Vermont Walked Out of Its Federal Payment Model in July. In September, VTDigger Found Some of Its Clinicians Selling Memberships.

Vermont’s all-payer accountable care model agreement was in place from 2016 through 2025, an arrangement with the federal government meant to let Medicare join Medicaid and commercial insurers in paying for care differently. In July, the state walked out of the federal program built to replace it.

Vermont’s Agency of Human Services told CMS it was withdrawing from the AHEAD Model, which the state had signed onto in January 2025. The reason sits on Vermont’s own health care reform site, stated without much diplomacy: new federal policy and operational guidance “substantially reduced anticipated funding to reinvest in some Vermont providers like primary care practices.” Vermont Public reported the numbers behind that. State officials had calculated the deal could bring an extra $138 million in federal funds for health care in Vermont. Renegotiation capped additional payments at $10 million.

The primary care piece of that is specific. OneCare had been the intermediary for roughly $25 million raised from hospitals, insurers and the federal government and paid out to primary care providers, according to the Vermont Medical Society. When OneCare closed, Medicare’s contribution to those payments went away, and state officials had hoped AHEAD would bring it back.

Two months later, VTDigger published a story about Vermont clinicians charging patients a membership fee.

Nobody in that story mentions AHEAD. They don’t need to. Susan Ridzon, executive director of Health First, a statewide association of private practices, gave the shortest account of why membership models are spreading there: “To be clear, this is a response to a payment system that doesn’t cover the work that practices are doing.”

Ten years of reform, and then a hole where it used to be

Here is what Vermont dismantled, in order.

The Vermont All-Payer ACO Model ran through the end of calendar 2025. OneCare Vermont, the accountable care organization that carried it, announced in November 2024 that it would wind down at the conclusion of 2025. The state had already been accepted into AHEAD and signed the final agreement on January 17, 2025. AHEAD was supposed to be the bridge: hospital global budgets on one side, prospective per-patient payments to primary care practices on the other.

Then the terms changed, and Vermont left.

Human Services Secretary Jenney Samuelson said in a statement that the decision “wasn’t made lightly” and that it “will not increase costs for Vermonters or reduce access to services.” That may hold at the level of a state budget. At the level of a four-provider practice in Chittenden County, money that was going to arrive as enhanced primary care payments is money that isn’t arriving.

Ridzon describes the underlying math without needing a federal program to explain it. Reimbursement varies by the biller, she told VTDigger, and a system like the University of Vermont has bargaining power a solo practice does not. “It’s really kind of obscene sometimes the differences for the exact same service,” she said.

What Vermont’s clinicians actually built

The two practices VTDigger profiled are running different models, and the difference matters more in Vermont than it would almost anywhere else.

Holly Whitcomb is a nurse practitioner who spent 24 years in Hinesburg. She’s opening Horizon Primary Care on Timber Lane in South Burlington, and it’s a concierge practice: a membership fee on top of ongoing insurance billing. VTDigger surveyed local membership prices and found them hovering around $2,000 a year, with Horizon scaling by age and family size. That figure describes a handful of Vermont offices rather than a national rate, and prices vary by practice and market. For comparison, the AAFP puts typical DPC membership fees at roughly $50 to $100 a month.

Whitcomb’s stated reason has nothing to do with revenue. “I’m not doing this to make a gazillion dollars,” she said. “I’m doing this to genuinely try to take better care of my patients in the way that I think they should be cared for.”

Beth Schiller owns Champlain Medical, an urgent care center in the same city, and she runs direct primary care. She offers it only through what VTDigger describes as a special relationship with some local employers. Schiller has worked with Engineers Construction Inc. for years, with Champlain handling ECI’s workplace injuries and the physical exams some of its employees need. ECI pays for the memberships and incentivizes employees to enroll, and it offers insurance separately from what Schiller provides.

An employee gets one annual primary care visit with basic labs, an EKG and a hearing test, and then, in Schiller’s words, “they have access to our facility for the rest of the year, for whatever, urgent care, primary care, essentially any of their other needs.” She said a routine EKG under that arrangement recently led to a cardiology referral, a stress test and a triple bypass.

That’s the employer-funded DPC pattern showing up in a state with no DPC market to speak of, built by a nurse practitioner out of an urgent care center, because a construction company was already a customer.

The workforce number sitting under all of it

Vermont’s Department of Health counted 40 fewer primary care providers in 2024 than in 2022. The longer series, reported by VTDigger in August, is worse than that two-year gap suggests: 634 practicing primary care in 2004, 569 physicians in 2022, and 529 people working as primary care providers in 2024. The wording moves with the years, from physicians in the earlier counts to providers in the most recent one. Adjusted for hours, the state has the equivalent of 402 full-time clinicians. Close to a third of Vermont’s primary care physicians are older than 60.

Ridzon’s claim is that membership models keep some of those physicians from leaving. “They’re finding a way to make it happen rather than retiring,” she said. “Because a lot of them are so burnt out that they exit the field or retire.”

She offers no data behind it, and VTDigger cites none. Health First puts membership practices at about 7 percent of its own members and says the share is growing. Nationally, the Health Affairs study VTDigger cites found concierge and DPC practice sites grew 83 percent, over a window of 2018 through 2023 rather than the 2019 start the article gives it.

Vermont never wrote the law

Here’s the part that should give a Vermont clinician pause. Per DPC Frontier, Vermont has never enacted a direct primary care statute, and its legislature is only beginning to consider the idea. The single bill the site points to, House Bill 207, proposes universal primary care rather than a DPC carve-out, and it has yet to make it out of committee.

Most states have enacted DPC laws, which DPC Frontier catalogues under the heading of defining these agreements outside the insurance laws. Vermont is not among them. Every periodic-fee agreement signed in South Burlington right now is written without that statutory cover.

The exposure is uneven. Whitcomb’s concierge model bills insurance, so it already operates inside a regulated framework. Schiller’s employer-funded contracts run through a business relationship with ECI rather than a consumer agreement, a different risk profile again. The clinician most exposed is the one who hasn’t opened yet: a Vermont physician who wants to sell a flat monthly fee straight to patients, with no insurance billing and no employer in the middle.

What This Means

If you’re a physician in a state that never passed a DPC statute, Vermont is the case study to read. It shows what happens when a state’s own payment reform runs out of road and clinicians start building their own arrangements anyway, in a legal vacuum, one practice at a time.

Get the sequence right, because the easy version of this story runs backwards. Vermont ran an all-payer model agreement from 2016 through 2025, meant to bring Medicare alongside Medicaid and commercial insurers, then signed on to the federal model built to succeed it. When the extra federal money shrank by more than 90 percent against projections, and the state said the new terms cut what it could reinvest in practices like these, Vermont left. Its clinicians began charging fees themselves.

A statute wouldn’t have kept AHEAD alive. It would tell the physicians now doing the math in Burlington and Rutland whether the thing they’re building is legal. Right now they’re guessing, the guess is probably fine, and probably fine is a strange foundation for a practice you plan to run for twenty years.