Scott Calls New Medicaid Program A 'Test Drive' For Health Care Reform

Feb 8, 2017

Gov. Phil Scott on Wednesday rolled out a Medicaid pilot program whose success or failure could determine the future of health care reform in Vermont.

The program represents another step down a long path that could one day reward providers for keeping patients healthy, instead of treating them when they get sick.

“This agreement is part our ongoing effort to rethink the way we pay for and, more importantly, the way we deliver health care,” Scott says.

Like everything in the world of health care, the program announced by Scott is complicated. But here’s the gist: Instead of paying doctors and hospitals for whatever services they perform, the state would instead give them a lump sum, in advance, to care for an entire population over the course of a year.

In this pilot program, the patient population consists of 30,000 Vermonters on Medicaid. The lump sum to take care of them is $93 million.

If it costs less than that to deliver the care, providers get to keep some of the money. If it costs more, they pay for it out of their own bottom lines.

"There's probably ... ways of saving money that's not about better quality, and so of course as a public advocate, as a consumer advocate, I have real concerns." — Healthcare advocate Mike Fisher

“This is the first time that an accountable care organization is taking what we refer to as upside and downside risk,” says Vermont Secretary of Human Services Al Gobeille.

The accountable care organization Gobeille’s referring to – it’s called OneCare – is the network of hospitals and doctors involved in the pilot program. Fundamentally, the idea is to bring down health care costs overall by giving providers an incentive to keep people healthy, instead of making money off them when they get sick.

The pilot program will last one year. And if providers make money, the state saves money and patients are happy, then the program will be expanded next year to include a far bigger chunk of the health care universe.

“And this should be like the canary in the mine shaft,” Scott says. “I think this is a point in time when we have the opportunity to look at things differently and test drive this, so we can see if this is the approach we want to take in the future.”

Scott says the success or failure of the initiative will determine whether his administration decides to move forward with the so-called all-payer model adopted by his predecessor, Gov. Peter Shumlin.

The all-payer model would fold patients on Medicaid, Medicare and private insurance into a "capitated" model, where providers are allocated lump sums to treat patients, instead of issuing bills as they accrue.

"I think this is a point in time when we have the opportunity to look at things differently and test drive this, so we can see if this is the approach we want to take in the future." — Gov. Phil Scott

Mike Fisher is the chief of the Office of the Health Care Advocate for Vermont, an outfit that’s supposed to make sure patients are being treated fairly.

“The interplay between the doctors’ best medical advice and the new financial interests that the doctor now carries is an interesting place,” Fisher says.

Interesting, Fisher says, because it means the less providers spend on patients, the more they stand to earn as professionals. Fisher says that creates a potentially dangerous dynamic for patients.

Fisher says the existing health care model is definitely in need of structural changes, and he says there are definitely ways to improve patient outcomes that would lower overall spending.

“But there’s probably also ways of saving money that’s not about better quality, and so of course as a public advocate, as a consumer advocate, I have real concerns,” Fisher says.

But Scott, Gobeille and the providers taking part in the pilot say there are plenty of patient safeguards in place.

Dr. John Brumstead is the CEO of the University of Vermont Medical Center, one of four hospitals involved. Brumstead says that, aside from the fact that doctors are generally altruistic people, providers will have other motives to avoid undue rationing of care.

“Because that’s clearly going to end up down the road with the escalation of a process that’s going to be more damaging to that patient – and that’s always most important – but it’s also going to be more expensive,” Brumstead says.

The providers will also have to satisfy 12 quality indicators.

“And if we just try and skimp and ration care, we’ll fail in our quality measures, it will cost us more in the long run, and we won’t get to enjoy any reward that’s available,” says Dr. Fred Kniffen, a practicing doctor and president of Porter Medical Center in Middlebury, another hospital involved in the program.

Scott says his administration will monitor the program as it progresses, and make changes midstream if patients are satisfied.

Health care advocates like Fisher will be watching closely as well.

This post was edited at 3:09 p.m. on 2/9/17 to correct the title of Dr. John Brumstead