States move to bring value-based pay to community health centers

Although they serve more than 24 million low-income individuals annually, federally qualified health centers have largely been excluded from experiments aimed at reducing costs and improving clinical outcomes. That's starting to change, though, as a handful of states advance alternative payment models for the centers.

There are 1,400 of the centers, known as FQHCs, across the country. They are reimbursed under a prospective payment system that pays a fixed amount for each patient visit. The system was enacted in 2000 to help struggling centers to stay afloat with mediocre Medicaid payments. Yet the volume-based reimbursement model is showing its limitations, especially by preventing centers from participating in outcomes-based care approaches.

These shortcomings have encouraged a growing number of states to consider establishing alternative payment models that enable such centers to expand services paid for by Medicaid. Federal law allows states to establish alternative payment models for its qualified health centers as long as the revenue is equal to the prospective payment model. California, Colorado, Minnesota, New York, Oregon and Washington have created reimbursement models that pay centers for value-based services such as at-home visits, transportation services and telehealth.

But shifting to a new payer model comes with challenges that include financial risks and difficulty accessing appropriate resources, especially necessary data. It can also be difficult to adapt to a new way of doing business.

"If you are on a visit-based model for decades and you change to another model that's hard," said Craig Hostetler, executive director of the Oregon Primary Care Association, which works with FQHCs and the state to roll out and oversee the program. ​

Of the six states, Oregon is farthest along in its push to value-based care for the centers. It began a pilot program with three centers in 2013. Washington plans to begin its pilot initiative July 1. The other states are still in the planning and implementation phases.

The push for states to engage in these value-based payment models has been partly influenced by Medicaid expansion under the Affordable Care Act, said Sara Rosenbaum, a professor of health policy at George Washington University in Washington, D.C. States that expanded Medicaid saw a large increase in the number of beneficiaries seeking care at federally qualified health centers. In 2015, 55% of qualified health center patients in expansion states were Medicaid beneficiaries, compared with 34% of health center patients in states that didn't expand the program.

For Oregon, the visit-based model was no longer sustainable. Of the 400,000 people treated at the state's 200 qualified health centers, about 60% are insured by Medicaid. A federal match program that allowed the centers to engage in transitional-care services such as partnerships with community organizations ran out at the end of 2013. This forced the centers to cope with a strictly fee-for-service model that strained doctors and drained funds.

"The big motivation was to get these FQHCs financially viable," said Jamal Furqan, program manager for FQHCs at the Oregon Health Authority.

The new model uses a capitated per member, per month payment system. The centers generate a list of patients who have had a visit in the last 18 months and determine the fixed rate for that patient's care based on their usage history.

Data collection has been a challenge, however, he said. ​

Because of the analytics-focused approach of the model, the centers must use EHRs in order to participate. They also must have stable finances. There are budgetary safeguards a center has to make about a year before it switches to the APM model to account for any losses.

"They need to not be risk-averse," Furqan said.