Changes are needed to a new health care payment system that focuses on keeping patients healthy rather than treating them when they get sick, the head of the Vermont Agency of Human Services said Thursday.

A report released Thursday is a “blunt outlook of the faults” in the system and what officials feel needs to change to make the system work going forward, Human Services Secretary Michael Smith said.

Despite the challenges, Smith said, he believes in the system. The traditional health care payment system, known as fee for service, encouraged health care systems to provide more care so they would get paid more, he said.

“I am committed to what we have now because to change right now, I think, would be unfair to the system,” Smith said. “So I am committed to trying to make this work, trying to make this successful as we move forward. We’ll see.”

The state received a warning letter from the federal Center for Medicare and Medicaid Services saying it was behind in meeting some of the program’s targets.

Four years ago, Vermont health care regulators, with the approval of federal officials, authorized a new health care payment system that would pay providers for each patient they care for rather than for each procedure they perform.

The goal is to keep patients healthier while reducing health care costs. By the end of 2022, the plan was to have it provide healthcare for about 70% of Vermonters.

The health care payment system is now covering about 42% of Vermonters. The federal government thinks the program should be at about 58% at this point, said Ena Backus, Vermont’s director of health care reform.

Among the recommendations in the report were to “advance a new leadership strategy” at OneCare Vermont, the independent accountable care organization that works with health care providers.

It also said OneCare must do more to help health care providers switch to the new payment system. Providers are unclear how participating in the system will improve care.

“Some resistance to change is to be expected, however widespread critique of the most basic tools to facilitate value-based payment suggests that OneCare has not responded quickly enough to address participant feedback,” the report said.

The CEO of OneCare Vermont, Vicki Loner, said the organization believes the report “creates a good opportunity for all stakeholders to be able to focus and re-engage on how best to make improvements in the model within our respective scopes.”

“These recommendations are a great foundation for further dialogue and collaboration,” Loner said in a written statement.

The report also recommends working with the federal government to address limitations and promote innovation between the state and federal government and increasing participation in the program by self-funded groups.

Separately, the state announced Thursday that it had authorized the health insurance provider Blue Cross Blue Shield to have people covered by the State Employee Health Plans participate in the accountable care system.

The state said the move will not impact employee premiums or copays.

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