State Auditor’s Report: All Payers System Costs More Than It Saves

State Auditor Doug Hoffer speaks at a press conference in South Burlington on October 20, 2020. Photo by Glenn Russell / VTDigger

The administrative costs of running OneCare Vermont, the company that enacts statewide health care reforms, are greater than the Medicaid savings that are attributed to its efforts, according to a report released Monday by the Auditor General. ‘State Doug Hoffer.

The 38-page document, which examines operating expenses associated with the state’s publicly funded health care system, shows that between 2017 and 2019, OneCare failed to meet Medicaid financial targets of $ 11.1 million .

During the same time period, the state – through the Department of Vermont Health Access – spent $ 14.5 million on OneCare to run the Vermont All Payor Healthcare Model.

“Simply put, at present the financial costs to run the model significantly exceed any Medicaid savings attributed to it,” Hoffer wrote in a letter accompanying the report.

Vermont’s All Payers System, created in 2016, aims to change the way hospitals and doctors are paid. Under the system, doctors are paid an annual fee per patient rather than for each treatment or procedure. The payments are meant to encourage doctors and hospitals to invest in preventative care that will keep patients healthy.

OneCare, the responsible healthcare organization that manages this system, brings together doctors and hospitals who accept responsibility for the cost and quality of their patients’ care. OneCare receives money from Medicaid, Medicare, and private insurance companies, and pays the money to hospitals and doctors as monthly payments.

A total of 137 medical facilities – including 13 of the state’s 14 hospitals, primary care physicians, federally funded health centers, mental health and disability agencies, nursing facilities and home care providers – participate in the responsible care system.

The state auditor’s office found that, based on available figures, Vermont has spent at least $ 29.8 million to implement the all-payers model since the state signed its agreement. of five years with the Centers for Medicare and Medicaid Services in October 2016 to implement the health care payment structure.

Eighty-four percent of that money comes from taxpayer dollars under the Medicaid contract that the Department of Vermont Health Access has entered into with OneCare. The other two main payers – the Centers for Medicare and Medicaid Services and Blue Cross Blue Shield of Vermont – did not provide any administrative payments to OneCare, according to the report.

The report also recommends a financial reporting requirement in the Medicaid contract with OneCare, so the responsible care organization will provide detailed information on how the Vermont Health Access Department’s money has been allocated.

This is the second report on the All Payors model that Hoffer and his office have released in the past 11 months.

In an interview, Hoffer said he hopes that as the state prepares to negotiate a new five-year contract with the Centers for Medicare and Medicaid Services, it will take into account the new information in the report.

“If the state proceeds as it does today, it hopes to secure a second five-year contract with CMS, and yet I think most reasonable people would agree that we don’t have enough information to base on. a decision as to whether it’s a safe thing to do at this time, ”he said.

“There is nothing wrong with the concept of any payer, the ACO [accountable care organization]. The question is implementation, ”said Hoffer.

In a written statement, OneCare CEO Vicki Loner said her organization did not agree with the “general conclusions and outlook” of the auditor’s report. She said the auditor’s report did not take into account the health care benefits the system provided to the state.

“This work takes time and investment, and OneCare’s more than 4,000 providers are committed to providing effective, high-quality care to Vermonters and have seen positive health outcomes through their joint efforts in OneCare,” Loner said. “We are proud of the good work being done in our state and the deep commitment to tackle one of the most pressing issues of our time.”

Kevin Mullen, chairman of the Green Mountain Care Board – which regulates the state’s healthcare system – responded to Hoffer’s report with written comments. Mullin wrote that he disagreed with the findings, and an analysis of the financial cost is not sufficient to assess how the all payers system worked.

“Look at it holistically and include the model’s impact on overall health care spending, health care quality and population health outcomes,” said Mullin.

Mike Smith, secretary of the Social Services Agency, also submitted a response to the report, in which he touted the success of the all payers system.

“Predictable Medicaid payments have increased the stability of Vermont’s health care system, especially given the unprecedented disruption of Covid-19,” he wrote.

Smith said the auditor’s report takes a “narrow approach to understanding the impact of the all payers model and instead presents several totals that combine ACO savings, losses and operating costs.”

Responding to those criticisms, Hoffer told VTDigger that the report never says that operational costs should be used to determine the efficiency of the system for all payers. This measure should be based on Vermont’s health results.

However, he maintained the importance of looking closely at financial data.

“If measuring the impact of the dollar wasn’t important, then why do they bother to measure it every year? Said Hoffer. “This is the program measure that everyone is talking about – are they shared savings or shared losses? “

“Since almost the majority of OneCare’s operating costs are paid by taxpayers, we have every right to ask the question, and the question is simple: are we saving more than our inputs? ” he said.

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