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Vermont lawmakers hope to stem ACO abuse of tax dollars seen in other states

By   /   March 31, 2017  /   News  /   No Comments

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SHOW ME THE MONEY: Vermont lawmakers are working to regulate Vermont’s accountable care organizations before the state relinquishes control millions of federal dollars.

MONTPELIER, Vt. — Members of the Vermont House on Wednesday reassigned to the Committee on Health care a bill requiring open meetings for accountable care organizations.

The move marked a next step in the debate over balancing the rights of private entities with the need for public accountability.

“This is really important. ACOs are private, but at the same time are involved with individual health records and Medicaid dollars that we need to regulate,” state Sen. Virginia Lyons, D-Chittenden, co-sponsor of S.4 told Vermont Watchdog.

ACOs are private networks of health care providers that cooperate together under a common umbrella administration with the goal of regulating health care expenses.

OneCare, an accountable care organization owned by University of Vermont Medical Center and Dartmouth-Hitchcock Medical Center, is contracted with the state to manage the care of 30,000 Vermont Medicaid patients in what the governor has considers a trial-run of the all payer model.

If the trial is successful, OneCare will morph with other ACOs in the state to form the Vermont Care Organization and manage the entirety of Vermont’s Medicaid, Medicare, and commercial insurance funds. In 2018, VCO will take over complete Medicaid coverage as an initial step.

While the bill has generated little attention and critique from outside sources, other states provide a lesson in what happens when states don’t properly restrict accountable care organizations taking over their health care.

Knicole Emanuel, a Medicaid and Medicare litigation attorney in Raleigh, North Carolina, has battled that state’s accountable care organizations since lawmakers gave them a behavioral health Medicaid allotment in 2012.

“They’ve really become autonomous. They act as if they have no supervision and can never be supervised,” Emanuel told Watchdog.

She added that “no one thought about” needing transparency regulations before the government signed over power to the accountable care organizations.

The organizations run on a model of shared financial risk: If network providers go over budget, the accountable care organization must make up a portion of the loss with the private organization’s own capital. When providers are under budget, accountable care organizations keep a portion of the profits.

In 2015, North Carolina accountable care organizations ended the year with $842 million dollars in the bank, with the funds largely intended for patients. Needy patients in North Carolina were waitlisted despite the large fund pool, and one accountable care organization, Cardinal Innovations, cut 11 state-funded services to patients while simultaneously raising their CEO’s salary from $400,000 to $635,000, with total benefits of almost $1.3 million.

Does Vermont have the regulations to protect Medicaid dollars?

Mike Fisher, chief health care advocate for Vermont Legal Aid, told Watchdog the Green Mountain Care Board is currently addressing that question.

Act 113, signed by former Gov. Peter Shumlin in May, charges the Green Mountain Care Board with creating rules to prevent the abuse of the cost-saving financial incentive structure.

However, Lyons, along with co-sponsor state Sen. Tim Ashe, D/P-Chittenden, the Senate president pro-tem, believe that Act 113’s language was too vague, and sought in S.4 to clarify what business could be conducted in executive session.

While Act 113 states that all business “not confidential or proprietary” should be conducted in public, S.4 clarifies that executive session is the exception to the rule. The bill lists seven acceptable uses for executive session, including protection of private health care data, litigation and personnel matters.

Todd Moore, chief executive officer for OneCare and Vermont Care Organization, testified against the bill in Senate committee hearings. “It is unclear what problem or anticipated problem this change in language seeks to address. S. 4 changes Act 113 before we even know how well it is working,” he said.

Emanuel said that, in the case of North Carolina, clearly defining what business accountable care organizations could conduct behind closed doors would have protected patients.

“[ACOs] are using exceptions for open meeting requirements in broad, expansionist ways. This information concerns our tax dollars, and the deliberations are important,” she said.

In additional testimony, Moore emphasized that ACOs have rights as private entities.

“The requirements are tantamount to imposing the Open Meeting Act … despite the fact that those requirements can only apply to public bodies, and the ACOs don’t qualify as public bodies,” he said. “In fact, the ACOs are private organizations with voluntary contracts with state and federal governments.”

While is it true accountable care organizations are private, Emanuel argues they have no right to be. Under 42 CFR 431.10 of U.S. Code, Medicaid funding may only be handled by a state agent.

“Though [ACOs] vehemently deny it, they are acting as a state agent. States cannot contract away responsibility of these funds,” she said.

Judges in North Carolina agree, and Emanuel has won multiple cases on the premise that private entities cannot control Medicaid funds.

She told Watchdog that privacy violations for other private entities with government contracts, such as infrastructure or security contracts, are not a feasible risk because they do not act as state agents.

While legislators and the Green Mountain Care Board have work cut out for them, Fisher, who advocates for the rights of consumers in Vermont, says the legislation is “an important first step.”

Emanuel has a word of warning for Vermont as the regulatory process continues: “States turn on a virtual firehose of taxpayer dollars. For these [accountable care organizations] to manage that much money is an issue, especially because it’s for a needy population. Someone has to be holding them accountable.”

Emma Lamberton is Vermont Watchdog’s health care and Rutland area reporter. Contact her at [email protected] or @EmmaBeth9.

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Emma Lamberton is Vermont Watchdog’s health care and Rutland area reporter. She has written for the Rutland Herald and Times Argus, two of Vermont’s largest newspapers, and her work has published in The Washington Times, FoxNews.com and a number of local Vermont newspapers. She is also a member of Investigative Reporters and Editors. Emma is always looking for new stories. Readers are encouraged to contact her with tips and story ideas.