing are not well fleshed out yet, and because the money is coming in the budget adjustment bill, we don’t have the time to do much of a review. There is some public policy power that is being turned over to this private provider entity.

The projects will still have to be approved by the state, so we recommended that language be added to the bill to direct the state Agency of Human Services to be fully engaged in project development. But we still weren’t happy about the timeline, and we told the Appropriations Committee that.

The Other Stuff

It’s taken so long to try to explain the status of OneCare that I’m going to have to postpone what I wanted to share about new changes in the health care market and a number of the other issues listed up top.

Other future topics: an overview of the one bill I introduced this session and the few others I signed on to as co-sponsor, and a brief list of key new bills that are being considered this session.

***

Feel free to get in touch any time during the session with Rep. Goslant and me. There is a lot more going on than we can summarize, so if you have questions about something – ask. We are buried in committee work and don’t always know what is happening in other committees, but we can find out for you. It is an honor to serve you. (kgoslant@leg.state.vt.us; adonahue@leg.state.vt.us)

You can also contact me to receive these updates by email.