How FQHCs Can Build a Better Contract to See Success with Value-Based Care

By Carmelo Cruz Reyes, Chief Managed Care Officer and Co-Founder of Yuvo

More than 15 years ago, I started working with FQHCs in some of the most challenging communities in the country. I’ve done a little bit of everything, from HIV/AIDS prevention and health plan contracting to serving on the board of directors of a large FQHC. Through these experiences, I developed a deep respect for FQHCs and grew to truly understand their importance as safety net health centers providing quality care to low income and historically marginalized populations.  

Growing up on Medicaid, I can relate to the socioeconomic life struggles experienced by many FQHC patients. Unfortunately, at the time, there were no FQHCs where I grew up. Accessing quality health services proved to be a struggle, and even when I did manage to secure an appointment, I felt belittled and easily dismissed by the physicians who were supposed to care about me. It was clear to me, from a very early age, that I never wanted anyone trying to access quality health care service to feel the way I was made to feel.

FQHCs understand that struggle intimately, and they make an enormous effort to be different. Through their innate desire to serve their community, they become an extension of a person’s family – sometimes they become a person’s only family – and offer the care and support so often lacking in other areas of their patients’ lives.  

But because FQHCs have such limited resources and often rely heavily on unpredictable grant funding, they don’t always have the capacity to meet all the needs of patients that present for care.

This is where FQHCs find themselves in a Catch-22. They know they are tasked to provide quality services to some of the most vulnerable members of our society, but they often can’t because of their lack of clinical, administrative and operational resources. And now that we are moving towards a more value-based care environment, staffing constraints and limited knowhow about value-based contracting are causing FQHCs to miss out on additional revenue opportunities that could help them become more financially sustainable.  

Want more on what value-based care means for FQHCs? Download our guide.

Trading in workarounds for contracting solutions that really work

I’ve seen a huge amount of creativity when trying to get around the problem of value-based contracting with payers. I’ve met revenue cycle managers and chief associate general counselors doing managed care contracting, or CFOs trying to negotiate with health plans. But with the best will in the world, these individuals just don’t have the bandwidth or experience to negotiate a truly advantageous contract with a health plan.

When I worked at one of the nation’s largest non-profit health plans, I would see FQHC contracts returned to us in a matter of days with absolutely no red-lining and no questions, because no one at the FQHC knew what to look for or what to ask. FQHCs shouldn’t have to accept that as the status quo any longer.  

Our objective at Yuvo is to provide the people power, skills, and experiences that FQHCs need to ask the right questions and push back on terms that aren’t in their favor. That way, FQHCs can start to see how success with value-based care contracts directly translates into the ability to deliver more exceptional care to more people.

What makes a fair and advantageous value-based care contract?

There are three major contracting areas where FQHCs aren’t yet maximizing their opportunities, starting with the medical expense ratio (MER) targets presented by payers. More often than not, the MER calculation passed on to the FQHC isn’t very transparent or the targets aren’t realistic. But FQHCs don’t often press their health plan partners on these numbers.  

Of the value-based contracts I’ve reviewed, the majority have an MER target of 90 percent or below. The fact is, the MER for most FQHCs is above — sometimes well above — 90 percent for the Medicaid line of business, because FQHCs exist to care for some of the most complex and high-cost members in our health system.

A fair contract will contain achievable MER targets that meet FQHCs where they are in their efforts to reduce total cost of care and reward FQHCs for the incremental changes they have made in reducing medical cost. In this world of greater emphasis on value, we have to move away from the all-or-nothing structures where there are no shared savings available for anyone who misses the ratio by even a small amount. We need to better enable FQHCs to take part in more robust, advantageous value-based contracting.      

The shared savings split is another area of concern. I have seen contracts where payers are poised to take the lion’s share of any generated shared savings, leaving FQHCs with disproportionately little despite performing all the heavy lifting.

In the New York State roadmap, for example, FQHCs in a Level 2 downside risk arrangement are eligible to keep a maximum 90 percent of the savings they generate, which means the health plan would get the remaining 10 percent. However, most plans are going to come in at a much lower rate. The goal is to push that number as high as we can go for the FQHCs while remaining equitable for the health plan (while we know FQHCs cannot take on downside risk on their own, they can participate in Level 2 arrangements through an independent practice association like Yuvo Health).

Lastly, FQHCs need to take a very close look at the quality measures they will need to meet to earn shared savings. Since health plans sign value-based care contracts with a variety of different provider types, they’ll often use default, one-size-fits all quality measures in their contracts with the expectation that individual partners will negotiate and customize the measures for their own needs.  

Generally, FQHCs aren’t negotiating much because they don’t have robust internal quality measurement teams to collect and analyze their data. If they don’t know what their current performance looks like, it’s hard to figure out how to improve. They need additional help to access and digest that information, so they can present the data to the health plan and secure a stronger position at the table.

Transforming community health with value-based care

How can FQHCs empower themselves to architect contracts that work to their advantage? They can start by being open to the idea that they’re not alone in the struggle. FQHCs all over the country are in the same boat, and they would greatly benefit by acknowledging the fact that there is power in numbers, even in a highly competitive market such as Downstate New York.

By joining an independent practice association (IPA), FQHCs can increase their collective patient panel size, thereby gaining clout with their health plan partners and becoming a force to be reckoned with.  

Right now, for example, Yuvo is negotiating with a very large Medicaid managed care plan in New York on behalf of a number of FQHCs. We have pushed back on a number of contracting points to make them more advantageous for our members. I don’t think the health plan was expecting a group of FQHCs to negotiate contracting terms in the same way as a large hospital system boasting robust contracting departments, but it’s actually a positive development for both parties.  

Most health plans would prefer to work with partners who are informed, engaged, and empowered to achieve the terms of the agreement. And FQHCs naturally benefit when they are able to achieve shared savings through a realistic value-based care arrangement that is personalized to highlight their strengths and skills.

FQHCs work hard every day to make sure their patients never feel alone when they’re facing a difficult time in their lives. We founded Yuvo to return the favor. When we join together to leverage each other’s strengths, we can better achieve our shared mission to improve health outcomes for our most vulnerable and underserved communities.