"This kind of quality improvement inevitably reduces waste and results in better service for the patient," said Dr. Allan Ramsay, a physician and one of five members of the Green MountainCare Board.

Care coordination will be led by the patient's primary care physician. A common electronic medical record will be used by that office, the oncologist and other specialists, officials said.

There's an up-front cost. It's $40 per month per patient to both the primary care practice — also known as the patient's "medical home" — and to the oncology practice for the extra effort at care coordination.

"Doctors want to provide the best care for their patients," said Anya Rader Wallack, chairwoman of the care board. "But too often we don't pay them for critical services like caremanagement."

Steve Kimbell, commissioner of the Vermont Department of Financial Regulation, said the hope is that in most cases, the extra expense will be offset by the better coordination of care. "It's a question of where the lines cross," he said.

Richard Slusky, director of payment reform for the Green Mountain Care Board, said "we're reasonably confident" that efficiency savings will more than offset the extra $80 per month per patient. "But that's what the pilot is for. There will be an evaluation of that within a year."

Participants in the project include the Northeastern Vermont Regional Hospital, a satellite cancer clinic in St. Johnsbury operated by the Lebanon, N.H.-based Dartmouth-Hitchcock Medical Center, the Northern Counties Health Care physicians' group, Blue Cross Blue Shield of Vermont and the state Department of Health Access, which administers Vermont's publicly financed or subsidized health insurance programs.

Paul Bengtson, CEO of the St. Johnsbury hospital, said a key to the program will be the common electronic medical record in which a range of providers will have access to the patient's care plan as recorded in linked computer systems. Once the system is up and running, "everyone knows how to access it and how to fit their contribution into the careplan," Bengtson said.

Rader said the St. Johnsbury program is one of several the Green Mountain Care Board will be rolling out in the coming months around the state as it tries out different types of new payment systems.

Legislation passed by Vermont last year calls for the state to use the 2-year-old federalhealth care overhaul as a springboard for a more ambitious state system under which Vermont would move as close as possible to a universal, publicly funded, single-payer system.

Wallack and other backers of the change say changing the way health care is paid for and managed will be key if the larger overhaul is to be successful.

"We appreciate that the health care community in St. Johnsbury is stepping forward to test a truly collaborative system designed to wrap around each individual patient in the way we expect care to work in small Vermont communities," Wallack said.