On February 3, 2016

Shumlin outlines details of “all payer” model

On Monday, Jan. 25, Gov. Peter Shumlin, his senior health care advisors, and Green Mountain Care Board Chair Al Gobeille released details of how Vermont will seek to transform its health care system under the so-called “all payer model” from one that rewards fee-for-service, quantity-driven care to one that rewards quality-based care that keeps Vermonters healthy. That transition caps off years of work that will enable Vermont to address rising health care costs that are squeezing the budgets of families, businesses, and state government, the governor stated.

“From Day 1, reforming the way doctors and other medical providers are paid has been a priority of my administration,” Gov. Shumlin said. “This is the only way we will curb the rising cost of health care that gobbles up money faster than Vermonters can make it. Today is the beginning of the rubber hitting the road on cost containment. Our success will mean better health outcomes for Vermonters and the end to health care costs rising faster than our economic growth.”

The fee-for-service health care model is over 50 years old and was designed to treat acute medical conditions that required a single visit. Today, treating people with chronic diseases accounts for 86 percent of health care costs, according to the Centers for Disease Control. The disconnect means that doctors are governed by a payment system that does not address the needs of patients, a situation that results in Vermonters receiving care that is expensive, fragmented, and disorganized.

The all payer model seeks to change that by enabling the three main payers of health care in Vermont — Medicaid, Medicare, and private insurance — to pay doctors and hospitals in a different way than they do today. Instead of paying for each test or procedure, doctors and hospitals will receive a set payment for each patient attributed to them, shifting the financial incentive from running tests and procedures to keeping patients healthy.

The heart of the proposal is to keep health care costs below the growth of the general economy. The terms outlined today propose a statewide health care spending target for all payers in the health care system of 3.5 percent with a maximum allowable spending growth of 4.3 percent for the next five years. The financial cap is set approximately 1 percent higher than Vermont’s economic growth as measured by gross state product over the past 15 years.

Along with spending targets will be quality ones that ensure Vermonters not only spend less but see better health outcomes.

The three goals included in today’s proposal are: increasing access to primary care, reducing the prevalence of and improving the management of chronic diseases, and addressing the substance abuse epidemic.

The state is finalizing negotiations of the terms of the all payer model with the federal government.

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