Audit questions cost savings and health outcomes of OneCare Vermont

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Audit questions cost savings and health outcomes of OneCare Vermont

Fri, 07/03/2020 - 5:06pm -- tim

by Timothy McQuiston, Vermont Business Magazine Vermont Auditor of Accounts Doug Hoffer released this week the first part of series of audit reports on OneCare Vermont. OneCare is a collaboration of the University of Vermont Medical Center and Dartmouth-Hitchcock, the state and the federal government. The concept is to pay health care providers a lump sum to provide preventative care, which in the long run will save the entire health care system a lot of money.

There is a leap of faith, of course, that in paying OneCare, which is based in Colchester, upwards of $20 million, that it will both actually save the system more than it costs and that, importantly to the auditor, you can prove it.

Hoffer also questions whether benchmarks are set appropriately and wonders how outcomes can be measured against what appears to be dated quality goals. Several of the goals have already been reached.

The report offers recommendations only. The auditor does not have enforcement authority, nor does Hoffer suggest there be any.

In this report, anyway, he’s asking questions mainly of the regulator, the Green Mountain Care Board, on how they can gauge if OneCare is really worth it.

Aside from that, Hoffer wonders, as others have, whether it’s a good idea that OneCare is a for-profit entity. The state’s community hospitals, including UVMMC and D-H, are non-profits.

Because of the way OneCare is structured it must operate as a for-profit and disentangling it from that would be problematic at this point.

Auditor Doug Hoffer writes:

“The State’s most recent health care reform effort is a federal-state test, called the Vermont All-Payer Accountable Care Organization (ACO) Model. The single ACO operating in Vermont, called OneCare Vermont, LLC, which was created by the two largest providers of Vermont care – University of Vermont Medical Center and Dartmouth Hitchcock Health – participates in this model. OneCare’s network includes all Vermont hospitals except for one (Grace Cottage) as well as numerous independent practices and Federally Qualified Health Centers.

“Bringing the lion’s share of Vermont hospitals and many other providers under one organization’s umbrella and building a health care finance and delivery system around this central structure has the potential to profoundly impact the quality and cost of care for Vermonters. I felt compelled to direct the limited resources of the State’s government accountability office to understand this organization in light of the hundreds of millions of public dollars that flow through OneCare and its network of providers and the State’s responsibilities to regulate this organization.

“Before we began this work, I was concerned that neither policymakers nor members of the public fully understood how this complex project actually works. Therefore, we decided to begin a series of audits about this subject starting with a descriptive audit that details: (1) how the ACO Model is structured and implemented and (2) the Green Mountain Care Board and the Department of Vermont Health Access’s roles in overseeing and monitoring OneCare. I’m hopeful this report will help lawmakers, administrators, health care professionals, and the general public better understand this complex and expensive undertaking that is under consideration for a subsequent five-year agreement.

“Although descriptive in nature, this audit makes two key recommendations to the Green Mountain Care Board. The first recommendation is that the Board should design and deploy a transparent method to measure the financial outcomes of the Vermont All-Payer ACO Model and determine whether they outweigh OneCare’s operating costs. This method and determination should be established prior to agreeing to a subsequent ACO model agreement and, to the extent possible, include consideration of available quality results.

OneCare has an operating budget of $19.3 million in 2020, but it does not provide direct health care to Vermonters. This cost appears to be in addition to administrative costs already built into the health care system. At a time when we see our state’s largest hospital cutting compensation for providers, it’s imperative that we ensure Vermont is getting the greatest benefit possible for the price tag of OneCare’s administration and the State’s work on this effort.

“Our second recommendation to the Green Mountain Care Board is to devise an alternate method to assess quality improvement for certain measurements to encourage continued improvement. More than 25 percent of the quality measures in the All-Payer Agreement have baselines that are the same or greater than their targets. Using this evaluation design, quality of care could worsen, and targets could still be achieved.

“In the Chair’s management response to our audit report, he did not directly address our two recommendations. These recommendations are straightforward, and I am concerned that the Board in its dual roles as health care reformer and regulator is not taking the latter role as seriously as the former. The ACO model is ultimately aimed at improving the value of health care delivery in Vermont by controlling cost growth and advancing quality of care. If Vermonters cannot determine whether this program accomplishes these goals for the added expense and risk, that poses problems for the viability of this effort. Our recommendations are intended to ensure that the GMCB achieves these objectives and conducts an arms-length evaluation of OneCare’s performance.

“Conceptually, the ACO model holds promise. But a consolidated system of any kind (utility, health care, etc.) requires rigorous regulation. While I’m hopeful this effort yields positive results for Vermonters, there has been limited evaluation to determine its benefit. The ACO model and OneCare are too important to the well-being of Vermonters for the State to allow them to operate without consistent appraisal and accountability, and we intend to continue our scrutiny of this effort.”

The Report

What follows is a mostly verbatim synopsis of the report. Click HERE for the full report or its Summary HERE.

In 2016, the State of Vermont and CMS agreed to test this alternative health care payment and delivery arrangement starting in 2018. Although there were previously three ACOs in Vermont, OneCare is the only ACO that remained to participate in this project.

OneCare promotes patient care coordination, acts as a pass-through agent between payers and providers, and monitors costs and quality related to its network of providers. This network includes all but one Vermont hospital and dozens of other providers. OneCare’s 60-plus employees do not provide medical services but instead provide support to providers in its network.

The ACO Model relies on insurers paying providers using both fee-for-service and monthly lump-sum payment structures. OneCare is held financially responsible for meeting health care cost and quality targets, and it distributes the financial risk to participating hospitals. Ultimately, the model aims to decrease the growth in health care expenditures and improve the quality of and access to care for Vermonters.

The Vermont All-Payer ACO Model Agreement is currently scheduled to conclude in 2022. Before the end of 2021, the GMCB in collaboration with the Agency of Human Services (AHS) and the Governor’s Office can submit a proposal for a subsequent agreement. This proposal does not require legislative approval. According to the AHS Director of Health Care Reform, the State has begun preliminary work on this decision-making process.

The GMCB has developed reports that allow it to evaluate various aspects of the ACO Model, such as cost growth and specific quality measures. However, as the State prepares to make the important decision of whether to enter into a subsequent agreement with CMS for an ACO Model, this audit found that:

  • The GMCB has not developed a methodology to determine whether OneCare’s operating costs will be greater or less than the benefits of the ACO Model.

The ACO seemingly poses new administrative costs to the health care system, (OneCare has an operating budget of $19.3 million for 2020). The GMCB has recognized the importance of this cost-benefit analysis and requires estimated savings from the ACO exceed OneCare’s operating costs over the duration of the agreement. However, the Board’s staff have noted that it is difficult to quantify costs that were avoided as a result of the ACO, and a determination of the ACO’s value should also consider quality improvements.

While there is limited performance data as of today, the GMCB can quantify the value of indicators that are known, such as OneCare’s financial data. Until the GMCB completes this cost-benefit analysis, the State cannot determine whether the ACO Model’s claimed financial and quality outcomes outweigh OneCare’s operating costs.

Recommendation

The GMCB should design and deploy a transparent method to measure the financial outcomes of the Vermont All-Payer ACO Model and determine whether they outweigh OneCare’s operating costs. This method and determination should be established prior to agreeing to a subsequent agreement and contain a consideration of available quality results.

GMCB Chair Kevin Mullin in his response to the report responds in part (Page 68):

“Analysis of the Model’s financial performance should not be limited to the ACO’s ability to achieve savings relative to its operational costs: it should include an assessment of the value generated as a result of investments in population health and improved care integration, as wells as economies of scale afforded by centralizing shared data infrastructure, analytics, and care coordination, among others.”

Mullin notes that the federal government is performing a comprehensive formal evaluation of the model which will provide some of the information Hoffer suggests and that asking the state to also would be duplicative and expensive.

  • Six of the 22 quality measures in the All-Payer Agreement have baselines — the numbers used as starting points to measure progress — that are either the same or higher than their corresponding 2022 targets.

That means quality of care could decline and yet the targets achieved. Therefore, should this occur, the public could be misled if the GMCB emphasizes that a target was met without also acknowledging that quality had declined.

Recommendation

The GMCB should devise an alternate method to assess quality improvement for those quality measures in the All-Payer Agreement that have a baseline that is higher than or equal to the target.

Without offering an immediate solution to this, Mullin agrees that, “It is imperative to continue to track performance and to make annual results transparent, both to identify continued success and any areas where performance declines.”

  • Critical gaps in the State’s knowledge may exist.

It is likely the State will only have quality data for 2018 and 2019 when it is required to decide about a subsequent agreement. GMCB has also requested to change some of the baselines from 2016 to 2018, which means the State will only have one year of trend analysis for certain quality measures. Furthermore, while CMS has contracted for an independent evaluation of Vermont’s All-Payer ACO Model, it is unclear if a final evaluation of the first two years of the model (2018 and 2019) will be completed before the end of 2021.

One of the issues with the Model is that the state must propose a subsequent model by December 2021. Mullin said in such a short window of time, it will not be possible to fully evaluate health outcomes and cost of a program that is intended to be a long-term solution to health care and health cost.

Mullin writes: “For these reasons, the GMCB and its co-signatories will use all available data – including quantitative data and trends that incorporate pre-baseline data, as well as stakeholder input – in deciding whether or not to enter into a subsequent agreement.”

On April 27, 2020, Governor Scott, the Secretary of AHS Mike Smith, and GMCB Chair Kevin Mullin sent a letter to CMS requesting that 2020 be a “reporting-only” year for quality measure results in 2020 due to COVID-19.

The letter also informed CMS that Vermont may propose other adjustments to the All-Payer Agreement due to the unanticipated consequences of the pandemic.

OneCare Vermont

Between 2014 and 2016, there were three ACOs operating in Vermont, which included OneCare Vermont, LLC (hereinafter referred to as OneCare). In anticipation of the All-Payer Agreement, Vermont’s three ACOs explored consolidating into a single ACO, but this effort was abandoned in 2017. Two of Vermont’s ACOs no longer exist. Some of the providers from these ACOs have joined OneCare.

Currently, OneCare is the only ACO that still operates in Vermont. In 2012, the University of Vermont Medical Center and Dartmouth Hitchcock Health – the two hospitals providing the most amount of care to Vermonters – formed OneCare as a for-profit limited liability company (see sidebar at right). At the request of the Secretary of AHS, OneCare is currently considering whether to apply for non-profit status with the Internal Revenue Service.

Prior to the Vermont All-Payer Agreement, OneCare participated in shared savings programs with Medicare, Medicaid, and BlueCross BlueShield of Vermont’s Qualified Health Plans11 (BCBSVT QHP). These programs were active from 2014 to 2016 and featured cost and quality targets paired with financial incentives to improve affordability.

OneCare achieved savings in 2014 for the Medicaid program, but it exceeded cost targets in 2015 and 2016. It also exceeded cost targets every year for its Medicare and BCBSVT QHP programs. With respect to the quality targets, OneCare improved its quality scores every year from 2014 to 2016.

OneCare’s Provider Network

Health care providers – including independent primary care physicians, Federally Qualified Health Centers,13 and hospitals14 – contract with OneCare to become part of the ACO’s network. Table 1 summarizes the types of providers that have agreed to participate in the OneCare network for 2020 as of June 2, 2020.

OneCare’s provider network is divided into geographic areas, called health service areas (HSA). Each HSA has an assigned hospital (see Figure 8 in Appendix III on page 54 for a map of OneCare’s HSAs).

OneCare’s Budget

OneCare develops an annual budget that contains three primary components: (1) provider reimbursements for health care services given to patients assigned to OneCare in the upcoming year; (2) population health management programs; and (3) OneCare’s operating costs.

For 2019, health care expenditures for Vermont residents were projected to be $6.3 billion (the actual amounts for 2019 are not yet available).

OneCare’s budget was $899 million, which is 14 percent of the projected health care expenditures.

For 2020, OneCare’s total budget is $1.4 billion. See Table 2 for a high-level summary of this budget.

Although OneCare’s $19.3 million operating costs are a tiny fraction of the total budget, it is not the total spent for provider administration. The $1.362 billion paid to the providers covers costs associated with providing health care services, which would include the providers’ overhead.

As shown in Table 3, most of the $19.3 million in OneCare’s operational expenses are for wages and benefits, software, contracted services, and risk protection expense. This risk protection expense is the cost to have a third-party cover some of the losses OneCare may owe CMS if it has high losses in the Medicare program.

OneCare’s wages and benefits for 2020 grew 33 percent ($2.9 million) from its 2019 budget. OneCare had the equivalent of 58 full-time employees in 2019, and the number of full-time equivalent employees is expected to increase to 78 in 2020.17 OneCare’s employees do not provide health care or perform care coordination.18 Instead, some of their employees act as facilitators and trainers to providers in the OneCare network who deliver and coordinate care.

OneCare’s operating costs, which seem to add new costs to Vermont’s health care system, are funded primarily by Medicaid and participating hospitals. DVHA estimates that Medicaid will pay $3.8 million of OneCare’s operating costs in 2020.19 Hospitals are responsible for paying the remaining amount ($15.5 million).

Table 4 provides the estimated dues hospitals will pay to OneCare in 2020. In addition to paying for OneCare’s operating costs, these dues also include $9 million for population health management programs , as discussed on pages 40 and 41 of this report. Non-hospital providers, such as Federally Qualified Health Centers and independent primary care providers do not pay dues to OneCare.

OneCare Is A For-Profit

OneCare is a for-profit Limited Liability Company because it could not be structured as a non-profit and comply with both state and federal requirements. According to Vermont’s 11B V.S.A. §8.13(a), no more than 49 percent of the board of a non-profit public benefit corporation can have a financial interest in the organization.

However, CMS’ Medicare contract with OneCare requires that at least 75 percent of the ACO’s governing body be ACO participants. GMCB also incorporated a similar requirement when the Board drafted Rule 5.202(b).

On April 6, 2020, the GMCB allowed OneCare to reduce the $24,467,226 hospital dues budget by $1,351,984 because of the financial pressure hospitals are facing during this pandemic.

The All-Payer Agreement promotes payers and ACOs in Vermont to enter into risk-based contracts that include cost and quality targets for providers participating in the ACO Model for those patients that meet criteria for being assigned to OneCare.

The ACO Model is a federal-state test to determine whether these risk-based contracts and other provisions of the model decrease Vermont’s health care cost growth while improving the quality of and access to care in the state.

The model began on January 1, 2017 and is scheduled to conclude on December 31, 2022. The test involves five performance years (2018 – 2022) each spanning a full calendar year.

Before the end of 2021, the GMCB in collaboration with AHS and the Governor’s Office can submit a proposal for a subsequent agreement (the General Assembly is not required to approve any subsequent agreement).

According to the AHS Director of Health Care Reform, the State has begun preliminary work regarding a subsequent All-Payer Agreement with CMS. AHS and GMCB had expected to formally engage stakeholders in July 2020 to meet the December 31, 2021 deadline for a proposal for a subsequent five-year agreement, which would end in 2027.

However, the timing of this planned stakeholder engagement has been postponed due to the COVID-19 pandemic and they are unsure when it will take place. The GMCB has developed reports that allow it to evaluate various aspects of the model.

CMS is responsible for evaluating this model and has contracted with a research organization called NORC at the University of Chicago to conduct annual evaluations, starting with the 2018 performance year.

CMS expected a final evaluation of the first two years of the model (2018 and 2019) to be completed by the end of 2021. However, CMS is unsure if that timeline still stands as the data collection may have been paused.

https://auditor.vermont.gov/.