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.