Beginning in January 2017, Vermont will launch a voluntary all-payer accountable care organization (ACO) model for financing health care. While the program is voluntary, the state has set a goal of bringing 70 percent of all insured residents and 90 percent of all Medicare beneficiaries into the program by 2022, according to information provided by the Centers for Medicare & Medicaid Services (CMS). CMS is supporting the program with a five-year extension of the state’s Medicaid waiver as well as a grant of $9.5 million. CMS has also announced that the program will qualify as an advanced alternative payment model under the Medicare Access and CHIP Reauthorization Act of 2015, the Medicare reform law that established new methods for reimbursing physicians.

In 2011, Vermont responded to the Affordable Care Act by forming the Green Mountain Care Board, with the original intention of organizing the nation’s first statewide single-payer health care system. That concept proved to be too costly, and the state scrapped the idea in 2014. Instead, it is creating an all-payer model that Gov. Peter Shumlin claims will make Vermont “the first state in America to fundamentally transform our entire health care system so it is geared toward keeping people healthy, not making money.” Grandstanding aside, there is no doubt that the experiment will be examined carefully by other states.

The implementation of global payments for hospitals in Maryland has been lauded for producing reduced readmission rates, and press reports have indicated that hospitals are generally satisfied with the program.

Most Americans are broadly familiar with the single-payer concept, as they have heard discussion of the health care system of Canada and other nations. However, they are likely less familiar with the idea of an all-payer system. Under a single-payer model, one entity (eg, the state) becomes essentially the sole provider of health insurance coverage—“essentially” because there will typically be a small number of individuals who seek care privately outside of the established payment system. In contrast, under an all-payer model, various governmental and private payers will continue to operate, but one entity will have responsibility for setting payment rates for all payers and health care providers that operate under the system. This facilitates the implementation of broad-based global payment programs and purportedly will improve the ability of payers to incentivize providers for high-quality care.

While this approach has not been common, Maryland implemented an all-payer program in 2014, exclusively applicable to hospital facility services. (See “Just Follow the Money” on pg. 7 for more on Maryland’s program.) The implementation of global payments for hospitals in Maryland has been lauded for producing reduced readmission rates, and press reports have indicated that hospitals are generally satisfied with the program.

Of course, as Vermont seeks to create a more ambitious program covering a broader range of payments to providers, the challenge of structuring it correctly will be increased as payments will have to account for varying services for differing patient populations. Under the Vermont program, the state will limit per capita expenditure growth for all major payers to 3.5 percent, with Medicare growth limited to levels below those of national Medicare growth projections. Thus far, emergency physician participation in ACOs has been limited, and the impact of this new system on emergency medicine in Vermont remains unclear.

Dr. Haddock is chair of the ACEP State Legislative/Regulatory Committee. Mr. Monroe is director of chapter and state relations at ACEP.