Vermont officials outline AHEAD payment-reform terms, warn of risks and unresolved issues

Jenny Samuelson, secretary for the Vermont Agency of Human Services, told the Health Care Reform Oversight Committee on the AHEAD model that the state has negotiated higher baseline funding and targeted primary‑care investments with the Centers for Medicare & Medicaid Services (CMS) but has not committed to the model.

The term sheet the state and CMS released proposes a hospital global‑budget approach, a per‑member‑per‑month (PMPM) primary‑care payment and a statewide equity and transformation pool the presenters called the EAST Fund (Equity, Access and Statewide Transformation Fund). ‘‘We are not committing to this model here,’’ Samuelson said, adding that Vermont remains in negotiations and will decide whether to sign later this winter.

The nut of the AHEAD proposal, as described by Samuelson and Pat Jones of the Department of Vermont Health Access, is to create statewide accountability for total cost of care and to return negotiated Medicare savings into the state to fund investments. ‘‘The total cost of care includes your basic Medicare Part A and Part B type services,’’ Jones said, listing inpatient, outpatient and professional services as examples. Samuelson said the state negotiated roughly $138,000,000 more than current Medicare spending as a baseline increase. She also described a PMPM primary‑care investment the term sheet estimates at about $15 to $21 per member (a roughly $11,000,000 range), continued funding for Blueprint and SASH (about $10.9 million) and roughly $12,000,000 in additional SASH support spread over 5.5 years.

Under the current term‑sheet outline, participation would ramp over multiple years: about one medium hospital (roughly 10%) in year one, 50% including UVM Medical Center in year two, 80% in year three and 85% by year five including medium and critical‑access hospitals. CMS and Vermont negotiators also aim to secure commercial‑payer participation by year two. Samuelson emphasized that whether the first cohort begins in 2026 or the second in 2027 remains a negotiation point.

Committee members pressed how non‑hospital services would be treated. Jones said the total‑cost‑of‑care concept can include home health and certain long‑term supports because Medicare Part A and Part B services are part of the measure; she noted the model would target investments where access challenges exist, including home health and behavioral‑health services. Samuelson and other speakers said that if hospital service‑line changes are proposed, those changes would require approval through the Green Mountain Care Board and CMS.

The term sheet also establishes an EAST Fund to redistribute savings above the statewide total‑cost target into transformation investments. Samuelson said the fund’s structure and decision‑making body must still be defined; possible participants include Green Mountain Care Board members, Agency of Human Services staff, the state health care advocate and legislators. Suggested grant‑style or one‑time investments could include equipment purchases (Samuelson used dialysis equipment in Rutland as an example) and ongoing payment changes where Medicare currently does not pay (for example, support for hub‑and‑spoke opioid treatment models).

Officials flagged multiple risks and open questions: whether funding projections will hold if enrollment shifts to Medicare Advantage, how increases in utilization (for example, home health) will affect the pool of available funds, whether sufficient commercial‑payer participation will be secured, and whether the state has the staffing and implementation resources to manage a complex multi‑payer model. Samuelson said the state negotiated an out clause allowing termination during pre‑implementation with 30 days’ notice and termination during an active implementation year with 180 days’ notice; she also said federal termination would require a 12‑ to 24‑month transition period in many cases.

Samuelson identified three official signatories to any AHEAD agreement: the Green Mountain Care Board chair, the secretary of the Agency of Human Services and the governor. She said some implementation funding is available (roughly $12,000,000 noted for implementation), but that additional budget decisions — including whether certain implementation costs would come from the state’s negotiated funds — must be resolved with the legislature.

Committee members and legislators repeatedly urged caution. Representative Wood summarized the concern: Vermont cannot afford “another failed experiment,” noting the state must weigh whether the projected total‑cost‑savings and investments outweigh the administrative and access risks. Several legislators asked whether cohort selection (2026 vs. 2027) should be driven by readiness and staffing capacity rather than an arbitrary deadline.

Officials said the AHEAD term sheet aligns with prior recommendations (including work by Oliver Wyman) but stressed the model is intended to tie payment reform to clinical and delivery transformation; Samuelson said: ‘‘We can’t do AHEAD without transformation, and we can’t do transformation without in some way changing the perverse incentives that we have in our health care system.’’

No formal action or vote was taken during the hearing; presenters said Vermont has a target signing window in January and that final decisions will require additional negotiation, legislative budgeting and definition of governance for the EAST Fund.

Closing remarks thanked providers and staff involved in negotiations and reiterated that the state was trying to align payment, delivery and measurement to avoid repeating past shortcomings.