Payment and Delivery Modernization: APM 2.0
The COVID-19 pandemic brought to light the limitations of the Prospective Payment System. Unable to see patients face-to-face, community health centers (CHCs) across the state went into a financial free fall. While CHCs were able to utilize, and bill for, telehealth services – transitioning to a new model of care overnight was difficult for many and led to additional losses. CPCA saw the alternative payment methodology (APM) as a strategy to ensure long-term success for CHCs as it ensures continuity of telehealth among other flexibilities and stabilized payment and cash flow.
The state of California also realized a volume-based fee-for-service (FFS) model was a vulnerability for their delivery system during a pandemic, but also acknowledged that their vision of CalAIM would be harder to achieve without a thriving community health center delivery system. CalAIM is a multi-year initiative to improve the quality and health outcomes by implementing broad delivery system, program and payment reform across the Medi-Cal program. The impact of the pandemic and the vision for Medi-Cal compelled both CPCA and the State to officially commence the formal process to develop an APM in April of this year.
CPCA is working closely with the Department of Health Care Services (DHCS) and the health plans (Plans) to review the decisions and elements from our previous APM work back in 2015 and 2016 (referred to as APM 1.0). Part of that process is determining what parts still make sense, what parts need simplification, and what no longer makes sense in our current environment. Our goal is to have these finalized by the end of this year, securing member input throughout the summer and fall.
We know that the APM will only be successful if FQHCs and Plans work together. Moving to an APM will be significant administrative work for the health plans, but there is agreement that the flexibilities of the APM will help to better align the CHCs and the plans collective goals to serve the patients in a high quality delivery system. CPCA wants to make sure health plans have a clear line of sight into the discussions on the APM, have a manner by which to raise concerns, vet ideas, and share solutions both in the formal DHCS process and also through direct health center engagement. The APM Leadership Committee has developed a Health Plan Ambassador program to intentionally engage each health plan in California on the APM development and roll out.
To date over 60 FQHCs have indicated that they are interested in participating in APM 2.0. There are many reasons California FQHCs are interested in the APM, the biggest one being the flexibility it offers. The design of the APM is to relax some of the constraints of (e.g. billable providers, four walls) while ensuring the resources (e.g., the revenue to health centers on a per member basis) will remain the same or better. Many FQHCs anticipate that this additional flexibility will allow them to deliver more patient-centered, whole-person care, and result in better access, improved outcomes and increased equity among patients, as well as more satisfaction for care team members working at the top of their licenses.
Some FQHCs foresee internal cost savings as health centers use non-provider team members to deliver care-- even after some of these internal cost savings are reallocated to non-traditional care. Additionally, cash flow up front is a huge opportunity compared to waiting for reconciliation payments for years. Also, there is no proposed impact to plan P4P payments and care management/coordination initiatives. The hope is that with additional flexibility to deliver care, there may be a chance for the FQHC to perform better on health plan P4P measures and support the managed care plan in their quality objectives thereby securing even greater resources.
The APM will be a new payment methodology for interested FQHCs. It is not mandatory as it follows the APM federal regulations of being voluntary and ensure payment that is least what the CHC would have otherwise received under PPS. The APM in its simplest articulation is a PPS equivalent of a Per Member Per Month payment. It would be calculated based on a FQHCs current PPS rate multiplied by the site’s historic utilization and divided by Assigned Medi-Cal member months. The APM Finance Committee is working through all the nuances and details of the calculation. In the APM a health center is assured payment for all PPS visits, and should PPS visits go down the FQHC will still be assured payment so long as quality measures are achieved. The “quality wedge” is being developed by the APM Quality Committee on quality approach that allows health centers to keep the full PMPM (even if traditional visits go down) by demonstrating performance on quality measures. CPCA’s APM Quality Committee is actively building a proposal for what quality measures, how reporting is done, and what a health center will be expected to achieve.
CPCA knows the details of the rate and quality measures are vitally important and every FQHC wants to weigh in. The APM Committees will be inviting the PPS Modernization WG to inform all decisions and ultimately the CPCA Board of Directors will be vetting and voting on the APM framework. It is CPCA’s goal that FQHCs be protected and positioned for greater success via the model.
We are working to launch the new payment methodology option on January 1, 2023. To participate FQHCs will have to apply and currently the working time frame is early 2022, with rate setting to commence in mid 2022 for those selected. FQHCs not in the first year of roll out will have ongoing opportunities year over year to utilize this new methodology.
We have made tremendous progress since the formal process commenced in April 2021 and will continue to provide members with updates every two weeks via email, the monthly PPS Modernization WG, and the quarterly board meetings. If you are interested in learning more please contact Andie Martinez Patterson, CPCA’s Senior Vice President of Strategy, Integration and System Impact at apatterson@cpca.org.