Alternative Payment Methodology Enters New Phase!
The FQHC Alternative Payment Methodology (APM) enters a new phase of operationalization. On December 1st, the Department of Health Care Services (DHCS) opened the application period for health centers interested in participating in the APM for the January 2024 contract year. APM participation is voluntary and health centers are guaranteed to receive at least their PPS equivalent for services provided. An application and a health plan attestation form are required for interested health centers. Visit the DHCS FQHC APM website for more information on the application and participation criteria.
Prior to the application period, DHCS asked interested health centers to submit a voluntary and non-binding Letter of Interest (LOI) by November 1, 2022. Forty-one (41) FQHC organizations from across the state submitted an LOI representing interest in almost 300 sites. DHCS and stakeholders expected this level of interest. But it’s important to remember that a lot hinges on these final months of negotiations.
After FQHC APM applications are submitted by January 31st, DHCS and Mercer (DHCS actuaries) will analyze encounter data for applications submitted to ensure the integrity of data submission between health centers and Managed Care Plans (MCP). This is important for future reconciliation when there is no state wrap payment to rely on. Health centers and MCPs must demonstrate that the health center received at least PPS equivalent for their encounters. DHCS is expected to select participating health centers in March 2023.
Despite the interest and the tremendous development work on the APM thus far, there remain key areas of policy development between DHCS and FQHC stakeholders. From CPCA, the details of the APM continue to be informed by health centers from three APM Committees (Leadership, Quality, and Finance) that report directly to the CPCA Board and work with the PPS Modernization Workgroup. The APM is negotiated by a team of CPCA staff and consultants with deep expertise in health centers and payment reform.
In the coming months, CPCA will prioritize ensuring that health centers in the APM have a fair opportunity to undergo a change in scope process that reflects the care transformation activities necessary for population health management. To accomplish what DHCS is asking primary care providers to do in the APM and the Population Health Management Strategy[1] clinics will need to have a different and robust care team and provide access to services in a new way than they would in a traditional volume-based model. This change from volume to value requires sustained investment in primary care that will achieve cost savings in other parts of the delivery system (like hospitals and specialty care) in years to come. The mechanism for health centers to true-up reimbursement to cost is the change in scope. Health centers should have confidence that alternative services and staff will be allowed in the cost report and that they can reasonably access a triggering event to update their rate.
We are also anticipating announcements about the $700M in Health Equity Practice Transformation grants that Governor Newsom allocated from January 2023 through June 2027 to advance equity and reduce gaps in care that were worsened by the COVID-19 public health emergency and provide resources to primary care practices to support practice transformation efforts. Health centers are eligible for this funding, and it is the infrastructure funding health centers will need to purchase new technology or equipment, hire new staff, and pilot new services that support value-based care and payment.
In preparation for APM, we invite health centers to browse the resources available on the CPCA APM Initiative website, especially the financial modeling workbooks, and join us for the PPS Modernization Workgroup meetings that occur virtually on the third Wednesday of every month at 2 p.m. Send any questions related to APM to Allie Budenz, Director of Population Health Management, at abudenz@cpca.org.
[1] The Population Health Management Strategy is DHCS’ statewide approach to ensure that all Medi-Cal members have access to a comprehensive program that leads to longer, healthier, and happier lives, improved outcomes, and health equity. Learn more here.