 Good morning everyone, welcome to the Green Mountain care board meeting. My name is Kevin Mullen chair of the board and we're going to get started with the executive director's report Susan Barrett. Thank you, Mr chair. I have a few announcements. I want to first start by letting folks know of our change regarding our physical location for public meetings as many of you know the state of emergency declared in 2020. In response to COVID-19 expired on June 15 at midnight. As a result, the temporary measures enacted by the Vermont legislature and tied to the declared emergency also expired. This means the board must have a physical location available for the public per Vermont's open meeting law. I want to note that presenters and board members will be participating in all of our public board meetings remotely through Microsoft teens, at least through September 1 2021. Members of the public can attend all meetings at the physical location at 144 State Street in Montpelier or through the Microsoft teams application or via our call in number. All of this information is located on our website under the board meetings tab and if you have any questions you can reach out to Abigail Conley or myself. I also wanted to just update folks on an ongoing public comment which you've heard before, but I will reiterate that we are currently taking public comment for a potential subsequent agreement with CMMI for an all payer model. We've been doing that for several months. We've been sharing obviously those public comments with the board, but also with our partners at AHS and the governor's office as they are taking the lead on the potential next agreement. And then there are two other public comment periods that were ongoing and have since closed those on the ACO budget guidance as well as the vital quarterly budget and our presentations this afternoon will address those public comments. And that is all I have to update the board and public on. Are there any questions or do you have any other comments on that, Kevin? I think there's one additional public comment period which is about Clover Health, which is available now for any public comments through the 29th and we'll be hearing from Clover Health this afternoon. And so again, that public comment period is open now through the 29th next Tuesday. I just want to make clear that despite the Secretary of State's release, some people have interpreted that that everything is going back to in person and that is not the case. So that at least through September 1st all of our meetings will still be remote except there's the physical location offered to the public to attend. And we'll have two staff members at that physical location to assist the public so that if they have comments at that time they can do so. But it does not mean that the board or the presenters will be there in person so we'll still be operating as we have been operating but just making sure that we have that actual physical location which will be our office space, the large conference room at 144 State Street. So again, don't read more into it than what is there. And with that, Susan, I'm actually going to turn it back to you to introduce our guest speaker this morning. It's always exciting to have a national expert come in and share views with us. And so, Susan, if you could introduce our guest presenter. I will. Thank you, Mr. Chair. And I am excited to introduce Eric Schell. I did want to turn it over to Alayna Biraby just to have a few words about the connection to Eric Schell's talk today and the work that the board's doing on sustainability per Act 159 of 2020. And then she'll turn it back to me and I'll introduce Eric Schell. So Alayna. Great. Yeah, just a few sentences. So, you know, per Act 159 of 2020, the board was tasked with working with Vermont hospitals to ensure that there's sustainability as we make this shift from fee for service to value based care. And so with the support from Vermont's program for quality and health care and the Office of Rural Health, we've invited Eric to come speak with us and, and, you know, particularly with his expertise in rural health care, you know, to help us think through some of these intersections between payment, payment models and the shift to value based care and population health and, you know, what our providers really need to be sustainable through this transition and into the into the future. So we really look forward to having a deeper conversation today and learning from Eric and also, you know, we've done a lot of thinking together of the last couple weeks as he's gotten up to speed on what's happening in Vermont. So we hope that everyone will take this opportunity to really be thought partners in this really exciting innovative area. So thank you. So thank you, John Olson, for making this possible too. Yeah, thank you. And our partners at VPQ. So I'm just going to give a little bit of background on Eric has impressive background and I think you'll hear that there's a lot of ties to what Alayna teed up in terms of sustainability and rural health care. So I'm very excited and we are very excited to hear from Eric Schell again. He was last year in April of 2019. Suffice it to say it was a lifetime ago, not not to mention the pandemic, but also the impacts on some of our hospitals here in Vermont and I think the bankruptcy at Springfield happened after his talk. So we've really experienced quite a bit here in Vermont in terms of the impact on rural hospitals. And so we are very excited to have him back to give us a national update on some of the things he talked about with us in 2019 as well as some of the issues that Alayna raised. Just as background, Eric is very dedicated to improving rural communities. He's an industry leader in supporting rural health care and its transition to population health. For his nearly 30 years in health care financial management and consulting, Eric's passion for sustainable and accessible rural health care has driven him to help hundreds of rural health systems achieve improved financial and operational performance. As healthcare transitions from fee-for-service reimbursement towards value-based payment, Eric and his rural team provide vital strategic financial and operational improvement services to ensure that rural health systems continue to provide local, high quality and accessible patient care. He's a noted speaker with a commitment to education and he's often featured at rural conferences nationwide presenting on the future of rural health care, critical access hospital financial and reimbursement topics, and rural hospital performance improvement. Eric has assisted in the development of a national program for rural hospital performance improvement and performance measurement. Further, he helped develop new rural demonstration programs for frontier clinics and hospitals. Eric has served on the National Rural Health Association's Rural Health Congress and Government Affairs Committee and the Federal Office of Rural Health Policy's Rural Hospital Issues Group. Before joining Stroudwater, Eric was the Director of Finance and Administration for Rochester Community Individual Practice Association, Inc., where he provided leadership and financial management to a 2,500 provider community-based IPA. He has also practiced as a CPA at Arthur Anderson and company and at a local accounting firm. So as you can hear, he's very well versed in rural health care and rural hospitals and also going to inform us on where we are now nationally and what we can do in Vermont to pave a way forward. So I'll turn it over to you, Eric. Thank you. Well, thank you, Susan. Note to oneself, shorten the bio. I know how many times I could say rural, but I did it all. Well, I'm assuming I'm home with most of us here as Vermont is a somewhat rural state. So first of all, I want to thank the Green Mountain Care Board for having me back to Vermont virtually this time, unfortunately, and discuss one of my true passions, which is ultimately creating a true health care system in the United States and not just a sick care system. And so as Susan just mentioned, two years have passed since my April when I was last out in Montpelier and talking to you. I remember snow on the ground. And while so much has changed with the pandemic and there's so much that has stayed the same. And so just being part of this conversation is incredibly rewarding to me. So with that, there's several topics in this presentation that we want to kind of talk about. The first is kind of the future of health care and rural health care where the industry is going why and what do we have to do to be successful as it transitions. This was, you know, a lot of this is a shortened version of what we talked about two years ago and updated for current affairs. The second is to really think about a vision for the future. And I will tell you both of these first two portions of the talk are presentations I've given around the country outside of Vermont. And so the really this this where it's going why and then the vision for the future national talks. Then we're going to drill down and to get into Vermont specific, you know, kind of what my findings were and how they relate to what I see as this future vision. And then and then finally we'll offer some considerations. You know, I'll say this right out. And I'm going to say it again at the end. Vermont is the leading state in the United States around the transformation to value based care and a true health care system. There's nobody close to you. And, you know, and so we'll state that but you know, are there some tweaks that we could do? Absolutely. And and I've got some ideas around that. My my my one caution and you know every good CPA is going to start with a qualification is it over the last 30 days I've been drinking from a fire hose with all that you've been you have got going on in Vermont and try to get up to speed in 30 days. And have a life outside of you know just study is is is there's a lot you guys have a lot going on and and so you know I may miss on some things I may not be 100% perfectly accurate. But it's it's more let's pay attention to the tone in the direction of what I'm saying rather than the specifics. If I miss something, call me out but let's hope it doesn't get too bad. So so with that, why don't we why don't we start the presentation do you have that up and running. Is that Alina or Susan somebody who's going to fire that who's going to fire that fire. And I'm back up in case Alina runs out of power. And thank you to John Olson for helping support this this project. Good to see you. So so you know it's the shaky bridge. So that's where we are so so this you know I like to start off with a call to action against this is the first part of the talk why the where the industry is going and why and at least from from from this account and perspective in Portland, Maine. And so the first call to action slide is this one right here and this is the the the Kaiser Family Foundation survey of health plans last year that the 2021 study is not available I checked yesterday it's not available yet. But it shows this step wide increase in the family premium for commercial health insurance where now insurance premiums are $21,000. The start of that amount is start because it's now a third of the average household income in the United States. And and you know at what point is it is it going to be too much and is it going to be consuming too much of the GDP. The second point is is that that you can see a stepwise increase in this payment system in the total premiums or costs going into our health care system. Now basic laws of supply and demand would say that as price rises, we would have demand demand decrease and supply increase. And I will suggest to you that because of the cost the price that has continued to go up. We have we have allowed or we have invited in new supply that we're going to talk about here in a minute that's that's almost unheard of and it's going to really kind of change rock our world. So, you know, again, there's a couple important pieces of this the one that stepwise increase and with and I don't see any end in sight to this supply and basic laws of supply and demand and the offering that we we've allowed the entry in new new new supply into delivering services. And then the fact that that were a third of household family income and at what point is it too much. So first call to action slide. Next call to action slide please. The second is this is this is again from the same Kaiser Family Foundation employer health benefits survey from last year that shows that the dark blue line is the the the average small firms and I like to point to this because it's most of what's rural Vermont are the small firms of health plans that high have high deductible insurance. They used to say we used to say I don't know 1015 years ago that as soon as we could attach consumption consumer consumption decisions to their hip pocket, we would solve this health care cost escalation. And and and so now we've got 42% of small businesses that have some that their commercial insurance has this this tie in of the hip pocket the wallet to health care consumption and have we have solved this cost escalation and health care. I point back to the prior slide and suggest not next slide. But the overall decline in in in in inpatient admissions. You know this is this is significant because what's funny is you're the only state in the union where there has been no decline at all in inpatient admissions because you guys have been healthy forever it's not like Mississippi where everyone eats fried food. But anyway we've had a 10% decline in inpatient admissions between 2008 and 2019 from an industry perspective in the United States. And and and those projections are expected to continue down. You know our payment system this fee for service world that so many of us kind of have mastered over the last 30 years as a payment that says price times volume is net revenue. When we have a big piece of our volumes i.e. the inpatient side especially for the larger academic medical centers that that when that when the price or excuse me when the volume side of that price times volume is net revenue equation is going down. You know things get to be challenging unless we could increase the price. And I would suggest to you is outside of the critical access hospitals over the last 10 years because of the Affordable Care Act. There's been a the price escalation by your by your biggest payer i.e. Medicare has been will give you your cost of inflation less and it was less 0.75 for I believe the last six years now that's finally gone away a year ago. But but so what what we're seeing from the Medicare your biggest payer is that they're going to get price is going to be cost escalation inflation less 0.75. In other words price relative to cost is going up. So here we are looking at this world of price times volume in the fee for service world is net revenue where you have a big chunk of volume i.e. inpatient volume heading down the exception of Vermont. And price relative to cost by your largest payer going down. This bodes trouble for that fee for service world. Next slide please. And and and here this is the perfect storm I look at the perfect storm it is happening this accelerating growth in technology and the next couple slides I'm just going to point out a couple cases of where this is the true. I look at the perfect storm as you know kind of this it was a three part whammy. The first is that because our price escalation in a total cost of health care is continued to go up on a stepwise increase. And again we've enabled this additional supply. So we offered in this whole new industry to our because of the higher costs. The second piece of this of this this perfect storm is the accelerating growth and technology that is enabled these new entrants to come into our industry. And then the third really I look at it as the pandemic. And the pandemic from the perspective is that we've gotten as a consumer we've gotten comfortable with online technologies to access pieces of our health care system. And so with that perfect storm. Next slide please I just got a couple of kind of you know interesting market updates here that are all leading to challenges to this world of fee for service. And I look at this one is a major impact United Health Care back in April when they when when they're buying optimum care with 56,000 physicians. And they want to grow this to $100 billion business, mostly through value based contracts. That's you know there's a whole bunch of words on this slide, but it's it's as we move people into value based credit pay arrangements there will be a major driver how we're moved to 100 billion book of business. $100 billion is going to come out of somewhere and you know it'd be interesting to see where it comes out of. So the first thing is is the insurance companies are getting much more aggressive about getting in on the front end of value based parent payment. Next slide please. CVS and in etna right and and kind of what they're moving they want to have 65 billion health care transactions over the next 10 years. And the piece of that strategy is the growth of their health hubs. In 2020, they opened 650 health hubs and they're on track to open 1500 by the end of 2021. They're offering both in store or in person and virtual services. Again, direct competition to what we've been providing as an industry for years and years and years. Walmart Walmart acquiring this me and the acquisition and and the big piece of this is that that it's it's it's it's ultimately a virtual health care system for for Walmart. Well now Walmart is saying hey we're going to be in health centers within stores. They have freestanding health centers in Georgia, Texas, Arkansas, in Chicago. Direct consumer telehealth through purchased app telehealth partnerships with Dr on demand. You know all of this is is Walmart jumping into this business as this new technology emerges next next slide. And and and and this is frankly the one I you know this is the the spirit I fear the most. You know Amazon and you know Amazon, you know ultimately they they they they they have this health product called Amazon care and and earlier this year they announced they were moving into primary care outside the workforce. They have two components to this Amazon care. One is is is the virtual where they want to connect patients or you know consumers to a health, you know, so a health somebody who can take care for their health needs within 60 seconds. And then their goal is to have within 60 minutes. If someone who needs to have have a home visit have somebody at their homes now that home visit is only offered in some big cities right now, but they're looking to roll this out nationally. Just as of last week there was an update and fierce health care that said that they're they're one of their executive DPs talked about the fact that this Amazon care now has multiple corporate accounts signed up with it. And on a per click basis where the patients have access to to online within 60 seconds of provider. The in home has is going to bring a bag of technologies where they're going to be able to do lab tests and other type of diagnostic procedures in the patient's home. This right now is is scares me. Next slide please. And it was interesting because, you know, back last year, American Hospital Association came out with a study that said in 2018 for the first time in 35 years, the number of emergency outpatient visits declined within our hospitals. Now it was interesting because this third bullet down the report I'll read it says the report sites that the amount of outpatient care delivered has most likely increased. But that care is being delivered in competitive new options such as urgent care and retail clinics such as those recently launched by CVS health. And, you know, this was in 2020 so now Amazon and Walmart and all of these other services that are just going to continue to stack up against our hospital business. And again, we live in this world of primarily in this world of price times volume is net revenue that's fee for service. And next slide please. And here's what we're starting to see now this is the green line is is Vermont's outpatient visits per thousand population. You can see back in 2009, we were at 5400. We're now at 4848, 48, 48, you know, 4900, for example. So we've seen some of this decline already taking place. And this is the numbers starting to play out is as would be predicted by the emergence of technology now this is only through 2019. And it'd be more interesting to kind of fast forward 24 months to see the impact of some of these new entrants that we talked about. So next slide. And so ultimately what we're seeing and this this came out of the MedPak report that was just released a couple months ago is is that we're seeing these so the orange is Medicare margin by for rural hospitals including the critical access hospitals. The blue is the rural hospitals excluding critical access hospitals and the gray is Medicare margins for all hospitals. And you can see this downward trend since 2013 that that I would suggest to you is is a both the the this this world of price times volume is net revenue when price relative to cost for the all but the critical access hospitals is going down. And and price relative to cost is going down impacting both dimensions of price times volume equals net revenue. Now the uptake you know if you read the MedPak report in a couple months ago the uptake is related to some upcoding inpatient codes as well as the some of the benefits of the 340 B program which is a discount drug program many providers are participate in. So, next slide. And then just a kind of kind of kind of a kind of couple more pieces of why this world of fee for services in demise. Dr Liz Fowler is the new director of centers for Medicare and Medicaid innovation. And she was speaking at the American. It was in the ACO annual ACO conference and and some of her comments are very, very important for us to understand and the first is it's in the it's in this blue caption, we can't have fee for service remain a comfortable place to stay. In other words, we've had a change in administration and the minute new administration is just as much on board with changing payment as the prior administration. They're there that the doctor Fowler's comments really are around saying hey, you know we've got to come up with innovative models that meet the needs of the providers where they are rather than trying to just put out a whole bunch of stuff that may or may not be working. And that first comment is we can't have fee for service remain a comfortable place to stay is a super important thing for all us to take to the bank. Next, next slide please. And then and then last year's med pack report that came out in June again around you know med pack is the group so it's Medicare payment advisory council, they advise Congress on payment kind of payment changes. And they hit on a couple really important pieces. One is that the value based payment, especially through the ACOs is going to be a really important part of how we're going to kind of have the Medicare trust fund be solved in the future. And so I just wanted to put that up there. So next slide. So, so really this call to action to summarize the call for action is fee for service. They're staying in fee for service is not a risk free enterprise fee for service is being threatened by a number of different counts both fundamental economics. You know it changes in kind of payment policy all of these things are causing this this this this fee for service world to change the value based payment. Good thing you all in Vermont are well aware of this and are moving. We're going to have to always continue operational efficiencies human and clinical integration going to create advantages we're going to have to continue to seek out clinical and advantage and then ultimately flexibility we've got ingrained flexibility into how we design and move forward into value based payment. So next slide. So, so, so where's the payment going again again this is the national national talk I'm going to drill down into Vermont in 10 minutes or so. But the the the this is the patient value the new kind of driver, the the the equation for driving value is patient value. That's going to be the new competitive force in it's a metric that says quality over cost applied to a population. So anything that we could do to improve quality holding cost constant anything we do to drive down cost holding quality constant increasing the population that this equation applies to increases patient value. This is the new competitive driver. I look at accountable care as a payment system and think about it as a payment system not from an ACO perspective, but as a payment system where providers monetize the value derived from increasing quality reducing cost. In other words, provider organizations will benefit from increasing quality and reducing costs and it takes the form it takes a number of different forms from bundled payments, value based payment programs, self insured health plans, Medicare defined ACOs, Capitated provider sponsored health care. All of these are opportunities where if we can bring increased quality reduced costs applying it to a larger population we create patient value the new competitive driver of our health care system. And and and I think about accountable care as a payment system is different. It's different than managed care. You think back 15 years ago to the managed care era and and and we think about who monetize the value of increasing quality reducing increase decreasing costs applied to a larger population. For the most part, it was the health insurance companies, not the provider organizations, whereby the provider organizations had the greatest ability to affect quality and cost. The second piece that it's different from the managed care era. There's a government's all in and and back in the managed care era. I mean, I was an active participant in all of that. We were doing all of this monkey business around gatekeepers and PM PMs and withholds and all that for 15 or 20% of our business. Now with the government all in, especially all in in Vermont with the all payer model that you have. It's a very different equation. The economics are very different. We have new information systems to manage costs and quality back in the day when I was at the IPA in Rochester. You know, we had to wait six to nine months to have any claims dated to present to the physicians to show if they save money or not. And that's changing. We've got a new science to base decision making on and frankly going back is an option. And if you heard anything I said in the call to action around the continued increase in escalation of costs resulting in increased supply and then with the new technologies and the new market entrance. I hope we understand that going back is not an option is not an option. And so so with that, let's let's go. Let's go forward then. I like to think about this is, you know, again, Vermont for the most part is a is a rural health care delivery system and and and I look at rural. This this whole ACL relationship to small and rural hospitals. I think rural hospitals have incredible value in this new world. And and a big piece of that is that is that the revenue streams of the future are tied to the primary care physicians and their patients through attribution. You all in in Vermont have really written the book on this through one care of Vermont and so so and the reason why that that really hit me specific to the ACL is is back when the ACL regs originally came out. Gosh, almost done probably nine years ago. I remember I was reading the regs and and and and it said this it said a primary care physician cannot belong to one ACL hospitals and specialists can belong to multiple ACLs. And that really struck me as oh my gosh this is why our rural health systems have so much value in the new world because so many of our rural hospitals are built around a primary care based delivery system. The thinking is that if you could if if if a primary care physician can only belong to one ACL, then those are the revenue centers of the new world. You can only attribute revenue to one case. You can't spread revenue around expenses on the other hand hospital specialist technology. They become expense centers in the new world and and and and so with that the rural hospitals in their in their primary care based delivery system have incredible value. And again, I would say for the most part all of Vermont is this rural health care delivery system in which primary care of the basis of your strength. So small hospitals with their alignment with PCPs with a that are highly efficient and have high quality, which many of you do in Vermont, you very high value in this new world. Next slide. And just just briefly compare and contrast the fee for service world with the population based or the accountable care payment system world. I always like to just show you this because it points out you know kind of some basic concepts around the fee for service world. So so if we look at the L and X the L and X acts graph right here what you have is across the X axis you have volume starting at zero going out to the right increasing volume. On the on the Y axis you have again starting at zero going to the top is dollars. If we just look at a health system really any health systems cost structure at zero volume we have very high cost. We have very very high costs I mean we've got a staff our emergency room we got a staff our inpatient units all of our all of the departments were staffing our administrative costs we have very high costs. We have one additional patient admitted to the day. Our costs are only going to go up a tiny bit in Pennsylvania with the you know I was working with all the rural hospital or many of the real hospitals and the global budget model down there. And there was an analysis done that showed their their their true variable costs really about 15 cents on the dollar. And what that's saying is that if if if our inpatient you know if we admit something to our hospital today our cost may go up 15 cents on that revenue dollar. So what happens is it on the other hand on the revenue on the orange line which is your revenue. Every time we admit a patient we get paid $2,000 a day. So $2,000 we've made a patient we get $2,000 our costs go up 300 bucks. And what's going to happen is there's this incredible incentive to drive up volumes because of that that that fixed variable cost equation. Your your revenue your cost curve is going to go up only slight amounts for incremental increases in volume where your revenue curve is going to go up. So the fee for service world there was an incredible incentive to push out volume and increase the slope of the payment line. Increasing the slope of the payment line said that we get paid a lot more per unit of service created. The result there is is what do we have there we have new offerings of more technology more services more higher end services, neurosurgery, cardiothoracic surgery, cardiology, orthopedics, all because we get paid more. So the fee for service world that we're moving away from created these perverse incentives around sick care. Now let's move to an accountable care or a population based payment. How do we increase our revenue? Well, we increase it by attributing more lives. How do we attribute more lives? It's through alignment with our primary care base. You know, I always like to kind of throw around numbers, you know, the average per capita healthcare costs the United States about $10,000. Maybe it's a little less in Vermont because you guys are so healthy. And a busy primary care practice with 2000 patients in their panel is 2000 times 10,000 is $20 million. So to figure out how to grow revenue in a population, it's not about providing more sick care, it's attributing more lives by offering value. It gets back to that value equation. Our cost structure, on the other hand, our cost structure, many of the costs that were revenue centers in the new world become cost centers. And those are technology specialists in bricks and mortar. They all become cost centers. And so, you know, this world is very different incentives and opportunities to grow revenue and manage expenses in that new world. So very, you know, comparing and crafting fee for service and population health, very different incentives. Next slide. Okay, this is the worst slide you've all ever seen and you probably remember it from the talk two years ago. But it's so important because there's, you know, three or four major concepts that we have that are important to talk about. The first is, so this over on the left, this blueish pillar, that's a pillar, and it's a pillar of payment and it's a fee for service pillar. And let's say it's 2014. Actually, Vermont, it was probably way before then because you guys advanced by 2014. And in this fee for service payment system, it's a pillar because it was a perfectly aligned delivery system and payment system. The more sick care that we do, the less healthcare we do, the more we make. And ultimately we have to make something in order to support our payroll and keep our hospitals and health systems vibrant. And so you have a stable platform. On the right hand side, you have a stable platform. This is a population based payment system where the payment and delivery system are completely aligned. The more healthcare you do, the less sick care you do, the more your financial benefit, your financial gains. A couple problems is, you know, first of all, this fee for service payment based on all the things we talked about in the call to action is smoldering. Price relative to cost is going down. The volume is being taken out of the system. Overall trends and inpatient volume and now new trends and outpatient volume. And all of a sudden this price times volume is net revenue when both price relative to cost is going down and volume is coming out of the equation is threatened. The risk of fee for service exists now. And so the problem is we just can't step from this stable but smoldering pillar to this pillar over on the right, because we don't have a healthcare system. We have a sick care system. We take care of sick people really well. And it's going to take us years to create a healthcare, a true healthcare system where we've invested, you know, you know, some proportion of our total sick care resources now into truly creating healthcare and community level. So it's going to take us time. Let's put a number on that 2034 is that time frame and everything in between is kind of schizophrenia. Well, as the payment system of fee for service starts to dwindle as we move more to population as the population payment starts to emerge, you get to year 2026, I would say in Vermont, you're in it now. It's 2021. We're your feeder right above the crocodiles and your feet are right above the crocodiles, because half your delivery system says we need more fee for service volume. Half of your fee payment system says we need less fee for service volume. We need more healthcare. And what do you do with your doctors? What's the message to your provider, your care team? Well, you know, commercial insurers, they're still paying mostly on a fee for service. So let's maximize utilization. Let's maximize the incentives of the sick care fee for service payment system. But for Medicaid and in some cases, Medicare, we're under a population based payment system. Let's minimize utilization. It's schizophrenia. And so, you know, this piece right here is Dangerland until we can start to figure out how to move our feet above that more towards here. I would say there's only one health system in the United States that's actually figured out this world of this population based payment system. And it's Kaiser. Kaiser literally says we're successful when our hospital beds are empty. Next slide. So several years ago, CMMI, Centers for Medicare and Medicaid Innovation came up with, they said the payment system is going to evolve over time. And as it evolves, it's going to take on different characteristics. And I lay these out because I want to go back and forth. So the first, this is fee for service, right? And that was the category that was the blue pillar on the left that was stable until price relative to cost is going down and utilization is coming out. Then we have category two. This is a column of payment. This is a payment system that's kind of where many of us are right now for many of our payers. For example, many of your commercial payers were still in this world of fee for service, but now with links to quality and value where there's pay for reporting, there's pay for performance. There's foundational payments for infrastructure, you know, PMPMs for primary care. All of this is fee for service with links to quality. This is, if you were to graph this on the prior slide, the crocodile slide, it's still to the left of the, it's to the right of the fee for service, but it's to the left of the feet right above the crocodiles. The next category, alternative payment models built on a fee for service architecture. This is schizophrenia. This is feet right above the crocodiles, danger land. And this is where you have alternative payment models with shared savings with shared savings with some downside risk. For the most part, most of your payers in Vermont are in this category three, which I consider right in the danger land. And because, again, our accounting systems within our provider organizations are still measuring performance, their financial performance based on claims. Claims are, claims is revenue for most of our systems with the exception of your Medicaid program. And as if claims are revenue, then anything that we do to take out claims reduces our financial performance and puts us in financial jeopardy. Once we get out to here, this is where we have population based payment on a population based infrastructure. We're recognizing in our income statement and our financial statements, revenue and bottom line, the residual claim of health. In other words, if we get a total cost of care payment amount, if we're able to keep our patients, you know, you know, you know, we're able to reduce that cost. We can take a residual claim if it's $10,000 and we can deliver that for $9,000, there's $1,000. That's the residual claim of health. And again, I think there's only one payment. This is the green pillar on the right. So these are the payment systems as they merge over time. I promise we're going to get to Vermont here in five more minutes. And so, you know, we've always gone with this premise and this is where we're going to twist things around here in a minute. We've always gone with the premise that the form we organize ourselves around the functional imperatives of the payment system of the financing system that exists. And if we think about the functional imperatives of a fee-for-service payment system, right, the functional imperatives of a fee-for-service payment system are managing one's own price, one's own utilization, and one's own cost. If we can get paid more for the sick care that we do while we manage costs, an organization acting in solo can be very successful in fee-for-service. And so the form that evolved out of that was independent organizations competing with others for market share and volume. Form follows function, follows payment. As we move to these accountable care payment systems or population-based payment systems, the functional imperatives become very different. The functional imperatives become we're trying to care for the entire population, both healthcare and sick care needs of an entire population. So we have 20,000 people around Springfield, Vermont. There's 20,000 people in the service area. We can't do that in the isolation of just a hospital. We have to have a medical staff. We have to have post-acute care. We have to have public health. All of these pieces, ambulance, become pieces of caring for, we have to have tertiary care. Become pieces of managing the entire healthcare and sick care needs of a population. The second is we have to accumulate lives to diversify insurance risk. And so two functional imperatives of this world of population-based payment, leading to a form that says aligned organizations competing with other aligned organizations for covered lives. And new competencies require network development, care management, risk contracting, risk management, all pieces of the form that's going to drive the functional imperatives to be successful in this new world. Next slide. And so several years ago, working with four critical access hospitals in Vermont, we came up with this as a, frankly, it's what we consider the vehicle for how we move across the phases of payment. This is how healthcare organizations should be thinking about this transition from volume-based fee-for-service to population-based payment. So let me just quickly explain this, and then we're going to kind of change around the conversation. So if we think about the pillars of payment going across the top, you can see it says fee-for-service. This is that 2014 model of payment that is smoldering at this point. Phase one, this is the CMMI, Centers for Medicare and Medicaid, that column one where you have fee-for-service predominantly, but with now quality, tie-ins to quality utilization control. This is where many of us are today for most of our payers, even in Vermont. Phase two is the fee to write above the crocodiles, the fee right above the crocodiles because you have alternative payment models built on a fee-for-service architecture. Anything that we do to create health looks really poorly on our financial statements. And finally, as we start to lift our feet away from the crocodiles, we go to the phase three of payment. The phase three of payment is we start to emerge out and we transition to alternative payment models or population-based payment models built on a population-based infrastructure, leading to what we consider the future where you have provider-based health systems. You have the geisingers, you have the where you integrate sick care, health care and payment under a constant umbrella. Again, I'm going to tie this back to the Vermont very shortly because you have a lot of these pieces in place, which is super exciting to me. So those are the phases. So think about this as time, right? 2014 on the left, the fee-for-service and PBPS is probably 2030 and then the phases as they evolve. There are three strategic areas that health systems have to address coming down the y-axis. The first is the delivery system. And there are three initiatives to make sure that we transition our delivery system, our sick care system. The next is the population health. We have to create a population health system. And we have to do that kind of moving from phase one, which is crawl, walk, run, sprint. We can't come out too quickly and create health care too quickly while we're still getting paid predominately in fee-for-service because that creates really bad results. And then the third strategic area we have to address and transform is our payment system and proactively pick up and move payment system. Again, three strategic areas. There's strike points to implement. The orange bar is strike points. So coming down, what are the delivery system? What are the key pieces of the delivery system have to do? Well, today, if we're in phase one of payment, fee-for-service with ties to quality and utilization, moving to phase two in Vermont faster than any other state in the union, we've got to make sure we have high operating efficiencies, quality, patient engagement, and we've got to do that today. And we've lost 138 rural hospitals already in the last 10 years or 11 years that haven't gotten there yet. We have to align with our primary care, fundamental alignment with our primary care. And I would suggest to you, just because you employ them does not mean you're aligned. Fundamental align with our primary care. By the time we get to phase two, I would suggest that in Vermont, this is something that's absolutely critical for everybody right now because we're right there. But today, we've got to make sure that we're planned for that. Phase three is service area rationalization. What this is coming together in larger systems to care so that by the time the payment system gets out to phase three, we can start making decisions around resource allocation of where it's best as an entire statewide or system to invest in healthcare resources and sick care resources. And so these three pieces are the keys to transforming our sick care system as they exist today. Again, our healthcare system, we've got to create that the first blue box and it's a strike point because there's orange bars around it. Patient centered medical homes. You guys in Vermont wrote the book on this. It's so incredible that you've done that. Care management, data analytics through one care of Vermont. You guys are starting to really accumulate data here. Evidence based protocols. We're starting to work on that. So think about crawl in phase one. Oh, excellent. Unless you're telling me I need to go faster. Phase two is a payer network contracting, which you guys are already starting to work on hotspotting value attribution coming up with that funds flow model for the hospitals, the health systems. And again, plan design risk. All of this is crawl, walk, run, sprint. And finally, we've got to pick up and move payment. And again, you guys have done a really incredible job here. So right now we're the initiative one at the bottom. It's hit the orange bar or strike point. You have our health self funded health plan. Do we take the entire population of our self funded health plan and roll them into our care management strategies. Maximize any fee for service quality and utilization. The next is transitional payment models. This is moving to the strike point is out very close to where you guys are in Vermont, where it's low risk ACOs and those types of things. Finally, full risk cap plans, which for your Medicaid, many of you are in at this point. But I look at that the future is these initiatives are absolutely critical for health systems to implement. Each one, so everything that we implement in column one is a twofer. It maximizes the world that we exist in today, the fee for service, and it positions us for phase two. Once the payment system gets to phase two, it maximizes phase two of payment and then creates an option on phase three and etc. It also breaks down this nebulous concept. This whole transition framework breaks down this nebulous concept into population health into bite sized pieces that health systems can really move forward with and implement. And finally, it keeps everything in check. And so with that said, now we're going to get into a little bit of vision for the future. Next slide. And so this is where again, a national talk. This is in 2014. I was on a flight. I was speaking at a conference in Hawaii to the rural health systems out there. And I started thinking about it. I said, maybe we have this rock. Maybe this premise of form follows function follows payment is not correct. Maybe what we ought to be thinking about. And at the time in 2014, I called the vision 2020 for for Hawaiian health care. And I modified this obviously for Mont and then we're going to take I'm going to go through these few slides and then tie it to what you guys are doing. So the vision and I had to change it from 2020. I was very optimistic for Hawaii. They've done nothing is what you use. They aren't anywhere on this map, but but it's called Vermont vision 2030 and isn't a vision. Vermont health systems partner with their community to improve the health of their community while preserving appropriate access to the high quality sick care that we currently offer. Let's flip the plan. Let's take this thing and flip it upside down. Next slide. And here's what I mean by flipping this upside down. You know how we talked about the premise being form follows function follows payment. Forget that. Let's take payment and set it aside. Let's move it to the back. It's the caboose now. Let's say what is the function that we want out of our health care system to find that figure out what the form is going to be. And then after that figure out how to pay for it. And so as I started thinking on this long flight ride to Honolulu, I started to see, OK, what is this function? Well, maybe it's health systems partnering with their community to prove health of a defined population while preserving appropriate access to additional care. And new things. Chronic disease manager increased relevance or health system in health care. You know, the social determinants of our health, our health care systems are a fraction of the total determinants. Because we don't get paid for them. We only get paid for treating sick care. If we figure out a way to get paid for health care, could we be more relevant in health care? Access. Again, the second function access to appropriate and right sized traditional patient care. Right care, right time, right place, right provider. A common set of evidence based protocols across the industry. And quality and patient safety are absolutely it's high quality. When you come into a health system for sick care, it's as high quality as you could possibly achieve. What are some of the common requirements in order to achieve this function? Well, we need a common vision for health care of Vermont. A common between the providers, the payers, the government, all of these a common vision. Well, you know, so again, I'm talking about a national talk and I'm going to lay on what you guys are doing. And a payment system that provides incentives for true health care. Next slide. So now let's talk about form. It's kind of shaded area. So we talked about function. What's that form going to look like? Well, we're going to have to have a line providers. We have to have centralized decision making around resource allocation. So we need high level of integration. Non-traditional partners at the table, public health, mental health, wellness. I would think government possibly is part of this. We need primary care with patient attribution that part of this form. New roles for health systems, claims analysis, network contracting, risk management, risk contracting. Again, I want you all to start thinking about what you guys are doing in Vermont and how much you guys are doing in Vermont ties back to this vision. Integration of payment and delivery system functions. Some of the requirements, we have to have enough lives to diversify insurance risk. Centralized decision making to appropriately right size the sick care system. And a common information technology platform among providers and stakeholders. And so if we're going to achieve the function that we want, this is the form. What is the payment system going to look like? Next slide. Well, the payment system is going to have to be, you know, the key requirement is that it has to fund necessary access to health care while preserving traditional patient care. What does that mean? Well, the payment centers cannot preclude health interventions. And if you think about the fee for service world, by definition, it precludes health. Now, we like to say every one of us in our health systems have a mission statement around improving the health of our communities, but that's not what we're paid for at this point. Payment systems cannot preclude access to appropriate patient care. We still have to maintain this high quality health care system that we have within our state and within our country. We have to have a financial reporting to reflect income for both health care and sick care. We have to show on our income statement that when we improve the health of our population, there's a credit on our income statement. What are the requirements? And this is in this humble consultant's opinion. Nearly 100% global payment to health care providers based on attributed population may require health care providers to assume insurance risk. A financial reporting methods to be adopted to new payment methodologies, i.e. a credit on the income statement for improved population. And then new cost centers are provided budgets to manage within. And again, in the world of the future, your cost centers are bricks and mortar technology and specialists, where your primary cares are your revenue, your attributed lives. This is the finance. So the next slide, please. And then so what are the short term imperatives proactive approach to determine vision for Vermont health care, led by the highest levels within our state government. It was interesting to see the governor's comments yesterday on related to the report by the state auditor on the health care organization and Medicare and just see how committed the governor is to transition to population and accountable care type payment models. Health care providers to accumulate scale and centralized decision making. Develop care management organizing framework, PHO, or we could say ACO clinically integrated network. We have aligned medical staff. We have claims analysis capabilities in partnership with commercial insurers to ensure pilot population payment models. These are the short term imperatives. Again, this is a national talk. Let's talk about Vermont. Next slide. So what are you doing in Vermont? What is the state doing? Again, I am humbled by what you have done and what you are going to be doing in the future. I've only listed four transformational efforts that are going on. And I could probably fill the rest of the slide deck with some of the efforts that are going on. Starting with the blueprint for health launched in 2023, which was in the Department of Health, DEVA, with a mission of integrating a system of health care for patients, improving the health of the overall population, proving control over health care costs by promoting health maintenance, prevention, care coordination, and management. Patient-centered medical homes, community health teams, hub and spoke assisted treatment. All of these are initiatives, made payment decisions for patient-centered medical homes. All of these are pieces of that vision that we just talked about. And that started in Vermont in 2003. We have the Green Mountain Care Board, who we're presenting to right now today. I think in terms of a regulatory body with a goal to improve the health of the population, reducing per capita rate of health care costs, enhancing the patient and health care professional experience of care, essentially the recruiting, retaining high quality health care professionals, and achieving administrative simplification. Incredible goals of the Green Mountain Care Board. Regulations of charge setting and those types of things. And then beginning in 2020, increased financial sustainability of Vermont. So again, I call both the blueprint for health and the Green Mountain Care Board transformational efforts. Next slide, please. The third strength transformational effort is the all-payer ACO model, which is a five-year demonstration ending in 2022. Wow, all-payer model allows Medicare, Medicaid and commercial insurers to shift payment from fee-for-service to the alternative value-based payment systems. With your Medicare ACO, we have a goal of cost containment of 3.5%, but no more than 4.3%. And there's scale criteria when we're increasing the scale. Really, really amazing effort. And then finally, One Care Vermont, where a lot of the pieces that we talked about in that vision and the short-term imperatives around accumulating providers, and I see what you created in One Care Vermont. Incredible progress towards achieving some of that vision. So a community of healthcare providers driving system change, improvement by leveraging innovation, investment, access and education. It's the only one in the state has total cost of care targets with payers for both upside-downside risk. And then all health systems are participating, but each health system, their participation in programs, i.e. payers, is optional. And I'll talk a little bit about why I think that that's a tough one, at least if we're going to achieve the vision. But anyway, for statewide transformational efforts that you guys are as close to anyone in terms of the pieces, you have all the pieces out on the table, and it's ready to put them together. Next piece, I'm just going to touch on the provider organizations, 14 hospitals. So you have a manageable size of health systems working within the state. One academic medical center, five PPS hospitals and eight critical access hospitals. Only three are in a system relationship with 11 independents, which is very rare as I'm seeing in states now as we're seeing an incredible roll-up across the country. The BRG, a study that they produced said that there's adequate bed capacity in the state and possibly some incremental capacity out past 2026, but overall decent bed capacity. But here, again, call to action. This consistent decline in operating margin between 2015 and 2019 that we really have to kind of get our arms around. And part of the reason why that act was at 159 was so important around financial sustainability within our health systems. Next slide. From a primary care perspective, you mix of employed and private practices with many FQACs and rural health clinics. A majority of the providers are employed in some health systems and most are participating in your patient-centered medical homes and some payment in the form of PMPM. Oh, great, great opportunities for you. Next slide, please. You have payers. This graphic here is a breakout between, you know, if you look at your inpatient payment broken up by Medicaid being the green, black is Medicare fee-for-service. The blue is Blue Cross and you got MVP and then you got other commercial. So you have inpatient payment, outpatient payment. Just some key characteristics of what I think are important around the payers, your commercial self-funded. They represent 36% of inpatient payment and 58% of hospital outpatient. It's reported that there's significantly higher inpatient outpatient commercial rates than Medicare or Medicaid, which results in providers prioritizing fee-for-service payment mechanisms to maintain operating margin. That's in my opinion. Okay, that, you know, I'm looking at if I'm the CEO of a health system and I have to maintain margin and I'm seeing my margins decline that with my commercial rates higher than Medicare or Medicaid. And again, it's that fixed variable cost equation that if I can generate additional outpatient or inpatient, patient volume, if I can get more than that 80-20, it's going to work out very well for me. The Blue Cross Blue Shield Vermont and MVP are participating with the One Care ACO, they're providing some per member per month to help support population health management activities, really good stuff. The challenge I see and we'll talk about this is that these commercial payers are primarily paying fee-for-service claims to the hospitals. Again, you know, our hospitals are recognizing income based on claims. That's sick care revenue with year-end settlements, but on a total cost of care budget. There's only shared savings, so there's not downside risk and it's 50-50. Again, I consider the 50-50 split a challenge and we'll talk about that in a second. And there is a Blue Cross Blue Shield pilot program with a health system where one of the health systems receives nearly a monthly fixed payment with no reconciliation to claims. Next slide, please. The self-funded health plans representing a significant portion of commercial insurance. You have large, many, many, many organizations that have self-funded insurance, many of which are using Blue Cross Blue Shield as their third party administrator, TPA. It was reported that the self-funded plans, generally there's an interest in moving to developing value-based contracts. It's just that there's not a lot of sophistication to deal specifically with the nuances of a contract. And there may be an opportunity there for improvement. Next slide, please. And then we got Medicare. 46% of inpatient payment, 29% of hospital outpatient payment. The hospitals can elect to participate in all-payer ACO, which results in them accepting risks tiered to their covered lives. So one-care Vermont accepts 100% risk with a 5% risk corridor. In 2021, eight Vermont health systems participating in the Medicare ACO. Criticized hospitals are paid on a cost basis with settlement to costs. Well, the prospective payment and academic medical centers are paid on a straight fee schedule. The hospitals or health systems are not required to participate in the ACO. And frankly, a barrier to the rural hospitals participating is their inability to accept risk for their covered lives. The big challenge here is that rural hospitals generally only receive between 30% and 40% of the total cost of care as revenue to them. If they're taking responsibility for the risk on 100% total cost of care, there is immediately, and there's a challenge there associated with that, that it's tough to take on risk for 100% when you're only receiving, let's say, 35% of the total payment in terms of revenue to you. Independent primary care providers can participate in comprehensive payment reform in which providers receive a monthly per member per month. Again, the federal government is moving in this direction with their direct contracting model and some of the chart models. So really good stuff. Reported that nearly 50% of independent primary care practices are participating in this per member per month payment, which I think is absolutely right on. Next slide. And then, finally, Medicaid represents 18% of hospital inpatient, 12% of hospital outpatient payment. Fixed payment to OneCare Vermont for all Medicaid lives with OneCare Vermont paying hospitals a fixed, capitated payment based on attributed lives. Total cost of care negotiated between OneCare Vermont and Diva with a risk reward quarter of 4%. Attributed Medicaid lives have increased from 29,000 to 111,000 in 2021, way to go, Vermont. So the risk though, so the hospitals are receiving fixed budgets. The risk reward is based on the fee for service. About 50% of the total cost of care is in fee for service. Some paid to out-of-state providers and then some paid to physicians and those outside of the budget. And that's about 50% of the total cost of care. And like Medicare, independent primary care providers can elect to participate. So that's your payer. That's your provider environment. That's your payer environment. Next slide. These are my last really two or three slides. I look at just setting back. And again, my mindset is that vision that we created, flipping around the transition framework to say, what if we started with the end in mind? What if we started with function leading to form and then figuring out how to pay for it? And given all that you guys have done in Vermont, beginning in 2003 with some of the governor's initiatives in the blueprint, here is just my observations. One is, and I stated this at the beginning, you are the leader of all states of the transformation from sick care to healthcare. I am blown away with what you've done and what you're achieving. Congratulations to everybody that's been participating. The vision established with buy-in from highest level of state government providers and payers right on. We have a payment system aggregator, one care of Vermont, which enables consistent payment to all providers. When we talk about all payer systems, I think what's important is all payment systems are consistent. And you have the foundation through one care of Vermont to have consistent payment to providers. I would say this, let the health plans compete on attributes of health insurance. But as long as we can have a consistent payment system, that meets the needs of those, that function that we want to achieve, we've got something to work with. We have a comprehensive payment system well underway. However, I consider these some challenges. Small rural hospitals generally paid between 30 to 40% of the total cost of care are unable to accept risk of total cost of care. Again, we talked about this just a few minutes ago. If I'm only receiving 30 cents on the revenue dollar, in other words, the total cost of care is $100. If I'm only receiving 30% of that, but I'm required to take risk on all $100, that risk as a percent of my $30 is significant. And so I consider that one challenge right now. And I understand why some of the rural hospitals want to sit out and say, hey, I can't do this. The numbers don't work. Commercial plans requiring 50-50 gainshare with no downside risk, along with payment to providers based on fee-for-service promotes fee-for-service payment across the entire system. And again, it gets back to that fixed variable cost ratio. That if health systems, let's just say on average, I told you I quoted Pennsylvania, they're about 15% of variable costs, 85% fixed. But let's just go with the 80-20 rule because that sounds better. So let's just assume a health system has 20% of its costs as truly variable, 80% are fixed or step-fixed. If we can't get the commercial insurers to have at least some form of 80-20 gainshare, then the incentives for the hospitals are continued to maximize the fee-for-service payment system. Because anything they do to take out health care when they're losing 80 cents on that dollar, they can reduce their costs. They take $1 of sick care utilization out of the system by getting incentives for health. They can take 20% of their costs out, but the 80% are gonna remain. And so that is one of the real challenge to this. The second is that for a majority of providers, fee-for-service payment, whether it be from commercial, the claims, whether it be they're not accepting fixed payment from Medicare, they're receiving claims basis and settling to costs, as long as that fee-for-service payment exceeds that 20% fixed variable cost threshold, that variable cost amount, thus then providing sick care is going to predominate. It has to because even if we had, let's just say we had 50% of our payment in the form of health care, excuse me, in the form of population base, the other 50%. Again, the hospitals, if they take any of that, if they take any sick care utilization out, they're not gonna be able to take out that 80% of fixed costs. So there's two pieces of it. One is the health plans, they're gonna have to have a different gain share, but the other is that we've got to move more of our payers into accepting fixed payment or some type of a global payment away from claims. Or we're gonna continue to have incentives for sick care volume. And then the optional health system and independent provider enrollment in alternative payment models based on the individual payers, and we call those programs. I see all of these points I consider as major challenges. Next slide, please, and then we'll wrap up. So here's, and I'm only gonna offer these as considerations. And again, you all are experts in Vermont. I'm coming in drinking from a fire hose for the last 30 days, and trying to see where you guys are relative to a vision that I see for health care. Again, highest level of state to participate in developing vision. Again, hearing the governor and the secretary yesterday in their press conference talk, I think they're on board with this. Target 2030 for full transformation of payment. Give providers time to develop that true health care system to make the appropriate investments in health care. It's difficult. If we have to roll out withholds against all providers, maybe we have to start thinking about a half a percent increasing to a full percent over time increasing to one and a half percent and then allowing those investments in creating true health care. One care Vermont to aggregate nearly all payer payment and channel to providers, right? So that we have a one payment system. We don't have a one payer system. Health systems are required to participate in all programs. Over time, again, 2030 is the vision here. Primary care practices required to participate in comprehensive payment reform. Transition nearly all health systems payment away from claims payment reconciliation towards fixed budgeted payment amount. As long as we're paying out in claims and we're recognizing revenue on our financial statements based on claims and we have this variable fixed cost conundrum. We are going to be challenged to focus on health until we get nearly all payment, at least 80% of payment in a budgeted amount. Critical access hospitals. I think we have to transition from cost payment to budget based payment. Again, in today's business world, the way we pay for cost centers, you know, we think about housekeeping or dietary, we give them a budget and we hold them to that budget. As cost centers of the future, the bricks and mortar, I even think about critical access hospitals. Let's give them a fixed budget payment. Total cost of, you know, so you get a fixed budget payment with a total cost of care shared savings risk with all payers and that may require some provider withholds. One care in Vermont as statewide vehicle for payment change must have broader governance representation. It is my belief. You guys can string me up for this one. It is my belief that if one care Vermont is going to be the aggregate payer, the single payment aggregator that has got to have broader governance reputation than just provider organizations. And then the Greenmont Care Board to actively participate in setting aggregate total cost of care and provider budgets as well ensuring high quality community investment in health-related activities. These are the things that I consider are, you know, and frankly, you know, pulling together this list, then I was recently forwarded that it was a November 19th, 2020 letter. It was called Implementation Improvement Plan. Many of what we have listed here marry up very well with that report. So the final slide here, I've gone five minutes over my allotted time, so apologize, Chairman. No worries. Okay. So the fee-for-service payment systems designed to pay for sick care precludes investments or payment for meaningful investment in health care activities, programs, or infrastructure. Currently, the function of health care is dictated by finance as the fee-for-service payment system was designed to pay for episodes of sick care. That is, take that one to the bank. A health care system that starts with the optimal function of health care requires both patient access to high-quality sick care, but investment in health and wellness activities, program infrastructure to generate health care. I believe a global budget payment system maintains a predictable and steady revenue stream so the local health system can maintain access to high-quality sick care and invest in community health. A shared savings on total cost of care could fund that health care. And with some tweaks, you have the necessary infrastructure to develop a true health care system faster than any state in the country. It's the third time I've said that. You know, I don't know if any of you are Simon Sinek friends. He's an author. His most recent book called The Infinite Game, he talks about the role of an organization is to perpetuate itself in order to achieve a cause that can't be achieved in its lifetime. That it's something so compelling that drives organizations forward. And he caused this is just cause. I have a personal just cause to see a true health care system that's equally invested in health care as it is in offering high-quality sick care. I'm excited to be participating just in this even this presentation to see a state in which you guys my own personal just cause of this true health care system is as close to being achieved as anyone with some tweaks, you guys are there. And so I congratulate you for all that you've done. And I encourage you to continue on the progress that you've made and thank you for having me come and present today. Truly honored. Thank you, Mr. Chairman. Thank you so much, Eric. We're going to start with before we go to public comment, we're going to start with board questions or comments and I'm going to go in alphabetical order. So I'm going to start with board member Holmes, Jessica. Great. Thank you so much, Eric. Super helpful so much to digest and that's really heartwarming to hear some kudos for the state of Vermont. So thank you for that as well. So I do have a couple questions but again, like I said so much to digest here. One of the things you talk about is service and network rationalization is one of the key factors to that successful transition to value-based payment world and you talk about ensuring access to appropriate and right size patient care, right care, right time, right provider, right place, all of that has to be in place. So I'm wondering if you could speak a little bit more about what does service line optimization look like in a value-based world in a rural state where we have to balance access to services with trying to achieve cost and quality and really what I'm thinking about here is we have a lot of hospitals that are trying to do everything for provide all services to the members of their community and rightly so, understandably so but what services in a value-based world what services do you think should be provided within some close proximity and what services are better delivered at say centers of excellence where you can actually ensure that you have enough volume to have low cost high quality care and how do we get there? How do we start to think about that? Because you talk about getting there and we have all these hospitals trying to do everything for their communities but we have declining populations, volume shrinking, costs growing how do we do that? So if you could just talk a little bit more specifically about how do we figure out what are essential services And you don't mind if I spend the next 40 minutes answering your question, right? Well, we could have a follow up but maybe, yeah, because this is really important to us we've got to figure this out. So here's initially where that service I told you that we were working with four critical access hospitals in northern Vermont when they originally came up with some of these concepts and this was several years ago and there were four critical access hospitals in a two county area in northern New Hampshire and the question became as they became one and three, I believe this was the case three of the four were offering 24-7 general and orthopedic surgery and the question became as we became one system and we had one all knowing president the AKP sitting at the top of this could we really do we really need one four critical access hospitals in a two county area or could we have two critical access hospitals maybe an urgent care and some different bricks and mortar and then the question became do we really need to have you know three full-time 24-7 general surgery programs in these in three of the four critical access hospitals when we became under one system and knowing that those were the perverse incentives of maximizing that 80-20 rule of the fee-for-service payment system and the conversation became as we became closer as a system we could really start to think about community resource planning matching supply and demand for health care really just matching that supply and demand for health care with population so that was that supply that service area rationalization big MBA speak for really just kind of justifying the need for bricks and mortar specialist technology really anything that's secure resources and now how do we get there you know what we talked about is that we come together as systems come together where you do have an all-knowing voice that could make community resource allocations around investments you know Kaiser's figured this out they have a CEO that sits on top of Kaiser and said you know we benefit from the residual claim of health in other words if we get $1 billion insurance premiums and we can keep our patients we can deliver health care and sick care for $9,000 our bottom line is $1,000 and they're showing with billion dollar quarterly profits over the last year or last two years they figured this thing out we've got to get you know that all-knowing president that makes these resource allocation decisions I think is going to be important to this again within the state of Vermont you guys the infrastructure through the you know really all four of those transformational efforts that I've noted to get there so I only answered about 5% of your question well let me follow up with you know you're advocating for high level of integration across the system and centralized decision-making to right size the delivery system and coordinate care which you know sounds reasonable but our state is dominated by independent hospitals so local decision-making is highly valued so who is this all-knowing omniscient planner that you're describing is that one care in your world and how do we what are the strategies to make this kind of centralized resource allocation highly valued you have to have the payment system change before that delivery system is going to change and make that yes I think one care of Vermont could be as long as the governance structure was was modified I think it could be because you do have if all the payment comes into one umbrella that one umbrella that starts the deciding you know makes resource allocations to maximize that return and but I do think it would take a change in the payment system at the bricks and mortar level around you know I think we've got to move to it's more perspective fix in a budgeted payment system lot so much in what I just said and it'll probably there's a lot to be considered in that one statement a lot of our hospitals are critical access hospitals and you talk about shifting from cost plus reimbursement to a budget based payment obviously cost plus reimbursement you know ensures that costs are covered whereas budget based you know budget based payments require far more cost containment efforts obviously so how do we actually incent critical access hospitals to want to move to that world so critical access hospitals are only cost based to the extent of their Medicare payment okay so let's just and if you actually for the hospitals I've looked at usually that's only around 35 to 45 percent when you factor in the emergency rooms that build on a professional fee basis and you know all the different things that are billed positions that are billed on a professional fee basis outside of cost based reimbursement and so the unhidden cap on cost based reimbursement frankly is the rates you're going to get from your commercial insurers because you can't have your cost exceed those amounts even if Medicare is willing to pay those full costs so that's the invisible cap on cost based reimbursement and the other part is cost based reimbursement doesn't cover the entire Medicare costs and what's especially on the professional side where our costs are going up the most so I think of cost based reimbursement let's just talk about on the Medicare side right so cost based reimbursement if you think about it from a critical access hospital perspective and I look at cost based reimbursement as frankly a budget based system with tweaks for changes in volume right if changes in volume to a critical access hospital result in a 15 percent increase in cost essentially 85 percent critical access hospital is budget based anyway with changes think of housekeeping we're going to give them a budget hold it to us but if housekeeping if we add a new MOB or medical office building and now they have to care for that building we've got to add incremental expenses so I look at as a budget base as budget with some variability to accommodate changes and that's why I think of cost based reimbursement as critical access hospital is budget with changes for small variation in cost differences I guess my last question is as we're thinking about there's a movement towards building out global budgets and things like that right now how would we start to structure what that budget looks like right right now our budgets are built largely on ensuring these cost centers are funded adequately and all of that but obviously if we want to move to a budget we're ensuring that essential services are provided but those are services that are traditionally underfunded right now how do we think about structuring the base budget to ensure that essential services primary care, mental health substance use disorder behavioral health all of those things that are predominantly underfunded now there's enough funding in the system to ensure that transition and there's access to those services in an adequate way well I can speak to my experience with Pennsylvania because I've been working I worked with those folks for about two years representing the hospitals and and they're the way they set their budgets was really based on prior year revenue and now there were some tweaks going forward a lot like we just talked about for cost-based reimbursement there were some tweaks that if they could demonstrate the need in a community for a certain service and that need would fall from the cost going to where else that there would be a transition there would be a settlement at the end of the year but I would think that you would start with what the payment was in the past and that's what Pennsylvania they use 2018 as a base year trended that forward for either 2020 or 2021 based on the hospitals getting in but they had about 90% of the payers involved in this I think obviously the devil's in the details on this thing especially when it comes to shifts in programs and those types of things but I think Pennsylvania then has a good thing going there. Great thank you so much Eric really really helpful. Thank you just member Laundre Robin. Thank you hi Eric it's good to see you. Hey Robin. Thanks for coming. I just following up on sort of some of justice thinking I'm wondering if you have any thoughts on Medicare hospital designations and how you know I know there's been some movement to add some new types of designations to allow for emergency room only or hospital at home type concepts and how might those fit into the future. So I look at for example the rural emergency hospital REH model that everybody in Washington DC is promoting and for critical access hospitals it would be a disaster and this in the current payment system but a lot like what I just shared with Jessica was that as we start to evolve the payment if we get a budget based payment system and we have resource allocation decisions then again the four critical access hospitals in northern New Hampshire maybe one of them could have been a rural emergency hospital but as long as we're getting paid you know it's a critical access hospital getting paid on a cost basis where your inpatient unit is 85 to 90% cost based and it pulls a bunch of your overhead costs in again this claims based cost based reimbursement world the inpatient unit is going to pull a bunch of overhead into that inpatient unit of which they're all going to get paid on an 85 to 90% cost basis inpatient unit and you give up cost based reimbursement what we're doing you know the REH model is paying it's going back to playing these small rural hospital rural emergency hospitals now on a straight sick care basis on a low utilization they're going to give 105% of APC payment but it's all going to be based now on volume and I look at some of these emerging these call to action factors that we talked about where emergency services now are being siphoned off by technology I think it's a very damaging model in the current payment system you guys in Vermont as you evolve to start looking at budgets and those types of things I think it's a whole new conversation great thank you the other sort of issue I think that we struggle with here is cross border issues which I'm sure other states struggle with as well so you know we know that a good chunk of remoners get a bunch of their care in New Hampshire for example or in other out of state locations and I'm just wondering if you have any thoughts on that based on your work with other states because I think you know it's hard to really change your delivery system when you're exporting a bunch of your care I've got one idea maybe we could build a big lake between Vermont and New Hampshire to start again you know you know again my people are going to go to New Hampshire for care where you have an academic medical center that is right on the border and there's people going to be in that portion of Vermont are going to cross that river into New Hampshire for care I think that can all be factored in as part of the budget setting process though all payer budgeting that becomes you know we recognize that part of that total cost of care we're not going to ever be responsible for that but I think the big lake is going to work best it's no fairies between anybody know anybody at ANR that can work on that so those were really my two questions that you know they're going to be on a very straight fee for service incentive until we can put them in some type of a budget so they're going to have perverse incentives to what we're trying to do in Vermont I have two questions that coming out of your talk for me I think one of the things that we struggle with here in Vermont is we we really do want transformational change in our healthcare system and we love transformational ideas I think one of our struggles is that we would prefer for that to happen on a two year within two years and without any upfront investment and so I think part of what was helpful for me is really seeing that on a national basis kind of the trajectory for this type of change the expectation is you know 20 years it's not even five years so I think you know that's something that just culturally I think we struggle with and this is not just with our current efforts but certainly with prior efforts around single healthcare and even with efforts before that with the blueprint for health which took a decade to really be statewide and fully developed so that's really more of a comment that came to me from your talk well I think the governor kind of talked about that yesterday at his press conference where he talked about we you know if you're going to keep a car for 12 years you invest in that car in the early years so that it has a long and it's taking a long time to get through the future and I thought that was a really interesting analogy I'm going to keep that car moving so that we can get through this morning and still have time for this afternoon's board meeting so thank you Robin and I'm going to turn to member Pelham Tom thank you Lake Sanunu what do you think it was a lake between New Hampshire and Vermont Lake Sanunu I have one question following pretty much on Jess and Robin's approach I went through an experience in my early financial life in Vermont where you never knew all the answers but there was a structure of sustainable spending that the governor had and there was a demand that departments and agencies fit within that structure so you know it's just not a perfect world my sense now is and I think as you've described is that Vermont, if the last few years has built the infrastructure for health care reform in Vermont and so you know when the auditor is saying you know it's not paying for itself I say you can't expect it to we just built the infrastructure but now it is there and it has some experience and so as we head into the next few months in terms of rate review for the insurers that we regulate in the hospital budget process I'm just curious as to what kind of incremental pressure we should be putting on the system to transition to more value based payments the hospitals are at a 14% rate in our last budget process that of their net patient revenue is a fixed perspective is a value based payments the Medicare one that gets reconciled to fee for service the range is I think 8% to 22% across the 14 hospitals and I think that the amount that I've sensed from our insurers that we regulate is only about 1% or 2% of their payments are associated with a prospective value based payments so I'm just you know do you have any sense giving your presentation where you started talking about your changes in technology and CVS and Walmart and all that stuff going on you know what might be a fair increment for rather than just doing kind of an actuarial trends analysis which we still do that's saying 5% or 6% growth you know what might be a an incremental growth rate that moves us toward a higher level of value based payments but isn't so demanding that that that would be a lot of pushback it's a very practical question for me trying to figure out what the path forward is that accommodates a lot of provider pressures so the things that are coming to my mind and that's a really difficult question a great question but difficult so things that are immediately coming to my mind and I may be out of touches that I'm thinking a 5 year plan for you know with each of the health systems you know that we've got to come up with okay what are we going to do with each of them individually to move the payment system the other thing that's immediately it's coming to mind is it's a lot like the housekeeping example I gave is that we give them budgets, we hold them to the budgets but if we add a new MOB we've got to accommodate that I look at from a budgetary perspective the new MOB is this potential 14% increase in the cost of drugs that our hospitals are going to have to shoulder the huge escalation in the cost of physicians and that we're going to be bearing you know it's like that's the new MOB and is there a way to get hospitals on board if we lay out a longer term plan that we have a budget with some flexibility to accommodate some of those changes that just you know with this new Alzheimer's drug now and the projected cost that that could bring to our industry here over the next 10 years I mean those are those are that's adding a new MOB so again I think those are the two things that you were talking Tom that immediately came to mind and for you the experts in Vermont you're probably better at answering that you know the rest of the flavor of that question well thank you for that the thing I would add to that this is not really a question but it's my favorite topic which is the Medicaid cost shift where you have in Vermont yes we have full participation on value based payments in Medicaid but the payment rate is so low you know that that there is this huge cost shift and I think in you know in terms of us working with our state leaders we need to try to push them to get on a remedial plan that doesn't continue to starve the Medicaid program and allows for some moderate growth that providers can rely upon or growth rate over the say a five year period that providers can rely on so thank you very much for your presentation thanks you know as an advocate of rural health systems I hear here to what you just said I mean we there's got to be adequate payment to cover the costs and some of those changes that we're seeing so okay thank you Tom and now we're going to move to member Yusuf or Maureen thanks and thanks for the presentation and thanks for all the questions that have already been asked I'm going to take a little different angle and ask a question on you know both whether we're in a fee for service system or a value based payment system at the end of the day people want to make money and you know in both sides I mean the doctors are taking oaths that oaths about you know giving the proper amount of care so I you know in a fee in a value based system we can you know look at getting the predictable steady income and you know clearly there's a lot of opportunity for you know heavy users of the medical system where we can wrap around them services and and save money right have them not going to the emergency room and they're going to be watching things like that but how do we counter the argument of in a fee for service world the incentive is to drive more right and and to shift more to maybe commercial payers so that they can make more money and if you go into a you know a totally a fixed space system the opposite could be true right again everyone's taking the oaths they're supposed to be doing the best for the patient but all the care that you need and I've heard that in Kaiser at times right where the Kaiser's making money absolutely but I know people that have gone through the Kaiser system and they weren't offered the level of care they needed for some very difficult situations went outside the system got different recommendations went back to Kaiser Kaiser wouldn't do it and and they you know didn't do the Kaiser way and and and they got better but you know how do we then look at the opposite which is as if I want to make money and I'm getting a you know I'm getting a fixed income stream in and say I'm not getting the efficiencies on eliminating the specialist or reducing the specialist on the technology on the bricks and mortar right so I still have to make money I can certainly do that by making care choices for best interests but might be lower cost overall so you know it's just trying to look at what people kind of counter as the potential opposite again lots of that question you guys ask multi-layered questions here I like it first of all it's not I don't think we have to we have to make money we're health system we have to make money we have to make a certain return to fund our cost of capital and those types of things we have to be able to make some money right so that's that's number one and and I just want to share you so I think it was two or three years ago I was in state college Pennsylvania which you know go Penn State and it was it was a global budget you know meeting of you know all the hospitals had come in CEOs CFOs CNOs and and I was part of those conversations with Clint McKinney who's at the school of public health in Iowa who's also part of the project he led a conversation the the morning of the second day where he laid out he presented a world he painted a picture which all your hospital budgets your revenue is fixed you get 90% of your revenue is fixed and then he opened up a conversation around what do we do to improve the health of our community and for the next hour the idea is that the CEOs and CNOs were raising their hands with enthusiasm to say here are the things that we do around diabetes management around you know COPD and here's what we would do to increase health and all of these things for an hour there was such enthusiasm and it struck me that wow it just seems like so many of us have gotten into our health into healthcare for all of these reasons and because of the darn payment system we're forced to think that we can only offer sick care and so I think that the opportunity in the future is around what can we do to take out you know all of the sick care we do around COPD diabetes and all of these key main sicknesses through creating health and that's where the money is to be made in the future now again it's that fixed variable cost though so if we take out sick care volume if everything's fixed we're only going to be able to reduce our cost by 20 cents initially you know and so that's a challenge but still I just think that that was just an incredible conversation I wish everyone could have been in the room to see the energy around that discussion to see that there is potential there then the last piece is just around how do we make sure that you maintain the quality and the access and those types of things and I think this gets back to when I if the ACO is going to be this aggregator of payment then additional regulatory authority would be as part of the governance and in steps whether it be Green Mountain Care Board or some other regulatory body but I think that there has to be that regulatory oversight to ensure that we're providing high quality access to our consumers within the state. No absolutely no thank you I just wanted to throw the counter out there and especially with so many specialists in the system and if we're shifting to some point to have more primary care that's got to also shift you know in the doctors and things like that but thank you it's very interesting. Thank you Maureen and it's always good to remember that we need the margin for the mission but we can still have the mission without the volume so with that I'm going to open it up to public comment and I would ask people to raise their hands using the teams format and before I call on anyone I want to just do a shout out to I see that Senator Lyons has been on this teams meeting and I know that today is a very busy day with your veto session but very appreciative that your leadership is there and that you have been able to find some time to join us this morning. So with that I'm going to first call on Jeff Teemann. Thank you Mr. Chairman good to be here and Eric thanks for your presentation your perspective is always valuable and informative so glad you could join us I have a question but just want to make a couple observations first you began your presentation by saying that Vermont leads the nation on value based care and that essentially no one else even comes close I agree with that point and I think it's worth underlining because it represents a lot it includes the investment that hospitals are making the patients and the persistence that they're demonstrating by staying in this and the commitment that's involved there I mean they've stayed in it despite two hundred and some million dollars of transformation money not really materializing so so I agree that it's important to recognize Vermont's kind of often pace setting approach to healthcare which which goes back decades I also think it's worth recognizing for context that along with the GMCB hospitals have pretty significantly reduced their net patient revenue growth and their expenses which has saved Vermonters more than six billion dollars since 2011 and still has not compromised the quality that kind of keeps us in the top tier of states and meanwhile we led the nation's best pandemic response and continued to meet all the needs our patients and our communities expect of us so so I appreciate your presentation and highlighting where our work is leading the nation and where it needs adjustments to make sure it's sustainable I also want to emphasize your point about Vermont hospitals being different than elsewhere as you pointed out they are predominantly rural they're mostly small they're mostly not part of a system and every single one of them is non-profit those are distinguishing traits and I think show how we continually do more with less whether that's delivering compassionate care to mental health patients in the ED or vaccinating Vermonters or working on health reform as you talked about so with that I just my questions to you are these in states that are not moving into this space or are doing so really slowly what is your sense of their hesitation and then more locally how do we stabilize our hospital finances to make sure that we're strong and stable going forward but also working on the premium reduction piece so with that I'll stop thanks so much Jeff thanks for your comments Jeff I think in states that haven't been able to get this moving some of the requirements the short term imperatives that we talked about in the vision there's no statewide vision for having this happen and I think it will take an organizing force like the state to really get people to do this I know in Washington years ago there was a healthy Washington program where there was a demonstration program where they tried to get all hospitals on board and they wanted to move 80% of payment into some form of value based payment within a 5 year period and I just have not heard anything come out of them that is anything close to where you guys are so but again it started with the governor had a position paper on this and submitted on behalf of the governor this healthy Washington program the states that haven't moved it's almost being left up to the providers themselves and they're stuck in this conundrum of do you put the payment do you put the function in front of the payment when you put the function in front of when you put that optimal function that we want in front of the payment we're going to get ourselves in trouble so I think we're stuck I think a lot of the other states are stuck until we have an organizing framework to get everybody on board with and that would be that's there in terms of the payment system I think again I do as I laid out in some of the considerations and again not to go so far as recommendations is that we just have to move towards this budget payment where our health systems are taking that residual claim on health and not being not being pulled into the trap of the sick care a fee for service and that's a tough one for me because it's where it's people are you know if I'm a hospital CEO and I have to go to my board and saying I'm going to move away from what I know generates profit from me to a payment where it's I'll take a budget and then I'll try to figure out if we can get health in our community take that residual claim on health. I mean that's a leap for me and then knowing it's going to take some time for that to happen. So but again based on your state's transformational efforts and what you guys are doing I think you are in the best position to see to the to my just cause around this true health care system. Thank you. Okay next I'm going to move to Lou McLaren. Hi thank you Mr. Chairman. Eric my name is Lou McLaren and I'm the Director of Contracting for Blue Grass and Blue Shield of Vermont and prior to that I was the head of contracting in Vermont for MVP health care. So I've been in the state for 20 years contracting with the provider community and I would just observe that I think you're overly optimistic and I appreciate that I appreciate that you you think we're better than we really are. When you looked at when you put up the slides that talked about the phases of reimbursement and you had us in the middle column which was sort of had you know alternative payment models with upside and downside risks I would challenge you to maybe research that more thoroughly because without getting into what I would consider proprietary information I will tell you that that is really not what the commercial landscape looks like and there's an extreme reluctance by providers to enter into episodes of care bundled payments upside downside risk for the very reasons you've talked about they get a revenue target approved by the GMCB it's a revenue stream it's not you know it's really just once you have that approved target you really don't want to move off of it so that the equation of value equals quality over cost times population there's no real movement on the cost part so how would you how would how would you get around that conundrum and I mean I think we need to say out loud that no one wants to be paid less money I think remember Yusuf was raising that in her comment we as payers are challenged because the providers have an extreme reluctance to move off of this to many sort of risks despite what the GMCB and the all-paying model are really pushing which is movement towards that and it's been pushed for years well first of all thanks for joining on the call appreciate your comments I mean I look at it and say if 58 percent of my outpatient revenue is is this is this tied to the fee for service you know for most for the most part and and and every time I generate additional fee for service outpatient revenue and as a rural provider if only 15 percent of my cost are variable I I'm going to be really reluctant to give that up because that's my margin and and not only is it my margin I'm going to create more of that and so I just think it comes down to fundamental economics here that and and fix variable cost equation and and to take that leap and to say I'm going to take less money you know maybe in Pennsylvania they don't necessarily have to take less money I mean that's so in Pennsylvania that the the equation is you get last year what you actually got paid by Blue Cross Blue Shield plus we're going to trend that forward at inflation for the you know and and set you you know so your target for for 2020 was 18 trended forward to 19 trended forward to 20 based on inflation so you're not going to get less money and and maybe that's what we got to say but we've got to change the dynamics of the payment so that on the income statement of these provider organizations that that claims isn't going to drive the economic incentives that is my fundamental belief it ties back to everything that I'm I'm passionate about in this in in helping you know kind of solve some of this this these these these issues okay next we're going to move to ham Davis thanks Kevin it's like I didn't have a personal note here of it when when right after Eric came over two years ago or three years ago whenever it was I was fascinated then so I went over to South Portland Maine and spent half a day with him and and it was very illuminating I've been doing this since 1980 probably longer than anybody else that's what the people from one coast to the other to the middle okay and I learned more in that afternoon hanging out at his conference room than I did in all of them in any long period in the rest of my career so given that I want to ask a couple questions for for a comment for Eric one is that one is that the it seems to me that the your fire hose didn't have enough volume if you you would be a start here people would be astonished who heard your your statement today that or in the last if you would have both on the question of whether we should yesterday in Vermont using whoever you want legislature the governor's office you name it including very significant in this board people hate one care they hate it they hate it because it's run by one by university of Vermont partly okay and they are they they just want no part of it for example you heard the governor but what the governor's position has been is that the governor that the secretary the secretary of the agency of human services has said he's going to reboot one care and he's got a 19 point plan 19 points to fix all of the horrible problems with one care so that's just one right here's my question and it's quick one but it gets out what I think is the issue here if you have do you believe you look at Vermont with all its small hospitals you think that very small hospitals including critical access hospitals should be doing things like spine surgery spine surgery including fusion with the tiny volume do you think that they should be that they should be doing vascular surgery in in in places like that that they should be doing hip replacement do we need to Vermont with 600,000 people does it need 12 hospitals doing hip replacement that's what most of these questions that you've heard error that's what it's basically about because the small hospitals believe that if they do if they do this kind of reform that they will they will that they cannot survive that in the form that they are now and it will cost a lot of money so first of all you're far too kind and coming over here to spend time with you that you know two years ago was a true honor so I learned as much as as you alleged that you did so you know but the comments around one care of Vermont you know a couple things one is that that I really like the aggregating payment source again you know let the commercial health plans compete on on plan design and those types of things but having that one aggregated payment so it's a consistent payment makes sense if that's one care of Vermont that's one care of Vermont if it's something else it's something else but you guys have the infrastructure in place already and it's called one care of Vermont now I did mention that I do think it has to have a different or a governance structure and it's that governance structure has to be tweaked if this is going to be successful and I'm sure there's people on on one care of Vermont kind of not happy with me making that statement but this just gets back to this this you know all-knowing president that sits on the top of a payment system aggregator and distributor has to have a wider voice than just those provider organizations so so so you know that's the comment there with regard to your comment around should rural hospitals be doing all of the things that you say that they're doing obviously I'm an accountant I'm not a I'm not a clinician and but I know there's lots of studies that would say that that small volumes is in for certain services is not not optimal I do think though though this fee-for-service payment system has created huge incentives for developing programs like that just to keep the doors open so again as we start to aggregate payment and we can decide you know this is that all-knowing president at Kaiser or whatever that that ultimately sits down with the community and the resources to be and decides where's investment in health care and where's investment in sick care and where those investments most appropriate and I think that there's a resource allocation decision that should be made so but I hope I answered a quarter of your questions thank you okay other public comment uh michael costa good afternoon michael costa CEO of northern counties health care thank you so much for sharing your time and your expertise with us as we're all working on this project I guess the the one question I would have you've referred several times to sort of the all-knowing uh here on top of this making resource allocation decisions at that point what is the role of the board of directors at Vermont's hospitals FQHC's etc how do you balance that role that you envision with notions of local control and the fiduciary obligations of local boards thank you yeah so so great great question and I definitely hear you again so so what I was trying to do was put Vermont into that vision that that that that came up with on the plane down on Hawaii several years ago and and you're kind of creating a centralized force for decision making in terms of resource allocations in the larger systems you know most of the rural communities have a board that that that is advisory board and provides those types of things I mean you know I don't know if we could ever have it's probably not like having you know kind of an ACO one care Vermont be the board the governance board for all of the independent rural hospitals in other states what's happening is and is that that that hospitals in North Carolina I think there's two independent rural hospitals anymore they're all getting rolled up into the systems in Iowa they're all getting rolled up into unity point or you know the the Catholic system there I mean they're all the hospitals are getting rolled up Vermont you guys haven't had the need to do that because you have an aggregating source and a centralized decision making that isn't hospital centric and so you're dealing with a very on Vermont's a very unusual beast here I would like to think that there's still a significant governance function for each of those rural hospitals but again that aggregating force is is is kind of what we got to have and you know maybe let me let me go this I mean maybe it's just around alignment with the ACO and alignment is functional governance and contractual alignment with the ACO that still allows the rural hospitals to have their full governance but we create full alignment with the ACO where you don't have to give up the the the the soul of your rural hospital but you can still create that aligning force that centralizing force that we're going to have to have for decision making you know what I ultimately Michael I think if we can get the payment fixed then we can really start envisioning what this could really look like and and so you know my whole advocacy here and the the the the core of my talk is around figuring out how best to get the payment system changed if we can do that that frees us to think very differently about the future okay other public comment uh yes senator lions welcome uh thank you very much and eric thank you so much for being here today um I really I I have many questions some have already been asked and as you know we continue in the legislature to evaluate uh to look how look at how we can take what steps we can take forward and one of the things that um I think it's critically important is transparency so the the transparency of uh payment reform and which then extends to the transparency of private insurer contracts I just maybe make a couple of comments about that that's just one of a thousand questions that I have but I really uh I do appreciate everything that you said and I do hope that going forward that uh the legislature and our legislative work uh can remain connected with you and the green mountain care board so thank you and thank you chair molland for the shout out well deserved well the the beauty of of what you have going on senator is is that there is transparency in in in payment for the most part and and and that is something to your credit so does that have to accelerate um possibly but you do have pretty significant transparency and thanks for your comments I guess the question about transparency is more to the more to the point is that currently we have the bifurcation of um our all payer and fee for service and that we have the aco making some decisions about the payment per member per month but at the same time we have negotiated agreements between hospitals and and private insurers and private insurers and or companies as you mentioned esi so that that they're they're in lax the transparency except perhaps as rates are set at the green mountain care board they're they're not exactly determined but they're set so so it gets to be more complex I I agree I mean you guys you guys thank you it's not it's not an answerable yeah it's it's you guys been dealing with this for uh let's see 2001 minus 2003 it's been a while and and and um we're not there yet thank you senator lions next i'm going to call on the health care advocate mike fisher um good afternoon eric thanks for the presentation yes mike fisher here from the health care advocates office um I guess I just want to make the point or sort of link uh to something that member use for said or the point you made about the flow of money that other people have recognized the uh that the providers need the revenue um I wanted to make the link to the very beginning of your presentation about the rate of growth of premiums and I also appreciate thank you for also including the rate of growth in out of pocket exposure uh and just recognize the the link between those two issues between those two factors uh we're not going to keep raising the the amount of money going to providers um without having a bad impact uh on on premiums and therefore access to care on that side and welcome any comments you have on that but I just want to really want to link those two things I completely agree I mean and and the comment I made was at what point have we taken too much of the GDP um you know now the market's starting to solve this unfortunately and um which is is that called action around the triple storm of of of of the emergence of technology the pandemic which is now making technology especially the telehealth type of features and and um and and the cost there the the total price it's it's the market is starting to insert itself in as a supply uh to the healthcare equation so um you know I I say the faster we take responsibility for this and and and we have an opportunity to I I don't know I need to say withhold some of that more market forces but it's going to be a tough one thank you okay other public comment hearing none and seeing no hands raised I want to once again thank you Eric um it's been a very good discussion that has ensued out of your presentation this morning and we really appreciate you um spending time and uh taking a look at the state of Vermont and um I just want to say that hopefully the next time ham goes over he buys you a nice dinner um and with that I'm going to place this meeting in recess until one o'clock this afternoon thank you everyone see you at once dinner ham