 Welcome back to Capital Beat, brought to you by the Vermont Press Bureau and Orca Media. I'm Bureau Chief Neil Goswami and joining me as always is Vermont Press Bureau reporter Josh O'Gorman. It's week four in the legislature and we're going to talk about the all-pair model presented by the administration earlier this week. We'll talk marijuana legislation with Senator Dick Sears and we'll bring you up to speed on the education bill, making its way through the chambers. But first let's talk to Lawrence Miller, Chief of Health Care Reform with the Shumon Administration. Thanks so much for being here. Absolutely. Earlier this week you and others presented the proposal that you plan to present to the federal government for an all-pair model. We've been talking about this for a number of years now here in Montpelier and I'm assuming there's a lot of people outside of this bubble we operate in that are quite unfamiliar with an all-pair model. So if you could first maybe give us a brief overview of what the all-pair model is and what it plans to do with our health care system. Sure. This is based on a model that's at work in Maryland already and has been stood up for a number of years. In Maryland that's just about hospital inpatient. What this is about is a transformative way of paying for care. So within a framework agreement with the feds you can shift from fee-for-service to capitated payments and really have provider-led transformation of health care. It goes back to previous times when your primary care doc, your primary care practice was the one where you could really turn for assistance and they would be paid to take care of you in a more comprehensive way. I think what you'll see in critical elements there are no changes for beneficiaries. So if you're on Medicare you don't see a change in your benefits. You don't see a change in co-pays. You don't see those sorts of changes. This is about how practices align themselves to deliver care together and coordinate that care and really make a system out of our health care industry that isn't really a system today. Now when we talk about fee-for-service we should clarify that currently health care providers are essentially paid based on the procedures they perform or the tasks that they perform when they're dealing with a patient. That's right. The more you do the more you get paid. Correct. You and others in the administration argue that that's really a perverse incentive, that the health care industry should be focused on better quality outcomes. So explain how it would work. We go from fee-for-service. What would doctors and nurses and others be paid for under an all-payer model? Doctors, nurses and others become part of one system. You can think about it as covering the overhead and then moving dollars to the incremental costs. Right now a hospital has to have an emergency room, for example. That emergency room is going to be open however many hours a day and it costs a certain amount, but it isn't busy all the time. So it doesn't necessarily pay for itself. So other procedures that are practiced in the hospital have to pay for the emergency room and therefore they have to do those procedures. If we go ahead and say we're going to pool all the money from the different payers and then we're going to make a lump sum payment that keeps that emergency room open because we need an emergency room every 35 miles in Vermont, then that's taken care of and the rest of the hospital doesn't have to figure out, oh, how do we make money to cover that? Same thing for other heavy capital items like MRI machines and CAT scans and then the primary care doctors aren't sitting there figuring out how do I fit yay many 15-minute increments in because I've got to cover that other stuff, they've got their overhead covered as well and when it comes to needing to spend an hour with a patient who needs it, they can do that and not be harmed financially. Has this turned out to be a sustainable model for the hospital system in Maryland? It has been a very sustainable model for the hospital system in Maryland. They feel like it's been very successful and one of the neat things is that it provides an incentive for them to spend money on behavioral health supports and other things that you don't necessarily associate with acute medical care that really helps people have a better quality of life and better health outcomes. Johns Hopkins Hospital, for example, was having high readmission rates for people who were homeless who had come through the emergency room. By providing transitional housing, they were able to operate their emergency room at a better cost structure so they were able to provide the transitional housing, all the emergency room services, way significant reduction in readmissions for that population, total overall lower cost for treating that population, much better outcomes for those folks. And we're kind of exploring something similar to that because we're looking, we're looking for permission to expand Medicare to include substance abuse treatment, right? Exactly. There's no coverage in Medicare today. And it's, if you can think about why we call it an all-payer model, it's because we want to align the way commercial Medicaid and Medicare pay so that a doctor or a practitioner doesn't have to wonder, what can I do for this patient? They're able to treat the patient the best way possible through the community health team model, through coordinated care in a seamless way regardless of the source of funding. And that's really the heart of it. We need to make it easier and better for our practices to do what they know how to do well. Lawrence, this is a, by any measure, a radical transformation of the payment system in our healthcare system. You mentioned that it would involve commercial insurance as well as private insurance in the government programs. And we're talking Medicaid, Medicare. As you know, there are a number of criticisms lingering out there about this type of proposal. Number one is that you're operating under a global budget with capitated payments. And some argue that that would lead to rationing of care. Another criticism is that the program would sort of change in some way how seniors receive care and benefits through Medicare. I know you've made the case a number of times that those are not fair criticisms. Let's hear it again. Well, I think it's important to understand that this is evolution, not revolution. I mean, these are big changes, but they're not changes that have not been tried elsewhere. And if you look at organized systems like Kaiser Permanente for its members or the Cleveland Clinic or the University of Pittsburgh Medical Center, these systems are working in America today. If you look at where Medicare is going, this is aligned with where Medicare is going and takes advantages of the systems that they're putting in place as part of the next generation model. Secretary Burwell has announced that they want to see 80% of Medicare beneficiaries treated in alternative payment models over the next few years. The reason they want to do that is because what they've seen is that results in better outcomes for the Medicaid population. Not because it saves money, but because it provides better outcomes. The result of better outcomes is saving money, but the primary objective is better outcomes for beneficiaries. And I think that's the part that people also don't quite understand is this isn't about the state stepping in the middle of this. This is about the state providing a framework and regulatory structure that supports provider-led innovation where the doctors and the nurses, psychologists and designated agencies, all of the people who really work with people on a day-to-day basis, where they're leading this practice transformation. Before we get to what the state is actually seeking from the federal government and the process of obtaining that approval, I want to talk first about, you mentioned next generation and how Medicare is sort of urging states and healthcare systems to move toward the ACO model, the Accountable Care Organization model. We have that in place in, I think, two instances here in Vermont. We have three Accountable Care Organizations who are practicing in what's called a shared savings program. So what are we finding? What are the early findings from these ACOs in terms of health outcomes and in terms of cost savings? The early findings appear to indicate good health outcome improvements. Only one of the shared savings program resulted in redeeming shared savings, but all showed some cost benefit. We've also had the blueprint for health operating in Vermont for a long time in community health teams that have shown a lot of power in transforming care. And care coordination is a really big deal. A very significant portion of healthcare spending every year is on a very small percentage of the population. And it's people who are having significant complications from multiple chronic conditions in a given year, as well as in acute issues. And if we're able to really coordinate care for that group of people, you can see a lot of savings. But remember, a lot of our health infrastructure is fixed cost. It's a capital intensive business. And if you were designing it from the ground up, you wouldn't necessarily finance it the way we're doing. So I think what we're moving to is a financial system that's better aligned with the way the business of healthcare is structured that will provide docs a better opportunity to fulfill their moral aspirations in the care that they provide patients. As we noted earlier this week, the administration presented the all-pair model it envisions. It requires a number of approvals and waivers from the federal government. Lay out the process from here forward. Sure. So we did submit the term sheet on Monday to senior management at CMS. They'll be reviewing that with lawyers and actuaries and everyone else. We've had a lot of discussions with them so far, as you know. But now it needs this formal process to come up with what the actual agreement would look like. And that's very detailed. The Green Mountain Care Board is getting an introduction to the all-pair model. And that's scheduled for a day and a half of hearings. So this is not good sound-bite material. But that public process is very important as we move towards implementation. It doesn't have a lot to do with affecting the framework of the agreement. But in terms of how that framework is expressed, that needs everybody who works in the community of healthcare to participate. It needs participation by patients, by people who both represent consumers and are consumers in that area. And that's all of us. And so what you'll see in Vermont over the next couple of months is that public process unfolding while the agency works on reviewing our proposal. And those two will come together at some point. And then we'll see how far we've gotten with the federal government and what the public comments are and be at a decision point. I'm just going to say ultimately January 1, 2017 is the goal here for rolling out and beginning implementation. Exactly. But remember that this also includes a lot of system changes. Medicare is needing to move to a new way to pay. When that system is going to be ready is an open question. And this needs to be done incrementally. We're talking about a big system. We are talking about significant adjustments. And the one thing we know is that we want to take this and break it into bite-sized pieces that can be managed effectively. So we know that the Obama administration supports moving to the all-payer model. We also know there's going to be an administration change the 20th of January of next year. Is there a sense of urgency to get this completed while we still have that administration in place that supports this change? Well, we're also leaving in January of next year. So there's a very explicit sense of urgency to accomplish the foundation and to be able to provide sort of everything in a stable condition for the transition. Lawrence, before we let you go, I just want to check in on Vermont Health Connect, the state's online health insurance marketplace. We know that the change of circumstance function was taken offline for a time. And a smaller backlog of requested changes had begun to build maybe up to 4,000 or so. I think we were at 5,700 Monday before we were able to begin processing again. We did complete an update over the weekend that allows begin processing changes again. Previously, we've been running about 300 a day. So I do anticipate that that backlog will be resolved over the course of a few weeks or through February. And as you're aware, the reemergence of the backlog raised some consternation in this building with lawmakers. Are you comfortable that you'll be able to explain this process moving forward, reduce that backlog and make everyone comfortable? Oh, definitely. And I think it just, I mean, it requires demonstrated progress. I did announce in October that we would be suspending change of circumstances. And I reaffirmed that when we returned, I'm not sure that people really wrapped their brain around what that meant. But, you know, we did have a very successful renewal season. We completed the renewal process four months before we did last year. It's a very substantial improvement. Everybody's 1095 tax forms going out on time. Very significant accomplishment. We've begun renewals for the Medicaid population, which is very important to make sure that people are still eligible for Medicaid. And we don't have anybody on Medicaid who's not eligible. So, you know, it's in a much better place than it was a year ago. That doesn't mean there won't continue to be rough patches from time to time. We'll leave the healthcare talk there for this week. Lawrence Miller, thanks so much for being with us. Thank you. And we're back with Senator Dick Sears of Bennington County, Chairman of the Senate Judiciary Committee. Senator, you have been working very diligently on a bill to legalize marijuana. You met with the governor earlier this week in front of the press to outline a bill, a scaled-back bill that would, in essence, legalize marijuana in small amounts and allow the retail sale of marijuana in some limited circumstances. You were sitting here Friday morning and your committee will be taking a vote later this morning on the legislation. Give us an update of, first of all, the prospects of it and the attempts you've made to scale it back to make it palatable for most of Vermonters. Well, first of all, I'm calling it a bill that removes the civil penalties for the possession of one ounce or less of marijuana for those who are over the age of 21. And that's really the only criminal, significant criminal change. There are some changes in furnishing that respond to people who are over 21 furnishing marijuana and other products to kids who are particularly those under 18. But while there are some new criminal penalties, the real issue here is the possession. And technically it's not a criminal statue, right? Because it was already a civil penalty from 2013. We decriminalized the possession. So it is a civil penalty of 200 to 500, depending upon the number of times you've been caught with the ounce. The bill also would not allow people to use marijuana in public, a public place. It would not allow people to drive under the influence of marijuana. It does nothing like that. It continues and it improves upon or I think improves on an effort to combat drug driving. And that's not just people who drive under the influence of marijuana, but people who drive under the influence of any substance. Could be a prescription drug or it could be a heroin or whatever. The bill is not effective in terms of the retail sales and lifting the civil penalties until July 1, 2018. And that gives us enough time to adjust some of the provisions to have a commission that looks at what's going on. But it puts us on a path that I think by the time ours becomes effective it would not surprise me to see Massachusetts, Maine and several other states, Hawaii among them going in this direction. And possibly Canada to our north. And possibly Canada to our north although I really don't follow the politics of Canada as closely as I should I suppose. Didn't the New Hampshire House move some kind of legalization legislation? Two years ago actually. Oh, two years ago. The story was old. Oh, okay. I got to you. Very good. So given the efforts that you've made in your committee to scale it back to a reasonable place where you can feel comfortable on it. Reasonable place for me. For you. Many people it's not reasonable. Do you expect to be voting for this? I will be. As long as there isn't some killer amendment put in for example to start to lift the civil penalties July 1, 2016. As long as something like that isn't put in I will vote for the measure as it's been amended significantly. Okay. And it has the votes in your committee? Well two sponsors of the bill are in the committee of the original bill and Senator Ash has indicated that he would support legalization effort. Okay. Senator I know you've got to run to go take a vote so we'll let you go. Thank you very much. Thank you so much for joining us. Enjoying joining you. Thank you. Thanks. As we noted at the top of the show pot and healthcare weren't the only major topics this week here in the legislature. The Senate Economic Development Committee finished its work on a paid sick leave bill which passed the house last year on a very narrow vote. They made some changes that they say makes it a little more palatable to the business community and that cleared the committee on a five nothing vote yesterday. And of course we've had the education saga going on all week. Josh you've been covering this fairly extensively. There was a, let me set this up briefly for you. The Senate initially voted to repeal spending thresholds packed last year in Act 46. The House had a different version to raise the caps and reduce the penalties associated with them. And they were on a collision course. It's now Friday morning and we see some resolution in sight. Yeah potentially. So yesterday the Senate in various forms there was a joint meeting of the finance and education committees then a full caucus and then they broke up into separate meetings. And then after all this they finally came to a compromise that is similar to what came out of the house. Right. And that means they're going to raise each and every individual school district spending threshold by 0.9%. And so this is kind of an acknowledgement of the fact that when they created this threshold legislation they didn't really think about how it's going to impact people. And so when they learned that health care spending is projected to go up 7.9% and people are going to have to pay for universal pre-K which is rolling out this year. All of a sudden all these districts kind of through no fault of their own simply through the results of the legislation that's been made here in this building found themselves over these thresholds. So they're going to raise the thresholds and so the Senate agreed with that. The Senate also took an interesting step of exempting any school district from thresholds if that school district is below the average per pupil spending which is roughly $15,000. So the Senate proposal would find about 68 districts if I believe 68 school districts are going to be over the spending thresholds. The House plan had 106 districts. Both of them would raise residential property tax rate assuming you're not income sensitized. We would raise that by about 2 cents and would bring in roughly between $1.8 and $1.9 million in tax penalty revenue depending on which plan you're going to do. And the House was on the low end and the Senate was on the high end at that range. So what's happening right now as we speak we're taping this right now at about 10.30 in the morning on Friday. So the House members have since received the amended bill back from the Senate and they are in the process of caucusing. The Republicans and Democrats have broken up and they're talking about what's going to happen. And if I understand things correctly the House cannot amend this any further. It would have to go to conference committee. Right so it's either going to be a straight up or down vote or go to conference committee. Now there's an imperative for people to get this done today because Sunday is the last day that municipalities can warn their proposed budgets if people are voting by ballot on town meeting day. And so lawmakers have set this weekend as being the final day. Now in actuality most school districts who are going to be warning their budgets finalized them weeks ago. They are not hanging with bated breath to see what these guys are going to do. However there are roughly 120 school districts that vote by floor and so you can do whatever you want on the floor. It's like thunderdome. You can make amendments. You can make changes. Do whatever you want on the floor. And so this will benefit those folks in terms of they'll have more clarity than their counterparts that have to plan for their budgets earlier this month without knowing what's going to happen here today. Okay. Should it pass today the governor's office says that the governor's the governor will review it this evening. Most likely sign it tonight or tomorrow and move this thing forward. But I want to get to sort of the politics of this. The Senate's original position was very strong vote to repeal the spending thresholds all together. And I think a lot of people in this building thought that because it was such a strong vote that voice would prevail in the end. But it appears that the Senate has moved much closer to the House position than the House moved toward the Senate. Is this a is this a major victory for the House here. Yeah. I mean you could really look at this as you know House and Senate lawmakers have really been playing a game of chicken here for the last few weeks. And so House members are prepared to say you know what you don't take our compromise. We're going to go ahead and leave the existing thresholds in place which would capture 127 school districts and bring in $9.5 million in tax penalty revenue. Hit people that are spending below average hit people are spending above average anyone who goes who goes over their threshold. And so House is held strong with you know I dare pretty much they're daring the Senate to say you know what people we have in place. The Senate never wanted the thresholds in the first place. The thresholds were a product of a conference committee during the creation of Act 46 last May and they never wanted them in the first. And this is this was to essentially grab support from House Republicans. Yes. And move something forward. Yes. So they and House folks are just really committed to keeping these thresholds and they just did not have the votes. At one point earlier this week on the House floor there was an amendment to repeal the thresholds altogether. I think it drew 30 votes out of 150. All right. So it was not a popular move. All right. So bottom line House won the game of chicken. It looks that way. All right. Very good. Thank you Josh and we'll leave this week's episode of Capital Beat right here. You can catch this show on Orca Media and other statewide community access channels and on VermontPressBureau.com. Thanks again for joining us. Thank you.