Via e-mail to [email protected] February 3, 2011 William Hsiao, Ph.D. 124 Mt. Auburn Street, Suite 410 South Cambridge, MA 02138 Dear Dr. Hsiao: On behalf of Fletcher Allen Health Care, Vermont’s academic medical center, I would like to thank you and your team for the efforts you put into developing the draft Act 128 report issued on January 19. Despite the limitations placed on that work that you have described – a small budget and short timeframe – the draft report reflects a great deal of research, analysis and thoughtfulness. We also appreciate the many meetings you and your team hosted for so many stakeholders, including Fletcher Allen’s clinical and administrative leaders. We were pleased to see that many of the concepts that are common to the three major designs included in the report are ones that have been under discussion, or have been implemented in some form in Vermont, in the past several years. We at Fletcher Allen have been fully supportive of those reforms, and have already incorporated many of them into our operations and organizational culture. Those include: An integrated care system that includes ten primary care practices, a large multi- specialty physician practice (the University of Vermont Medical Group, physicians jointly employed by Fletcher Allen and the UVM College of Medicine), and a full spectrum of inpatient and outpatient care services. As recognized on pages 49 – 50 of the report, Fletcher Allen’s hospital service area is among the highest-performing in the three-state region discussed in the Tri- State Report commissioned by the Department of Banking, Insurance, Securities and Health Care Administration in 2010, including having the lowest per- member per-month costs; the lowest rates of Emergency Department visits, potentially-avoidable ED visits, and hospitalizations for ambulatory-sensitive conditions; and among the lowest hospital re-admission rates. A commitment to primary care and the primary care workforce. Unlike some academic medical centers, Fletcher Allen recognizes the importance of a strong primary care presence in the communities we serve, and along with the UVM College of Medicine – our partner in the academic medical center – we continue Fletcher Allen Health Care – 111 Colchester Avenue – Burlington, VT 05401 Dr. William Hsiao February 3, 2011 Page 2 to invest resources into educating and training primary care providers as well as promoting primary care through the expansion of the Blueprint for Health’s patient-centered medical home model (discussed in more detail below). An electronic health record capable of capturing and using information on a real-time basis not only for claims processing, but for quality improvement and operational efficiency purposes. Over the past several years, Fletcher Allen has invested over $70 million (capital and operating expenses) in implementing a system-wide EHR known as PRISM (Patient Record and Information System Management). As of December 2010, PRISM is now live in our inpatient setting and all of our outpatient offices and clinics. It is also available to referring providers who are not part of Fletcher Allen, but whose patients we care for. Fletcher Allen is now among the top 3 – 4% of health care institutions in the U.S. that have a fully-integrated EHR system. Fletcher Allen was the second pilot site for the state’s Blueprint for Health, which is focused on transforming both the delivery of care and how care is reimbursed. We are expanding our Blueprint activities from the original pilot site (the Aesculapius Health Center, Vermont’s largest primary care practice) to our other nine primary care practices, and are also working with several community-based primary care practices as well as the Community Health Center of Burlington to assist them in implementing the patient-centered medical home model. This includes developing Community Health Teams for over 30 primary care practices and over 100,000 patients. We are also working with the Department of Vermont Health Access to expand our Blueprint pilot to include specialty care, targeting patients with chronic heart disease as a first step. We are actively exploring the potential for creating or participating in an Accountable Care Organization (ACO) or Healthcare Innovation Zone (HIZ), an ACO-like designation authorized under the Patient Protection and Affordable Care Act (ACA) that emphasizes not only changes in care delivery and payment, but achieving those goals in the context of academic medicine and the education of new health care professionals. (In fact, we are eagerly awaiting the release of ACO regulations being prepared by the federal Centers for Medicare and Medicaid Services.) We have also been active participants in the Payment Reform Advisory Group formed in late 2010 to advise the new Director of Payment Reform for Vermont in his development of a strategic plan for payment reform in Vermont. Our physician-hospital organization, Vermont Managed Care, has 15 years of experience in accepting capitated risk for defined populations of patients, and of managing their care cost-effectively. VMC contracts for and manages care for 2 Dr. William Hsiao February 3, 2011 Page 3 over 40,000 covered lives across six counties in northern and central Vermont, with a care network that includes ten hospitals and over 3,000 providers. Our James M. Jeffords Institute for Quality and Operational Effectiveness has fifteen years of experience in clinical process redesign and implementation. The Institute is focused on ensuring that Fletcher Allen meets its strategic goals in the area of quality, patient safety and operational efficiency. Its care management philosophy, developed in 1995, echoes the “six aims” adopted several years later by the Institute of Medicine: “Fletcher Allen Health Care is committed to continuously improving the quality of care provided to our patients. It is our fundamental belief that high quality care is cost-effective care. The care management process will result in standardization of patient care that is patient-focused, evidence based, built on consensus and data-driven, results in improved outcomes, safe, efficient in resource consumption, and economically viable.” The Institute’s functions and resources include measurement (providing expert analysis of data to support clinical research, clinical and operational process improvement and ongoing monitoring of performance indicators), patient safety (focusing on proactive risk reduction and promotion of patient safety initiatives), and quality consultation (providing expertise in project management and all relevant analytic and process improvement techniques are available to serve the needs of the organization). Having said that, we did identify a number of concerns and questions arising from the draft report, which we have addressed in detail in the enclosed comments. Some of our overarching concerns include: The need for state-based reform efforts to align with the ACA, whose implementation is already well underway. Our concern about the reliance on national data to understand Vermont’s health care system and to model the impact of any changes to it. There are many areas in which Vermont’s health care system is structured differently or operates differently than elsewhere, and we believe there is real danger in assuming that national statistics – particularly those around potential cost savings – can simply be scaled to Vermont. While the options would move many Vermonters into a single-payer plan for the benefit package chosen, there would still be many other payers that providers would be dealing with. Fletcher Allen alone, for example, currently processes claims for about 1,150 unique insurers, many (if not most) of whom would not be affected by the “single channel” being proposed in the options. This materially impacts the savings assumptions in the report. 3 Dr. William Hsiao February 3, 2011 Page 4 While the report at one point recognizes the fragility of Vermont’s hospital system (acknowledging that “[a]ny measurable reduction [in the] total amount paid to Vermont hospitals could jeopardize the survival of Vermont hospitals”), we do not believe that this concern is adequately addressed. For example, Fletcher Allen is the only hospital in Vermont with a credit rating, and that rating is already at the low end of the industry norm. Any deterioration in our finances will threaten our ability to maintain our current services while transitioning to a new care delivery system. Thank you for the opportunity to submit these comments. We look forward to your consideration of these comments, and to the final version of the report. Sincerely, Melinda L. Estes, M.D. President and Chief Executive Officer Enc. 4 Fletcher Allen comments on Hsiao Report February 3, 2011 We have divided up our comments into several categories, as well as offering some general comments at the beginning (including comments that did not fit well into the categories we used). General Comments One of the most important principles for Fletcher Allen is that any state-based reform effort must align with the Patient Protection and Affordable Care Act (ACA), whose implementation is already underway. We recognize that Option 3, in particular, seeks to do that, and would hope that any legislation that is introduced will do the same. The report does not discuss the impact of anticipated cuts to Medicare and Disproportionate Share Hospital (DSH) payments that will occur over the next several years under the ACA. It is not clear whether these were considered in each design model and their savings assumptions. As importantly, the final report should also address the impact of the Governor’s proposed changes in state health care spending as announced in his budget address on January 25, especially in the context of the need for a strong health care infrastructure to deliver the care contemplated in all of the options. Those include an increase in provider taxes on hospitals and moving the Catamount Health program out of the private insurance market and into Medicaid, thereby reducing payments to providers from roughly 110% of costs to much-lower Medicaid levels.