Health Centers and Value-Based Payment

November 16th, 2022 | Research


A new article in The Milbank Quarterly highlights health centers and the importance of value-based payment (VBP) and health center payment policy reform. The research comes from a collaboration between JSI, University of Chicago, and Health Resources and Services Administration.  

Health centers are vital to primary care for Americans. They serve one in every five Medicaid enrollees and do not turn anyone away based on inability to pay. Health centers and policymakers can use VBP to make health center payment more flexible; invest in population health; and provide incentives to meet the access and care needs of the millions of Americans who health centers serve. 

In the paper, we describe the current health center payment system and offer a conceptual multi-layered model for primary care payment reform. We then use two national data sets to analyze health center VBP adoption in seven states. We examine the relationship between VBP participation and health center size, financial solvency, and financial performance. Based on interviews with health center leaders in the study states, we describe how policy environments and other factors influenced VBP adoption. We conclude with reflections on how VBP for health centers might evolve.

Key policy points of the paper include: 

  • As essential access points to primary care for almost 29 million people, of whom 47% are Medicaid enrollees, health centers are positioned to implement the population health management necessary in VBP contracts.
  • Primary care payment reform requires the use of multiple payment methodologies to offer flexibility to care providers, encourage investments in infrastructure and new services, and offer incentives for achieving better health outcomes.
  • State policy and significant financial incentives from Medicaid agencies and managed care plans will likely be required to increase health center participation in VBP, which is consistent with broader state efforts to expand investment in primary care.

Our study shows that a multi-layer payment model is useful for implementing and monitoring VBP adoption among health centers. Our study also finds that state policymakers, payers, and health center leaders will need to work collaboratively to increase health center participation in VBP, thereby catalyzing the changes in care and outcomes that are the ultimate goals of payment reform.

Read the full article here.

Partner with Us

We strive to build lasting relationships to produce better health outcomes for all.