Shumlin Signs 'All-Payer' Agreement With Feds, Amid Criticism Deal Was Rushed

Oct 27, 2016

On Thursday afternoon, Gov. Peter Shumlin signed an agreement with the federal government that could overhaul the health care system in Vermont. Hospitals and many doctors say the so-called "all-payer" model has the potential to improve care, and curb costs, but critics say the deal was rushed.

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Shumlin was all smiles at the afternoon news conference in his ceremonial office in the Statehouse.

“This is indeed a great day for Vermont,” Shumlin said.

A great day, he said, because a reform initiative nearly two years in making has finally come to fruition.

“My guess is six or seven years from now, this will be one of things that seemed little at the time that will turn out to be huge for Vermonters,” Shumlin says.

The “thing” he’s referring to is known as the all-payer model. And it will give Vermont the latitude to redeploy federal Medicare dollars in ways that transform the way health care providers are paid.

“I firmly believe that our system that now rewards quantity is instead going to reward primary care, prevention, good diet, exercise, getting off the smokes,” Shumlin says.

"My guess is six or seven years from now, this will be one of things that seemed little at the time that will turn out to be huge for Vermonters." - Gov. Peter Shumlin

Just about everyone agrees with the necessity for payment reform. The current system compensates providers for the volume of services and procedures they perform. The new model will instead tie pay to patient outcomes, thereby creating an incentive to improve overall health and lower overall health care expenditures.

House Minority Leader Don Turner is among the lead critics of the proposal. Turner says it’s not that he’s against the all-payer concept.

“I’m not saying I’m flat-out opposed, because I’m not,” Turner says.

What Turner takes issue with is the “rushed” manner in which the state has signed onto the agreement.

“What’s the hurry?” Turner says. “Why are we ramming this through during an election when people are so focused on that and have no idea this is even taking place?”

"Why are we ramming this through during an election when people are so focused on that and have no idea this is even taking place?" - House Minority Leader Don Turner

Shumlin says the coming election is precisely the reason the state has to act now, since his administration and the Obama administration are the ones who put the deal together.

“So when I hear folks say, ‘We should delay this, we should take longer,’ that’s saying ‘No.’ And I don’t think no will work for Vermonters,” Shumlin says.

Turner points to a recent analysis by the Legislature’s Joint Fiscal Office that points out potential risks associated with all-payer. The all-payer model calls on Vermont to cap per-capita growth in health care costs to 3.5 percent annually. If the state fails to do so, according to the Joint Fiscal Office, health care providers could “face sustainability risks if they cannot provide the included services at or below the capitated payment.”

Turner says Vermont hasn’t been able to curb costs up until this point, and he’s skeptical the all-payer model will be the magic bullet.

“How do we assure Vermonters that our main system, which is essentially a monopoly, is going to be here in five years if they lose money year after year?” Turner says.

Shumlin says the all-payer contract with the federal government includes exits along the way. If the initiative doesn’t work for providers, Shumlin says, the state can terminate the deal.

“Government’s job is to bring people together when something isn’t working and say what will. I think this is an attempt to say what will,” Shumlin says. “This is a beginning, not an end. It’s got a long way to go.”

Either Democratic candidate for governor Sue Minter or her Republican opponent, Phil Scott, will inherit the all-payer deal Shumlin signed on Thursday.

Minter says payment reform is the key to cost containment.

“That’s why I’m very interested in the all-payer waiver and moving through that process to help us get away from fee-for-service and move toward a capitated payment,” Minter says.

Scott agrees with other critics that the all-payer process was “rushed.” But Scott says he’s still hopeful the initiative will improve care, and control costs.

“I think what it means to me is a more global look at how we attack health care costs, and it has some glimmers of hope,” Scott said in September.

Shumlin says he’ll work with whichever candidate wins the election to ensure a smooth transition.