Vermont is a step closer to having an all-payer accountable care organization model that would set the amount all insurers pay healthcare providers.
The Centers for Medicare and Medicaid Innovation, which is run by CMS, and the state have reached a draft, preliminary agreement on the concept, according to a Sept. 28 release by the state's Agency of Administration Health Care Reform.
Under the all-payer model, rates paid to a given hospital are set so that all third parties, from Medicare, Medicaid and commercial insurers, pay the same price for services to a particular provider. This does not mean that all hospitals are paid the same.
The state has commitments from Medicare and Medicaid and is currently working with commercial insurers such as Blue Cross Blue Shield of Vermont, which has been open to the idea, according to Robin Lunge, Vermont's director of healthcare reform.
Since the draft proposal was released Wednesday, the state has yet to get feedback from providers, she said, but all Vermont hospitals are already members of one of three ACOs in the state, she said.
The all-payer system did not come out of Vermont's failed efforts for a single-payer system. Both all-payer and single-payer were on a parallel course, Lunge said.
Maryland has a similar all-payer agreement with hospitals.
Under single-payer, a single public or quasi-public agency becomes the insurer for healthcare.
"At this point, we are testing out this model," Lunge said. "I think this model is a model for other states to potentially look at."
The all-payer model would align payers and sets targets for quality and total cost of care expenditures. It would create a path for providers to get to Merit-based Incentive Payments or Alternative Payment Model payments being mandated under the Medicare Access and CHIP Reauthorization Act, known as MACRA.
Providers would be able to participate in the Medicare Shared Savings Program ACO model, Next Generation ACOs, or full capitation under the prepaid model.
It would allow Vermont Medicaid to design an ACO payment model that aligns with Next Generation.
The all-payer model is seen as a way to save consumers money and to improve health outcomes. In 2014, healthcare spending in Vermont grew 4.6 percent.
While income in Vermont from 2015 to numbers projected for 2025 will grow from $60,000 to $73,140, plan costs per year are expected to double, from $23957 to $41,253, according to Vermont Health Care Reform.
In the all-payer value-based model for ACOs, the cost growth target is 3.5 percent; and the Medicare growth target is set at 0.1 to 0.2 percent below the national standard, according to the state.
Medicare would fund $51.1 million in total funding from 2017 through 2022, with a $9.5 million one-time investment in 2017.
Before the bill becomes law, there will be a public process in the state. The draft agreement is under legal review by Vermont and CMS. The final agreement would need to be signed by the governor and health administrators.