Vermonters for Health Care Freedom is a 501 (c) (4) organization of individuals and businesses who are deeply concerned about health care reforms being implemented by Governor Shumlin, and seek patient-centered reforms that protect the traditional doctor-patient relationship.
Vermonters For Health Care Freedom
Health Care Reform Newsletter #52
Vermonters For Health Care Freedom is a reliable source for candid and insightful critiques of Vermont’s ongoing health care reform efforts. Through research and our own network of experts, VHCF regularly updates Vermonters on the state’s latest health care reform efforts. We report on the impacts of the state’s continued push for a government-run health care system. We keep our readers informed about the facts that even the Shumlin administration would prefer not to reveal. No other Vermont organization is dedicated solely to this work.
In This Issue:
• Vermont Health Connect: Strange Citizenship Letters Sent To Insured Vermonters
• “All-Payer Model”: Son of “Single-Payer”
• More Medicaid Woes
Quotes of the Week:
“There are no ‘Cliff Notes’ for what Vermont is trying to do.”
Bea Grause, CEO of the Vermont Association of Hospitals and Health Systems, remarking on the All Payer Model
“It’s all happening at lightning speed.”
Al Gobeille, Chairman, Green Mountain Care Board, remarking on the All Payer Model implementation
“What are the providers ready for? How do we get them more ready for something more aggressive?”
Robin Lunge, Director of Health Care Reform, on the change to an “all-payer” health care model
Vermont Health Connect: Strange Citizenship Letters Sent to Covered Vermonters
Vermont Health Connect (VHC) management has apparently been watching too much Donald Trump TV lately. Suddenly, VHC has become paranoid about whether or not Vermonters insured through the exchange are U. S. citizens! No, we’re not talking about our Jamaicans friends who come here every fall to help with the apple harvest. These are Vermonters who have been insured by VHC for years, and have recently received either one or two letters from VHC asking for physical proof that they are legal United States citizens.
Letter #1: “We have been unable to verify some of the information that you gave us when you applied for health insurance through Vermont Health Connect (VHC). It is important that you read this notice and send us copies of the documents that we need. You have 90 days to get us the information. If you do not provide the documents we need by November 27, health coverage through VHC may end on December 31, 2015….”
“Proof of citizenship is needed for (recipient)…please provide proof that the person is a citizen or a national of the United States.”. The recipient is instructed to “Send your information in the enclosed return envelope and include the return page.”
Letter #2: “We are very sorry that we forgot to include the return envelope with that notice….”
Several concerned Vermonters contacted VHCF to find out what was going on. VHCF posted the letters on our Facebook page and received many more responses. Among them: “My six month old son got one..”; “I received two letters asking if my family are U.S. citizens”; “I got one too! Did you all comply and send in documents? I couldn’t believe it!”; “I did. Kind of floored me actually, why do I need to do this”; “Check”.
Erica Da Costa wrote in the 9/4/15 issue of the Times-Argus: “I signed up for Vermont Health Connect when it was first offered (some two years ago now). Today I received a letter from them asking for proof of citizenship as they were not able to verify my citizenship. Despite the fact that I have been paying my premium for approximately two years. And they have my social security number. And I’ve been a citizen since birth.”
Why has VHC been accepting premiums from Erica for two years if they didn’t know whether she was a U. S. citizen? Why are they threatening now to end her coverage if she doesn’t provide information they must already have, or they shouldn’t have been covering her for the past two years? Despite all the rah-rah coming from Health Care Reform Chief Lawrence Miller, this gang still can’t shoot straight.
All-Payer Model: Son of Single Payer
If you breathed a sigh of relief when the state finally abandoned its pursuit of a government-run, single-payer health care system in 2014 – take another deep breath. It’s not over. The Shumlin administration and the Democratic-led legislature have been quietly moving full speed ahead during 2015, laying the groundwork for Single Payer II. This time they’re calling it the “All-Payer Model”.
The activity has transpired mostly under the radar, among the Shumlin administration, the Green Mountain Care Board (GMCB) and the Federal government. It has not been widely covered by the mainstream press. As a result, most Vermonters are unaware of how far down the track this train has already gone, without any opportunity for Vermonters to understand it, or to weigh in on whether or not they like the direction their elected representatives are taking their health care.
In fact, within the next two weeks, GMCB expects to hear back on the application they submitted to the Feds in 2015 for an “all-payer waiver”. This waiver will allow the state to replace Vermont’s current “fee-for-service” health care system with an “all-payer model”.
What Is An “All-Payer” Model? Another name for an “all-payer model” is global budgeting. An all-payer model is used to put the state’s health care providers on a fixed income, allotting them a set amount of money to take care of all health care needs of all Vermonters. The current “fee-for-service” health care model - (for each health care service you receive, you or your insurance pays a fee) - will be replaced by a global budgeting system. Already the red flags are waving in the breeze. But let’s continue.
An all-payer model will allow the state to control the amount and mechanism of payment to all doctors, hospitals, mental health and other health care professionals. Under global budgets, the five- member unelected (and unaccountable to voters) GMCB will set fixed payment rates for Vermont health care providers. These fixed reimbursement rates will apply to all patients, regardless of the type of coverage or insurance a person has. Included are patients covered by commercial health insurance, Medicaid and, going forward, Medicare (all payers). GMCB will be allowed to determine how much doctors and hospitals will be paid for treating Vermont’s Medicare patients. Currently, the Federal government sets reimbursement rates for Medicare patients across the country. If a Vermonter covered by Medicare receives treatment in Florida, will GMCB pay the Vermont “global budgeted” amount, or the amount that Federal Medicare pays for other Medicare patients? This could have a chilling effect on providers when they learn that a Vermonter does not have Federal Medicare, but another type of “Medicare”. Vermont seniors on Medicare should be concerned about this.
What Are “ACOs”? Remember HMOs? HMOs were going to replace the “fee-for-service” payment model. HMOs would pay docs a flat fee for keeping patients healthy. Providers would coordinate care, reducing waste and thereby saving money. Well, it didn’t turn out that way. The system did little more than wring out some initial administrative savings from the health care system. After the one-time savings, health care costs kept increasing faster than the rate of general inflation. HMOs didn’t make enough money; the flat fee system didn’t work. The HMOs focused on cutting costs to stay afloat, rather than enhancing health care delivery. Members found they had to jump through hoops to get the care they needed, and they left the HMOs for other insurance plans. That scenario is what VHCF predicts may well happen with Vermont’s new “ACOs”. The problem is – in Vermont there will be no alternative insurance plans to flee to.
In the new world order of an all-payer system, all Vermont medical providers, including providers who practice independently, will have to organize into networks called “Accountable Care Organizations”, or “ACOs”. ACOs are the new HMOs, with global budgets, all health care provided for fixed fees, etc. Like HMOs, ACOs are structured so that cost is a major focus. Rather than being paid per procedure (fee-for-service), ACOs are given a global budget to work with. Only this time there is a new twist. If the ACO spends less on patient care than its allotment, the “savings” is shared among the doctors and hospitals in the ACO. Conversely, if an ACO spends more than its budget, it faces financial penalties. Sounds like “Russian Roulette” health care.
This “shared savings” arrangement offers perverse incentives. One is to cut costs by providing less care. If delivering all necessary patient care costs providers more than the global budget they are given by the GMCB, they will either have to ration care – or pay back the overage.
One of the primary drivers of health care costs is the unbridled inflation in prescription drug costs, caused by the ability of Big Pharma to control the Congress and charge outrageous prices for necessary medications. Another uncontrolled cost sector is the medical device industry. Until there is meaningful reform on the federal level, health care costs will continue to escalate. The all-payer model does not address this problem at all. It merely addresses who pays and how much – and does nothing about these basic drivers of health care inflation. None of this is going in the direction that health care reform ought to be going. It won’t make things better.
Medicare ACOs Not Saving $$: As if to confirm our belief, Kaiser Health News published an article on 9/14/15 entitled, “Medicare Yet To Save Money Through Heralded Medical Payment Model”. Under Obamacare, the Feds offered the lure of “earned bonuses” to health care practitioners who formed ACOs to take care of Medicare patients. Last year, 196 ACOs saved Medicare money, while 157 ACOs cost more than expected. Medicare did not realize any savings because it paid out bonuses to 97 ACOs, but only 3 of the costly ACOs had to repay Medicare for the losses their patients incurred.
In the long run, ACOs could even drive up health costs. ACOs encourage providers to band together and share financial risk. But consolidation almost always reduces competition. The HMOs of the 1990s failed because they relied on a top-down model that placed cost savings above patient care. Patients rebelled and put decision-making back where it belongs – between patients and their doctors. It appears that history is now repeating itself with ACOs. It’s time for Vermonters to stand up and demand a seat at the health care table.
More Medicaid Woes: Over 30% of Vermonters are on tax-payer funded Medicaid, which severely underpays providers (40% of costs). In 2014 - with the state budget already in a deficit - the Shumlin administration expanded Medicaid eligibility - with no identified funding source to pay Vermont’s share. That in turn allowed tens of thousands of new beneficiaries to qualify. It is widely believed that the “Health Care Governor” did this so he could brag about Vermont’s uninsured rate dropping to 3.7% on his watch. Coincidentally, he didn’t tell taxpayers that the state didn’t have the money to pay for it.
The funding shortfall to pay Medicaid benefits is around $40m for this fiscal year. Vermont’s share is around $20m. The state has admitted that it has been so busy with Vermont Health Connect that it hasn’t checked Medicaid eligibility in two years! People are just put on Medicaid. For every person who is on Medicaid and shouldn’t be, that person might be eligible for VHC and draw down a federal subsidy to pay providers at a higher rate.
VHCF suggests that VHC stops sending out citizenship letters to bona fide Vermonters - and start checking Medicaid eligibility!
The Medicaid shortfall is about to get worse. On 9/15/15, it was revealed that Dartmouth-Hitchcock (D-H) has threatened to sue the State of Vermont for paying Vermont hospitals higher Medicaid rates than it pays D-H. D-H wants a $9m increase in their payment rate to bring it in line with Vermont hospitals’ payment rate. Shumlin’s staff is blaming the legislature for not appropriating enough funds. Perhaps that is because Vermont’s Medicaid liability is $20m in the hole already.
Further, the Governor and Lawrence Miller have stated that in order to obtain the all-payer waiver from the Feds, the state would need to bring Medicaid reimbursements (about 40% of costs) up to the level of Medicare reimbursements (about 80% of costs). This is huge. With expanded Medicare rolls, 30% of Vermonters now on Medicaid, the fund already $20m in the hole, Dartmouth-Hitchcock demanding $9m more, and Medicaid eligibility not checked for the past two years, where will the money come from to nearly double the state’s Medicaid payments? This is insane. Vermont already pays high Medicaid reimbursement levels compared with other states.
The questions and implications of this vast health care payment shift are monumental, and will affect every Vermonter’s health care. There is something intrinsically wrong with paying doctors “earned bonuses” if they save money on patient health care. Health care is not a corporate sales program. Or at least it shouldn’t be.
The all-payer model health care reform process is eerily reminiscent of the Vermont Health Connect implementation. As with VHC, this has never been done before. Only one state, Maryland, has ever had an all-payer model, and that was solely for hospitals. Maryland received huge federal subsidies every year to enable it to do so. Not only will Vermont will not be receiving these subsidies, but Vermont’s all-payer model goes far beyond Maryland’s, to include all health care providers.
New ideas are fine, but one must look to: (1) the ability of the planners to carry them out, and (2) the results that will come from the implementation. The same team that is in charge of the still-botched VHC rollout is now handling the switch to an all-payer model. That should keep you up at night. This administration has proven repeatedly that it cannot handle health care reform.
There is absolutely no reason for Vermont to be the “first” to try out an untested health care delivery system, so our citizens can suffer when it doesn’t work. This is reckless behavior.
The only good news is that the shift will take a couple of years to implement, so there is time (2016 elections) for Vermonters to elect candidates who will put the brakes on this.
In 2016, voters need to get out to the polls and elect representatives who will wait for an idea to be tested in other venues and found to be affordable and beneficial, before foisting it on Vermonters. The old saying, “If you’re not at the table, you’re on the menu”, was never more true.
“If you feel your health care freedom slipping away, that’s no illusion. It is.”