DHCS Selects Health Centers for the Inaugural FQHC APM Cohort
The California Federally Qualified Health Center Alternative Payment Model (FQHC APM) is an initiative of the California Department of Health Care Services (DHCS) designed to modernize health center payment from traditional, volume-based fee-for-service to value-based capitated payment. This move would reward access and quality and support coordinated, team-based care that best meets patient needs. Community health centers, CPCA, regional associations, state partners, and statewide associations representing managed care and public hospitals have been deliberating the APM 2.0 since 2020.
DHCS opened the application for the inaugural FQHC APM cohort of health centers in late 2022 and 27 health center organizations applied. Health centers applied to participate without knowing the full details of the policy design because DHCS has never released the required APM Program Guide or Draft State Plan Amendment that articulates the program structure. DHCS informed applicants of their decisions in March 2023. Fifteen health center organizations were selected for a total of 106 sites (including 64 parent sites). Some organizations selected may not have been selected for all sites, making it difficult to effectuate organizational value-based care transformation.
The scoring methodology DHCS used to determine selected sites was released in April and health center applicants are meeting with DHCS to understand perceived deficiencies. As many health centers report back to their senior leadership and boards on the status of their application, they find they lack the necessary information to explain the rationale. Additionally, many are concerned that their practice transformation investments thus far will be unsupported in a continued volume-based system.
Based on information members sent to CPCA, we know that encounter data quality was one of DHCS’s primary concerns with most applications. DHCS maintains that APM participants must have complete, credible, and accurate encounter data to operationalize the APM. This is because in the APM, there will not be a state wrap; the full Per Member Per Month (PMPM) capitated payment will be made by the Managed Care Plan to the FQHC. Once an FQHC is participating in the APM, health plan encounter data will be used to ensure APM funding was sufficient to reimburse the FQHC at least equal to PPS1 (including to reconcile any potential visits above historical utilization) and to measure required access and quality performance. DHCS sent CPCA the data matching methodology in April and we are working with health centers to ascertain the underlying reasons for low match rates and share our findings with DHCS.
CPCA also reviewed and commented on the DHCS Draft Program Guide to ensure the policies articulated align with previous agreements and the guide contains the necessary level of details for health centers to understand the implications of participation. If an accepted health center is not satisfied or has concerns with the APM, they may withdraw up to 180 days before the contract year initiation. This requirement aligns with the two federal requirements for FQHC APMs – that participation is optional and that health centers are guaranteed their PPS equivalent.
DHCS intends to open the application window on an annual basis. The next opportunity to submit an application will be in 2024 with an anticipated start date of January 2025.