How Small Health Centers Can Succeed With Value-Based Payments

June 13, 2018 - Small community health centers should shift to a population-based mindset and deliver care management and coordination to succeed under value-based payment models, uncovered a new analysis from Health Center Partners of Southern California (HCP SoCal).

But developing the capabilities for value-based payment success will require help from partners in the community, the California-based primary care consortia found after a literature review, environmental scan, and interviews.

Value-based reimbursement is reaching community health centers through Medicaid managed care plans, Medicare alternative payment models, and state-proposed value-based payment arrangements. For example, Medicare manages the Health Homes program, which offers supplemental value-based payments to participating community-based care management entities.

However, small community health centers face challenges with implementing the new payment models.

“All health centers struggle to put this infrastructure in place, but small health centers — defined for the purposes of this paper as having fewer than 10,000 patients or an annual budget of $10 million or less — face unique challenges in securing access to capital, building strong data capabilities, and negotiating favorable rates with vendors and contracts with health plans,” HCP SoCal wrote.

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But the analysis showed that small community health centers can position themselves for value-based payment success by implementing a population-based mindset based on members, not just patients.

Value-based reimbursement models call on providers to manage the health of an entire attributed population, whether those population members seek healthcare services at the community center or not.

“This includes understanding who assigned members are and then proactively reaching out to ensure that all members have received preventive screenings, disease management, and appropriate referrals to specialists or social services,” the study stated. “Most pay-for-performance contracts calculate incentive payments based on quality outcomes and sometimes hospital utilization rates for all assigned members.”

Community health centers should also deliver care management and coordinated services to succeed under value-based reimbursement models, HCP SoCal found.

“Value-based payments, such as supplemental payment under Health Homes, require that providers demonstrate to the state and managed care plans that this payment reform results in reduced hospitalizations, skilled-nursing facility stays, and emergency department visits,” the study explained.

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“For many health centers, this means expanding their care management and coordination skillsets and workforce to be able to stratify their population and then provide intensive care management services to individuals at the greatest risk for experiencing high-cost utilization.”

To shift to a population-based mindset and coordinate care, community health centers need robust data analytics and infrastructure, researchers added.

At the most basic level, a health center should have real-time data and associated processes to track attributed patients throughout the care continuum. Admission/discharge/transfer (ADT) data and other information sources are crucial to reducing costly hospital utilization and preventable morbidity, which are common metrics used to determine value-based payments.

Data is also key to proving the value of care delivered at small community health centers. Value-based payment models hinge on quality reporting.

“Being able to track, improve upon, and report outcomes requires increased sophistication around data analytics,” the study stated. “It also requires being intentional and systematic about measuring and improving the effectiveness of interventions that have long been part of the fabric of health centers but in a variable or fluid way.”

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A population-based mindset, care coordination, and data analytics may be the three keys to value-based payment success for small community health centers. But developing and implementing the workforce and leadership, care delivery systems, data infrastructure, and business model needed to achieve these three goals will require a partner, HAP SoCal reported.

Developing the right partnership for value-based payment success

Through the review and interviews, researchers found that small community health centers are reaching out to local healthcare stakeholders for value-based payment success.

“For many small health centers, executing such changes on their own is neither efficient nor feasible, particularly if their financial and operational infrastructure is already strained,” they wrote. “Partnerships and alliances can be critical to securing resources and leveraging the skills of another entity. In fact, participating in partnerships emerged as a promising strategy for small health centers for attaining the infrastructure needed to deliver high-quality, comprehensive care and succeed under value-based payment.”

The study revealed that small community health centers are engaging in one or many of the following partnership types:

• Partnerships with community-based agencies and organizations
• Partnerships with hospitals
• Consortia
• Management Services Organizations (MSOs) and Clinically Integrated Networks (CINs)
• Health center-led Independent Practice Associations (IPAs)
• Mergers and acquisitions
• Partnerships with health plans

Deciding on what type of partnership is appropriate for the small community health center will depend on the capabilities needed at that particular facility for value-based payment success.

For example, forging a relationship with a community-based organization can help health centers to address social determinants of health and behavioral health. Health centers can improve care coordination and reduce the costs associated with social determinants of health using the expertise of a local agency.

But these partnerships do not help community health centers manage the financial risk associated with value-based payment models, like a partnership with a hospital could. Hospital partnerships allow health centers to track patients throughout the care continuum and access specialty services, as well as share data and technology.

However, hospitals may take the larger share of incentive payments or value-based reimbursement because it is covering more of the financial risk and delivering care to more lives.

On the other hand, consortia, CINs, and IPAs tend to leverage the buying power and capabilities of each member organization. The combined capabilities allow the governing organization to negotiate for more favorable payer contracts on behalf of the health center, engage in group purchasing discounts, and manage the administrative component of value-based payment participation.

Small community health centers in serious financial distress or located in markets with few partnership opportunities may consider full mergers and acquisitions. Merging with a neighboring health center or a health system can bring together technologies, care management capabilities, and workforce to help health centers stay open and create the market power to enter favorable value-based reimbursement models.

Whichever partnership type community health centers decide to use, the centers can use these relationships to work with health plans and enter value-based payment models.

“Small size can be a challenge when engaging with payers. For example, payer representatives indicated a preference for working with larger entities that they perceive as having a greater capacity to implement change,” the study explained.

Through partnerships that enable small community health centers to implement a population-based mindset, care coordination skills, and data analytics capabilities, these small facilities can demonstrate their commitment to high-value care and put them in a position to handle the financial risk associated with value-based payments.