Federally Qualified Health Centers (FQHCs) play a critical and innovative role in delivering comprehensive care to underserved communities, yet they face ongoing challenges in sustaining financial health and operational efficiency. With Medicaid and Medicare margins tightening as rate increases lag behind inflation, and expected reductions in Medicaid and ACA marketplace membership to cause a growth in uninsured, proactive strategies are essential for sustainability. This article explores 5 key strategies that FQHC’s should explore to improve financial viability, diversify revenue streams, and prepare for a changing Medicare and Medicaid environment.

1. Strategic PPS Rate Resetting
Depending on the state, there are triggering events that would cause or allow an FQHC to reset their PPS rates. Given the rate at which expenses are growing beyond that of which rates are growing, FQHCs should be budgeting to consolidate major expenses when possible into a single period every so often to prepare to re-rate set. Optimizing Prospective Payment System (PPS) rates is critical for ensuring FQHCs receive fair reimbursement, as PPS rates are meant to be cost-based. Long-term budgeting in accordance with the strategic plan is key to optimizing this reimbursement potential and understanding opportune timing to consider assessing if this is a possibility.

2. 340B Savings Maximization
Participation in the 340B Drug Pricing Program is one of the key benefits afforded to FQHCs, and the savings are a significant portion of most health centers’ bottom line. With recent cuts and limitations from manufacturers, maximizing the capture rate of all drugs, but particularly specialty drugs, is key to reaping the program benefits. Beyond implementing strategies to maximize script capture rate, FQHCs need to strongly consider, and run the numbers for, owning versus contracting for their 340B pharmacies, both because of the limitations placed on contract 340B pharmacies in recent years, but also because of the significance of volume of revenue generated by owned pharmacies.

Robust analytic platforms such as Analytics for Risk Contracting (ARC) contain pharmacy modules that can track prescribing and dispensing patterns to support the build out of strategies to maximize your organization’s success in the 340B program.

3. Quality, Gap Closure, and Performance Improvement Initiatives
FQHCs can earn incentive dollars, tied to quality initiatives or care gap closure, that are beyond the enhanced reimbursement afforded to them through Medicare and Medicaid PPS rates. Not only are high quality providers attractive providers for patients, but this creates an additional diversified revenue stream for health centers.

It is important to deploy the appropriate data collection and reporting tools to proactively monitor quality metrics that are vital to payor contracts in real time, allowing you to incorporate performance improvement strategies if thresholds or targets are not being met. Untimely data collection or review often impacts overall quality scores as lagging data eliminates time for corrective action. Provider scorecards, patient chase lists, and management reporting dashboards are a few key reports that industry leading tools like ARC deploy to ensure quality dollar maximization in payor contracts.

4. Value-Based Care Success Enablement
The pressure to control total cost of care while improving clinical quality and patient experience for patients across all lines of business continues to increase from CMS, states and employers. FQHCs can participate directly, or through IPAs or ACOs, in value-based payment agreements with heath plans and with CMS through the MSSP ACO program or the expected new version of ACO REACH. FQHCs and FQHC Look-Alikes are well positioned to impact total cost of care and succeed in value-based payment arrangements given their unique, high touch care model and wrap around services for vulnerable populations.

Generally, Medicaid Managed Care, Medicare Advantage, D-SNP and Exchange are the best fit lines of business for FQHCs in value-based payment arrangements with managed care organizations, as well as the CMS and CMMI Medicare Shared Savings Program (MSSP) and next evolution of ACO REACH. FQHCs can contract directly with health plans for primary care capitation, with quality and HCC upside, and some access to shared savings. This provides an opportunity to grow into “global risk” arrangements over time, in which the FQHC, or a network of FQHCS and/or other providers in an IPA or similar contracting network, has access to more of the total premium dollar. Success requires expert contracting, data and financial analytics to ensure your contracts are fair based on the services your FQHC provides and can control in your market.

5. Clinic or Service Line Expansion

Depending on service area and market needs, a fifth strategy for FQHCs to consider to improve performance and bolster financial sustainability is growth- either in new sites or services. Updating the market needs assessment will inform if there is a need to expand geographically, or a service gap that would significantly enhance visit volume. A detailed market assessment to understand viable estimated market capture is important to build the necessary pro forma to determine the relative value of the investment against the potential additional revenue. Adding additional services to the FQHC’s scope of service, such as high-impact specialties like behavioral health, dental, or endocrinology, address critical community needs, increase volume and improve care continuity, all of which help strengthen attribution, patient retention and performance in value-based payment arrangements. Expanding the range of services allows FQHCs to manage a greater share of the total cost of care, which is essential for maximizing quality incentives and shared savings.

COPE Health Solutions’ can help determine which strategies would provide the largest benefit to your organization and partner to improve financial success to ensure organizational longevity for the community. We have expertise in FQHC long-range financial and strategic planning, turn-around support, payor contracting and quality improvement, and bring to bear our market leading comprehensive population health analytics, care management, quality and HCC workflow tools that wrap around and integrate with all EMRs. In addition to these workflows, our ARC product can also support prescription capture rate analyses to help your organization understand savings opportunities through the 340B drug pricing program.

Contact us at info@copehealthsolutions.com to learn about our flexible options and how we can support your FQHC in unlocking new opportunities for growth, maximizing revenue streams, and improving population health outcomes.