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Vermont Proposes Risk-Bearing, State-Run Medicaid Managed Care Entity

This week our In Focus section reviews Vermont’s Global Commitment to Health Section 1115 waiver renewal application. In the proposed five-year demonstration extension, Vermont seeks to move the Medicaid population to a new a risk-bearing public, state-run managed care organization (MCO). Under the arrangement, the Department of Vermont Health Access (DVHA) would transition into the new entity and accept capitated risk for the state’s Medicaid population, covering physical and mental health, pharmacy services, substance use disorder (SUD) services, and long-term services and supports (LTSS) beginning January 1, 2022.


The Global Commitment to Health demonstration began serving Medicaid beneficiaries in September 2005. DVHA acts as a public, non-risk prepaid inpatient health plan (PIHP), complying with state and federal statutes, regulations, special terms and conditions, waiver, and expenditure authority. DVHA was payed a per-member-per-month (PMPM) capitation rate by the Vermont Agency of Human Services (AHS) until 2011, when it shifted to being paid at cost. Until 2017, the demonstration operated under a global cap. In its most recent waiver renewal, Vermont secured dedicated funds termed MCO investment dollars which can only be spent on pre-defined programs and services approved by the Centers for Medicare & Medicaid Services (CMS). The total amount of the permitted MCO investment dollars in the current waiver is capped.

The demonstration was expanded in 2018 to cover Medication-Assisted Treatment for opioid use disorder and substance use disorder, and in 2019, to include beneficiaries with serious mental illness or serious emotional disturbance in residential and inpatient settings that qualify as institutions for mental diseases. It is the state’s “principal vehicle for major expansions of health coverage, building an extensive ecosystem of public health and health-related services, driving all-payer payment reform, and rebalancing LTSS.”

Renewal Application

Under the new extension, DVHA would act as an MCO and would be at risk for managing the Medicaid population. Under this structure, DVHA would be incentivized to develop innovative care models, improve care coordination, and strengthen population health management capabilities. It will be responsible for managing total Medicaid spending and managed care delivery system administration.

If costs exceed capitated payments, the state will not limit Medicaid eligibility or benefits but rather work with CMS to find a mitigation strategy. If costs are below capitated payments, the savings or profits would have to be reinvested in delivery system reforms and service initiatives that advance whole-person health. DVHA will collaborate with the Vermont Department of Health, Department of Disabilities, Aging and Independent Living (DAIL), Department of Mental Health (DMH), Alcohol and Drug Abuse Program (ADAP), Department of Corrections (DOC), and Department of Children and Families (DCF).

The renewal also continues Vermont’s All-Payer Accountable Care Organization (ACO) Model Agreement, a statewide, total cost of care model, in which providers under Medicaid, Medicare, and commercial contracts can accept full risk. The ACO model was launched in 2017 with OneCare, a network of providers and hospitals. However, CMS issued a warning to the state for failing to meet enrollment and spending targets in 2018 and 2019. Vermont issued a request for proposals (RFP) for the ACO program in April 2021. Contracts from the RFP will run from January 1, 2022, for two years, with an option to renew for an additional two-year period. DVHA plans to sign an agreement with one or more ACOs to continue to move away from fee-for-service reimbursement for health care services and transform the health care system to deliver value-based care.

Demonstration goals include:

  1. Advancing toward population-wide, comprehensive coverage
  2. Implementing innovative care models across the care continuum that produce value
  3. Engaging Vermonters in transforming their health
  4. Strengthening care coordination and population health management capabilities to encompass the full spectrum of health-related services and supports
  5. Accelerating groundbreaking payment reform

DVHA will continue to participate in the state’s All-Payer ACO Model Agreement. As a risk-bearing MCO, DVHA and its contracted providers will be able to align incentives through innovative value-based payment (VBP) mechanisms.

DVHA’s transition to a risk-bearing managed care plan will be central to the demonstration renewal.

The public comment period on the initiative ends August 8, 2021.

Link to Pending Application