The National Academy for State Health Policy (NASHP) designed this tool kit to support states interested in developing a value-based alternative payment methodology (APM) for federally qualified health centers (FQHCs). The following section on state policy levers for implementation discusses key considerations and promising strategies based on lessons learned from states during NASHP’s Value-Based Payment Reform Academy.
Key considerations for state implementation include:
- States can amend current FQHC Medicaid state plan language to support value-based APMs.
- States can consider other Medicaid state plan options to support value-based payments for FQHCs.
- States can incorporate APMs for FQHCs in waiver applications to test new ways of delivering or paying for care that include FQHCs.
Medicaid agencies have a number of policy options to consider when developing an APM approach for FQHCs. States can submit an state plan amendment (SPA) that updates FQHC-specific portions of their state plans, or they can develop a more expansive SPA that creates a new payment mechanism to support value-based models, such as accountable care organizations (ACOs). SPAs do not need to be budget neutral.[i] States may also elect to submit a waiver to implement and test broad payment reform innovations. Regardless of the Medicaid authority selected, state policymakers report that early engagement of Centers for Medicare & Medicaid Services’ central and/or regional office leadership in the planning process can help to troubleshoot concerns related to federal regulations on FQHC reimbursement.
States can amend current FQHC Medicaid state plan language to support value-based APMs.
The District of Columbia is implementing its pay-for-performance APM through a SPA to the FQHC section of its state plan, which was approved in September 2017.[ii] The District will launch the APM at the beginning of fiscal year 2018. FQHCs that elect to participate in the APM will receive a supplemental performance payment if they perform at or above a target threshold or if they improve their performance from the baseline year on nine required measures.[iii]
Oregon also implemented its value-based APM through an approved SPA to its FQHC language, which was approved in September 2012 and launched in 2013.[iv] The SPA covers components such as:
- Assurances that FQHCs that do not want to participate in the APM will be paid under PPS, as required by federal regulations in Section 1902(bb) of the Social Security Act;[v]
- Details of the PMPM payment rate calculation, based on attributed patients and average historical utilization; and
- A description of the reconciliation process to ensure that aggregate PMPM payments to FQHCs are at least equivalent to what they would have received under PPS, per Section 1902(bb) of the Social Security Act.[vi]
States can consider other Medicaid state plan options to support value-based payments for FQHCs.
Integrated Care Models, described in a 2012 State Medicaid Director letter, provide additional flexibility to states to support value-based payment systems that can include FQHCs.[vii] Minnesota implemented its Integrated Health Partnerships (IHP), a Medicaid ACO initiative, through an approved Integrated Care Models SPA. The SPA details how cost, quality targets, and shared savings are calculated, and describes criteria for providers or provider groups that would like to participate. The SPA also includes FQHC services as eligible “core services” under the initiative, facilitating the participation of groups of FQHCs, such as FUHN, to participate.[viii]
States can incorporate APMs for FQHCs in waiver applications to test new ways of delivering or paying for care that include FQHCs.[ix]
FQHC value-based APMs can be a part of a broader state 1115 waiver initiative. Approved waivers allow states to forgo one or more federal Medicaid requirements; however, they are typically time-limited and have significant reporting requirements.[x] Massachusetts will begin its accountable care organization (ACO) initiative in March 2018[xi] as part of its five-year 1115 Medicaid waiver.[xii] The state has contracted with 17 ACOs, including an ACO formed by 13 FQHCs, to participate in the ACO program. Massachusetts’ ACO program is designed to improve care quality and patient experience, while reducing costs through better integration and coordination of physical and behavioral health and long-term care.[xiii]
For more resources about state policy levers to implement value-based APMs, see the resources tab. To view additional information about developing a value-based APM for FQHCs, return to the toolkit home.
[i] 42 CFR 430.32; Medicaid and CHIP Payment and Access Commission, “State Plan,” accessed September 29, 2017.
[ii] Centers for Medicare & Medicaid Services, approval letter, District of Columbia State Plan Amendment related to Pay-for-Performance (IHP) Program, September 20, 2017. https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-Amendments/Downloads/DC/DC-16-009.pdf.
[iii] District of Columbia Department of Health Care Finance, Notice of Emergency and Proposed Rulemaking, Governing Medicaid Reimbursement for Federally Qualified Health Centers, October 6, 2017. https://www.dcregs.dc.gov/Common/DCMR/SectionList.aspx?SectionNumber=29-4502.
[iv] Centers for Medicare & Medicaid Services, State Plan Amendment, State Plan Under Title XIX of the Social Security Act: Oregon, accessed November 20, 2017, https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-Amendments/Downloads/OR/OR-12-008-AtT.pdf.
[v] Social Security Act, 42 U.S.C. § 1902.
[vi] Ibid. Centers for Medicare & Medicaid Services, amendment, State Plan Under Title XIX of the Social Security Act: Oregon, accessed September 29, 2017, https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-Amendments/Downloads/OR/OR-12-008-AtT.pdf.
[vii] Center for Medicaid and CHIP Services, letter to state Medicaid Directors: SMDL# 12-001, Integrated Care Models, July 10, 2012. https://www.medicaid.gov/federal-policy-guidance/downloads/smd-12-001.pdf.
[viii] Centers for Medicare & Medicaid Services, approval letter, Minnesota State Plan Amendment related to Integrated Health Partnership (IHP) Program, September 20, 2016. https://mn.gov/dhs/assets/15-15-spa_tcm1053-270779.pdf.
[ix] Medicaid and CHIP Payment and Access Commission. “Waivers.” Accessed September 29, 2017. https://www.macpac.gov/subtopic/waivers/.
[x] To learn more about the different types of waivers and waiver requirements, visit https://www.macpac.gov/subtopic/waivers/.
[xi] Massachusetts Department of Health and Human Services, Press Release: MassHealth Partners with 17 Health Care Organizations to Improve Health Care Outcomes for Members, August 17, 2017. Accessed November 15, 2017. https://www.mass.gov/eohhs/gov/newsroom/press-releases/eohhs/masshealth-partners-with-17-health-care-organizations.html.
[xii] Mass.gov. “1115 Waiver.” Accessed November 14, 2017. https://www.mass.gov/service-details/1115-waiver.