Health care providers and insurers joined Gov. Peter Shumlin Wednesday to announce new programs they hope will contain system-wide costs and improve treatment quality.
The so-called "shared-savings" programs announced at the press conference are offered by payers, in this case Medicaid and commercial insurers, to provider groups called Accountable Care Organizations.
Under the agreement, ACO providers will meet quality standards for the care of a patient population at an agreed upon price. If providers can meet quality standards for less, they split the savings with the payer.
Those savings give providers an incentive to cut costs and improve care.
Savings realized by commercial payers will be passed on to consumers in the form of lower premiums, said Don George, the CEO of Blue Cross Blue Shield of Vermont.
Patients are unlikely to know their care is being managed by an ACO through a shared-savings program. However, patient satisfaction is one of the quality measures that will be used to determine if providers have lived up to their end of the bargain.
Vermont currently has three ACOs. The largest is One Care Vermont, which is underpinned by Fletcher Allen Health Care and Dartmouth-Hitchcock Medical Center, and includes Vermont's 13 other hospitals, several federally qualified health centers and rural clinics, and hundreds of private physicians and specialists.
There is also Community Health Accountable Care, which includes seven of Vermont's federally qualified health centers, and Healthfirst, an association of independent practices that includes 130 physicians in the state. All three participate in the Medicare shared savings program, which the federal government offered nationwide several years ago.
Participation during the first three years of that program poses no risk to providers, meaning they can only share in savings and won't be penalized for overages to the agreed upon budget. Medicare and providers share the risk starting in the third year.
The programs are retroactive and providers will be responsible for their patient populations from the start of the year.
Providers won't have a solid estimate of what population they are responsible for until late spring or early summer, according to consultant Anya Rader Wallack and members of the Green Mountain Care Board.
The performance period extends through next January, at which point the payers will begin to assess whether the ACO met quality and cost measures. That will take four to six months, because of the lag in processing health care claims.
That means the state won't know the results of this experiment until mid-2015.
Providers in ACOs have until the end of March to decide if they want to participate.
MVP Health Care, which was involved in the programs' development, hasn't committed to the program, Wallack said.
If MVP does not participate, the new program will only include Blue Cross members and roughly 35,000 to 40,000 Medicaid patients.
This first year is being treated as an opportunity for all parties to acclimate to the changes and to fine tune the program.