Tag Archive: Center for Medicare & Medicaid Services

One year after jettisoning single payer, Vermont now looks to control medical costs via expanded “all payer” ACO

One year after Vermont abandoned its plan to move to a single payer health finance framework amid concerns over the ability of tax revenues to cover rising medical utilization costs under that payment model, the state is rolling out an alternative aimed at reining in those costs. It would do so through a proposed “all payer model.” The model builds on the Patient Protection and Affordable Care Act’s Medicare Shared Savings Program Accountable Care Organizations (ACO) model in which providers share risk with reimbursements tied to the overall cost and quality of care provided rather than discrete medical procedures under the traditional fee for service model. Reflecting the pervasiveness of costly, chronic health conditions no longer largely confined to the Medicaid eligible population, the Vermont proposal would expand that model to all forms of reimbursement, including Medicaid and commercial plans:

The State would agree to coordinate with Medicaid and commercial insurers, and in return the federal government would allow Medicare to participate in the ACO value-based payment model. As is true today, health care providers’ participation in ACOs is voluntary; the ACO must be attractive to providers and offer an alternative health care delivery model that is appealing enough to join.

The goal of the proposed all payer model is to limit the annual growth of statewide medical spending to 3.5 percent with a maximum spending growth of 4.3 percent:

The goal of this financial target is to bring health care spending closer to economic growth. When health care costs grow faster than Vermont’s economy, Vermont families find their premiums rising faster than wages. This is also true in the state’s Medicaid budget, which grows faster than the revenue sources used to fund it.

The board’s authority to regulate reimbursement rates exists under current state law, according to a term sheet outlining the proposal. Vermont will seek any necessary waivers from the federal government to operate the all payer model, noting the state has jointly developed a policy framework and the needed waivers in consultation with the federal Health and Human Services Department’s Center for Medicare & Medicaid Services.

The fee for service reimbursement model is no longer suitable and is “antiquated” according to the Vermont proposal:

When the fee-for-service health care payment model was devised over 50 years ago, the average life expectancy of Americans was significantly shorter than it is today, and the burden of chronic disease was smaller. The Centers for Disease Control and Prevention (CDC) reports that treating people with chronic diseases accounts for 86 percent of our nation’s health care costs. Health care reimbursement was designed to pay for acute medical conditions that required a single visit to the doctor or a single hospitalization. By contrast, persons with chronic conditions require regular, ongoing care across the continuum of traditional medical services and community-based services and supports. Fee-for-service reimbursement makes it difficult for innovative health care providers to adapt to the changing needs of the population that they serve. The antiquated system provides clear financial incentives to order additional tests and procedures, yet it does not reward doctors and other health care professionals for providing individualized and coordinated care for complex chronic conditions. In the end, patients may receive care that is expensive, fragmented, and disorganized.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Medicaid managed care plans could be sold on state health benefit exchanges

With Medicaid enrollments strongly outpacing commercial individual plan enrollments in state health benefit exchanges, a number of factors are aligning to set the stage for policymakers to allow Medicaid managed care plans be offered on the exchanges alongside individual Qualified Health Plans (QHPs). They include:

  • A rulemaking issued in June by the federal Center for Medicare & Medicaid Services that would apply requirements similar to those for commercial individual and Medicare Advantage plans to Medicaid managed care plans, including allowing plan issuers to advertise products offered across the Medicaid and exchange markets (Click here for a summary of the proposed regulations posted at the Health Affairs blog);
  • The need to assure operational sustainability among state health benefit exchanges, particularly in states that have expanded Medicaid eligibility standards to households earning up to 138 percent of federal poverty levels and single childless adults. Beginning in 2015, federal establishment grant funding began drying up, leaving exchanges reliant on generating fees from participating plan issuers. Adding Medicaid managed care plans to commercial QHPs assessed exchange participation fees would bolster exchange revenues and reduce fiscal uncertainty;
  • The success of the Arkansas “private option” in expanding coverage under a federal Section 1115 waiver permitting adults that would have otherwise been eligible for expanded Medicaid coverage under the Affordable Care Act to purchase exchange QHPs;
  • Substantial and ongoing difficulties fully integrating exchange eligibility and enrollment IT platforms with legacy state Medicaid eligibility and enrollment systems to meet the Affordable Care Act’s mandate of a single application process for QHP and Medicaid eligibility determinations and enrollment;
  • Financial considerations in the distribution channel: insurance producers are wary of enrolling households eligible for Medicaid since they earn commissions only on commercial individual plans sold on and off the exchanges. The role of brokers and agents relative to Medicaid enrollments is currently under evaluation by California’s exchange, Covered California.

Sections 1301(a) and 1311(c) of the Patient Protection and Affordable Care Act defining a QHP eligible for sale on the exchanges would appear to allow Medicaid managed care plans be deemed QHPs in the exchanges provided the plan issuer also offers individual plans on the exchange that also meet state requirements (The Affordable Care Act requires a minimum of one silver and one gold level plan be offered). Indeed, the QHP requirements set forth in Section 1311(c) have some overlap with those proposed for Medicaid managed care plans in the June CMS proposed rulemaking, including provisions requiring provider network adequacy standards, plan quality improvement programs and clinical care quality management.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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