Vermont All-Payer ACO Model

The Vermont All-Payer Accountable Care Organization (ACO) Model is the Centers for Medicare & Medicaid Services’ (CMS) test of an alternative payment model of the most significant payers (Medicare, Medicaid, and commercial health payers) in a state (Vermont) incentivized health care value and quality, with a focus on health outcomes, under the same payment structure for the majority of providers throughout the state’s care delivery system and transform health care for the entire state and its population.

Highlights

  • In a traditional fee-for-service health care system, hospitals, physicians and other medical service providers are paid based on the number of patients they treat, and health care services provided, without regard for the quality of care provided or the outcomes achieved.
  • The Vermont All-Payer Accountable Care Organization (ACO) Model brings together physicians, hospitals, and other health care providers to better coordinate care for their patients who have Medicare, Medicaid or commercial insurance. As a result, these patients are more likely to receive treatments that meet their specific and unique needs and less likely to get unnecessary, repeat medical tests. Additionally, doctors are better positioned to identify potential problems sooner, including chronic conditions, mental health issues and substance misuse, and begin early intervention, all of which can improve the patient’s overall health.
  • This model aims to provide Vermonters with better medical care by tying payment to the quality of care given, rather than the number of tests, procedures or office visits.

Background

CMS and Vermont aim for broad ACO participation throughout the state, across all the significant payers and the care delivery system, to make redesigning the entire care delivery system a rational business strategy for Vermont providers and payers. The model's goal is to drive meaningful improvements in the health of the state’s entire population by transforming the relationships between and amongst care delivery and public health systems across Vermont.

The Vermont All-Payer ACO Model continues Vermont’s efforts towards health care reform. In 2011, the state established the Green Mountain Care Board, an independent entity responsible for overseeing the development and implementation, and evaluating the effectiveness, of health care payment and delivery system reforms designed to control the rate of growth in health care costs and maintain health care quality in Vermont. The Board’s regulatory authority includes payment and delivery system reform oversight, provider rate-setting, health information technology plan approval, workforce plan approval, hospital and ACO budget approval, insurer rate approval, certificate of need issuance, and oversight of the state’s all-payer claims database. The Green Mountain Care Board is a key partner in administering the Vermont All-Payer ACO Model and provides additional information on the Model at its website: http://gmcboard.vermont.gov/payment-reform/APM.

Model Details

The Vermont All-Payer ACO Model offers ACOs in Vermont the opportunity to participate in a Medicare ACO initiative tailored to the state. The model provided Vermont with $9.5M in start-up investment to assist Vermont providers with care coordination and bolster their collaboration with community-based providers. Additionally, CMS approved five-year extensions of Vermont’s section 1115(a) Medicaid demonstration, which enables Medicaid to be a full partner in the Vermont All-Payer ACO Model. Under the Vermont All-Payer ACO Model, the state commits to achieving statewide health outcomes, financial, and ACO scale targets across all significant health care payers. CMS and Vermont expect to work closely together to achieve success.

Participation by providers and other payers in the Vermont All-payer ACO Model will be voluntary. The Model and the section 1115(a) Medicaid demonstration extensions will make a Vermont Medicare ACO Initiative and Medicaid ACO initiatives tailored to the state available to physicians and other clinicians in Vermont. The Vermont Medicare ACO Initiative is an Advanced Alternative Payment Model for the providers in the two-sided risk Medicare ACO portion of the model within CMS’ Quality Payment Program, Physicians and other clinicians participating in the Vermont Medicare ACO Initiative may potentially qualifed for the Advanced Alternative Payment Model bonus payments starting in performance year 2018. More information is available on the Quality Payment Program website.

Performance Period

The Vermont All-Payer ACO Model began on January 1, 2017, and is scheduled to conclude on December 31, 2025. There will be nine performance years (PY0-PY8), each spanning a full calendar year.

  • Performance Year 0: A funding opportunity announcement for start-up funding was made available to Vermont to fund care coordination, connections to community-based providers, and practice transformation in order to help Vermont achieve the statewide health outcomes, financial, and ACO scale targets during subsequent performance years.
  • Performance Years 1-8: The Vermont Medicare ACO Initiative is available for eligible ACOs in Vermont. Additionally, Vermont is accountable to statewide health outcomes, financial, and ACO scale targets.

 

Statewide Targets

By establishing state and ACO-level accountability for health outcomes for a state’s entire population, the Model will incentivize the collaboration between the care delivery and public health systems that is necessary to achieve these outcomes.

ACO Scale Targets: Vermont will encourage Vermont payers and providers to participate in ACO programs such that by 2022, 70 percent of all Vermont insured residents, including 90 percent of Vermont Medicare beneficiaries, are attributed to an ACO. ACOs will continue to have payer-specific benchmarks and financial settlement calculations, but the ACO design (e.g., quality measures, risk arrangement, payment mechanisms, and beneficiary alignment methodology) will be closely aligned across payers. The Model will contribute to the Administration’s goals of having 50 percent of all Medicare fee-for-service payments made via alternative payment models by 2018.

All-Payer and Medicare Financial Targets: Vermont will limit the annualized per capita health care expenditure growth for all major payers to 3.5 percent. Vermont will also limit Medicare per capita health care expenditure growth for Vermont Medicare beneficiaries to at least 0.1-0.2 percentage points below that of projected national Medicare growth.

Health Outcomes and Quality of Care Targets: Vermont will focus on achieving Health Outcomes and Quality of Care targets in four areas prioritized by Vermont: substance use disorder, suicides, chronic conditions, and access to care. Vermont will be held accountable for three categories of measures for each of the four priority areas:

  • Population-level Health Outcomes Measures and Targets: Statewide measures and targets related to the health of the population consistent with the priority areas, regardless of whether the population seeks care at the providers in the ACO.
  • Health Care Delivery System Measures and Target: Measures and targets primarily related to the performance of care delivered by the ACO. 
  • Process Milestones: Milestones measurable during the early years of the Model that would support achievement on the population-level and health care delivery system measures and targets.

Vermont Medicare ACO Initiative

The Vermont Medicare ACO Initiative is the Medicare Fee-for-Service ACO initiative tailored to Vermont that is offered by CMS to ACOs in Vermont under the Vermont All-Payer ACO Model. The Vermont Medicare ACO Initiative is largely based on the Next Generation ACO Model and will support ACO design alignment with other Vermont payers’ ACO programs. Additionally, Vermont’s Green Mountain Care Board, Vermont’s health care regulatory body, will have a significant role in setting the Vermont Medicare ACO Initiative benchmarks in accordance with standards specified by CMS and subject to CMS approval. Note that for Performance Year 1, the Vermont Medicare ACO Initiative was a modified version of the Next Generation ACO Model, and for this Performance Year, ACO participants were considered to be participants of the Next Generation ACO Model. Additionally, participants in the Vermont Medicare ACO Initiative may not simultaneously participate in the Medicare Shared Savings Program.

The Vermont Medicare ACO Initiative qualifies as an Advanced Alternative Payment Model under CMS’ Quality Payment Program, allowing physicians and other clinicians to potentially qualify for Advanced Alternative Payment Model bonus payments. Additional information can be found on the Quality Payment Program web site.

Medicaid

Medicaid is a critical health care payer in the Vermont All-Payer ACO Model. CMS approved five-year extensions of Vermont’s section 1115(a) Medicaid demonstration in 2018 and 2022, which enables Medicaid to be a full partner in the Vermont All-Payer ACO Model. Specifically, section the 1115(a) Medicaid demonstration promotes delivery system and payment reform by allowing Vermont Medicaid to enter ACO arrangements that align in design with that of other health care payers in support of the Vermont All-Payer ACO Model. More information on Vermont’s section 1115(a) Medicaid demonstration extension can be found on Medicaid's Vermont 1115(a) demonstration website. 

State Partnerships for Delivery System Reform

The Vermont All-Payer ACO Model is an exciting advancement in CMS’ partnerships with states to accelerate delivery system reform. CMS has been partnering with Maryland since 2014 as part of the Maryland All-Payer Model to shift hospital payments to global budgets that reward value over volume. The Vermont All-Payer ACO Model builds on the Maryland All-Payer Model by bringing statewide health care transformation beyond the hospital. This Model will provide valuable insight for other opportunities for CMS to participate in state-driven all-payer payment and care delivery transformation efforts.

On September 8, 2016, CMS released a request for information on concepts related to state-based payment and delivery system reform initiatives. The Vermont All-Payer ACO Model is an example of a partnership with a state to implement payment and care delivery reform across all major payers throughout a state. CMS requested information on potential additional opportunities to partner with states (PDF) on payment and care delivery reform. Responses to the request for information were due by October 28, 2016.

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