In January, Vermont will become the first state in the nation to move to a voluntary all-payer accountable care organization model, the CMS announced Wednesday.
The Vermont program is modeled after a similar one from Maryland, but the Maryland program covers only hospitals. The Vermont ACO will cover Medicare, Medicaid and commercial payers, requiring those who participate to pay similar rates for all services.
The CMS is giving Vermont $9.5 million in start-up funding to support the transition. The demonstration, funded through a 1115 waiver, will last five years.
“This model is historic in terms of its scope, aiming to include almost all providers and people throughout the state in an all-payer ACO model to drive improved quality, better care coordination, healthier people, and smarter spending,” the CMS' Chief Medical Officer Patrick Conway said in a statement.
"We will become the first state in America to fundamentally transform our entire health care system so it is geared towards keeping people healthy, not making money," said Vermont Gov. Peter Shumlin, who earlier this year traveled to Washington to negotiate a deal with HHS Secretary Sylvia Mathews Burwell.
The state aims to have 70% of its insured residents covered by an ACO by 2022. The model will be considered an advanced alternative payment model under the new Medicare reimbursement program, making participants eligible for a performance bonus.
Vermont will limit annual per capita expenditure growth for major payers to 3.5% and Medicare growth to at least .1 to .2 percentage points below projected national growth. State officials have also said they are looking to improve access to primary care and treatment for substance abuse, mental health and chronic disease.
An issue brief from the Vermont Legislative Joint Fiscal Office found several potential benefits of the model, including better care and an improved economy for the state. It also found possible risks, such as uncertainty that the federal funding will cover transition costs and a question of whether all providers will be adequately represented.
Maryland has had an all-payer system since the late 1970s, but strengthened it in 2014 by setting per capita rate caps on all hospitals. Preliminary studies have shown some success in keeping costs down while improving the quality of care.
In 2014, Shumlin pulled the plug on his plan to create a single-payer program, saying the taxes that were estimated to cover the costs of the program would be insufficient.
