 Good afternoon and welcome to the Green Mountain Care Board. My name is Kevin Mullen, Chair of the Board and the meeting is about to begin. The first item on the agenda is the Executive Director's Report, Susan Barrett. Thank you, Mr. Chair. Good afternoon, everyone. First of all, I have a scheduling adjustment to our board meeting today. Unfortunately, we need to reschedule the hospital debrief, which is the second item on the agenda. So I am requesting that we move that, remove that item from the agenda. It's likely that we'll be able to get back to that, that first week of November. And that is the goal. So that would be moved to November 4th, but stay tuned on those updates. In addition, I want to remind everyone that next week, Wednesday, October 28th, we have an all-day board meeting. It starts at 9 a.m. We'll be reviewing One Care Vermont's budget. And actually, I can reach out later during this meeting and hear from Sarah or somebody's calling in here. And Abigail, you may know if we received any public comments regarding the potential vote for today. We have not received any. Thank you. Okay, I'll turn it back to you, Mr. Chair. Thank you. Thank you, Susan. The next item on the agenda are the minutes of Wednesday, October 14th. Is there a motion? So moved. Second. It's been moved and seconded to approve last week's minutes. Without any additions, deletions, or corrections. Is there any further discussion? Hearing none, all those in favor, signify it by saying aye. Aye. Aye. Those opposed, signify it by saying nay. Hearing none, the motion carries. So we're now going to move on to a discussion. And before we do, I just want to make sure, I see that Marilyn, I see your name on the screen. Chris, are you on? Hi, this is Chris Whaley. I just have time. Great, great. Super. So we're going to be talking about new tools to help states address hospital costs. And we have two incredible guests today. Very fortunate that they were able to participate today. And especially with short notice, there was a webinar last week and a few members from the Green Mountain Care Board, including member homes, participated and really were fascinated by the research being done and wanted to see if the whole board could be briefed on what was happening. And very fortunately, both Christopher and Marilyn sees the opportunity and are here today. So just briefly by way of introduction, Christopher Whaley is a policy researcher at the RAND Corporation and professor at the Party RAND Graduate School. His research focuses on using large scale medical claims data to examine how information and financial incentives influence patient's choice of providers, how providers respond to changes in consumer incentives and how employers and insurers can design insurance benefits to promote value. His research has been published in a variety of clinical health policy and economics journals. He is the lead author of a JAMA paper that examines the effects of online price transparency information. This paper was a finalist for the 2015 National Institute for Healthcare Management Foundation Annual Healthcare Research Award. He also received the 2015 AHRQ Research Conference Directors Award for a paper published in JAMA Internal Medicine that examines the effect of reference pricing on consumer choice of providers for cancer screening services. Chris has a BA in economics from the University of Chicago and a PhD in health economics from the University of California, Berkeley. Also with us today is Marilyn Bartlett. Marilyn earned a bachelor's degree in education from the University of Nevada and taught high school. And this is not my editorializing, it's in her brief bio and experience that sent her promptly back to school to complete the accounting finance program at Montana State University, Billings. She then became a CPA followed by CMA, CGMA and CFM designations. Marilyn turned immediately to the business world holding financial management positions in various industries. Her focus narrowed to healthcare financial management serving as controller for Blue Cross, Blue Shield of Montana, CFO for a regional TPA and special projects coordinator for the Montana Department of Securities and Insurance. Marilyn then took the helm of the state of Montana Employee Benefit Plan in late 2014. Moving the plan from projected reserves of minus 9 million to 112 million in less than three years. She disrupted the status quo by implementing reference-based contracting with all Montana hospitals. Transparent, pass through pharmacy benefit, enhanced primary care, on-site health clinics, vendor management systems, cloud-based enrollment, administration system and a cloud-based data warehouse. For her accomplishments, she appeared in an article co-published by National Public Radio and ProPublica. She was selected number 13 of Fortune magazine's world's 50 greatest leaders of 2019 and was recently inducted into the Montana Business Hall of Fame by Montana State University Billings. Marilyn currently serves as a senior policy fellow for the National Academy of State Policy, NASPI, addressing hospital pricing. So with those brief introductions in order, Marilyn and Chris, who would like to kick this off? Either way, so whether it'd be helpful to have a high-level overview of hospital prices or have dive into Marilyn's class tool, either spine with me. I think it's best for Ram to go first, for Chris to go first, because then I'll pick up how we use his information. Okay, Chris, you've won the coin toss. All right, look at me. So let me share my screen. So can everyone see my screen? I cannot. Not yet. Sometimes it takes a couple of seconds. I think it's moving. Okay, does that work? Yes, it does. Great. All right, great. Well, really excited to be here and to talk about some of our work on hospital prices. Just some quick acknowledgements. This study was funded by the Robert Wood Johnson Foundation. And this is a study that was really kind of the brainchild of an employer's form group out of Indiana and had the opportunity to work there. A really fantastic study team at Rand on this project. So why we got interested in this study particularly is that if we look at kind of the healthcare ecosystem in the United States, about half of people in the individuals in the US receive health insurance through an employer. Collectively, employer-sponsored plans spend about $1.2 trillion a year on healthcare with the largest portion of that pie, about $480 billion going to hospitals. And so thinking about hospital prices and dollars that are going to hospitals is something where we think that there is a, if we're thinking about kind of rating and sending, that's an opportunity that maybe we want to look at. And if we look at what's kind of known about hospital prices in general, we know that they are higher than what Medicare pays or rather private insurance pay higher prices for hospital care than Medicare pays. This study or this table uses data from Medicare data to look at just average prices for private insurance in the blue line and then also Medicare in the orange line and Medicaid in the gray line. Over the last couple of years, private prices, private insurance prices rather have been a lot higher than Medicare and Medicaid prices and have also been increasing at a faster rate. And so why I personally think this is important is that when we think about healthcare spending, I think it's really important to think not just about spending and healthcare dollars in the vacuum, but to really think about affordability and where those dollars are coming from. So in a paper that we released this summer, we looked at how healthcare dollars are being eaten to wages for the privately insured population. And so here in the top blue line, we have average wages for American workers in inflation-adjusted terms and then health insurance costs are the amount of costs required to provide insurance for their worker population. Over the last decade, take-home wages for workers have been flat and health insurance costs have increased steadily. And so I think there's a growing concern that healthcare costs are eating into wages and workers are now getting paid essentially in healthcare dollars rather than in take-home dollars. There's I think an awesome growing concern that healthcare markets are changing quite a bit and that this places pressure on healthcare affordability. So in the left-hand side, what we've done is look at prices for hospital care for the privately insured population following hospital mergers. And so the dash vertical line indicates when a hospital merger occurred. And what we find is that healthcare prices go up by about $500 following the hospital merger. And now on the right-hand side, we look at what happens to wages in the exact same markets. And so when a hospital merges or when a market has a hospital merger, prices for hospital care go up, as you've seen on the left, and wages for workers go down and seen on the right by about the same amount. And so if you think about what we already know about healthcare and hospital prices, we know that the prices paid by private health plans are higher and growing faster than the rates paid by Medicare or even Medicaid. And if we look at a host of other studies, we know that if either we look at variations in healthcare spending in the United States or compare the United States to other countries, the increases in overall spending are really driven by differences in prices and not by differences in utilization or use of services or population health. And we also know that broadly prices vary from market to market. And even within a market, very within different providers within that market. But what we don't know is how prices compare across the country and what markets actually have the highest prices versus other markets. We don't know if prices are continue to rise over the last couple of years. And then more importantly, it's one thing to know that there's lots of price variation, but if you're really going to design policies that address prices, you have to know which providers are high priced and which providers are low priced. And so right now we don't have a really good sense on what hospital systems are actually high priced. And I think this really kind of ties into the reason that we did this study, is that right now we don't know whether the prices that individual self-funded employers are paying. And if these prices are in line with the value that payers are getting for their healthcare dollars. And thinking about the role of either the employer or the plan sponsors in the healthcare system, most many employer plans or in other plans are what's called self-funded. And so under this type of model, there's a financial responsibility for the plan sponsor and also everyone else involved in allocating resources to make sure that they're done so efficiently and at the best interest of the patient and their families. And so as we're thinking about kind of what's the role of everyone who touches dollars and is involved in the healthcare ecosystem, it's hard to know how well those individuals and those organizations can ensure that they're meeting their fiduciary responsibility if we don't even know basic things like prices. And so just to acknowledge the unique time that we're in, the COVID-19 pandemic has placed a tremendous amount of financial pressure on both hospitals and employers. Hospitals and other health professionals are critical members of their communities. And we need to make sure that they stay in business and continue to provide care. But at the same time, health benefits are one of the largest expenses for many employers and organizations. And we also need to make sure that families and workers following some of the earlier slides I presented do have the ability to earn take home pay and not just get paid in healthcare dollars. And so as we're thinking of the impact of COVID on the healthcare delivery system and also the financial health of just the US economy as a whole, we think that now kind of more than ever is an important time to actually have good and transparent information about healthcare prices. And so we, this in mind, undertook a study where we've collected lots of data that I'm gonna describe in a couple of minutes. And to be clear as we're thinking about measuring prices, we as researchers actually don't know what the right price is for hospital care. But at the same time, individual purchasers and employers and other organizations can't act as responsibilities and maintain their fiduciary responsibility if they don't have accurate price information. And so what we really wanted to do in this study is give employers and other organizations information that allows them to be smart shoppers for healthcare and to make sure that they are actually getting adequate value for their healthcare dollars on behalf of their employees and their other individuals who rely on them for benefits. This is the third wave of the RAND hospital price transparency study. And so in our first study, we actually just looked at Indiana and got data from employers. Last year, we expanded that to look at 25 different states. And for that study, we continued to get data from employers. We also got data from health plans and also from two all-payer climate databases. There in the study last year, we looked at both inpatient, outpatient hospital prices, but primarily just looking at both facility fees. In the study that we released about a month ago, we were able to expand our study to 49 states. We excluded Maryland because they have a unique all-payer rate setting model. We continued to get data from employers, health plans, but expanded to six all-payer claims databases. We unfortunately did not get the Vermont all-payer claims database, but did get the new capture and the main APCD data. And we again looked at inpatient and outpatient services for both facility and professional fees. And then also looked at some procedure level differences in prices. And so as I mentioned, we obtained a large host of claims data from a variety of different organizations. We measured prices in two different ways and so I'm gonna describe these in detail in a couple of minutes. Our first way is relative to Medicare and this is essentially exactly how much Medicare would have paid for the exact same service. And then also prices per a case mix weight. And so this case mix weight is download and website and this is our report that pools data across our data collection samples. This report also has supplemented material that's on the RAND website where we actually name specific hospital systems and facilities. And so you can actually go into the RAND website and see estimates of prices for about 3,000 hospitals. And then we also have an option for large, for employers to receive a report that just looks at their specific property. So when we're thinking about comparing prices, this is something that's not entirely straightforward. And every single hospital is totally different to see participation in those types of procedures. And so if we're just to say compare average prices across hospitals, that would be pretty misleading to do. And so what we do is we actually leverage the Medicare system to build onto the work that Medicare has developed over the last several decades to help standardize across different hospitals and to make more of an apples to apples comparison. And so we call this the making an apple pie, but like many things are baking, there's multiple ways to do things. And so we're gonna have two different recipes to make this pie. And so our first is what we call the percent of Medicare. And so this is kind of the metric that we most commonly use, largely because I think it's the easiest to understand. And so what this measure is, is it represents how much employers in private health plans pay relative to what Medicare would have paid for the exact same service at the exact same hospital. And so for every service that we see a privately insured individual receiving, we use the Medicare payment for it formulas to say how much would Medicare paid for that exact same service at that exact same facility. This is pretty easy to interpret and it's also easy to compare across hospitals. And so if we see that one hospital is getting paid 300% of Medicare, another hospital is getting paid 200% of Medicare, that's a pretty easy comparison that allows us to tell but hospitals less expensive than the other hospitals. The other advantage is that the Medicare system adjusts for cost of living and wage differences. And so if you're getting hospital care in New York City versus Kansas, maybe you wanna account for those differences in cost of living and cost of hiring doctors and nurses in payment. Our second approach is what we call the standardized prices approach. And here we're not gonna compare relative to Medicare but we're actually going to still leverage a lot of the Medicare payment model. And in the Medicare payment model, Medicare has essentially figured out how much more resources it costs to provide different types of services. And so for just a quick example, in the Medicare system Medicare and CMS has figured out that it costs about 34, exactly 34.65 times more to perform a heart transplant than to treat a patient for chest pains. And they've done this for every type of service that you can imagine. And so we're gonna use these relative procedure differences to make a comparison across hospitals that standardizes across the different types of procedures that they perform. And so the way we think about this is this is the average walk out the door amount and we're able to get actually a dollar level difference prices. The other advantage of this approach is that it doesn't incorporate differences in Medicare payments that are specific to each hospital. So some examples include Medicare pays academic or teaching hospitals more than non-academic hospitals. Medicare reverses hospitals more if they receive or if they treat lots of uncomplicated care patients. And we don't have to worry about those differences in this approach. And so just to be clear about the comparison to Medicare we are using the Medicare system as a benchmark and not as a price endpoint. So what I mean by that is that we're using the payment models that Medicare has developed to compare private prices between different hospitals and not necessarily to say that the private hospitals or private players should be paying the exact same as what Medicare pays. The Medicare system is not a perfect benchmark to use but it's hard to think of what a better benchmark would be. And I think this is really true for two reasons. So one the Medicare system and the Medicare reimbursement logic is totally transparent. So we can actually go or we or you can go to the CMS website and download the payment models for more specific hospitals and know exactly how much the Medicare system pays for different hospitals. The Medicare payment model has also been developed over the last several decades with lots of input from industry and other stakeholders. And so this is something where I think we have a pretty good consensus that the Medicare system is at least empirically based in how they pay prices. And so we think that using the system as a benchmark really allows employers and other health plans and other organizations within the private insurance market to compare prices between hospitals and then also relative to the largest purchaser of health care services in the world. Just a quick note on data protection. So the study was regulated by the Rand Human Subjects Protection Committee. We conducted all the analysis in a kind of similar environment that we used to analyze confidential Medicare data and have lots of DUAs and human subjects training in place. So what do we find. So the kind of top level finding is that the prices paid by employers and other private health plans relative to Medicare has increased pretty rapidly over the last couple of years. And so if we go back to 2016 prices paid by employers and health plans were 224 percent of Medicare. This increased to 230 percent in 2017 and then up to 247 percent in 2018 rather. Across the board this is about a 5 percent increase per year and keep in mind that this is on top of the inflation adjustments that are already baked into the Medicare system. And so this is the the gap between the between private health plans and payers relative to Medicare not just price increases overall. We also found pretty wide variation in prices. And so this looks at prices for both facility and professional fees and in the the red dots or the the red squares rather has overall inpatient and outpatient. The circles look at just inpatient prices and the triangles look at just outpatient prices. If we look at prices overall there's a pretty wide variation and so while the average is 247 percent it ranges from below 200 percent in states like Arkansas and Michigan all the way up to over 350 percent in states like like South Carolina. And so if we look across states there's almost a 2x variation in hospital prices across the different states in our sample. And if we look at how much prices vary for facilities we we again find the the same levels of variation. And so if we look at just the the facility prices we find a range from below 200 percent Medicare and in Arkansas to close to 350 percent Medicare in South Carolina in West Virginia. Vermont is actually pretty close to the national average at about exactly 250 percent Medicare. And instead of looking at its facility fees if we look at how much doctors and other health care providers make we find similar levels of variation although the the order is flipped pretty considerably. And so in states like Delaware and Kentucky physicians and other health professionals are re-bursted almost exactly the same amount as Medicare in states like Minnesota and Alaska. The rate is above 350 percent Medicare. Vermont is again pretty pretty close to the middle of the packet around 200 percent just under 200 percent Medicare. We also looked at the gap between facility fees and professional fees by state. And so here similar to the previous two charges in some states like Minnesota and Rhode Island professionals make quite a bit more relevant to Medicare than facilities. And in states like Indiana and West Virginia there's about a 200 percentage point gap between facility fees and professional fees. Vermont is again close to the middle in the sense that facility fees are slightly about professional fees but we don't see the same wide gap as for other other states. And then if you also look at the range within price within states we found that in many states there's actually more price variation within that state than if you were to compare prices across states. And so this this plot shows the 75th and 25th and 50th percentile of prices across states. And we find that in many states there are huge there's a huge range of prices within that state. And one of the the results that surprise me is we also found the same result for for variation in prices within health systems. So going into the study I actually expected that prices would be pretty standard within the same health system but we actually find pretty wide variation in prices across different hospitals within the same system. And then so I also mentioned that we did look at prices for specific procedures. We actually didn't have enough data from Vermont to look at procedures specific prices for specific procedures. But we do have quite a bit of data from the Maine and New Hampshire APCDs and so I just wanted to highlight some of the high level findings that we have to get from those APCDs as a test case of how data from APCDs can actually be applied. And so one of the things we did is also look at differences in labor and delivery prices. And so for example in the state of Maine we find that the labor and delivery prices range pretty considerably. And if we look at the state of New Hampshire we also find comparable levels of price variation where prices for labor and delivery range from about $7,000 all the way up to about $25,000. And the same thing for orthopedic surgery we find really similar ranges in prices where prices for orthopedic surgery range from about $5,000 to over $30,000. And if we repeat the same exercise in New Hampshire we find similar levels of variation but not quite as large. So here instead of a minimum of about $5,000 here we find a minimum of about $8,000 and prices range to about $25,000 instead of $30,000. We also look at the link between price and quality. And so this figure shows price in three periods. And so we categorize hospital prices as those which are called low price or hospitals less than 150 percent Medicare. Those are prices between 150 and 250 percent Medicare. And those with prices above 250 percent Medicare is the high price hospitals. And then we looked at two different quality definitions and so we used data from the Medicare hospital star system and so this ranks hospitals between five stars of those the highest quality and one star with the lowest quality. And then we also use safety score data from the LEAPROB group where we have data that ranks hospitals from grade A of the most safe hospitals to grade F those the least safe hospitals. And so for both measures of prices or of quality rather we do find some link between price and quality. But it's a pretty weak link and so we find many high price hospitals that are low quality and also many low price hospitals that have high quality. And so as we're thinking about hospitals in the race relationship between price and quality I think it's really important to think about price and quality for individual hospitals rather than thinking about the hospital sector as a whole. And then the last test we did is we looked at the relationship between patient mix and prices for hospital care. What one of the the pushbacks that we've gotten as we've done in the study over the last couple years is that hospitals have to charge high prices to account for underpayment from Medicare and Medicaid. And so if that's the case then we should find that hospitals that have lots of Medicare or Medicaid patients are the ones that ended up charging high prices in hospitals that have fewer Medicare or Medicaid patients actually have relatively low prices. And so if that's the case then on this plot we should find more or less a 45 degree line and higher prices for those that have more Medicare or Medicaid patients. Instead as you can see this looks like essentially a random scatter of dots and we actually don't find any correlation between hospital price and their share of patients that come from public payers suggesting that that it's other factors such as hospital reputation or hospital market structure and the ability to charge high prices that lead to to variation in private prices and not changes or differences in Medicare and Medicaid payment rates. So just to wrap up on where maybe these results can be taken. So as we think about what's the spectrum where where employers or other organizations can use these results I think there's kind of really three points. And so some groups have taken this information to finally have information about prices. Some have used this data to actually benchmark prices and then some have used it to actually change hospital networks. And so as an example of having information about prices and using this data to inform decision making one example is the hospital value report produced by the Colorado Business Group on Health. And they used our price data from last year and combined it with pretty grand quality information they've collected to think about the relationship between price and quality within their market and think about what are the high value hospitals in Colorado. And then also to propose specific options to both Colorado employers and the state of Colorado Legislature to address prices. Employers are also using this data to benchmark prices. And so I mentioned earlier that this study came out of the employers from Indiana is really their brainchild. And so after seeing the variation in especially outpatient care prices the employers from Indiana actually pushed their insurer to benchmark prices to a percent of Medicare. And so this is kind of similar to the price mechanism being proposed in a lot of public option policies where employers pay a percent of what Medicare pays and they actually put in place this program in January this year. And so I think you'll be really good to see over the next year or so how this type of price gap leads to savings for employers in Indiana. And I think the final way is many employers are actually using this data to really push on the negotiations prices that are being negotiated on their behalf. And so when we did the report last year we identified a hospital in Fort Wayne Indiana as being one of the most expensive hospital systems in the country. And if you're a so this you know got a lot of attention from policymakers but I think we really got a lot of attention was from the Fort Wayne Employee community who were essentially not not happy to see that they were paying probably the most expensive possible price in the world. And so what they did is they told their insurer look now that we've got better information on on the prices that you're out negotiating on our behalf we are going to actually use this data to hold to accountable. And if you don't do a better job in negotiating prices we're going to move our business to ensure that actually does do a better job. And so there was a new contract that was negotiated over the actually the summer and the new contract which benchmarks prices closer to Medicare is expected to save over a five-year period over $600 million to Fort Wayne employers. And so those are kind of three broad actions that employers or employers have taken. But I think there's also an important role for state and federal policy makers. And as we talked about kind of the role of employers shifting patients to lower price hospitals it's important to recognize that in many markets many employers and purchasers just don't have lots of options. And so if we look at the kind of the standard definitions of a competitive market that's used by the Federal Trade Commission or the Department of Justice about 70 percent of U.S. metropolitan markets are meet the kind of the legal thresholds of the concentrate. And so in those markets employers may just not have a lot of these same type of options that I highlighted earlier. And so in those types of markets I think it's important for employers to put states to a couple different options. And so these can include things like implementing all payer claims databases. And so the the state of Vermont has an EPC and so I think that's a really good first step. I think the another option is to to promote policies that promote hospital provider competition and eliminate gay causes in hospital insured contracts that that help stymie the slow price I think also limiting out-of-network charges can be something that can place pressure on in-network prices and really change how how hospital prices are negotiated. And then finally I mentioned that we didn't include the state of Maryland at all because they have a really unique all-payer global budget setting. And so those types of policies might be something that that might be useful if if we're thinking about standardizing prices within the state. And so just to wrap up I think that rising healthcare costs place a tremendous amount of pressure on work wages and I think this is especially true during the COVID pandemic. The the glass half empty outcome of our study is that the wide variation in hospital prices creates lots of waste in the US healthcare system and drives lots of unnecessary spending. But I think the glass half full story is that this actually could create a potential opportunity for savings. And so if you're market with lots of high price hospitals or your patients are going to high price hospitals and there are lower price hospitals that are nearby then there's a potential saving of opportunity for shifting demand to lower price hospitals. Employers and others in the healthcare ecosystem and other purchasers really need to demand transparent information on the prices that they and especially their employees are paying for healthcare. And then they need to not just demand and access this information but also think about using it in ways to innovatively inform the benefit design strategy. So thank you. Happy to turn it over to Marilyn and answer any questions. Kevin you're on mute. Thank you Robin. I wondered why I didn't get any response from Marilyn. Great yes and I'm just trying to to figure this out so I truly apologize to you. I've not done this on teams and I hope you'll be patient with me. Your time and I'm trying to figure that out. I see that Alayna has her hand raised. Alayna were you trying to point something out to us. I think we're going to hold questions until after Marilyn has spoken Alayna. Great. Okay I think it's a couple of seconds once you. You might be able to put it up on my screen but when I do click share it doesn't come up in that little screen below. Abigail do you think you could share the slides from your screen. That'd be great. There they are. Perfect. Hey Kevin mentioned I am a senior policy fellow with NASSB and we are under an Arnold Foundation grant to look at hospital costs. So as such we developed a hospital cost tool. Next slide please. Next slide please. Our hospital cost tool the goal was to help purchasers and regulators better understand hospital costs. There is information out on hospital prices but nothing in a national public arena of hospital costs other than the Medicare cost reports. So we use the Medicare cost reports to drill into some of the costs. And we're finding that employers are using our tool to help complement the recent findings that Chris just reported on. Now we're working with officials from several states that have reviewed the tool and they are looking at it in different ways. One is looking at it for insurance rate review. One is an analysis of hospital mergers further informing hospitals global budget parameters and then specifically negotiating hospital reimbursements as a reference to Medicare rates as states are large purchasers of hospital services through their state employee health plan corrections even some of their self funded for workers comp etc. Next slide please. So we use the hospital cost tool to take a look at Vermont hospitals. Now next slide. Thank you. I want to say that this is just one tool of many things that your board already has available and it is using information from the Medicare cost reports that are filed by the hospital and attested to by the hospital CEOs CFOs. But how they may classify costs how you may look at it may be different depending on the tool you're using. So again this is just one of tools that are out there that your board uses. I wanted to just give a high level summary of what the Medicare cost report shows for the hospitals listed there what their net patient revenue is what their reserves are and what their profit margin is. Again just a high level overview of this what this tool will report out. Next slide please. So what we did with this tool was we decided to drill down a little bit. One of the things that we're working on with one particular state their legislative audit committee is looking very closely at charity care. And you'll see that what's reported on the 990 Schedule H will be charge master rates. You'll see what's reported in the Medicare cost report for a portion of charity care will be charge master rates because the DSH payments are dependent on that. But we go one step further in the tool and we calculate what is the true cost of charity care uninsured and bad debt. And then what percentage is that of what percentage is that of your overall operating expenses. And I think that's an important thing for state regulators to look at. We're starting to see some states wanting to delve more into coming up with their own reporting on what truly is charity care. So this using the tool this is how the hospitals played out. Vermont hospitals. Next slide please. There's always a delay coming from hard work on that slide change. That's fine. It gives me time to think. Okay now we use the Medicare cost report to allocate payer mix by looking at charge master or gross payments. Now what I haven't shown on here is that we do carve out as the payer mix the charity care bad debt and uninsured. Now overall for the average of the Vermont hospitals was 3 percent but we do have that available. I just did not put it on this slide because I wanted to care cover payer mix versus profit loss. Now our numbers are going to be different a little bit from the calculations that you have within your board. And Patrick and I have talked about that and there's reasons for the different reporting. And again I want to emphasize this is just one tool. Now we calculate the profit or loss on Medicare Medicaid and then commercial includes all of commercial. It will include tri-care self-pay insurance carriers employer self-funded plans and within the commercial there's going to be varying amounts paid. I want to show you the Medicaid column though. Now I want to alert you that the way the tool looks at this is that the hospital is required to report on Schedule S 10 what the charges costs and receipts were for Medicaid. It also requires reporting for any other state or local low income programs S chip etc. What I did find when looking at the Vermont hospitals is it appears you have a distribution of provider fee. Now in most states that is captured under this Schedule S 10 but it appeared to me that a lot of these hospitals are reporting that as other income. They're not reporting it as associated with the Medicaid program but are associating it with other income. We'll look at the impacts of that. So I caution you on the Medicaid gain and loss it's calculated off the self-reported S 10 and definitely your team will have worked through some of those concerns. Next slide please and we will wait while I think about what's on the next slide. What the tool does is the next step is we calculate estimated break-even points for the hospitals. So what we're looking at here and let's look at the first one for instance Brattleboro. We're looking at break-even level one and what level one says what if commercial were to pay all of their own expenses plus any shortages or benefit for many overages from government programs charity care bad debt and uninsured. Break-even level two is more a tool truing up in that that includes all Medicare allowed costs whether they were over or under allocated we pretty much true up to whatever the Medicare allowed costs were. Break-even level three says okay we are going to pay let commercial pay all of the Medicare disallowed costs. Now when I negotiated with the hospitals in Montana that was a big point that was brought up is if you're going to use Medicare reference-based pricing Medicare disallows for a lot of costs and so we did delve into that. But on Brattleboro it is saying that commercial would need to pay 169 percent of Medicare to break-even. Now one thing that we're going to go into a little bit is that our break-even point on level three I say that it includes all of Medicare disallowed costs but we did not bring back in physician direct patient services and physician private offices. So I will talk about that later. Now break-even four is probably going to be the closest because then it brings in other income other expense. And when you see a big drop from level three to level four I'm looking at the Vermont hospitals it was mostly attributed to the fact that these additional payments that were prospective payments to hospitals were included as other income. But you're also going to have investment income in there and other items that most of the big drop there I found was related to how those payments were brought in and you know much better than I do the nature of those payments whether they relate to Medicaid or not or do they relate to a specific program but I just want to alert you those are in there. And you can see that on the Medicare cost report. Now what we did then we worked with Chris and we looked at the RAND 3.0 port and we looked at now this is just the hospital costs. Again we're just looking strictly at hospital services. Other services a hospital provides like clinic and whatever. We have carved all that out and so has RAND. This is just looking strictly at taking care of the patient through the hospital. Just the facility as Chris mentioned. So we looked at the RAND relative price that employer self-funded plans were paying that participated in this survey. There was not enough data for the ones that are blank but there was sufficient data that RAND did record that. And this gives you somewhat of a comparison between hospitals and then a comparison to potential breakeven points. Next slide please. Now I wanted to mention specifically physician costs is when I negotiated with hospitals that became a discussion point and it's a it's a valid discussion point. And I wanted to show you what is going on. Now the Medicare cost report in yellow. These are the costs that Medicare disallows. They do not allow physician professional direct patient services. And the position in the Medicare cost report rules is that these are services provided directly to a patient and are actually billed and paid for through other systems. Whether it be RBRBS in Medicare you have Medicaid fee schedules you have provider network physician network contracts with insurance companies and networks. But they are paid for in other payment mechanisms. The thought is that is the same with the physician private offices. So Medicare excludes those. Now Medicare also excludes what they call rice levels. That is a calculation they do where they determine what is a reasonable compensation equivalent and where hospitals may be providing their paying their providers higher than that. They disallow those. But what Medicare does allow is in the blue box and that is defined as hospital services. That is defined as physician costs that are incurred for the general public use. It may be doctors within emergency care within ICU but those are hospital or hospitalists are going to be there. Now our cost tool is disallowing the first two categories of physician professional direct services and physician private offices. But our cost tool does allow for exceed reasonable compensation. We did not feel that was something that we had a position on. So when you look at our breakeven points we are disallowing those first two columns. The other thing that's interesting to look at that when you do start working with hospitals which I know you already do and have much more data is I don't know this about Vermont. I do know about it with other states that we are working with is that some hospitals have purchased physician practices for numerous reasons and are losing money on them. And so in our negotiations with other states hospitals have asked for those costs to be included because they are losing money on that segment. And it brings up a good theoretical argument about whether that is something you know should be included in hospital rates if a hospital is losing money on a physician practice to keep that as a base or is it something as Chris noted physician payment are usually much lower. So it's a good discussion point but I want you to be aware of that. Next slide. So one thing that we wanted to do we were asked by your board to take a look at was comparing academic hospitals because they kind of are in the whole category of their own. So we did take a look at Mary Hitchcock Memorial Hospital in New Hampshire and we took a look at Albany Medical Center Hospital just to try to see you know were there any fair comparisons. Now this first one I found really interesting because the net patient revenue was not all that different even though the hospital bed counts were different and I don't have that here. And then you can see the profit margins roughly. And now again this is Medicare cost reported information. Now the payer mix I have excluded it does not include the charity care and bad debt. And again this is how the Medicare cost report would. It tells you the payer mix and the profit loss. Again I caution you on Medicaid because I also found this in New Hampshire that those fees there are fees coming in as other income. But this is to look at academic centers. Next slide. We looked at academic standards beyond these two charts. We looked at them through the rest of the cost model too. And we calculated the break evens. And again I show you those four points. Now level 4 look at the Mary Hitchcock and University of Vermont. You see that big drop between break even level 3 and break even level 4. That's most likely that there is revenue included as other income that might not be attributable to a specific program with how that report is filled out. Now RAM did have sufficient information on all hospitals to show what the participating in groups did employer groups what they are paying as a percent of Medicare for those hospital facilities. Again I wanted to point out the issue on physician cost. Now I found this really interesting because the Medicare disallowed cost. Mary Hitchcock you would assume did not include in their report so they had none to disallow or maybe they don't have a large physician practice. I don't know the particulars of that hospital. But you do want to take a look at the physician professional direct patient services reported that were disallowed 162 million for University of Vermont Medical Center. But you definitely know that structure better than I do. Again the physician exceeding reasonable comp that is the amount that Medicare disallowed but we allowed it in our tool. And then finally what Medicare does allow what was classified as definitely the hospital services provided. So it probably raises more questions than answers. I think it's a good chunk to look at in conjunction with your other tools we're finding we're working extensively with employer plans on this and it has raised questions that are good to have a discussion with when you're negotiating prices. Now when I negotiated in Montana there were two hospital systems and one private hospital that were holdouts and declared that Medicare did not pay them sufficiently enough and Medicaid they were at a loss on. So I used a much rudimentary copy of this worksheet to try to calculate that to look at some fact-based evidence that we could continue our discussions with. So I propose this as a model that is available for anyone to use. It doesn't require any special knowledge. The tool is an Excel-based tool. It tells you what worksheet what line what column to go to to insert numbers to do these calculations. And we have completed the tool for all of these hospitals and we'll be forwarding those to you. And that's the end of my presentation. Thank you so much Marilyn. So at this point I will open it up to questions. Elena did you want to go first. Oh boy. Sure. Can you all hear me. And I I'm unfortunately going to have to hop off in a couple of minutes. Okay so can I ask a quick question to you Chris. I was just wondering if you could talk about the covariates that you might you know that you have considered in some of the policy recommendations you made you know Vermont is a pretty unique area. So are there any that you think are particularly generalizable to a small state such as ours or other areas of interest you think we should consider. Yeah. So I think the things that maybe would be especially applicable are in APCD to monitor prices. And I think that's something that applies to every single state and so it sounds like you are already well along that path and so that's great to hear. And then I think the other thing that is potentially a workable model for us like Vermont is actually building on the program that Marilyn developed for the state of Montana that thinks about capping prices and benchmarking at least relative to Medicare. And I think as you're thinking about monitoring hospital prices that's just a easy thing to think about what's the the relative standardization across providers and something that at least for state plans and other employer groups is a model that's been shown in the past to to save quite a bit. And also frankly just make the you know whether the key challenge is on thinking about prices is that the nature of the price negotiation process where it varies by hospital by hospital is just so confusing and and leaves a it's hard to think of a simple system to to to address prices in a more straightforward manner. And so I think rather than thinking about kind of the prices for specific services or discounts and charges etc. If you think about just what's the multiple Medicare and how that may be various across hospitals I think that's just something that's more straightforward. Does anyone have questions for Chris so that we can let him get on to his next engagement. Kevin. Walter. Yes. Walter. I just have one question for Chris and for the second presenter as well. Let's just focus on Chris for now Walter. You can come back to barrel or later. Very simple question. What is why why are hospital costs so high. That's none of the presenters answered that. So I think I mean so that's a big question and a lot of it I think builds upon so in Maryland's work where you can see that there are variations in cost to run a hospital. And so I guess the question that may be more applicable is why are markups for private plans so high and is Maryland shows in our work also described as well. There is a tremendous amount of variation in prices and which would end up being markups across hospitals. And so I think that the reasons are pretty varied and so some hospitals just have lots of grand power reputations. So for example in your market the Dartmouth hospitals probably have longer relative to good prices because people want the Dartmouth and other academic medical centers in their network. I'm not sure how well this applies to Vermont but many other markets we see that that high prices are driven by market consolidation and concentration. So if you're the only game you can find that you can find at a higher price. Okay other questions. Other questions. This is Robin. Robin. Yeah Chris I just wanted to get a little bit better sense of the extent of the Vermont data that you had available to you because I know you said you didn't use the APCD and it looked like from the report there are 120 self-insured employers and I was just curious sort of the extent to the Vermont data. Yeah so I think a lot of our Vermont data is spillover from the New Hampshire and the Maine CDC who live in the state care in Vermont. Thanks. Okay more. Have a question. And I guess on that note so we are planning a round additional next year and so including the Vermont APCD I think is is a really good thing that we could do to look at kind of the folks in a price variation within Vermont. I have a question. Yeah I had recognized more at first. Okay. But go ahead Dale. I think I missed part of the exchange there and because it sort of blocked out on the audio. My apologies. My question was simply that in the first presentation when you start talking about shifting where people go to get their care based on that's the most affordable cost I immediately started seeing this image of life in schools segregation. You would get segregation. And with the segregation conveniently would be usually a correlating investment as far as what the school had for money to work with what the quality of education was. Is that been looked at in your scenario in terms of down the road five ten years if everybody starts migrating into most affordable care how does this play out. So I do not believe anyone has looked at that. And I guess if you are thinking you know what one thing to keep in mind is the what many employers have done is shift patients out of high price and because of their high prices high resource hospitals into more efficient lower price hospitals. And so if we're thinking about kind of the allocation of resources across the hospital sector and the hospital industry these are types of policies that tend to actually increase the level of resources for lower price hospitals. Okay Mark Stanislaus. Hi Chris thank you very much for your time and the information today by the way. I'm just curious as we look at pricing as a percent of Medicare you have to consider the numerator and the denominator and the state of Vermont has a high number of critical access hospitals that is paid on the cost base. And just because you see a lower percentage of Medicare doesn't mean they're at a lower cost. So is there any sensitivity analysis where that can be done as it relates to that. Yeah that's exactly right. And so we do see in Vermont and also Maine there are lots of critical access hospitals. And so that's where the secondary measure of the standardized price that doesn't bake in the relative to Medicare amount is actually a good comparison. And so from the procedure specific results I glossed over them pretty quickly but we have both measures of prices and we do see that there are many kind of prices that hospitals are kind of low price to Medicare because they're critical access hospitals but still have high standardized prices. Thank you. So I don't see any other. Thank you. Thank you. I don't see any other hands up at this point. Chris if we have further questions could we email them to you. Absolutely. And I'm happy to share my if you want to pass on my email Kevin that's fine. Okay. Thank you Chris. And we thank you for the time that you've given us. It's been greatly helpful. So thank you. So now we'll move to questions for Marilyn. Thank you. Marilyn I'm going to jump on your teaser because you tease me a little bit when you talked about the hospitals that opted out of your negotiations at the beginning and it you seem like someone who's very tenacious. Can you tell me what's happened since then. Oh you're on mute Marilyn. That's because I have a Cocker Spaniel who is having a heyday out there. I apologize. Yeah I started this process in Montana in summer of 2015 and I made the decision that this is going to be in place. Every Montana hospital will be reimbursed a multiple of Medicare by July 2016. So I have one year to get it done. And the two big hospital systems well they're not big compared to back east OK. But one had two hospitals one has three hospitals and they did not want to move and they were my higher priced ones. And what they did was a lot of lobbying with the governor's office to be able to do their own ACO do other programs do narrow networks whatever. But we made the decision we're going to move forward without them because they were basically in areas where we had another hospital that had signed on. So we did not do like last and final offer sort of thing. We did this is it. If you don't want to be a network that's fine. And we did travel benefits for members. They ended up all signing on by July 1 except for one independent hospital. And they went in the newspaper and said we can't do this for the state of Montana because that would be giving them better pricing than we give Blue Cross Blue Shield. And that opened a whole heyday of a conversation. And by August 6th they signed. So we had right now it we ended up with all Montana hospitals signing. Super. Super. Questions for Marilyn from the board first and then I'll open it up to public comment. Hi Marilyn. This was Tom. Just a quick question. I'm just curious as we have this January 1st new federal rule coming out on being implemented on price transparency and I'm just wondering if you have any sense is how your work and Chris's work will line up against that data source. I think any transparency is good. I think that the more you can look at this from different angles is really important. I think I think you know I think it will be another way to look at hospital costs. I think that's good. I think that we will still have that tool out there is perhaps one other angle of looking at the cost. Now what we're trying to do is like be able to separate it by payer mix like just like Chris is doing. Be able to Chris is definitely comparing it to what Medicare would reimburse which is more of a cost plus basis versus a discount thing. So I think it will just enhance the conversation. Okay Jess. Yeah I have two questions for you Marilyn. Thank you for the presentation. I'm wondering you know using the cost reports as a basis for the analysis. My sense is and I could be wrong about this but that hospital designation has an impact on how much the hospitals rely on the cost reports so the critical access hospitals you know focus a lot of their attention and energy around you know their cost reports. I'm wondering is there a difference in how cost reports are interpreted for you know other types of hospital designations academic medical centers etc. Do we have to think differently about this tool as it applies to different types of hospitals. That's a really good question and your group would be able to discuss that much better than I can. I think that it tends to try to make hopspitals apples to apples but you're right our tool is looking at whether it's a sole community hospital is it a critical access hospital is it eligible for low payment ratio payments etc. And so it factors all of that in we are able to carve out just critical access hospitals to compare them. One of the things that we are doing is we are working with Rice University and they are linking the tool to the Hickriss database so that they may get that report for the whole nation as well as specific states by classification of hospitals etc. And the example is I have been doing a lot of work with Colorado and their health care and policy or group has linked the tool to Hickriss for Colorado and been able to do benchmarks by hospital type by bed size by be able to get medians so that they can better compare by hospital types. And I think that is important to look at. You know you don't want to compare a critical access hospital with 25 beds to a hospital with a thousand beds. So they're taking a cut at the data and Rice University is to to see if there is that comparison. Great thank you we may have to follow up with you and learn about how they're you know how that worked out. The other question was around that break even level analysis which I thought was interesting. And I'm just wondering what kind of feedback you've gotten from hospitals about that particular analysis and are there caveats to the interpretation of that or you know just wondering what the hospital response has been to that particular tool if there has been yet. There has been some. We've worked with five independent hospitals in another state and two large hospital systems in another state. The two large hospital systems we gave in the report and said tell us where we're going wrong what's going on send it to your corporate office that does these reports. Both of them came back and didn't have issues on how we were calculating. Both of them said you've got to include all of the physician costs because we're losing money on that. And that's an interesting question because why did hospitals buy large physician practices if they're a lost leader. Was it to help with referrals was it to provide a broader base of support for their hospital. It's a good thing to open up that discussion. We had one hospital say well on the break even point we're losing a lot of money on our nursing home and we feel the hospital payments should cover the losses of our other facilities. So we got those kind of discussions that you know are up to the people that are making those calls on negotiations whether those should be covered or not. What do you feel your community needs how should those be paid. I did do some analysis on what those hospitals were bringing in as far as profits from 340B that aren't reported and we dug into that a little bit more. Now I'm about to really open up I mean I think I'll just put the target on me right now. We're meeting with three very large systems in Indiana and have done the report there and they're going to be providing me feedback. We are also opening up to a very very large large health system that has six hospitals in Texas and so we'll be gaining more feedback and we're more than open to if that tool needs to be changed so far I guess a long answer to your your quick question Jessica is that it's a good thing to start the dialogue to find what hospitals find between that break even point and what they're charging. Why do you need that extra money. And the things that have come up now is pretty much to supplement other things there in than that direct hospital and that may be appropriate or not. It's not for me to decide. Great. Thank you. I appreciate it. Other questions from the board. Yes. First I really appreciate all the analysis that you did and you know it's one of the things we've been looking at too is that benchmark against against Medicare. When we look at the Vermont hospitals you know they're actual where they actually end up in the year you know many of them lose money or make you know two to three percent and you know as you're going through this process to try to really pressure which I think is worthwhile to be to be looking at it this way you know what what should be charged and how does the relationship to Medicare if they're being brought down and those numbers are coming down for commercial payers. And one of the things that we always ask the hospitals about are their efficiencies their cost table programs and things like this. So if nothing else changes other than them charging a lower price for commercial right then they're going to be making less revenue. You know how what success are you having and seeing that those expenses are coming down in order to be able to make some margin that they do need at the bottom line to be able to you know to sustain. So just question there because that's the challenge we get we can look at the numbers and say they look high. No very very good point. You know this tool does not tell you if the revenues are too low or the costs are too high and it will not tell you that. We are looking at some efficiency measures. We and in your group I'm sure has already done that. We've been working with Rand a little bit on some metrics of risk based inpatient costs per you know discharge. We're looking at some other efficiency metrics. We've also been able to plug in overhead hospital overhead as a percentage of total salaries. We've been we're trying to do that next because I don't have an answer for you. I do say when you have that profit margin I can see there's a tendency to say would we lower revenues and you're going to be in a lost situation. What happens then. So I go back to you'd have to lower costs too to maintain that and our costs too high. I don't know that. It requires a lot more analysis. And I think obviously the other part of that mix is the Medicaid reimbursement which in many cases is significantly lower than Medicare. So even if Medicare was functioning more around a break even commercial is offsetting that loss that hospitals are making on Medicaid. You know that's that's what we're hearing right. I'm just saying how does that work in this mix because you didn't really do anything against kind of a Medicaid comparison as well. Yeah it's tough and I think your group can figure that out because of the way our tool is built these supplemental payments that are coming in. A lot of hospitals will record those differently. So you can kind of see now within Montana when I did it I was surprised the hospital association really took on what I was doing and said that Medicaid was reimbursing 40 percent and Medicare was reimbursing 60 percent. Now Montana has 11 acute care hospitals and that made up 87 percent of my Montana hospital spend so that's where I put my effort because our 48 critical access hospitals were only 13 percent of our plan spent. So I looked at those acute care hospitals and I saw that on average Medicaid was paid because we have such large CMS payments. Medicaid was reimbursing 97 percent of their costs and Medicare was reimbursing 93 percent of their costs. So you really have to dig to try to figure that out. Those different components but every state different on how they handle those funds and come in. Yeah you do have to look at that and you will hear that argument from hospitals that Medicare and Medicaid don't pay and I as part of the state employee health plan I was fine making up that difference. I mean that was part of what I felt the state taxpayer dollars and our governor's directive to me was. But at first I needed to get what is that. What is that number. And then let's go from there. But you do open the whole issue of our costs too high. Our revenues too low. And one final question. The other you know big contributor we'll hear on the bottom line is the 340B programs that are in there. So when we're looking at these net income that you're looking at and still you know overall for most of Vermont hospitals it's in that you know two to four percent range for bottom line net income with probably a big contributor being 340B which would would possibly mean that you know everything else is is underwater right. So you know when you look at that break even analysis I'm just wondering you know how that factors in there as well because it's almost like you need to take the net income and adjust for for things that may be a major contributor in the bottom line. I think so you really do need to do it which your group does much much more in depth. Now on 340B what's interesting what I found in Montana is the hospital sharing of 340B savings sharing it with insurance companies sharing it with employer plans. Those are some issues that we dealt with is that the intent of the 340B program although the law is so vague it doesn't say how the 340B savings should be spent and what we're finding more and more of is that that's being shared especially with contracted pharmacies. You'll find like Humira the 340B price is a penny and my state health plan was paying $5,000. The contract pharmacy retained a thousand of it and then the rest went to the hospital and then what you saw insurance companies doing was splitting that savings. So that's an area of interest too that maybe indirectly could benefit the hospital more but then it hurts through the premium pair you would think if you saw those 340B savings go to premium dollars. I don't know. Yeah. OK. Thank you. That's very interesting. Elena I saw that you had a question. I guess we're going to move to a public comment then and the order that I have the hand so far is Sarah Teachout Mort Wasserman and Mike Del Treco. So Sarah Teachout. This is Abigail. Sarah can't get off mute with her current setup so I can read her question out loud for her. How did the travel piece work for patients where they're issues with access to care by excluding a hospital from the network. That's a really good question. There were two hospital the group that would not sign in three of the cities there were two hospitals. So there was access. There was only one city that had one hospital and they were 60 miles from the closest. And they did have actually they had two hospitals in it too. Forget it. All the towns had two hospitals. Now there was some specialty care that was provided at the one hospital. It was in Great Falls Montana and we had nursecase managers working to reroute the care the best we could. One thing that really really helped me is that the union was supportive of what we were doing. And we worked with union leadership extensively and they worked with their members to help me. And so there was a lot of lobbying by the union members a lot of letter writing and a lot of opinions. And once the hospital came out and said they couldn't give us better than Blue Cross Blue Shield it was the union group and the union leadership that took over with letters. And when we were finally able to negotiate with that hospital that was the main pressure. But you raise a really good issue and it's a tough one because the state employees were very much used to going wherever they wanted and not having a narrow network. We got slammed by the hospital association for having not having network adequacy. We actually did a very ingenious thing. It was not my idea it was our TPA to deal with that but we ended up with just having to implement the travel benefit in one hospital. I think the public pressure was pretty tough because that's taxpayer money that's really funding that. OK thank you. Marilyn could you just say what the travel benefit was for folks who aren't aware. Oh certainly the travel benefit was we would pay for the mileage the hotel stay depending on certain items. There were some procedures that could be done at our onsite health centers a lot of primary care visits and then we had one in Helena 60 miles away and that's no copay no coinsurance labs etc. And as a result that started some steerage those six weeks before they signed and people ended up staying with that. So it took some of that business away. But it was mainly oh I can't even remember but we did the mileage the lodging. We had our case managers really on top of that also trying to see how we might be able to waive some other things. Can't remember. Was the mileage based on federal reimbursement. I can't remember to be honest with you. OK. I can't remember what it was. OK. OK more. Thank you. That was a really interesting presentation and this question may be because I'm in the remedial health care economics course. But what can your model or to the extent you understand it the RAND model tell us about the effectiveness of alternative payment models that ACOs can offer with partial cavitation or or other tools bundled payments. Is there anything we can learn from these tools about those models. How well they work. You know I have not delved into that that much. The states that I'm working with we have not gone that path. My limited you're going to be so much more knowledgeable than I am on this. My limited exposure to the ACO models that I have worked with have been more around primary care more around managing the care. I mean what comes down to doing an appendectomy it's still fee for service. And some you know there I'm going to probably say I'm not going to answer that because I have not really delved into that that much but it's a valid question. OK. Mike Del Treco I see your hand is down. Did you have your question answered or. You know my question wasn't answered. I just put it down because I thought you had the list going Kevin. OK. See me on screen now and I should be off mute. Is that correct. That is correct. OK. Cool. Marilyn and Chris I know you're not there but thanks for a thorough presentation. I you know being a whether being fortunate to have filed many cost reports by hand and or doing it electronically whether that's a good fortune or a or a curse. I've done such things like that and sort of the question that I think about when we file cost reports you know in the years they're being used that I just would politely and respectfully throw caution to how our current all payer model interacts with filed cost reports that you may have pulled. I'm not saying the data is wrong. I'm not saying I just don't know how that may have impacted your your results. So just something to think about. Maureen I really liked your sort of line of questioning around sort of how we balance expenses and revenues in the 340 B conversation. And and I think in although maybe indirectly I think our Green Mountain Care Board has largely the ability to manage sort of looking at 340 B growth dollars and then and then managing and making recommendations or budget orders to our hospitals around charge increases to those commercial carriers. Although it may not be a perfect equation to say 340 B revenues equal this amount and you know it's it's X percent of the of the net patients of excuse me of operating revenue to gross charges. The mindful thing I want to put on the table is that in Vermont our 340 B represents 100 percent of our hospitals operating margin not not 80 percent not 70 percent not 100 percent. So our services to patients do not cover just cover operating expenses. So that's another thing that I think we have to sort of think about. And then Marilyn just to touch on the subjective thought around why hospitals and I didn't like the word buy practices because I don't think our Vermont hospitals have purchased practices. I think we're in this this situation where our pair mix in Vermont is largely governmental and in order to preserve access in communities hospitals have really brought practices on to to meet the needs of their community. And some of our hospitals would say at the time we've brought some of these services on we've actually seen more challenges to our bottom line. So just a few points but really thank you for pretty comprehensive outline and appreciate your time. Great points Mike I didn't see a question in there so. No question no question. OK so next is going to be Mike Fisher and after Mike is going to be Dale. Mike. Good afternoon and thank you. Thank you to both both presenters. Marilyn I really want to start by recognizing you. I I I'm the health care advocate which means I have my team has a role in hospital budgets over the years and we've been asking the question about costs as a percent of Medicare for a few years now maybe two maybe longer. And I understand that the question the concept of it originally came from you. So thank you. And I'll also note that I I still feel we still have work to do to to feel confident that we're getting an apples to apples comparison that that the hospitals are responding to that question and using the same methodology. So there's more work to do on that. And then the question is I really it's interesting to me. I really wanted to give you an opportunity to speak. Are there other lessons learned from Montana that you think would be useful to us. And I think you know the one concept that comes up to me is you know over time did it help stabilize costs or or did you see too much pressure being put on hospitals bottom lines. I really wanted to open up to you if there are other lessons learned that you think would be useful to us. Oh thank you Mike. That's a really thoughtful question. Again as far as the critical access hospitals I we negotiated lower prices on three of them and all three were owned by acute care hospitals. The remaining of them we didn't touch. So our situation is different than Vermont's. I do want to throw that out there. As far as what we saw is after we did this the Montana Association of Counties has a trust for county employees and then the Montana Interlocal Municipal Authority has a plan for cities. They went on the similar plan and had significant savings so that they could get that. We then had a private employer Pacific Hyden for a large private employer out of Great Falls come in after we had hit Great Falls and they put in the same plan. So the population got bigger. No hospital has changed services. We did see a couple of higher level positions were let go. Whether they related to that I am not. Sure. We did see charge masters not increase by hospitals for a year or so. We did not have. We did not see any downfall from that in Montana. It was kind of interesting because it almost became competitive on the hospital's side because our approach was to look at what the hospitals were paying as a multiple of Medicare on our own claims. And then we could see one average 611 percent of Medicare for outpatient while one was averaging 237 percent of Medicare for outpatient. So why that difference and we were able to talk to hospitals through that and the glide path brought this one down. So we already had about four hospitals that were operating at the range we wanted to be. And we became and they had good quality numbers and we began calling them the efficient hospitals. And it became almost competition of what we can do the same. So it was a weird kind of thing that happened that I didn't expect. So we have not seen anything you know negative come out of that. The one thing when I was doing this that I really delved into that continues to be something as a sideline that kind of hits on what you're asking is what's in that community benefit bucket that you report for 990. The biggest chunk is subsidized services. And that stuff is not easy to find that detail. Then what I was able to show when they are able to declare the difference between Medicaid charge master and Medicaid fee schedule. You know that was kind of disturbing to me because what my numbers were coming up different than that and since I had the bulk of that information through the large hospitals. And then when I started delving into subsidized services and again this was back I had to use a 2014 report and it may have changed. I found in subsidized services was the difference between charge master and insurance contracts as subsidized services. So I think it opened up a can of worms that others are looking at for the bigger community benefit. You know that may not apply to you but it did here that that's kind of what people started looking at. I it also opened up with what other businesses do you have what other things do you operate that you may be losing money on and is that needed for the community or is that a joint venture that maybe doesn't fit. So it opened up a lot of questions mainly for legislators. They're the ones that are pursuing this certainly not me. I don't know if that answers your question. You're muted Mike. Thank you. I think that's a really that's a really useful conversation. Thanks. I think the thing to point out of interest too was that Montana ended up we were going to be at minus 9 million in reserves in two and a half years. Instead we had 112 million to the good. We had more money than the general fund and we they started borrowing money for me which was fine because I could charge interest on it. But then they did pass legislation which was appropriate because this was taxed near money. They passed legislation to pull 25 million back into the state. The plans ended up 2019 before COVID because we did this ratcheting in with there's a recommended reserve level to cover IBNR and liabilities. And the plan then was 54 million above that. So I would think you're going to see more money come which is appropriate. So I think there were other things we did in addition to this though big things that we did other things. But I think that you know from my mind as Chris said in his thing I felt I was fiduciary that plan I didn't have a choice. I had to manage every penny in there for the members. Thank you. OK we're going to go to Dale Hackett. Yes my question is and the beginning of her presentation she mentioned Colorado. And since my kids live there and I've actually been there it brought up this visualization of a hospital in Denver versus a hospital halfway up in the Rockies and one of those towns that you can't even see it. And you take this 2,000 foot drop on a road to get to it. There's no way out. There's only that one road. How does demographics like that fit into where these hospitals are located. How charges work out. I mean rule out there. Vermonters don't know rule. They just don't. I mean they call Rochester rule here. I would say that's that's a big value that's almost flock compared to out there. You know I think we've got the same in Montana with 48 critical access hospitals and we're the fourth largest state. But I would say in Colorado this is one data point they can look at. They have a very very good healthcare financing and policy agency that is really looking at all aspects of hospital care and all. They are definitely taking into consideration everything you said where are hospitals. What kinds of services should be that goes into your whole community needs. So I think that this is just one tool to compare. But then there are a lot of other tools to determine what's needed. And so it's just one part of that bigger puzzle that you raise. But it's also to say should the Danbur hospital and again I I'm not able to share those details but you would say on Danbur that maybe has six hospitals large hospitals that's where this tool kind of helps with some comparisons. Okay thank you. Okay next we're going to go to Mark Stanislaus. Hi Marilyn thank you very much for your presentation and your thoughtfulness so far to all of the answers. I have a couple just technical questions well to understand some of the graphs but when you say break even that doesn't include any profit margin. Absolutely not. That's your base lowest just break even and that's not what you're going to pay. You know you're going to what I we've been working with a couple of employer plans in negotiating with hospitals and definitely a profit margin comes in as well as what other contributions to your initiatives that are not specifically hospital care would we want to contribute to. So it's just a baseline. Okay and then and this is if I understood it but when you take a look at your payer mix you're evaluating that payer mix based upon the volume of services or IE gross charges. Gross charges. Charges K gross charges not net payments. Right. Okay and and and and then this is just more of informational. I thought you made the reference to Medicare Advantage programs that they fall under the commercial category. Okay so it was so it's just you know coming from the only academic medical center in the state a lot of our Medicare Advantage programs are actually negotiated on Medicare rates. So I just worry if that could convolute what you really think the payer mix is if it's actually because you know those are Medicare patients. They they are just qualifying for a different plan like most of our negotiated plans basically they're negotiated on the Medicare rate. And then well just from a curiosity what's the provider tax in the state of Montana. Oh my gosh it is well it's $50 an inpatient bedstay and 1 percent of outpatient gross revenue. Gross pay yeah okay and and then you know how do you balance this if you happen to be the only only tertiary care court and every care center within the state. Okay for a state that has a very low population. The state of Vermont has a very low population and and and it's just thinking out loud that if you want specialty care in state and if that specialty care is 24 seven you know you need 3.2 physician FTEs say to cover pediatric pulmonary service. So and and and then the other thing within that too is is is that you know we also own all of the renal dialysis services with the state and you know they're not big money makers. So you know you know that's also if you turn to cost to make up the difference to the breakeven as you kind of said that was the equation I think there's certain cost that hospitals can can choose to shut off but that doesn't lower the cost of health care in the state because the patients still need to go elsewhere. So I was curious and and I mean it is really different if you're really in a competitive market candidly. So and you don't need to answer all of that. And then the other thing too is I think Vermont's the first or second oldest state and the and older people utilize more services. And so how that falls into that equation too. I know Montana is not a young state either by the way. Now and I'm representative of that. Okay well that's not what I was implying. Hey actually speaking to that. So well did they run you out of Montana yet. No not yet. Boy but we're sure getting a lot of people coming in aren't we. You are actually very young people. We are but I did want to say I think you know some of the things you brought up I think we have mentioned that this is just the hospital services only and it opens up the discussion whether it be an employer group or your board. What other services might not be included in here that may be running at a loss leader that are important for your citizens of Vermont. That's a discussion that's nothing I have an opinion on. I would say that a lot of your focus is more what is needed for Vermont and that's certainly nothing I have knowledge on. I know that within Montana the discussion came up on an advanced pediatric care unit and it was tried in Montana but for Montanans the solution is to either go to Danvers Salt Lake or Seattle and it's become part of the culture. So there are just a lot of different things and I think you brought up a list of things that go beyond just the pure mathematics into more the policy that your board looks at. Well thank you very much and it was a very good conversation I appreciate your time and listening in to both you and Chris. Thank you. Okay Robin Alvis. Thank you Kevin. Marilyn this is really very fascinating and I think you really do have a lot of insights and I appreciate your comments and quick to point out how Vermont may be different from Montana but there are some similarities as well. A couple of questions I had to do with macro issues in the state and you mentioned a couple of things that suggested to me that you really did have a multi-stakeholder approach to reducing some of the cost with policy makers with your TPA around the travel restrictions and that's really something that everyone can be rowing in the right direction on or those macro issues that add to the cost so could you speak to a little bit about that and was your TPA part of your state Blue Cross or was it another commercial TPA? Okay. Very good questions. When I decided I wanted to do this reference-based pricing and all of this I issued an RFP. I fired, we had a very large carrier was our TPA and I fired them because I couldn't get my data from them and they thought my idea was stupid and how did I know? Maybe it was but I did an RFP and I think we had about nine respondents and only one said they would put this in place and it was an independent TPA, a smaller TPA. I did not have one single national carrier want to take this on. I had a large carrier say, we will give you discounts that approximate but I wanted to move away from charge master less discount so that was it. So we moved to a smaller one. And then your other question was on, oh it was a good one and I missed it. It was on the travel benefit and... Some of the macro issues reliance upon policymakers or that sensitivity to the travel bans. Those are unpopular decisions but we know that they work to reduce cost. They do work to reduce cost. And there it wasn't, I had two real supporters in the budget director and my director of administration and they were the ones that worked to get the union on board. And once the union was on board and the legislature in 2015 had made the promise that if we could get the health plan cost under control there would be pay raises. So that was some leverage. And sure enough, when 2017 came around the health plan didn't need money in fact gave it back and there were pay raises but it was the union and whatever they did to really mobilize the forces that really, really did help me. It was also transparency in that the information we got, we were sharing with the hospitals, we shared with the public, we shared this transparency and people could kind of see what was going on and could help us. One thing I wasn't prepared for were the legislators that mandated this be done. All of a sudden they also sit on the hospital board of directors. And so that kind of slammed me but there were those more macro levels of communication with employees and we did hire a marketing firm who did wonderful, wonderful little video snippets on what we were doing and why. We made commitments to employees and that group that if you can help us with this this is what we'll do. And you will have no, in fact you're gonna have enhanced benefits. We will have no increases in premiums and there haven't been for five years. So we made those commitments if you'll help us and it was the unions I'd have to say. Okay, I'm not seeing any other public comment. So Marilyn, we wish to thank you. So, so Kevin, this is him. Could I get a question? Sure, him. I didn't see your hand raised. Go ahead. I don't have a hand. I'm just too technical for me. Sorry, Kevin. Is this a question for Marilyn? The it's very interesting to look at Montana which is a small rural state very like significantly like Vermont. But my question is this, I've done some research out there myself in the whammy states, Washington, Montana, Alaska, and Idaho. And I'm curious what, and I know this is kind of a hard question but I wonder if you could say the extent to which your success, however you define it in Montana, depended on the University of Washington that Seattle services, they deliver, they do your medic, they educate your doctors. They have very strong commitment at UW Seattle to primary care. And they insist that their graduates, a lot of their graduates go into primary care. I'm just curious whether you would, whether you just, whether you could guess whether your success would have been as great in Montana if you had, if you were standing alone without it would be UW Seattle helping you. I can't really answer that directly but for primary care, we do not rely on the commercial market. We have five onsite health centers that serve 73% of the members and that is independent of the hospital system. It's a vendor that handles that. So our primary care, health coaching, referrals to special team, most of that occurs in our onsite health centers in five different cities. And one of them is located, UW is mainly working with Providence systems in Missoula and we have a health center in Missoula and UW is working with only one of the hospitals. There's community medical center and our health center and UW works with St. Pat's, one of the hospitals in Missoula and the state population in Missoula, now the university population is high but the state population is in Helena. Over 65% of the employees were in Helena so it's hard to say the UW had a big play in it but I can't quantify that. Thank you. Okay, thank you so much, Marilyn. We really appreciate it and we'll be in touch. Thank you. So at this point in time on the agenda, we are going to move towards a discussion of the benchmark rates and Sarah Lindberg, are you on the line? I am. Okay, if you could just summarize what our motion should be and so on, it would be very helpful. Absolutely, yeah. So I come before you with a recommendation that we revise the methodology for the benchmark for the 2020 Medicare program with OneCare Vermont. The motion would be that we use a retrospective trend to account for the uncertainty in the COVID related time. So I'm not very good with words but I would say the motion would be to revise our proposal to Medicare to use a retrospective trend for the 2020 benchmark. So member Lunge, would you like to put that in the form of a motion? Sure, I would be happy to. But Mike, can I ask Mike a quick question which I didn't think about before the meeting, Mike Barber. So during hospital budgets when we wanted to revise our decision first, we needed to move to modify the decision and then move for the change. Do you want me to handle it that way? Is Mike Barber on or who's our lawyer today? I assumed it was Mike. Mike Barber, are you on? Yeah, sorry, I had to thought I was off mute. I guess I won't. Sorry. I think I would propose that you make it, well, I don't think you need to do that because my understanding of what's happening here is in the event that CMS is modifying the existing benchmark as they have the ability to do under their contract with one care, we wanna be involved in that. And so if that is taking place, then we're going to be proposing this retrospective trend. So I don't think you need to redo what was already done and kind of reconsider that, if that makes sense. Yep, that makes sense. Okay, just wanted to double check. All right, so then I move that we propose a revision to the 2020 Medicare ACO benchmark for one care Vermont to be a retrospective trend to account for the uncertainty with COVID-19. Is there a second? Second. Is there a board discussion? Hearing none, I'm gonna open it up to any public comment before a vote. Would anybody wish to offer any public comment on the motion to change to a retrospective Medicare benchmark? Hearing none, anything further from any board member? Hearing none, all those in favor of the motion signify by saying aye. Aye. Those opposed signify by saying nay. Let the record show that the motion carried unanimously. Thank you, Sarah. Thank you, have a good one, everyone. You too. So is there any old business to come before the board? Hearing none, is there any new business to come before the board? Hearing none, is there a motion to adjourn? So moved. Second. It's been moved and seconded to adjourn. All those in favor signify by saying aye. Aye. Aye. Those opposed signify by saying nay. Good afternoon, everyone, and thank you very much. Enjoy what appears to be a little heat wave going on here in Vermont.