Vermont All-Payer ACO Takes Steps Toward Risk

Four of the state's 14 acute-care hospitals are participating in the new statewide accountable care organization, contracts have been cut with Medicaid and Medicare, and negotiations are underway with BlueCross BlueShield.

Six months after Vermont got federal approval to form an all-payer accountable care organization for more than three-quarters of The Green Mountain State's population, providers and payers have made the first steps in launching the ACO.

"We haven't arrived at the new payment models yet, but we are transforming," Judi Fox, CFO/vice president of finance and revenue cycle at Rutland Regional Medical Center (RRMC), said during her HFMA-ANI conference presentation this week in Orlando, FL.    

The Vermont All-Payer ACO has "four steps to get us to risk," she said:

• Step 1: Approval of the All-Payer ACO's Medicaid 1115 waiver by the Centers of Medicare & Medicaid Services (CMS) in November 2016
• Step 2: The ACO has cut deals with two of its three primary payers—Medicaid and Medicare. Negotiations are underway with BlueCross BlueShield of Vermont. Together, these payers account for about 82% of the state's beneficiary lives. The population of Vermont is about 625,000.
• Step 3: Hospitals take the lead in taking on risk in Vermont All-Payer ACO. In the first year of the initiative, which began in January, four of the state's 14 acute-care hospitals are actively participating in the ACO. The next ACO sign-up date for hospitals is Jan. 1, 2018.
• Step 4: Setting and operationalizing strategies for success. RRMC is not participating in the All-Payer ACO this year, but the 133-bed facility is modeling what its performance could have been in the ACO, Fox said. "For us, there are a few pieces to the strategy. The first is negotiating a contract with the ACO, then ensuring our systems internally and with the care providers in our area are in place to make sure we can manage ACO care."

With hospitals bearing the most healthcare-provider risk in Vermont All-Payer ACO, RRMC is poorly positioned to participate in the initiative this year because the hospital does not employ primary care physicians, she said. "We need to enter into the risk with them. We can't do it without them. If primary care does not go in with us, we would only have about 1,000 lives, which is not big enough [to assume risk]."

Establishing contractual relationships with primary care physicians is a top goal at RRMC this year, Fox said.

Vermont All-Payer ACO is based on one of CMS' most advanced ACO models—Next Generation ACO. "It is built on the Next Generation ACO model, but we have slightly better financial pieces," she said.

Fox highlighted three provider "wins" from the All-Payer ACO so far:

• Some relief from costs linked to prior-authorization: "This is a major win for us. The federal government said, 'You are at risk anyway.'"
• $250 million in federal funding to support ACO infrastructure, including healthcare IT and bolstering of Vermont's existing patient-centered medical home program.
• All-Payer ACO participation earns approval as an Alternation Payment Model (APM) under the Medicare Access and CHIP Reauthorization Act (MACRA), which comes with a 5% annual increase in Medicare reimbursement.