Throw health centers a lifeline by replacing outdated payment model

At this crucial moment before a second wave of COVID-19 crests and crashes, policymakers should confront a significant payment problem brewing within our primary-care safety net that, if unaddressed, threatens care for millions of Americans.

Though much of healthcare has made progress with value-based payment models, most federally qualified health centers (FQHCs) remain tethered to an outdated, visit-based payment structure. Without change, many centers will not stay afloat for long.

In her Sept. 8 opinion piece for Modern Healthcare, “Agility is the key to success for community providers—and for the future of value-driven care,” Tara Hoffman of California-based Borrego Health outlines the importance of FQHC services, particularly in lower-income and rural communities, and the steps necessary to adapt in a post-COVID reality. To support those concepts, policymakers must advance policies that enable FQHCs to re-invest and re-invent.

It is worth understanding where FQHCs have come from to reveal the path to dry land. Health centers rose to prominence during the War on Poverty era, when President Lyndon Johnson dedicated the first federal funding for community health centers under the Economic Opportunity Act. FQHCs are meant to solve a market problem: using federal resources and protections, health centers are established in “medically underserved areas” and provide primary and preventive healthcare services to all individuals, regardless of ability to pay.

Today over 1,400 health centers serve 29 million people across the U.S. Health centers predominantly serve individuals on Medicaid who identify as belonging to racial and ethnic minority groups. Emerging evidence suggests that individuals of racial and ethnic minority groups –consistent with the primary demographic of health centers—are disproportionately impacted by Covid-19.

In other words, a strong primary-care safety net, embodied in FQHCs across the country, is crucial for fending off the worst of COVID’s second wave. Unfortunately, the FQHC payment model present in most states today is alarmingly inflexible.

In 2001, Congress established the current prospective payment system model that pays FQHCs a single per-visit rate for each qualifying patient encounter. As the pandemic hit, the health centers, like every other healthcare provider, switched seemingly overnight to virtual modes of care. Many facilities were then forced into labyrinthine negotiations with payers and states to fight for parity between in-person and virtual visit reimbursement, often on different fronts across agencies overseeing health, mental health, and substance use disorder services.

These conversations for FQHC leaders, all while trying to reach high-risk patients, manage furloughs, and dispel misinformation were a distraction factor few could afford to take on. Today many health centers teeter on the brink of financial ruin.

In a world with more universal capitated models, FQHCs could have simply shifted between in-person and virtual care, without the complicated back and forth with payers or states. Importantly, the key value of an FQHC alternative payment model is flexibility rather than reducing excessive utilization and costs within the health center. If anything, FQHCs, which typically operate on razor-thin margins, are very cost-efficient. While a number of states have pursued FQHC APMs, many of these models are limited pay-for-performance structures or simply rework portions of the existing PPS.

In order to financially sustain our primary-care safety net, policymakers must create expedited pathways for FQHC APMs that not only support hybrid in-person and virtual services, but also seize the moment to adequately invest in primary care, tying health center capitations to meaningful percentages of total cost of care.

In the first wave of COVID-19, FQHCs rose to the challenge, testing more than 200,000 patients, over half of whom belonged to racial and ethnic minority groups. Without immediate steps to reimagine the payment model, these health centers—and their never-more-relevant mission to address healthcare inequities—may be lost at sea, another casualty of the pandemic.