Building on DSRIP With a New Roadmap to Value-Based Care for FQHCs in NY

For Federally Qualified Health Centers (FQHCs), the transition to value-based care has been particularly challenging. FQHCs occupy a unique place in the healthcare landscape, with their mission-driven structures, distinctive payment models, and historically disadvantaged patient populations.

As a result, FQHCs have often felt left out of the broader movement toward value-based payments. Unlike their peers with larger numbers of commercial and Medicare beneficiaries, many FQHCs have been unable to learn the ropes of value-based care through initiatives like the Medicare Shared Savings Program.

That’s about to change as more and more opportunities arise for FQHCs, especially in states like New York that have ambitious goals for health system reform. Value-based care is rapidly gaining ground in the Medicaid space, offering FQHCs a viable entry point into this innovative reimbursement ecosystem.

Download our guide to better understand the top opportunities for NY FQHCs to participate in value-based care.

DSRIP's Impact on Value-Based Care in New York

For five years, New York’s $8 billion DSRIP initiative guided the redevelopment of the state’s Medicaid program.

During this time, the state was able to achieve its two major goals:

1. Reducing potentially preventable hospitalizations by at least 25 percent, and
2. Moving 80 to 90 percent of Medicaid managed care contracts from fee-for-service to value-based payment arrangements.

DSRIP’s final data reveals that avoidable hospitalizations dropped by 26 percent, while more than 80 percent of all Medicaid managed care contracts were in some type of value-based arrangement. More than 35 percent of those contracts contained an element of downside risk sharing for participating providers.

Despite achieving its goals, DSRIP will not be renewed.  The Centers for Medicare and Medicaid Services (CMS) has denied the state’s request for an additional $8 billion to extend the waiver, leaving state authorities to decide how to proceed without the same level of federal financial support.

Their answer is to take some of the most successful components of DSRIP, including its main reimbursement goals, and augment the framework with a flexible, adaptable approach that invites FQHCs to actively participate in value-based care.

The Value-Based Payment (VBP) Roadmap for New York FQHCs

“The core principle of the Value-Based Payment (VBP) Roadmap is that payment should be concurrently tied to both the outcomes of care delivery and efficiency,” the New York Medicaid Redesign Team explains in its draft document, released at the end of 2021. “The combination of these two principles is what drives the value for all Medicaid stakeholders.”

“In this respect, arrangements differ from more traditional quality improvement programs or pay for performance constructs where a bonus or penalty tends to be exclusively tied either to a cost result or a set of quality measures, but not both.”

With reimbursement tied to both cost containment and quality outcomes, managed care organizations (MCOs) and contract participants will need to maintain – or exceed – what they achieved under DSRIP.

The new framework requires at least 80 percent of total expenditure to be in value-based arrangements with a minimum of 35 percent of total payments contracted through higher-level, risk-bearing arrangements. MCOs that fail to meet these goals will be subject to penalties.

These ambitious targets set the stage for a “comprehensive, sustainable approach to achieving health equity across Medicaid populations,” state officials asserted.

If you'd like to dive deeper into the opportunities that the VBP Roadmap provides to FQHCs, download our guide here.