Top 10 Terms Community Health Centers Need to Know about Value-Based Care

As healthcare continues to become increasingly complex and expensive without a corresponding rise in patient outcomes, lawmakers and industry leaders have been looking for effective ways to curb spending and improve experiences for everyone involved in care delivery.

In the past, stakeholders have tried somewhat severe methods of controlling costs by narrowing provider networks and rationing payments, but these actions did little to change the trajectory of the American healthcare system.

In 2010, however, the Affordable Care Act set the stage for a new strategy: value-based care.

This modern approach relies on the notion that providers should be reimbursed based on the quality and cost of care they provide. Participants in value-based care, also known as accountable care, must meet benchmarks for delivering preventive care services, avoiding unnecessary utilization, achieving desirable outcomes, and keeping spending within agreed-upon parameters for a defined patient population. In return, they can earn incentive payments and other rewards that fuel continuous improvements.

Value-based care models have been steadily spreading across the healthcare industry for the past decade, but they haven’t reached every corner of the ecosystem just yet.

Unfortunately, due to certain quirks of policy and payments, community health centers (CHCs) have largely been left out of the loop. That’s all changing as Medicare, state Medicaid agencies, and commercial health plan partners turn more attention to the community health space. Leaders are now recognizing that proactive, preventive care for traditionally underserved populations is a crucial part of turning the healthcare system around.

(Learn more about the opportunities that value-based care presents CHCs with our downloadable guide)

With CHCs now taking their turn to benefit from everything value-based care has to offer, here are the top ten terms prospective participants need to know about this innovative and challenging approach to delivering optimal care to vulnerable communities.

Value-Based Care for CHCs: Top Terms

Accountable care organization (ACO)

An accountable care organization is a group of physicians, hospitals, health systems, or other provider types that come together to deliver cost-effective, high-quality care to their patients. ACOs are voluntary but legally binding associations that agree to specific benchmarks with sponsoring payers, including Medicare, Medicaid, or commercial health plans.

When an ACO succeeds in hitting its targets, all members of the group are eligible to share in the financial rewards. If the ACO falls short, some models will require members to return a portion of the losses to the sponsoring payer.

The Medicare Shared Savings Program (MSSP) is the nation’s largest ACO initiative, covering 11 million Medicare beneficiaries and returning more than $2.3 billion in shared savings to providers as of 2020. Lessons learned from MSSP have significantly influenced other ACO programs, including state-level Medicaid models, commercial contracts, and the new ACO REACH program.

Alternative payment model (APM)

Alternative payment models are programs that use value-based reimbursements or quality-based incentives to guide the delivery of high-quality care. APMs can be centered on a specific condition, a population, or an episode of care.

Providers participating in certain approved APMs, including advanced APMs (AAPMs), may be eligible to “test out” of parts of the Medicare Quality Payment Program (QPP) or earn additional incentives. Not all value-based care projects are official APMs. CHCs should make sure they understand how prospective programs fit into this landscape before agreeing to participate.

Bundled payments

Bundled payments offer a single, standardized reimbursement rate for all of the services typically provided during a single, well-defined episode of care for an illness or injury. For example, an orthopedic surgeon may receive a set reimbursement for a low-risk knee replacement, since the procedure tends to be similar in time, outcomes, and utilization for most patients.

Providers are responsible for paying any costs that exceed the bundled payment amount. If the cost of care falls below the payment, however, they may keep the difference – as long as they achieve a desirable outcome for the patient. This strategy incents providers to offer proactive, comprehensive, evidence-based care that is both cost-effective and good for the patient.

Independent provider association (IPA)

An independent provider association is a business entity established by a group of physician practices, including CHCs or Federally Qualified Health Centers (FQHCs) to pursue beneficial business ventures, such as joining an ACO, managed care organization (MCO), or other value-based contract with a payer.

IPAs can negotiate favorable contracts on behalf of its members, manage a range of tasks related to model administration, and provide valuable expertise about how to succeed with the clinical and financial requirements of value-based care.

Member attribution

Value-based care requires providers to take on enhanced financial accountability for patient outcomes – but not for just any patient who walks through the doors. Value-based care models are predicated on specific populations attributed to participating providers. Attribution allows payers and providers to work with a shared baseline for the number of patients, their typical costs, and the health complexity of the targeted population.

Attribution models may use historical claims data, geographic location, health plan membership, disease state, or other methods to identify populations that fall under a provider’s purview. Participants must then find ways to establish ongoing relationships, reduce costs, and improve outcomes for these attributed patients.

Patient-centered medical home (PCMH)

The patient-centered medical home is a care model that prioritizes proactive, preventive, holistic primary care. PCMHs are not value-based care models in and of themselves. However, adopting the principles of the medical home can help practices succeed with the financial and clinical requirements of many value-based models.

PCMHs leverage team-based care and a variety of advanced technologies to offer patient-centered services, such as expanded office hours, care coordination and care management, chronic disease management, preventive services, community-based partnerships, and other resources.

Many CHCs and FQHCs already meet some or all of the requirements to become PCMHs and may have sought official recognition through NCQA or other organizations. This means they are already well positioned to start shouldering some degree of financial accountability without too many additional changes to their practice.

Risk scoring

Risk scoring is the act of documenting the clinical complexity of an attributed patient population to set accurate benchmarks for financial and clinical goals. Without practice-provided risk scores, payers do not know how much a provider is expected to spend on caring for their population. This means it is extremely important for practices to fully and appropriately document their patients.

Risk scoring can be challenging for practices. Clinicians must be thorough, but they must also avoid over-zealous coding that may unintentionally inflate the clinical complexity of their patients. Technology tools can be very helpful for risk scoring by highlighting potential gaps or automating parts of the process.

Risk sharing

Risk sharing is a fundamental component of value-based care and a key part of negotiating an advantageous contract. There are two primary types of risk sharing: upside risk and downside risk.

In upside risk, also called one-sided risk, practices that achieve their targets receive a portion of the savings generated between the anticipated costs of care and the actual costs of care for an attributed population. If the actual costs exceed the anticipated costs, the practice is not liable for the difference. The payer absorbs the losses.

In downside or two-sided risk models, participants still earn a percentage of the savings if they are successful. But if they don’t meet their goals, they must return a portion of the differences to the payer. Typically, downside risk arrangements entice participants with the promise of a higher percentage of the upside returns in exchange for the greater risks of falling short.

Social determinants of health (SDOH)

The social determinants of health are all of the varied conditions in which people live, work, and play. These include economic stability, access to healthcare and educational services, the safety and healthfulness of the built environment, and the strength of interpersonal relationships.

Experts estimate that SDOHs account for up to 80 percent of health outcomes, far exceeding the direct impact of clinical care. Since value-based care models focus on holistic health and emphasize prevention, participants must reach outside the walls of the traditional clinic to help patients manage these factors in their homes and communities.

CHCs and FQHCs are specifically designed to reach populations negatively affected by SDOHs. Their care models often prioritize community-based outreach and partnerships with local governments, social services, and non-profits to address socioeconomic barriers to better health. These competencies are essential for reducing health disparities and producing a positive impact on overall outcomes for vulnerable patient populations.

Triple Aim

The Triple Aim of Healthcare is the underlying credo of value-based care. Originally developed in 2008, the Triple Aim encourages the industry to meet three primary goals: improve the patient experience of care, improve patient health outcomes, and reduce unnecessary spending.

Over the past decade, stakeholders have volunteered additions to this mission statement, including improving the experiences of overwhelmed clinicians and achieving health equity for all individuals.

To reach these goals, all members of the care continuum must put aside traditional conflicts and boundaries to coordinate care, engage patients, provide fair reimbursements, and share information appropriately. Value-based care models offer a pathway to realigning incentives and encouraging collaboration across the industry.

CHCs and FQHCs play a vital role in this emerging ecosystem by offering comprehensive, proactive, holistic primary care to traditionally underserved and disadvantaged communities. By participating in the value-based care environment, community health centers can lead by example and bring the healthcare system closer to becoming truly effective and efficient for everyone.

Interested in finding success in value-based care? Download our guide.