June 14, 2024

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Vermont ACO model ties payer, provider payment to care quality

7 min read

Photo: Jeff Lagasse/Healthcare Finance News

Nestled between New Hampshire and upstate New York, Vermont is a quiet, mostly rural state. 

But it’s the site of a federal test of an alternative payment model in which the most significant payers from throughout the state – Medicare, Medicaid, and commercial healthcare payers – incentivize value and quality, with a focus on health outcomes, under an ACO model that has seen some success since its 2017 implementation.

The Vermont All-Payer Accountable Care Organization (ACO) Model, spearheaded by the federal Centers for Medicare and Medicaid Services, is a value-based care initiative that ties provider payment to the quality of care given rather than to the number of tests, procedures or office visits. 

All providers in the state are paid the same amount for a service or a procedure, whether that money comes from Medicare, Medicaid or commercial payer dollars.

The goal of the initiative is to better coordinate care and cut down on unnecessary repeat medical tests. It’s also geared to better position doctors to more quickly identify problems, including chronic conditions, mental health issues and substance misuse, and to begin early intervention.

The program is administered by OneCare Vermont, which was spawned out of the Medicare Shared Savings Program (MSSP) and evolved into a multi-payer entity, covering a broad spectrum of the state, including every type of provider and every hospital in Vermont – and even one in New Hampshire.

Participation in the model is voluntary, but to date encompasses 14 hospitals, 100 primary care organizations and a smattering of home health organizations and other entities.

“It allows (providers) a window beyond just their interactions with the patient, to understand what’s going on across the entire continuum with that patient,” said OneCare Vermont Interim CEO Abe Berman. “It allows them to see, from a patient-centric way, what is the experience with that patient in the system, and to share info to get the best treatment protocol. We’re concerned with those folks who are ‘rising risk’ – they’re progressing further into a disease state. We can cut that off and be more proactive about their health.”

According to Tom Borys, OneCare Vermont’s chief financial officer, CMS has allowed the organization to use a unique approach to how they bring together different payer groups. One example of this is a program that offers similar reimbursement no matter the type of insurance.

“A patient has a more coherent approach from the provider,” said Borys. “They know they’re getting a certain amount of money from us that can go to mental health screenings or other things that aren’t covered under a fee-for-service framework.”


To date, the model has been successful in helping to build a large provider network, which Borys said is inspiring a reinvestment toward better healthcare coordination and efficiency. The model was particularly helpful during the height of the COVID-19 pandemic, since value-based programs with fixed reimbursement allowed providers to keep their practices going without worrying about how they were going to get paid.

A key partner in administering the model is the Green Mountain Care Board, an independent entity responsible for overseeing the development and implementation – and evaluating the effectiveness – of healthcare payment and delivery system reforms designed to control the rate of growth in healthcare costs. 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.

“We know incentives are important in healthcare,” said Berman. “When we shift away from a model that encourages more utilization, you have to couple that with making sure patients get the care they need and that it’s of the highest quality. Our providers are well ahead of the curve. Those metrics are a really important way we measure our success, beyond the financial ones.”

Currently, the Vermont model is a one-off. But the Center for Medicare and Medicaid Innovation – an arm of CMS – is constantly testing new payment structures, and it tries to build programs that can be scaled nationally. Components of the Vermont All-Payer ACO Model have crept into the AHEAD model, a total cost-of-care (TCOC) model that seeks to drive state and regional healthcare transformation and multi-payer alignment, with the goals of improving the total health of a state population and lowering costs. 

Under a TCOC approach, a participating state uses its authority to assume responsibility for managing healthcare quality and costs across all payers, including Medicare, Medicaid and private coverage. States also assume responsibility for ensuring providers in their state deliver high-quality care, improve population health, offer greater care coordination, and advance health equity by supporting underserved patients.

The AHEAD Model is scheduled to operate for a total of 11 years, from 2024 through 2034. CMS will provide cooperative agreement funding to select states for up to six years to support their participation in the model, and a maximum of $12 million may be awarded to each participating state.

Relatedly, CMS released a program called the ACO Realizing Equity, Access, and Community Health (ACO REACH) Model, which provides tools and resources for providers to work together in an ACO to improve the quality of care for people with traditional Medicare. To help advance health equity, the ACO REACH Model requires all participating ACOs to have a plan describing how they will meet the needs of people with traditional Medicare in underserved communities, and make measurable changes to address health disparities.

Aisha Pittman, senior vice president of government affairs for the National Association of ACOs (NAACOS), described the ACO REACH Model as an upside-only model – meaning if a provider can prove they’ve lowered costs, they get a share of the savings. 

“There are more ACOs in risk models,” said Pittman. “If they exceed their target benchmarks, they pay money back to CMS. The evolution is really putting more of the risk into the hands of the providers for managing costs.”

Describing the Vermont model as a “great approach,” Pittman said the MSSP – which essentially spawned the model – continues to save more and more money, to the tune of about $22 billion in just Medicare to date. 

“We think there’s some ways you can improve the program, shift more providers into it,” said Pittman. “One of the things we’re worried about that would impact ACOs is the ‘ratchet effect’ – when you’re in an ACO and you’re generating savings, at some point you form a new contract, because the contract for an ACO is five years. When you re-sign that contract, your benchmarks are recalculated based on historical spending. So you have significantly less to manage the patients, because you’ve generated savings.

“We’re not sure that’s the right approach,” she said. “Savings go back to the accountable care entity, and they increase provider compensation and invest in care … that wouldn’t always be covered by traditional Medicare, like 24/7 care lines. CMS has a proposal that would add a portion of shared savings back into the benchmark. It’s not perfect, but it’s a step in the right direction.” 

Pittman expects to see some minor improvements each year, and is encouraged by CMS’ current goal to have most providers in an ACO relationship by 2030.


The Vermont All-Payer ACO Model has proven popular among both payers and providers, said Borys. Both groups invest into the program, and in particular the hospitals, which have seen the benefit to their patients and to the population as a whole.

“Payers by and large have been satisfied,” said Berman. “They’ve embraced the relationship with us … and relaxed some policies and protocols that, in the past, weren’t deriving a lot of value, but were part of their age-old process. Now they take more accountability for the outcomes, hence why the old metrics aren’t as important.”

They’ve just scratched the surface, Berman said. Some programs are meant to ease the transition into a more prospective, fixed-revenue model. Vermont isn’t all the way there. Berman said there’s still work to do around preventative care access, ensuring children and adults have access to regular check-ins with their providers such that OneCare can track the progression of their health over time. It’s been a challenge, but it’s one of the goals for 2024.

Despite this, patients are often unaware of what’s happening behind the scenes.

“We’re a bit like the ‘Intel Inside’ sticker on your laptop,” said Berman. “Patients don’t always understand what we do, and that’s ok. Our messaging to them is what value they can unlock in this relationship. We spend some time making sure patients understand it’s an enhancement to their care, not something that takes away from what they experience today.”

“Success to me is continuous improvement,” said Borys. “We can use the data … to understand where there are opportunities for improvement, and to do this over and over again, so tomorrow’s healthcare is better than today’s.”

Vermont’s All-Payer Accountable Care Organization Model Agreement was a five-year (2018-2022) arrangement between Vermont and the federal government. In 2022, Vermont and CMMI agreed to an extension of the APM Agreement for one year (2023) with an additional transition year at the option of the State (2024).

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.


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