FQHC Readiness

The National Academy for State Health Policy (NASHP) designed this toolkit to support states interested in developing value-based payment (VBP) methodologies 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.

FQHC Readiness Considerations 

  • • Does the FQHC have a vision for care delivery that cannot be achieved under the current payment structure?
  • • How will a VBP methodology free up a FQHC to provide more robust, patient-centered, and team-based care?
  • • Is the leadership team stable?
  • • Has the FQHC considered its capacity to train staff on a new model of care delivery and workflows?
  • • How much experience does the 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.

Key considerations for FQHC readiness and practice transformation include:

  • •  Engage the primary care association (PCA) to provide clinician and staff education, training, and resources;
  • •  Assess FQHC interest and readiness in the early stages of VBP methodology development; and
  • •  Consider FQHCs’ short- and long-term financial, information technology (IT), and staff capacities when preparing for implementation.


For FQHCs, transitioning to a VBP methodology often requires additional infrastructure and investment, such as enhanced IT and quality improvement capacity, as well as clinical and workflow 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 VBP methodology offers benefits to practices, including the opportunity to support team-based care models that can improve health care quality and enhance workforce retention, and the potential for increased revenue. Depending on staffing, IT capacity, and available financial resources, FQHCs will vary in how quickly they can transform their practices. Not all FQHCs in a state need to be ready to launch at the same time. States may find it beneficial to pilot a VBP methodology with a few FQHCs and refine the methodology 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. 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 various VBP methodologies. For example, value-based purchasing has been a board-level priority for PCAs in both Colorado and Michigan, and the PCAs have provided technical assistance to FQHCs on the topic. The PCA in Hawaii has also educated its members to increase understanding of VBP methodology development and implementation.

The PCA can provide support to FQHCs as they transition to a VBP methodology. The Oregon PCA developed the Advanced Care Model learning collaborative in partnership with FQHCs and the Medicaid agency to help practices transition to the state’s VBP methodology. 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. 

Assess FQHC interest and readiness in the early stages of VBP methodology development.
Readiness assessments can help states identify which FQHCs have the capacity to implement a VBP methodology and 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 Washington, DC, one of the state teams participating in NASHP’s Academy), and the University of Iowa Value-Based Care Assessment Tool, which was developed specifically for rural health providers.

Consider FQHCs’ short- and long-term financial, IT, and staff capacities when preparing for implementation.
In addition to having a clear vision for practice transformation, FQHCs should also assess their financial readiness, IT capacity, and staffing needs. Both states and FQHCs may benefit from a participation agreement that clearly identifies the state’s and the FQHC’s expectations.[i]

Financial readiness:
Prior to adopting a VBP methodology, FQHCs may consider:

  • •  Days cash on hand;
  • •  Available financial resources to support necessary practice transformation efforts;
  • •  Payer mix, including:
    • •  Number of Medicaid lives. It may be challenging to participate in payment reform if the FQHC serves fewer than 1,000 active Medicaid patients
    • •  Amount of visit-based revenue the practice will continue to generate
  • •  Average Medicaid visits per patient, per year; and
    • •  Stability of historical utilization
    • •  Stability/predictability of patient population
    • •  Low visit rate per patient, per year
  • •  Reimbursement from other payers tied to quality.

For states implementing a VBP methodology under a FQHC state plan amendment, it is important to note that FQHC participation is voluntary.[ii] FQHCs may revert back to PPS if participation causes them financial distress. States will want to have a process for FQHCs to exit the methodology without incurring financial hardships or impacting patient care.

Data and health IT capacity: States and FQHCs require accurate, timely data to calculate practice performance on quality and/or cost targets. States 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 complex VBP methodologies, they will need increasingly 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[iii] and are used by about 70 percent of health centers.[iv] Partnership with a HCCN may help to leverage limited FQHC resources and provide technical assistance, particularly related to data analysis to support quality measurement and improvement.[v]

Staffing needs: Participation in a VBP methodology requires FQHC leadership to have a clear strategic vision and strong commitment to changing care delivery through new clinical and workflow processes. It may also require additional training or investment in new types of staff, such as care coordinators or community health workers. FQHCs interested in participating in a VBP methodology may need to assess:

  • •  Their board’s commitment;
  • •  Stability of leadership team;
  • •  Capacity for and history of change management;
  • •  Any competing priorities (new electronic health record systems, new practice sites and services, etc.); and
  • •  Capacity of operations, clinical, and quality improvement staff, as well as staff training opportunities. 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 new quality improvement processes or rapid cycle improvement strategies; and
    • •  Working with state and community partners to influence upstream utilization.

For more resources about FQHC readiness, see the resources tab. To view additional information about developing a VBP methodology for FQHCs, return to the toolkit home.

[i] Example participation agreement from Oregon’s Alternative Payment and Care Methodology (APCM). https://nashp.org/wp-content/uploads/2017/09/Oregon-Primary-Care-Association-APM-ACM-Partner-Agreement-07062016.pdf.

[ii] Social Security Act, 42 U.S.C. § 1902(bb).

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

[iv] 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/.

[v] Ibid.