The introduction of value-based care brings many challenges. While the concept is inherently sound and in many ways overdue, the switch from volume- or service-based remuneration to value- or outcome-based reimbursement is far from simple. This is particularly true for community health centers (CHCs) that operate in Medicaid expansion states and are facing an influx of new patients who were previously uninsured.
Nevertheless, value-based care for community health centers is coming and the Oregon Primary Care Association is taking the lead with their Alternative Payment and Advanced Care Model. The difficulty facing many CHCs is that this transition, unless carefully managed, could lead to lower Medicaid reimbursements, thereby affecting their ability to balance their budgets.
Value-Based Healthcare Goals
The principle behind value-based care is to reward health centers that improve patient outcomes while reducing their spending. For this to work, the implication is that the CHC expense ratios should improve as costs are lowered. Unfortunately, the cost of providing care which leads to better outcomes may, in fact, increase, at least in the short term.
A key component of value-based initiatives is the formation of multidisciplinary teams. These teams interact with patients to help them make lifestyle changes that reduce external influences which inhibit positive health outcomes. This is supported by work performed by the Nemours Child Health System. It shows that 80 percent of child health outcomes are influenced by external factors such as lifestyle, behavior and environmental factors.
Oregon Community Health Center Example
In Oregon, the previous visit-based Medicaid model was proving to be unsustainable due to the increase in the numbers of newly insured patients. This created the right conditions for the switch to outcome- or value-based care that reduced the number of patients streaming into Oregon's federally qualified health centers (FQHCs).
The model adopted by the Oregon Health Authority allowed centers to switch to value-based care while maintaining reimbursement levels. This is founded on a capitated model based on the number of patients utilizing the health centers' facilities over the last 18 months. Each center is paid a fixed rate based on that number of patients. This allows the FQHC to provide services that are not billable under service- or volume-based payments.
Cost Cutting Solutions Are Key to Financial Success
Value-based healthcare may be a natural fit with the philosophy and ethics of community health centers. However, the key to financial success of any CHC is to maintain a positive revenue to operating expense ratio. Whether the reimbursement is volume-based or value-based, cost control is essential. Managing costs while providing optimal patient care is the key to financial, clinical and operational success.
Concordance Healthcare Solutions is pleased to be able to provide high-quality products and supply chain services to community health centers across the country at the lowest total cost of ownership. As our name implies, we are focused on providing solutions. To learn more about how we can help, contact us here or call us at 800-585-8882.