Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Value-Based Care News

FQHCs Push for Health Center Medicaid Payment Reform Models

A new study found that federally qualified health centers are willing to participate in more Medicaid payment reform models to implement value-based care.

By Jacqueline LaPointe

- Federally qualified health centers (FQHCs) in five states voiced strong interest in Medicaid payment reform model participation to improve value-based care delivery and boost healthcare employment strategies, a recent Geiger Gibson RCHN Community Health Foundation brief reported.

Researchers called on the federal government to promote Medicaid payment reform models for FQHCs

Health center staff perceived alternative payment model adoption not only as a way to tie Medicaid reimbursement to value, but a method for recruiting and retaining employees to care for vulnerable patient populations, such as Medicaid beneficiaries and uninsured individuals.

“Several expressed a desire to substitute community health workers and for more highly trained and licensed clinical staff in order to reduce clinician burden, and identified a need for more efficient care models targeting specific health conditions to reduce the need for a high volume of face-to-face encounters,” the brief stated. “Payment reform thus has emerged as a crucial workforce and care redesign strategy and is viewed as a means for promoting recruitment and retention.”

While FQHCs in the five Medicaid expansion states studied expressed interest in alternative payment model adoption, researchers examined how states were developing Medicaid payment reform programs and what challenges they faced.

Federal Medicaid laws mandate that FQHCs are reimbursed under a prospective payment system that aligns Medicaid revenues received with the proportion of Medicaid patients served. The methodology has been successful, the brief stated, with 49 percent of health center patients in 2015 receiving Medicaid and Medicaid accounting for 44 percent of health center revenues.

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Medicaid payment reform models also had to respond to underserved patient populations that FQHCs typically treat, such as uninsured individuals. Almost one-quarter of patients served by FQHCs in 2015 were uninsured, the brief reported.

Federal grants are the primary method for paying FQHCs for treating uninsured populations. The grants allow health centers to absorb uncompensated care costs for patients who qualify for assistance based on income.

However, both the Medicaid prospective payment system and federal grants are based on fee-for-service payment arrangements. Some states and health centers are seeking ways to implement value-based reimbursement while still ensuring that FQHCs receive appropriate reimbursement for treating underserved communities, including Medicaid and uninsured populations.

To better manage both populations, the health centers expressed interest in joining broader healthcare reform initiatives that focused on supporting medically complex patients, improving performance outcomes, and enhancing efficiency, the brief stated.

In four of the states, healthcare payment reform projects were part of larger care delivery system changes. Although, health centers in all states expected to take on “a role as part of broader managed care initiatives or integrated delivery system formation.”

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Minnesota-based health centers, however, lead a FQHC-specific Medicaid payment reform model, researchers added.

Researchers also revealed that a per-member-per-month reimbursement structure was the most common method for alternative payment model implementation at FQHCs. The models sought to include efficiency and quality improvement goals while ensuring that the total payment amount did not fall below the prospective payment system’s reimbursement floor.

Under the per-member-per-month payment structures, the FQHCs reported less face-to-face encounters, but highlighted more frequent patient “touches,” such as telephone and texting consultations.

Health centers in Minnesota, however, participated in an encounter-based model with a shared savings provision that linked incentive payments to quality performance.

Quality measurement was a key feature in most Medicaid payment reform models, researchers added. The models primarily focused on decreasing diagnostic services use, reducing inpatient and emergency care, improving primary care management of chronic conditions, and enhancing patient satisfaction and communication.

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Since many FQHCs qualitied as patient-centered medical homes (68 percent) and had higher rates of EHR adoption (98 percent), health center staff said they had the resources to participate in broader quality improvement incentives or performance-based payment models.

All respondents also said they were interested in shared savings payment structures that rewarded health centers for quality improvement. Minnesota and Colorado were the only states that implemented shared savings programs at the time.

All state models, though, were challenged with how to reconcile alternative payment structures with the prospective payment system’s reimbursement floor, which required alternative reimbursement to generate the same revenue amount in relation to patients served that the prospective payment system would produce. In other words, the payment reform models needed to similarly align Medicaid revenues with the cost of covered services.

In three states, the state Medicaid agency maintained payment reconciliation responsibilities, while California health plans participating in the payment reform program assumed responsibility and the state of New York continued this role.

Researchers noted that Oregon’s reconciliation arrangement was unique because it accounted for aggregate reimbursements as well as supplemental payments per encounter.

“That is, the reconciliation negotiations reflect the hold-harmless requirement of the PPS [prospective payment system] revenue floor, and have focused on how to ensure that health centers could maintain the overall revenue flow needed to make the workforce and capital improvement investments necessary to achieving change,” the brief stated.

Based on the study’s findings, researchers called on the federal government to encourage Medicaid expansion states to create FQHC-specific alternative payment models that test Medicaid payment reform.

“These models can be coupled with information sharing to allow the more rapid spread of reform innovations such as the introduction of global payments coupled with strategies for ensuring that overall revenues remain adequate for robust health center operations and growth,” concluded the brief.

Researchers continued, “In this respect, efforts in recent years by CMS to accelerate large-scale Medicaid reform might be extended to include the creation of alternative FQHC payment systems that can, in turn, encourage greater health center integration into payment transformation efforts.”

Dig Deeper:

Understanding the Value-Based Reimbursement Model Landscape

Preparing the Healthcare Revenue Cycle for Value-Based Care


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