Vermont’s auditor is again taking aim at the steep costs of the state’s all-payer health care system, raising thorny financial questions as policymakers ponder a new five-year contract with OneCare Vermont.
The latest report by State Auditor Doug Hoffer runs the numbers on the first three years of the state’s contract with OneCare and concludes that the start-up and operating costs far surpass any savings realized to date.
“Put simply, at this time the financial costs to run the model significantly exceed any Medicaid savings attributed to it,” Hoffer wrote in a 41-page report released Monday.
OneCare is Vermont’s only accountable care organization and manages the state’s all-payer health care system. The foundation of the system is a five-year agreement between the state and the federal government for Medicare, Medicaid and private insurers to pay OneCare a set amount per patient for their care, as opposed to reimbursing health care providers for every medical test, visit and procedure.
The goal is to control costs and improve health care outcomes by focusing on preventative care that keeps people healthy and catches illnesses early before they become acute, and treatment costs soar.
Since it was launched in 2017, OneCare has cost the state $25.6 million more than what it would have paid under the fee-for-service Medicaid model, Hoffer's analysis found.
In addition, Hoffer questioned whether the Department of Vermont Health Access, which along with the Green Mountain Care Board oversees the OneCare model, was keeping a close enough eye on its payments to OneCare.
The auditor deemed $12.7 million in spending by the state as “unaccountable expenditures” and found the department “lacked the proper financial oversight” to ensure OneCare spent the money appropriately. The report recommends a more detailed accounting of such payments going forward.
Hoffer also questioned why Medicaid, a state and federal program providing health care for low-income residents, is shouldering an increasing percentage of OneCare’s administrative costs. Medicaid started out paying 28 percent of such costs. But by 2020, that figure had soared to 78 percent, even though Medicaid patients make up less than half of the OneCare population, the report found.
Medicare, the federal program providing health insurance to people over 65 regardless of income, and private insurers such as Blue Cross Blue Shield of Vermont, made up 52 percent of the OneCare population in 2020 but paid none of the administrative costs, the report found.
State officials pushed back on Hoffer’s conclusions, arguing that the start-up costs of such a program would, by design, be greater in the early years. They also contended that Hoffer ignored a variety of non-financial benefits the all-payer system provides.
“We want a health care system that rewards providers for the high-quality care that they deliver instead of for every additional service rendered, regardless of the outcome,” Human Services Secretary Mike Smith said in a statement included in the report.
Smith called the state a national leader in the field and said the predictable Medicaid payments flowing through OneCare “have added stability for Vermont’s system of care" during the disruption caused by the COVID-19 pandemic.
Significant up-front costs in information technology and prevention programs were “intentionally concentrated in the earliest years." Therefore, Smith wrote, it would be “premature” to reach broad conclusions about the program based on an analysis of its implementation costs.
The shift to an all-payer model represents an ambitious, long-term transformation of the state’s health care system with multiple benefits, Smith wrote, including better outcomes for patients and more efficient use of health care dollars.
“Although there is still much work to be accomplished in this area, it is fair to say that an assessment that does not highlight the complexity of the change that is being undertaken nor acknowledge realistic timeframes for measurable results may leave a reader without a clear picture of performance,” Smith wrote.
Kevin Mullin, chair of the Green Mountain Care Board, had a similar response, noting that any analysis of an all-payer program required a "holistic" assessment instead of a strict "return on investment analysis."
OneCare has struggled to sign up sufficient numbers of patients. Last year, the Green Mountain Care Board receive a notice from the Centers for Medicare and Medicaid Services warning the state that OneCare had missed its registration targets in 2018 and 2019.
Earlier this year, most state employees' health plans moved to OneCare.
OneCare says that 270,000 Vermonters were covered by the program at the beginning of 2021, or about 42 percent of those eligible. The goal is to get to 70 percent by 2022.
“Ultimately, we disagree with the general conclusions and perspectives in this report and believe it fails to capture the benefits of a value-based care transformation in Vermont," Vicki Loner, OneCare Vermont CEO, said in a statement, adding that "this work takes time and investment."
The suggestion that it’s too soon to draw conclusions about the program, and whether the state should commit to another five-year contract with OneCare in 2022, rubs Hoffer the wrong way.
He issued a report last year that that stressed the need for the Green Mountain Care Board to be clear how it would evaluate the costs and saving of OneCare, but the board has yet to establish a methodology for doing so, he wrote.
“If now is too soon, then when exactly are Vermonters entitled to call the question on whether their money-saving investments are actually going to save them money? Next year? In five years? Ten? Twenty?” Hoffer wrote.