This week, we reviewed the draft waiver agreement between the Centers for Medicare & Medicaid Services (CMS) and the Governor of Vermont, the Green Mountain Care Board (GMCB), and the Vermont Agency of Human Services (AHS) to form an all-payer accountable care organization (ACO) model in Vermont. The agreement, if approved by all parties, would implement ACO assignment targets, outcomes and quality milestones, and would require Vermont to keep all-payer and Medicare-specific total cost of care growth per beneficiary below annual growth rate thresholds. The all-payer model (APM) encourages alignment across Medicare, Medicaid, and commercial payers, moving toward next generation ACO models with all-inclusive population-based payments. Vermont and CMS have reached preliminary agreement on the draft waiver, with state and federal officials conducting further review at this time.
All-Payer Model Overview
Under the APM, the GMCB will oversee the flow of funds from Medicare, Medicaid, and participating commercial payers to the participating ACOs. ACOs will be paid an all-inclusive population based payment (AIPBP) based on their attributed members, similar to a capitation payment. The annual growth rate of per member AIPBPs will be capped based on total cost of care targets. The APM builds on existing Medicare ACO models, and is aligning itself with the Next Generation ACO model, which offers broader financial arrangements, greater risk- and gain-sharing, and movement to AIPBPs. Additionally, the Next Generation ACO model expands access to services, including post-discharge home visits, telehealth services, and skilled nursing facility services for Medicare beneficiaries. Medicaid and commercial ACO models would be aligned with the Medicare Next Generation ACO model under the APM. The state must also develop a plan to align the financing and delivery of Medicaid behavioral health and home and community based services (HCBS) with the APM by the end of the third year of the program.
Total Cost of Care Growth
A key driver of Governor Peter Shumlin’s administration’s efforts around the APM are rising health care costs for Vermont residents. Health care spending in Vermont is projected to grow by 6 percent annually over the ten year period from 2013 to 2023. In the next ten years, individual health care costs are projected to grow from 38 percent of average income to 56 percent of income. By capping total cost of care growth at 3.5 percent, instead of the 6 percent projected, the state estimates it can save nearly $9.75 billion over 10 years.
Under the APM, total cost of care growth per beneficiary in the APM would be capped at 3.5 percent annually for the five years of the APM. Meanwhile, Medicare total cost of care growth per beneficiary would be capped at 0.2 percent annually for the first two years of the agreement.
ACO Scale Targets
The APM would implement scale targets for Medicare and all-payer beneficiaries aligned to an ACO in each year of the demonstration. By the end of year 5 (2022, if implemented next year), the APM targets 90 percent of Medicare beneficiaries aligned to an ACO and 70 percent of all-payer scale target beneficiaries aligned to an ACO.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Medicare | 60% | 75% | 79% | 83% | 90% |
| All-Payer | 36% | 50% | 58% | 62% | 70% |
Population Health and Delivery System Targets
The APM includes population-level health outcomes targets including reduction of substance use disorder (SUD)-related deaths; deaths due to suicide; limiting the increase in rates of COPD, diabetes, and hypertension; and maintaining and expanding access to primary care. The APM also includes delivery system targets around mental health and SUD, including follow-up appointment targets and decrease in emergency department visits. Targets on chronic conditions and timely access to care are included as well.
Timeline
If agreed to by Vermont and CMS, the APM would begin in January 2017 and run through December 2022. The APM proposes 2017 to be “year zero” of the program, to allow the state, CMS, and participating ACOs to prepare for implementation in 2018.