Helping FQHCs Get Off the Treadmill

Under the prospective payment system (PPS)—as established in federal law—federally qualified health centers (FQHCs) receive per-visit payments for treating Medicaid enrollees.  This system ofencounter-based reimbursement can be difficult for FQHCs for several reasons:

• FQHCs need face-to-face visits in order to generate revenue.  Accordingly, many FQHC-based providers are on the same “15-minute treadmill” as their colleagues in private practice.
• Valuable, cost-effective “in-between” care—such as proactive phone-based follow-up and care coordination—is generally not reimbursed directly.

Earlier this month, NASHP convened a webinar for state Medicaid officials to discuss options for supporting FQHCs through value-based payment—that is, payment that facilitates, promotes, and rewards efficiently delivered high-quality care.  Learning more about Oregon’s proposed alternative payment methodology (APM) for FQHCs was a highlight of the webinar.
In 2011, the Oregon Primary Care Association (PCA) approached the Oregon Health Authority, the state’s Medicaid agency, with interest in developing a payment system that could support FQHC operations without regard to the frequency of face-to-face encounters while enabling FQHCs to successfully assume responsibility for a defined population. PCA leaders thought such a payment system could enable FQHCs to deliver better care, while making them more attractive places to work.  This could address ongoing hiring and recruitment challenges.
The Oregon Health Authority was receptive to the PCA’s ideas.  From their point of view, an APM that decoupled encounters and payment could help the state by:

• Eliminating the incentive for FQHCs to generate more and potentially unnecessary encounters with Medicaid enrollees;
• Enabling FQHCs to focus efforts on high-risk/high-needs patients, keeping these individuals healthy and out of the hospital through traditionally unreimbursed activities; and
• Paving the way for value-based alternatives that align reimbursement with Triple Aimobjectives.

Oregon has now proposed a voluntary APM for willing FQHCs to the Centers for Medicare & Medicaid Services (CMS).  FQHCs will have the option to receive payment under this proposed system—there is no requirement to transition away from PPS.  Here’s how the APM will work:
1)   Attributing patients: The Oregon Health Authority will identify Medicaid enrollees who have historically received care at participating FQHCs.  These patients will be “passively attributed” to participating FQHCs.
2)   Calculating per member per month (PMPM) rates: Actuaries will analyze information on historical utilization for the attributed patient population, as well as current PPS rates, to develop an all-inclusive monthly PMPM rate for FQHCs.  The PMPMs will be set as to deliver the same level of support for FQHCs that they have historically received (assuming the number of encounters with attributed patients remains constant).  Therefore, the APM will be budget neutral for the state—a key requirement given Oregon’s fiscal challenges.
3)   Making PMPM payments: Medicaid fee-for-service, Medicaid managed care plans, and Coordinated Care Organizations will make PMPM payments to participating FQHCs.  The Oregon Health Authority will directly “wrap around” plans’ payments to FQHCs if the plans’ rates are lower than the calculated rate.  (This is similar to wrap-around payments that the Oregon Health Authority currently pays under PPS.)
4)   Reconciling (if needed): At the end of the year, the state will examine encounter data to determine what each participating FQHC would have been paid under PPS for the preceding year.  If the amount of the aggregated PMPM payments is less than this figure for any given FQHC, the state will make a supplementary payment.  Oregon expects that participating FQHCs will bill fewer encounters than they have historically—so reconciliation payments will not be necessary.  However, a provision for reconciliation is required by federal law, which specifies that APMs must pay no less than PPS.
5)   Monitoring: The state will monitor a set of quality and access measures to ensure that FQHC performance improves or holds steady.  These selected metrics will align with existing measures that many FQHCs are already reporting.
Three large FQHCs have volunteered to pilot the APM once CMS grants approval.  In the future, Oregon hopes to expand the pilot program to additional FQHCs.  The state is also interested in eventually including mental health and dental services in the all-inclusive PMPM rates.
It will take time before we know what the APM changes on the ground.  But one fact is already clear: there are areas of mutual interest between Medicaid agencies and FQHCs.  With a commitment to partnership, Medicaid and FQHCs can move forward in pursuing shared goals. Better care for enrollees, better work environments for providers, and better value for Medicaid may await.
Have Medicaid and FQHCs partnered to advance shared goals in your state? Tell us in a comment below.
This webinar and blog post were made possible by NASHP’s national cooperative agreement with the Health Resources and Services Administration.