Fletcher-Allen, Dartmouth propose for-profit Medicare program for 13 of Vermont's hospitals

September 24, 2012


Posted By Andrew Stein

Fletcher Allen Health Care and Dartmouth-Hitchcock Medical Center have teamed up to propose a for-profit entity for administering Vermont Medicare benefits called OneCare Vermont, LLC.

Earlier this month, the two academic medical centers — in conjunction with almost 80 other Vermont providers — submitted an application to the federal Centers for Medicare and Medicaid Services (CMS) to establish an ACO, or accountable care organization. [2]

The Affordable Care Act established the Center for Medicare and Medicaid Innovation in 2011 with the purpose of testing new payment and provider models. One of those models is the ACO, which brings hospitals, clinics and clinicians under one umbrella to help coordinate care by sharing information and working toward a common cost-savings goal.

Thirteen of Vermont’s 14 community hospitals would participate in OneCare. Porter Medical Center in Middlebury is the only hospital to opt out. Additional participants include the Brattleboro Retreat, two Federally Qualified Health Centers in Springfield and Morrisville, five rural health centers and 58 private practices.

Fletcher Allen and Dartmouth are the leading drivers behind OneCare, and by the end of October their executives hope to know whether the ACO is approved. If it is, executives say, OneCare would likely be up and running by Jan. 1, 2013.

OneCare would serve the vast majority of the state’s roughly 105,000 Medicare beneficiaries.

Anya Rader Wallack, chair of the Green Mountain Care Board, said Medicare beneficiaries shouldn’t notice a big change in their care right away, but over several years they should notice a higher quality of care at similar or lower cost.

“If they don’t see any difference in their care quality then the model isn’t effective,” she said.

The corporate structure
At a Joint Health Care Oversight Committee meeting on Thursday, legislators grilled Fletcher Allen Senior Vice President Todd Moore and Medical Director Norman Ward about the executive structure of the proposed Limited Liability Corporation, or LLC.

Moore would be the CEO of OneCare; Dartmouth-Hitchcock Senior Medical Director Barbara Walters would be the official chief medical officer; and Fletcher Allen Compliance Officer Jennifer Parks would be the chief compliance officer of the new entity. Ward would continue to contribute his management skills.

“None of us are drawing a salary from OneCare at this point just because it’s a theoretical entity,” Moore told the committee. “I’m CEO of exactly nothing until CMS approves it.”

Moore said that the rest of the corporation would take shape after CMS approves the proposal and logistics are ironed out with Dartmouth.

“What we’re working on with our partners at Dartmouth-Hitchcock is how do we want this thing to operate,” added Moore.

Why create a separate corporate entity?

Milner Noble, a spokesman for Fletcher Allen, explained that the two hospitals were meeting CMS requirements for partnership arrangements. “The legal team that put this entity together determined that because it was a partnership, the LLC was the most appropriate as it allows the most flexibility for setting management and government structures,” he said.

Wallack said she doesn’t see a problem with the model. Fletcher Allen executives have been very transparent throughout the ACO application process, she said.

“If there is some reason that is an impediment to us having what we’d otherwise have in oversight capabilities, that would be concerning to me,” she said. “But there’s nothing of that in what I’ve heard from them so far.”OneCare wouldn’t be the first in Vermont set up as an LLC.

Vermont’s first ACO was established in July by a group of private practices under the banner of Healthfirst, Inc. The ACO is called the Accountable Care Coalition of the Green Mountain State, LLC.

OneCare is seeking CMS approval via the same program through which federal regulators OK’d the Accountable Care Coalition.

The risk and the payoffs
Fletcher Allen and Dartmouth proposed to form OneCare through the Medicare Shared Savings Program. This program enables OneCare and its providers to generate revenue by providing Medicare beneficiaries with more efficient care while meeting the same standards of quality that they currently do.

CMS establishes a target cost point based on the combined per capita Medicare costs of patients from the previous three years.

If OneCare providers can cumulatively provide care to Medicare beneficiaries at a cost below this benchmark, then OneCare and its providers can hold onto half of the savings while CMS takes the other half.

As Wallack explained, this ACO model encourages hospitals to become more efficient.

“Right now you could do something to make a hospital more efficient … but you wouldn’t benefit from it,” she said. “Medicare would just pay you less.”

For the first three years of the program, the OneCare network can exceed this target cost point without punishment or risk. If the providers exceed the mark, they will receive Medicare allocations as usual. They will simply lose out on the extra savings.

The ACO would give health care providers access to Medicare data for the first time.

After three years, if OneCare and its providers want to continue as an ACO, the system faces what’s called a “downside” risk. If the OneCare network exceeds the cost benchmark for a given year, it would have to pay a percentage of that amount.

If there were savings, Fletcher Allen representatives said funds would be divvied up based on a formula, which takes into account providers’ services and the number of beneficiaries they serve. A portion of those savings would also go to OneCare to offset the costs of running the network.

The ACO would also give health care providers access to Medicare data for the first time.

“This is really an access to information revolution as much as it is anything else for us,” Moore told regulators on Thursday. “This gives us access to the full claims set for the first time to Medicare beneficiaries that we treat … to understand how they seek care, how often they go to (the doctor) — whether it be at Fletcher Allen or at Northwestern Medical Center or in Florida.”

Moore said this data set is important because providers can keep better track of a patient’s care and won’t mistakenly duplicate services. Such information, he said, could help providers reshape Vermont health care as the state demands reform.

“We don’t want to fly blind,” Moore told lawmakers.

Another big potential boon that regulators and executives hope would stem from the ACO is a statewide health care system that would encourage provider collaboration.

“The Medicare program is a perfect place for us to start together,” said Moore, “because the federal government sets the rules, they set the reimbursement rates and they set the quality measures. So, we don’t have to argue about that with anybody within the network.”

The physicians and the CEOs
On Saturday, more than 100 physicians and executives from Vermont and nearby states congregated at the University of Vermont Medical School campus for a conference hosted by the Vermont Medical Society, which is Vermont’s physician advocacy group.

The keynote speaker was Tom Lee, Harvard professor and CEO of Partners Community Healthcare Inc. His talk was followed by a panel discussion, which featured, among others, Wallack and the CEOs of Fletcher Allen and Dartmouth-Hitchcock, John Brumsted and James Weinstein.

The panel discussed how to improve the value of health care through provider collaboration.

After Brumsted and Weinstein brought up the OneCare proposal, physicians in the audience asked why their practices weren’t included.

Brumsted explained that the application needed to be submitted under tight time constraints and Fletcher Allen and Dartmouth-Hitchcock tried to include as many Vermont providers in the application as they could. If OneCare comes to fruition, other providers would have an opportunity in the future to join the network.

Paul Harrington, executive vice president of the Vermont Medical Society, fully supports OneCare.

“I think it’s probably one of the most significant steps in the evolution of Vermont’s health care,” he said. “We don’t have a health care system, so this clearly is an attempt to form one — not based on mergers, but rather a statewide partnership platform to better serve Vermont’s seniors. It could be transformational in what Vermont’s health care system looks like in the future.”

Brumsted, who graduated from Dartmouth College and Dartmouth Medical School, said the proposal marks the beginning of a relationship between the two medical facilities that he thinks will stretch long into the future.

“We will continue to come together to meet the needs of the populations we both mutually serve,” he said.

Weinstein downplayed the long-running competition between the facilities. “Our competition is how to best take care of patients together,” he said.

“How do we help the population in this new world of economically challenging times?” he asked, rhetorically. “John and I came together to answer just that.”