SVMC emergency room

The Emergency Department at Southwestern Vermont Medical Center in Bennington.

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MONTPELIER — The state Agency of Human Services is proposing improvements to the state’s all-payer health care model, saying it won’t deliver on its promise to change how health care is delivered and paid for in Vermont unless significant changes are made.

“While there are clear indications that value-based and fixed payment programs are demonstrating some promise over traditional fee-for-service, the state will not realize the potential of health care payment and delivery system transformation unless we strengthen the weak points in both the model itself and its implementation through provider operational change,” the 23-page report says.

In September, the federal Centers for Medicare and Medicaid Services, the agency working with Vermont on the pilot project, warned the state had failed to meet patient participation targets in 2018 and 2019.

Federal regulators had set a target of 70 percent participation by the time the six-year program expires in 2022. It’s currently at 42 percent, said Ena Backus, the state director of health care reform.

Secretary of Human Services Michael Smith said he sees great value in the all-payer program as an alternative to traditional fee-for-service reimbursement. He said the state’s ability to provide payments to Vermont hospitals in advance during the early days of the COVID-19 pandemic helped those hospitals survive financial turmoil.

But to make the program work and make the federal government happy, changes are necessary, Smith and Backus told reporters Thursday.

“I am a believer in a value-based payment models, such as the all-payer model,” Smith said. “I’ve seen how moving away from fee-for-service reimbursement brings stability to our system. I am dedicated to AHS being a partner in reform, and we need strong partnership in return.”

Smith said the report was “blunt for a reason — we have to make changes.”

“We’re committed to what we have now. To change right now [away from all-payer] would be unfair to this system. So I am committed to trying to make this work, trying to make this successful as we move forward. We’ll see. But I believe in value-based payment system.”

The report, developed in consultation with Green Mountain Care Board staff, said the OneCare Vermont Accountable Care Organization (ACO) should “pursue a new leadership strategy to provide more value to its network.”

Specifically, OneCare Vermont needs to focus on providing usable and valuable data to its members that will help them provide better care and streamline costs, Smith said.

“We heard from providers that ‘we need information. If you’re asking us to take risks we have to have the information to control the risks,’” Smith said. “They need data they can understand and can use.”

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Smith also said the COVID-19 pandemic proved the all-payer system’s value, and showed where improvements in the system should be made.

“Had it not been for perspective payments sent out to bolster the health care system I would say we would have been in a serious problem as we moved forward,” he said.

The all-payer agreement is a contract between Vermont and the federal Centers for Medicare and Medicaid Services. It’s intended to reward OneCare Vermont and its member providers for efficiently delivering high-quality services and maintaining patients’ health and wellness. OneCare then provides its members predictable prospective payments — rather than fee for service reimbursements — in return for providers working efficiently within a budget to provide high-quality care.

What’s gotten in the way is that many healthcare providers, and by extension, their patients, have not joined the initiative.

The State of Vermont recently added its employees to the all-payer system. And OneCare Vermont has contracts with two state-regulated commercial payers, Blue Cross Blue Shield of Vermont and MVP, as well as with Blue Cross for self-funded clients.

But that still leaves Vermont short of the 70 percent target.

“The state risks being in limbo in payment and delivery reform if it cannot transition more dollars to true fixed prospective payments,” according to the report’s executive summary. “Vermont, through its Agreement, must continue its innovative work with [federal Medicare regulators] to design and implement prospective payments from Medicare that are no longer reconciled to the fee-for-service payment system.”

Other key improvements sought by AHS include:

• Negotiating with the Centers for Medicare and Medicaid Services to set more realistic targets for patient participation by 2022.

• Accelerating the transition to fixed prospective payments across all payers.

• The Green Mountain Care Board should adjust its future regulation decisions to promote success for fee-for-service alternatives.

• Organizing health care reform activities in the Agency of Human Services to better meet the federally required participation goals.

Greg Sukiennik covers Vermont government and politics for New England Newspapers. Reach him at

Greg Sukiennik has worked at all three Vermont News & Media newspapers and was their managing editor from 2017-19. He previously worked for, for the AP in Boston, and at The Berkshire Eagle in Pittsfield, Mass.