The Time is Right for Community Health Centers to Embrace Value-Based Payment Models

This blog originally appeared on MedPage Today on May 4, 2017

For the past half century, community health centers have been perhaps the most steadfast providers of healthcare services for low income populations in the U.S. Special funding from both states and the federal government have, to date, enabled these centers – which now provide care to more than 24 million Americans and serve everyone regardless of their ability to pay – to develop in communities where other clinics frequently are not able to exist. Because of the unique importance of community health centers in providing comprehensive care to vulnerable populations, they are one of the few social service programs with true bipartisan support.

Currently, community health centers (also often referred to as federally qualified health centers, or FQHCs) get paid according to what is known as the prospective payment system (PPS), in which the state prospectively sets a rate for each Medicaid visit. These rates vary depending on several factors, including the scope of services provided by each center. Because of the PPS, community health centers have been able thrive, even in challenging, low-resourced environments.

Perhaps the biggest downside of the PPS system, however, is that it functions as a volume-based reimbursement mechanism in which revenue is tied to the number of visits with billable providers rather than to quality or patient outcomes. Though some states have experimented with alternative payment models for health centers, federal statute has limited the implementation of advanced, risk-bearing payment strategies.

In this week’s Journal of the American Medical Association Viewpoint, we argue that, at a time when many third-party payers, including Medicare, are shifting to value-based reimbursement strategies, it is time for reimbursement at community health centers to evolve as well. Because of the vulnerability of the patients served at these centers, we believe it will be critical to proceed cautiously, honoring the original intent of the community health center program: to make primary care viable in low-income communities. Nevertheless, more flexible, value-based payment strategies that reward not just the quantity but also the quality and efficiency of care may enable community health centers to provide even better care. For example, with reduced pressures to generate visit volume, capitated payments would allow these centers flexibility to offer care in non-traditional ways, such as via telephone and electronic communication, or using ancillary care team members.

Community health centers are uniquely positioned to ensure high quality, accessible care for low-income populations, and to address disparities in health outcomes. Implementing value-based payment models will support these institutions in continuing to serve this vital role in the years ahead.

Written by: Jay Bhatia, Rachel Tobey, and Michael Hochman. Jay Bhatia is a second year medical student at the Keck School of Medicine of the University of Southern California. Rachel Tobey specializes in health policy and directs the John Snow, Inc., office in San Francisco, CA. Michael Hochman, MD, MPH, is the director of the Gehr Family Center for Implementation Science at the Keck School of Medicine and a co-editor of the MedPage Today blog Slow Medicine.