Health Centers and Value-Based Payment: A Framework for Health Center Payment Reform and Early Experiences in Medicaid Value-Based Payment in Seven States.

Policy Points As essential access points to primary care for almost 29 million US patients, of whom 47% are Medicaid enrollees, health centers are positioned to implement the population health management necessary in value-based payment (VBP) contracts. Primary care payment reform requires multiple payment methodologies used together to provide 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 Medicaid 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. CONTEXT: Efforts are ongoing to advance value-based payment (VBP), and health centers serve as essential access points to comprehensive primary care services for almost 29 million people in the United States. Therefore, it is important to assess the levels of health center participation in VBP, types of VBP contracts, characteristics of health centers participating in VBP, and variations in state policy environments that influence VBP participation. METHODS: This mixed methods study combined qualitative research on state policy environments and health center participation in VBP with quantitative analysis of Uniform Data System and health center financial data in seven vanguard states: Oregon, Washington, California, Colorado, New York, Hawaii, and Kentucky. VBP contracts were classified into three layers: base payments being transformed from visit-based to population-based (Layer 1), infrastructure and care coordination payments (Layer 2), and performance incentive payments (Layer 3). FINDINGS: Health centers in all seven states participated in Layer 2 and Layer 3 VBP, with VBP participation growing from 35% to 58% of all health centers in these states from 2013 to 2017. Among participating health centers, the average percentage of Medicaid revenue received as Layer 2 and Layer 3 VBP rose from 6.4% in 2013 to 9.1% in 2017. Oregon and Washington health centers participating in Layer 1 payment reforms received most of their Medicaid revenue in VBP. In 2017, VBP participation was associated with larger health center size in four states (P <.05), and higher average number of days cash on hand (P <.05) in three states. CONCLUSIONS: A multilayer payment model is useful for implementing and monitoring VBP adoption among health centers. State policy, financial incentives from Medicaid agencies and Medicaid managed plans, and health center-Medicaid collaboration under strong primary care association and health center leadership will likely be required to increase health center participation in VBP.

Factors associated with federally qualified health center financial performance.

OBJECTIVES: To understand factors associated with federally qualified health center (FQHC) financial performance. STUDY DESIGN: We used multivariate linear regression to identify correlates of health center financial performance. We examined six measures of health center financial performance across four domains: margin (operating margin), liquidity (days cash on hand [DCOH], current ratio), solvency (debt-to-equity ratio), and others (net patient accounts receivable days, personnel-related expenses). We examined potential correlates of financial performance, including characteristics of the patient population, health center organization, and location/geography. DATA SOURCES: We use 2012-2017 Uniform Data System (UDS) files, financial audit data from Capital link, and publicly available data. DATA COLLECTION/EXTRACTION METHODS: We focused on health centers in the 50 US states and District of Columbia, which reported information to UDS for at least 1 year between 2012 and 2017 and had Capital link financial audit data. PRINCIPAL FINDINGS: FQHC financial performance generally improved over the study period, especially from 2015 to 2017. In multivariate regression models, a higher percentage of Medicaid patients was associated with better margins (operating margin: 0.06, p < 0.001), liquidity (DCOH: 0.67, p < 0.001; current ratio: 0.28, p = 0.001), and solvency (debt-to equity ratio: -0.08, p = 0.004). Moreover, a staffing mix comprised of more nonphysician providers was associated with better margin (operating margin: 0.21, p = 0.001) and liquidity (current ratio: 1.12, p < 0.001) measures. Patient-centered medical home (PCMH) recognition was also associated with better liquidity (DCOH: 19.01, p < 0.001; current ratio: 4.68, p = 0.014) and solvency (debt-to-equity ratio: -2.03, p < 0.001). CONCLUSIONS: The financial health of FQHCs improved with provisions of the Affordable Care Act, which included significant Medicaid expansion and direct funding support for health centers. FQHC financial health was also associated with key staffing and operating characteristics of health centers. Maintaining the financial health of FQHCs is critical to their ability to continuously provide affordable and high-quality care in medically underserved areas.