by Mike Smith Most anticipate the state of Vermont will soon sign a waiver with the federal government that will fundamentally change the way health care is delivered in Vermont. The all-payer model changes the way doctors and other providers are paid from the current fee-for-service system — where providers are reimbursed for each service they provide — to one where they would be given a global budget and be required to manage the health of their population to that budget number. The all-payer model has three advantages: It makes the payment structure to providers less complex; it focuses on preventative health care; and it attempts to ease the administrative burden on providers. Governor Peter Shumlin has said the all-payer model could save the state $10 billion over the next 10 years.
However, there are those that have begun to raise red flags. Some believe this model may saddle providers with an added layer of bureaucracy if accountable care organizations aren’t properly structured. Others believe that the reimbursement amounts for primary care services are insufficient. And some are just plain skeptical of the governor’s estimated savings number of $10 billion.
Certainly, Shumlin’s projected savings are highly suspect. It seems the governor is using a trend analysis to project the state’s future health care costs and then saying the all-payer model will reduce that future trend by nearly half to get to his $10 billion in savings. The problem with this analysis is that the all-payer model is only a portion of the state’s total health care costs, and therefore the model’s ability to reduce total costs is minimized. Other health care costs — those outside the all-payer model waiver — would have to be reduced substantially in order to achieve a savings of $10 billion over 10 years. Will the all-payer model save money? Probably. But these savings will likely be far less than the governor is touting. Unfortunately, inflating any potential savings can undermine other aspects of the all-payer model that do have merit.
There is no doubt that revamping how we pay for health care costs is long overdue. A single payment to providers is better than the current fee-for-service system that is confusing and burdensome.
The concept of preventative care is designed to reduce chronic diseases, like diabetes and heart disease and therefore reduce future health care costs. Although it is likely to be a generation or more before we see significant reductions in these costs, we must begin our efforts now to have the desired results.
Also needed is a system to ease the bureaucratic burden on providers so they can focus on the patient and not struggle with payment or administrative issues.
But all of these improvements in the quality of care and the administration of our health care system will be upended if Vermonters are suspicious of estimated cost savings associated with the all-payer model. The governor’s inflated savings number may hinder Vermonters’ acceptance of the waiver, not enhance it.
There is another concern with Vermont’s effort at turning our health care system into an all-payer model. Accountable care organizations can’t be just another bureaucracy between the provider and the payer, they must be more than that. They must render value-added services that help the providers manage the care of the patient and ease administrative burdens at an affordable price. Absent all of this, they just become another layer of unnecessary bureaucracy in an already heavily bureaucratic system.
So why are we rushing to sign this waiver? Proponents will suggest a new administration at both the federal and state level will slow momentum on the implementation of the all-payer model. Therefore it is imperative to have final approval before the election. They will also contend major players in our health care system have been involved in this effort for years — that process has been transparent and little more is to be gleamed from further analysis and input.
But in order for Vermonters to feel comfortable with the direction the state is headed in health care — which represents 20 percent of our economy — the process can’t seem rushed, savings estimates can’t seem shoddy, and the all-payer model must be made more understandable to the public. After all, the last time a major health care decision was rushed, it had disastrous results. And years later the state is still dealing with problems at Vermont Health Connect.
Mike Smith is the host of the radio program, “Open Mike with Mike Smith,” on WDEV 550 AM and 96.1, 96.5, 98.3 and 101.9 FM. He is also a political analyst for WCAX-TV and WVMT radio and a regular contributor to Vermont Business Magazine, The Times Argus and Rutland Herald. He was secretary of administration and secretary of human services under former Gov. Jim Douglas.