FQHC Readiness

The National Academy for State Health Policy (NASHP) designed this toolkit to support states interested in developing a value-based alternative payment methodology (APM) for federally qualified health centers (FQHCs). The following section on FQHC readiness and practice transformation discusses key considerations and promising strategies based on lessons learned from states during NASHP’s Value-Based Payment Reform Academy.

Key considerations for FQHC readiness and practice transformation include:

  • •  Engage the PCA to provide clinician and staff education, training, and resources.
  • •  Assess FQHC interest and readiness in the early stages of APM development.
  • •  To prepare for implementation, FQHCs will want to consider their short- and long-term financial, information technology (IT), and staff capacity.

For FQHCs, transitioning to a value-based APM often requires additional infrastructure and investment, such as enhanced IT and quality improvement capacity, as well as clinical and work flow changes, including team-based care, population-based management, and care coordination. FQHCs may also need to change how clinicians and other staff work together and with community partners to improve quality and efficiency.

While challenging, the transition to a value-based APM offers benefits to practices, including the opportunity to support team-based care models that can improve health care quality and enhance workforce retention and recruitment. Depending on staffing, IT capacity, and available financial resources, FQHCs will vary in how quickly they can transform their practices. FQHCs must individually agree to participate in an APM, so not all FQHCs in the state need to be ready to launch at the same time. States may find it beneficial to pilot an APM with a few FQHCs and refine the model as necessary.

Key Considerations

Engage the PCA to provide clinician and staff education, training, and resources.
PCAs are state or regional entities that provide training and technical assistance to safety net providers.[i] PCAs are an important partner for states, and serve as a conduit for outreach and education about value-based purchasing to FQHCs. PCAs can also assist states in assessing FQHC capacity to take on value-based APMs. For example, value-based payment has become a board-level priority for PCAs in both Colorado and Michigan and each has provided technical assistance to FQHCs on the topic. The PCA in Hawaii is also engaged in educating its members to increase understanding of value-based APM development and implementation.

The PCA can provide support to FQHCs as they transition to a value-based APM. The Oregon PCA developed the Advanced Care Model learning collaborative in partnership with FQHCs and the Medicaid agency to help FQHCs transition to the PMPM APM. As part of this learning collaborative, FQHCs have access to practice transformation and implementation support through on-site technical assistance, webinars, networking, and strategic planning.

Readiness Considerations for FQHCs 

  • • Does your FQHC have a vision for care delivery that cannot be reached under your current payment structure?
  • • How will an APM free up your FQHC to provide more robust, patient-centered, and team-based care?
  • • Is your leadership team stable?
  • • Has your FQHC considered capacity to train staff on a new model of care delivery and workflows?
  • • How much experience does your FQHC have with quality improvement and performance measurement?

Source: Laura Sisulak. “Clinic Readiness, Preparation, and Support.” PowerPoint, National Academy for State Health Policy’s Value Based Payment Reform Academy Closing Meeting, July 26, 2017.

Assess FQHC interest and readiness in the early stages of APM development.
Readiness assessments can help states identify which FQHCs have the capacity to take on a value-based APM, and also pinpoint where the state and PCA should provide technical assistance to help increase FQHC capacity. Several FQHC-specific readiness tools are available, including the NACHC Payment Reform Readiness Assessment Tool, the Health Management Associates Value-Based Payment Assessment Tool (developed in partnership with the District of Columbia, one of NASHP’s Value-Based Payment Reform Academy states), and the University of Iowa Value-Based Care Assessment Tool, which was specifically developed for rural health providers.

To prepare for implementation, FQHCs will want to consider their short- and long-term financial, IT, and staff capacity.
In addition to having a clear vision for practice transformation, FQHCs should also assess financial readiness, IT capacity, and staffing needs. 

Financial Considerations
FQHC participation criteria will be unique to each state, and depend on the structure of the APM. Both states and FQHCs may benefit from a participation agreement that clearly identifies the responsibilities of the state and of the FQHC.[ii] 

Prior to adopting a value-based APM, FQHCs may assess:

  • • Days cash on hand
  • • Available financial resources to support necessary practice transformation efforts
  • • Payer mix
    • •  Consider the number of Medicaid lives. It may be challenging to participate in payment reform if the FQHC serves fewer than 1,000 active Medicaid patients
    • •  Consider the amount of visit-based revenue the practice will continue to generate
  • • Average Medicaid visits per patient, per year
    • •  Stability of historical utilization
    • •  Stability/predictability of patient population
    • •  Low visit rate per patient, per year

Because FQHC participation in any value-based APM is voluntary under Section 1902(bb) of the Social Security Act,[iii] FQHCs may revert back to PPS if participation causes them financial distress. States will want to have a process for exiting the program without financial hardship or impact on patient care.

Data and Health IT
States and FQHCs require accurate, timely data to calculate practice performance on quality and/or cost targets. States will typically use claims or encounter data to calculate measures tied to payment but may require additional reporting from FQHCs on outcome-based quality measures or other types of clinic-based measures. As FQHCs take on more advanced value-based APMs, they will need robust health IT and analytics capacity to support quality improvement initiatives, perform population health management activities, maintain attribution lists, facilitate coordinated care, and report data as required by state participation agreements. Health Center Controlled Networks (HCCNs)—groups of health centers working together to address health information technology challenges—are active in 38 states[iv] and are used by about 70 percent of health centers.[v] Partnership with a HCCN may help to leverage limited FQHC resources, and provide technical assistance, particularly related to data analysis to support quality measure and improvement.[vi]

Participation in a value-based APM requires FQHC leadership to have a clear strategic vision and strong commitment to changing how care is delivered through new clinical and workflow processes. It may also require investment in new types of staff, such as care coordinators or community health workers, and additional training. FQHCs interested in participating in a value-based APM may need to assess:

  • • Board Commitment
  • • Stability of leadership team
  • • Their capacity for and history of change management
  • • Assessment of competing priorities (new electronic health record systems, new practice sites and services, etc.)
  • • Adequate operations, clinical, and quality improvement staff, and staff training capacity. Participation may require:
    • •  Implementing a new payment system, understanding new billing and reporting processes, managing attributed patient lists;
    • •  Adapting to new clinical care processes, working with internal or external care managers, incorporating data into clinical work flows, identifying and formalizing partnerships with community providers;
    • •  Developing and integrating internal and external reporting on key indicators (e.g., measurement, cost, access);
    • •  Implementing quality improvement processes or rapid cycle improvement strategies; and
    • •  Working with state and community partners to impact upstream utilization.

For more resources about FQHC readiness and practice transformation within a value-based APM, use the resources tab. To view additional information about developing a value-based APM for FQHCs, return to the toolkit home.


[i] Health Resources & Services Administration, “Primary Care Associations.” Accessed October 18, 2017. https://bphc.hrsa.gov/qualityimprovement/strategicpartnerships/ncapca/associations.html.

[ii] States may find an example participation agreement from Oregon in the resources tab.

[iii] Social Security Act, 42 U.S.C. § 1902.

[iv] National Association of Community Health Centers, “All Network Data.” Accessed September 29, 2017, http://nrg.nachc.org/networkdata/all-network-data/.

[v] Health Resources & Services Administration, “Health Center Controlled Networks,” accessed September 29, 2017, https://bphc.hrsa.gov/qualityimprovement/strategicpartnerships/hccn.html. To find a HCCN in your state, please visit this interactive map: https://findanetwork.hrsa.gov/

[vi] Ibid.