Vermont’s All-Payer ACO Model is driving the shift toward value-based healthcare. By aligning incentives through risk-based payments tied to performance, it has reduced costs, improved patient care, and boosted participation in value-based payment models. Focusing on primary care has been pivotal, while challenges include aligning diverse reimbursement models. Expanding all-payer models to other states and enhancing ACO participation can further advance value-based care transformation in healthcare.
The Vermont All-Payer Accountable Care Organization (ACO) Model is making significant strides in the realm of value-based care and reimbursement, marked by recent achievements. This innovative model, as the name suggests, brings together patients with both private and public healthcare coverage. What makes it particularly appealing to healthcare providers, and could it be the answer to steering healthcare stakeholders away from traditional fee-for-service models toward value-based care?
The model’s impact on healthcare spending and quality indicators certainly points in the affirmative, and it underscores the importance of fostering participation in ACOs and alternative payment models (APMs), not just within Vermont but across the nation.
At its core, this model employs an ACO structure to align financial incentives across payers through risk-based payments linked to provider performance. By prioritizing quality over quantity, healthcare stakeholders perceive this model as a promising pathway to value-based care.
In this article, we delve into the development of Vermont’s All-Payer ACO Model, its influence on healthcare quality and spending, the strategies underpinning its success, and the challenges encountered by the sole participating ACO.
Origins of the Model
Traditional payment models often cater to a single type of healthcare payer. However, Vermont’s All-Payer Model distinguishes itself by reimbursing providers through Medicare, Medicaid, and commercial health plans statewide. Currently in its sixth performance year, the model shares the financial risk of patient care through the risk-bearing ACO, OneCare Vermont. Payments from various payers are routed through the ACO, which then distributes these payments to providers based on their attributed patients.
ACOs consist of healthcare providers who collaborate to enhance value by coordinating patient care and assuming responsibility for both the cost and quality of that care.
The Green Mountain Care Board has played a pivotal role in spearheading this model. Vermont established this board in 2011 to oversee the development, implementation, and effectiveness of healthcare payment and delivery system reforms in the state. Alongside former Vermont Governor Peter Shumlin and leaders at the Vermont Agency of Human Services, the Green Mountain Care Board has been integral to the model’s inception.
Governor Shumlin’s vision was to secure legislative approval for a single-payer plan prioritizing cost containment. However, he recognized that systemic changes could only occur by incentivizing healthcare providers to become catalysts for change. This perspective opened the door to the possibility of an all-payer ACO model.
Collaborative leadership and a state innovation model testing grant from CMS (Centers for Medicare & Medicaid Services) helped Vermont realize this vision and establish the all-payer model. Following negotiations with the federal government, Governor Shumlin, the Secretary of the Agency of Human Services, and the Chair of the Green Mountain Care Board signed the model agreement in 2016.
The model builds upon earlier payment and delivery system reform initiatives in Vermont, such as the state’s Global Commitment to Health Section 1115 Waiver, Blueprint for Health, and a multi-payer ACO Shared Savings Program pilot.
Key Impacts of the Model
The Vermont All-Payer ACO Model has had a significant influence on healthcare spending, quality, providers, and the participation in value-based payment systems. The third evaluation report of the model, conducted by NORC at the University of Chicago for CMS, analyzed the model’s effects during the first four performance years from 2018 to 2021.
During this period, the model reduced gross Medicare spending by $686.40 per beneficiary per year, equivalent to 6.2 percent, for ACO-attributed beneficiaries. For Medicare beneficiaries statewide, the model reduced per beneficiary per year gross spending by $1,177, amounting to 9.9 percent.
The model also impacted healthcare utilization among patients. In the fourth performance year (2021), acute care utilization decreased among ACO-attributed beneficiaries by 10.0 percent and statewide beneficiaries by 18.7 percent.
At both the ACO and state levels, there was a reduction in specialty care visits and an increase in primary care visits, illustrating a shift towards more holistic care.
“The short news is we’ve lowered costs, driven down the need for hospitalizations, and improved patient care in terms of opportunities for the future,” stated Abe Berman, CEO of OneCare Vermont.
The model has also driven advancements in quality measurement, although concrete statistics are somewhat lacking. It has created a statewide infrastructure for evaluating quality, enabling providers to assess their own quality and work towards improvements. This newfound insight into the quality of care has prompted providers to adapt their approach to value-based care.
The model’s framework held the state accountable for population health indicators such as reducing deaths from suicide and drug overdose and decreasing the prevalence of chronic illnesses. Additionally, it received positive feedback from providers about how the ACO influenced their workflow and provided the necessary resources for success.
The Vermont All-Payer ACO Model succeeded in increasing participation in value-based payment systems, a notable achievement as participation in APMs like the Medicare Shared Savings Program (MSSP) had been declining. Encouraging more providers to participate in APMs remains a top priority for CMS and organizations like the National Association of ACOs (NAACOS) and the American Medical Association (AMA).
Factors Behind the Success
Understanding the factors that contributed to the Vermont All-Payer ACO Model’s success can serve as a valuable reference for policymaking in other states aiming to implement similar care delivery models.
Emphasizing primary care is a pivotal element in achieving success in any ACO striving for value-based care. Primary care physicians often maintain long-term relationships with patients and possess a deep understanding of their communities and healthcare needs. This makes them well-suited to influence downstream healthcare decisions and effectively manage chronic diseases.
Investing in primary care services can also help preserve the independence of these practices, ultimately resulting in cost savings for providers and patients. Furthermore, integrating primary care practices into ACOs can empower them to pursue innovative strategies that may be challenging within a fee-for-service system.
Collaboration and coordination between primary care and specialty care providers are crucial for effective care transformation. The primary care aspect of Maryland’s Total Cost of Care Model, for example, incentivizes primary care practices to offer advanced primary care services. This approach has been successful and complements Medicare ACOs, demonstrating the value of aligning different care delivery models.
Challenges of Vermont’s Model
While the Vermont All-Payer ACO Model has achieved considerable success, it has not been without its challenges. Aligning different reimbursement models within a system designed to incorporate all healthcare payers can be intricate. Operational challenges, such as setting realistic expectations for care delivery, arise when coordinating across multiple providers and payers.
Additionally, governing the model has proven complex, given the involvement of several regulators and organizations in leadership roles. Achieving long-term care transformation requires patience from stakeholders, particularly considering the pressures faced in day-to-day healthcare delivery.
One notable challenge is limited hospital participation in the Medicare ACO initiative of the model, particularly among smaller and critical access hospitals. These hospitals perceive the financial risk as too high to participate, prompting CMS to evaluate potential solutions.
Expanding the Use of All-Payer Models
As value-based care gains prominence in healthcare delivery models, increasing ACO participation and extending all-payer models to more states can accelerate this transition. ACOs serve as a bridge between fee-for-service and advanced APMs, making them crucial for
