Vermont All-Payer ACO Model

The Vermont All-Payer Accountable Care Organization (ACO) Model is the Centers for Medicare & Medicaid Services’ (CMS) new test of an alternative payment model in which the most significant payers throughout the entire state – Medicare, Medicaid, and commercial health care payers – incentivize 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.

Background

CMS and Vermont aim for broad ACO participation throughout the state, across all the significant payers and the majority of the care delivery system, to make redesigning the entire care delivery system a rational business strategy for Vermont providers and payers. CMS and Vermont additionally aim for this Model to deliver meaningful improvements in the health of a 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 will be 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, and will provide Vermont a funding opportunity announcement for $9.5M in start-up investment to assist Vermont providers with care coordination and bolster their collaboration with community-based providers. Additionally, CMS also approved a five-year extension 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.

CMS will make available to Vermont start-up funding of $9.5M in 2017 to support care coordination and bolster collaboration between practices and community-based providers. Vermont is expected to direct at least a portion of any such funding towards its existing Blueprint for Health and Supports and Services at Home programs that perform such activities.

Participation by providers and other payers in the Vermont All-payer ACO Model will be voluntary, and CMS and Vermont expect to work closely together to achieve success. In particular, this Model and the section 1115(a) Medicaid demonstration extension 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 considered an Advanced Alternative Payment Model for the providers in the two-sided risk Medicare ACO portion of the model within CMS’ Quality Payment Program, and physicians and other clinicians participating in the Vermont Medicare ACO Initiative may potentially qualify 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 will begin on January 1, 2017, and conclude on December 31, 2022. There will be six performance years (PY0-PY5), each spanning a full calendar year.

  • Performance Year 0: A funding opportunity announcement for start-up funding will be 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 PY1-PY5.
  • Performance Years 1-5: The Vermont Medicare ACO Initiative will become available for eligible ACOs in Vermont. Additionally, Vermont will be 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 will be a modified version of the Next Generation ACO Model, and for this Performance Year, ACO participants will be 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 a five-year extension of Vermont’s section 1115(a) Medicaid demonstration, 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 into 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 in this fact sheet (PDF) and CMS approval letter (PDF).

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 would like to gather information on potential additional opportunities to partner with states on payment and care delivery reform. Responses to the request for information are due by October 28, 2016.

Additional Information