This article was originally published on September 2, 2015 by Health Affairs Blog
Accountable care strategies are spreading from Medicare and commercial insurance arenas to Medicaid programs, thus extending the benefits of payment and delivery reform to the safety net. Medicaid Accountable Care Organizations (ACOs) are now emerging in 18 states and a quarter of all ACOs nationally have contracts with Medicaid. The Centers for Medicare and Medicaid Services (CMS) and many state Medicaid programs have committed to accelerate this movement toward accountable care.
Community health centers are well suited to pursue accountable care strategies and serve as the integrators of care on a community basis for a variety of reasons. Health centers are a key provider of primary care to large segments of the Medicaid and uninsured populations, and a strong primary care system is critical to improving health outcomes, reducing unnecessary hospitalizations and emergency department visits, and lowering costs. Unlike hospitals, health centers have a clear incentive to reduce inpatient use when medically appropriate. Finally, health centers have a history of addressing social determinants of health and behavioral health concerns, and a strong mission of improving the population health of the communities they serve.
Although community health centers provide primary care services to a large portion of Medicaid beneficiaries throughout the country, many health centers have not participated in or led ACOs. In fact, the majority of emerging Medicaid ACOs are led by hospitals and health plans, rather than by health centers.
Size is the paramount challenge to community health centers’ ability to participate in accountable care. Accountable care is characterized by providers accepting increased levels of financial risk in exchange for assuming responsibility for populations of patients and changing the delivery of care to improve cost and quality outcomes. To take on risk-bearing contracts, a provider must have a sufficient number of lives so that the cost impact of any individual can be spread across a large population. Large size can also be beneficial for the purposes of negotiating contracts, establishing partnerships, and affecting broader policy discussions. Finally, perhaps most importantly for improving community-level health, having a sizeable revenue stream and number of covered lives provides the economies of scale to make large investments in delivery system transformation possible.
Community health centers wanting to transform care delivery and anticipating a future where they may be encouraged to bear increased risk and accountability need to identify strategies to grow and/or to overcome the barriers associated with small size. Based on over 40 in-person meetings and telephone interviews with health center leadership in Oregon, Colorado, California, Minnesota, and Massachusetts and a two-year case study series of emerging safety-net ACOs (funded by the Robert Wood Johnson Foundation and the Blue Cross Blue Shield of Massachusetts Foundation), this blog outlines five such strategies that health centers are currently using.
The first strategy, applicable to larger community health centers, is to grow as rapidly as possible to participate in accountable care on their own. This can be achieved through growth in revenue, patient population, or both. Patient population growth can facilitate health centers’ ability to assume risk, as the risk can be spread over a larger number of patients. Revenue growth contributes to health centers’ margins, providing them with more flexibility to make investments in accountable care efforts.
Patient growth can be obtained by increasing the number of patients enrolled in Medicaid, Medicare, or commercial insurance through the state marketplaces. Revenue growth can be spurred by strategies such as participation in Medicare’s Program of All-Inclusive Care for the Elderly (“PACE”) and the 340B pharmacy program. PACE programs have the added benefit of allowing community health centers to gain experience managing high-risk, high-cost patients under global risk-based contracts.
For example, AltaMed, the largest health center in the country, with sites in Los Angeles and Orange County, has pursued multiple strategies simultaneously that have allowed its independent practice association to assume risk and invest in care delivery changes. AltaMed operates a globally capitated PACE program, and its independent practice association accepts professional capitation contracts for Medicaid, dual-eligible, and commercial beneficiaries. Under current (and in anticipation of future) risk-based contracts, AltaMed’s growth has facilitated the addition of several key delivery system transformations, including patient-centered medical homes, high-cost case management, integrated behavioral health, and substantial investments in improving quality outcomes and patient experience, such as a call center and a patient portal.
‘Big In A Small Pond’
A second strategy, applicable to smaller community health centers even if an intrinsic growth strategy is limited by infrastructure, is for a health center to become a dominant provider in a given geographic service area. In the words of one senior leader at a health center, “You don’t have to be big, but it helps to be big in your small pond.”
Health centers have long known that when a single entity holds clinical and financial responsibility for most of the people in a community, that entity has greater incentives to make community-level investments in health services, form partnerships with hospitals and social service providers, engage in health promotion, and address social determinants of health directly and indirectly. Becoming the dominant provider in a service area also makes it easier for a community health center to retain patients over time, allowing the center to better realize its investments in population health initiatives. For many health centers, this strategic path would include ensuring that their systems and care models are adapted for individuals as they age into Medicare.
For example, East Boston Health Center, the most prominent provider of primary care in the East Boston area, has a diverse portfolio of population health programs for children with disabilities, HIV, fitness, and chronic disease education, directed at both their patients and the community at large. The health center’s population health efforts are supported by Healthy Planet, a tool provided by Epic, to capture data for preventive care and disease management services for their patients. These population efforts were facilitated by their participation in a number of different alternative payment arrangements, including PACE, the state-based primary care capitation programs, and risk-based contracts from Medicaid health plans.
Affiliation With Other Health Centers
Another strategic option for smaller community health centers is to affiliate with other centers to form an ACO. Either as a novel group or through an existing network, an affiliated group of health centers can negotiate risk-based contracts on behalf of its members. These coalitions can accept financial risk for health outcomes and negotiate contracts with select payers. For example, the Federally Qualified Health Center Urban Health Network is a Minnesota-based network of ten Federally Qualified Health Centers that takes upside risk for a Medicaid population under Minnesota’s Medicaid ACO demonstration. Similarly, the Family Health ACO in the New York Hudson Valley involves formal collaboration of three health centers, and holds a Medicare shared savings ACO contract.
There are also examples of community health centers leveraging contracting capabilities without relinquishing community-level boards, through network models or health-center-led independent practice associations. For example, the Community Health Center Network, an independent practice association in Alameda County, California, accepts professional capitation contracts from payers, even though the group is made up of eight autonomous health center organizations.
Affiliation With A Hospital Partner
Another option is for community health centers to affiliate with a compatible hospital partner that would play the dominant role in leading accountable care efforts. This approach provides health centers with a number of contracting advantages, allowing them to benefit from the hospital’s size and clout in contract negotiations. Partnering with a larger hospital also allows health centers to reduce the administrative burdens associated with risk-based contracting.
It is crucial for community health centers to choose their hospital partners carefully to ensure that both entities have an aligned mission and mutual trust built on historical relationships. In Massachusetts, the South End Community Health Center and a number of other centers are partnering with Boston Medical Center to form an accountable care organization. Another example is Northpoint Community Health Center’s partnership with Hennepin County Medical Center (which plays a strong leadership role), the county human services department, and a county-run health plan to form Hennepin Health, an accountable care demonstration that accepts global capitation for a Medicaid expansion population in Minneapolis, Minnesota. Together, the organizations have established a system to deliver integrated medical, behavioral, and social services for Medicaid beneficiaries.
Some communities are taking a more comprehensive approach by forming community-based coalitions to lead accountable care efforts. While still an emerging concept, these coalitions provide community health centers with the opportunity to participate in accountable care while furthering their mission of prevention and population-based health approaches in the broader community. This structure allows health centers to participate in accountable care without being dominated by either a hospital or a health plan.
One early example can be found in the Central Oregon Health Council located in Bend, Oregon — a community coalition that predated the state’s Coordinated Care Organizations, but has since become the governing board for the Central Oregon Coordinated Care Organization. This governance structure is unique in that the community board, consisting of multiple county commissioners, the hospital CEO, the health plan CEO, the independent practice association president, and the CEO of the local health centers network, gives all board members equal votes, regardless of the amount of financial risk their individual organizations assume.
Community health centers are playing, and should continue to play, a leadership role in the evolution of accountable care strategies in Medicaid. While many health centers may view the prospect of relinquishing autonomy as undesirable, the future of value-based health care in the U.S. may require them to consider affiliations for the purposes of changing care delivery, contracting under risk, and shaping policy discussions. Health centers do not necessarily need to develop an ACO model all at once, but can incrementally expand reliance on risk-based contracts and adopt delivery system transformations linked to accountable care.
Some community health centers such as AltaMed and East Boston are large enough to pursue accountable care on their own. However, many, if not most, health centers may be required to consider novel collaborations and affiliations to remain viable in an era of increasing pressure to transform care and assume financial risk. Such collaborations could help health centers achieve the power of numbers in a way that benefits both their community health mission and long-term financial viability. Ultimately, community health center-led accountable care strategies that improve access to robust primary care and address behavioral health, social, and medical issues together represent one of the most promising approaches for achieving the goals of health reform for low income and vulnerable populations.