Health Centers Mull State’s Alternative Payment Model Pilot Program

California’s Department of Health Care Services (DHCS) is eying a Jan. 1, 2024 launch date for its Federally Qualified Health Center Alternative Payment Model (FQHC APM) – a pilot program for county and community-based FQHCs to move away from the traditional volume-based prospective payment system (PPS) to an APM that provides health centers upfront, clinic-specific capitation rate payments.

If approved by the Centers for Medicare & Medicaid Services (CMS), California will join Washington, Oregon and Colorado as the only states to have implemented APMs.

Per federal regulations, participating in the FQHC APM is voluntary, but local health centers are already expressing interest in the program.

“TrueCare is planning to participate in the new FQHC APM plan, but our organization is not part of the initial cohort of health centers that will begin January 2024. We are interested in this new structure because of the increased flexibility it provides to patient care,” said TrueCare Vice President of Government & Community Affairs Anthony White.

According to the California Federally Qualified Health Center Alternative Payment Model Implementation Guide, published by the nonprofit California Health Care Foundation (CHCF), under the traditional PPS, FQHCs are paid for each face-to-face encounter with billable providers and those payments are based on volume of visits “rather than value, which can discourage innovation and limits the ways in which providers and teams can care for their patients.”

Under the APM, FQHCs are given upfront per-member per-month (PMPM) payments for each assigned patient in their health center. The upfront payments are designed to give health centers more flexibility in the ways they provide care and improve accountability by rewarding FQHCs that improve quality of care. The APM may also provide clinics with opportunities to improve infrastructure.

Clinic, Patient Advantages

The APM includes payment incentives for healthcare providers who deliver high-quality, efficient care. “This can help encourage better care outcomes and reduce unnecessary costs,” said Kevin LaChapelle,  CEO of the San Diego American Indian Health Center (SDAIHC), adding that the APM “provides healthcare providers with a more predictable revenue stream, which can help us plan for the future and invest in our health center.”

LaChapelle said SDAIHC is still analyzing the APM’s impact on the health center, which is dually funded through the Health Resources and Services Administration (HRSA), an agency of the U.S. Department of Health and Human Services  and the Indian Health Service (IHS).

For patients that use FQHCs, LaChapelle sees the potential for the new payment model to increase access to care.

“By providing more stable and predictable reimbursement rates, the APM can help attract more healthcare providers to serve Medi-Cal beneficiaries, which can increase access to care in underserved communities,” he said.

White also pointed out that the APM “promotes health equity” and added that its structure “ultimately improves clinical quality” for patients.

“This new approach offers a multitude of advantages for participating members, including enhanced patient-centered care,” he said. “The APM also increases clinical level autonomy, significantly impacting patient-provider relationships, improving patient satisfaction and positive outcomes.”

Patient-Centered, Physician-Designed

The movement toward APMs in California began in 2015, following passage of Assembly Bill 147 and the stakeholder workgroups to develop a model. DHCS developed a pilot and submitted it to CMS, but ultimately decided not to pursue the pilot because of its complexity. The disruption of the COVID-19 pandemic led to a new planning process in 2021 which included input from a broader set of stakeholders like the California Association of Public Hospitals and Health Systems, California Primary Care Association, California Hospital Association, California Association of Health Plans and several individual Medi-Cal managed care plans and FQHCs.

According to the American Medical Association, physician involvement in the design of APMs is “essential” in ensuring they remove barriers doctors face in delivering quality care and making sure the APM doesn’t require physicians to be accountable for spending or outcomes they can’t control.

“Implementing a focused but comprehensive set of patient-centered, physician-designed payment models would be a win-win-win – delivering better care for patients, reducing spending for Medicare and other payers, and maintaining financially viable physician practices and hospitals to expand access to care,” said AMA President Jack Resneck  Jr., M.D.

Complexity an Issue

Even with the comprehensive set of stakeholders behind the development of the new FQHC APM, the complexity of the plan remains a concern.

“The APM can be complex and difficult to understand, which can make it challenging for some healthcare providers to participate in the program,” LaChapelle said. Providers may find that the administrative requirements associated with participating in the APM are burdensome and time-consuming.”

Complexity and administrative requirements associated with the APM and how it will be implemented locally are a concern of Vista Community Clinic (VCC), according VCC Chief Financial Officer Michele Lambert. San Diego is one of two counties in the state that operates in a Geographic Managed Care model providing medical care for Medi-Cal recipients in specified aid code categories for a capitated fee. The San Diego plan operates as “Healthy San Diego” and currently offers five plans that will reduce to three in 2024.

“VCC’s hope is to participate in the APM within a few years,” Lambert said. “The complex MediCal Managed Care Plan composition in San Diego County results in a number of issues that would make participation difficult, including the data requirements and confidence in member assignment by site by the plans.”

Implementing the APM

Despite its complexity, White said the goals of the FQHC APM “greatly outweigh any perceived challenges.”

“Any new system rollout will come with challenges, but TrueCare is keeping our mission and vision at the forefront of our desire to participate in future iterations of this plan,” he said. “While this change will come with a cultural shift, FQHCs will remain committed to providing comprehensive services to anyone needing quality health care. We don’t anticipate significant disruptions to organizational operations and expect this plan to help better address patients’ complex health needs.”

LaChapelle said the difficulty of transitioning to the APM will vary for each individual FQHC, depending on a number of factors, including the specific APM model being used, the size and complexity of the healthcare provider and the provider’s level of experience with alternative payment models. “Some healthcare providers may find the transition relatively smooth, while others may face significant challenges,” he said. “It’s important for healthcare providers to carefully evaluate the pros and cons of participating in an APM and to seek guidance from experts in healthcare policy and payment reform.”

One of the cons FQHCs may face in implementing the APM is the need to adapt to new administrative requirements such as data and quality reporting that might need time-consuming and costly investments in new systems and processes.

“APMs often rely heavily on data and IT infrastructure to calculate payments and measure performance,” LaChapelle said. “Providers may need to invest in new technology or upgrade their existing systems to meet the data requirements of the APM.”

Those investments are necessary because of the financial risk to providers because APM payments are often tied to quality performance and other metrics.

“Providers may need to adjust their operations and workflows to ensure they are providing high-quality, efficient care in order to maximize their reimbursement under the APM,” LaChapelle said.

Another requirement of the APM is to meet certain quality metrics in categories outlined in the pilot program, such as prevention, access to care, and behavioral health integration. Meeting the metrics should be easy, however, as they are already standardized across community health centers.

“The metrics are similar to current plan HEDIS (Healthcare Effectiveness Data and Information Set) and quality measures that we are already being held accountable to by the plans, so we do not anticipate that this will be an issue,” Lambert said.

Evolving Plan

Because the FQHC APM is launching as a pilot program in select health centers, it has the advantage of being a plan that can evolve and adapt to challenges with changes.

“A leading feature of this new system is our collaborative approach with the California Primary Care Association and the Department of Health Care Services to identify program benchmarks and goals appropriately,” White said. “Collaboration is critical to innovative change in health care. TrueCare is proud to work alongside the state to ensure residents receive the best care possible. This work allows us to advocate for our patients and diverse communities at the state level.”

LaChapelle said the “real test” of the APM will happen when the health centers selected to pilot the program encounter issues and find if those issues can be “addressed and mitigated to perfect the model.”

He also suggested that potential ways to improve the APM would be to incorporate other payment alternatives into the model, such as bundled payments where healthcare providers are paid a single payment for all of the services associated with a particular episode of care; telehealth payments that reimburse healthcare providers for delivering care via telemedicine; and Patient-Centered Medical Home payments that reward healthcare providers for delivering care in a patient-centered medical home model.

In addition to these payment alternatives, LaChapelle also suggested several changes that could be made to the APM to improve care and efficiency for health clinics.

“For example, the APM could be revised to better align payment incentives with the goals of improving care quality, reducing costs, and increasing access to care. The APM could also be simplified and made more transparent, so that healthcare providers can better understand how payments are calculated and what is expected of them in terms of quality reporting and other administrative requirements. Finally, the APM could be integrated with other healthcare reforms, such as electronic health records and population health management, to create a more seamless and coordinated healthcare system,” he said.