Health Center State Policy

Washington Health Centers Implement New Payment Model


This post was written by NACHC Summer Intern Madeleline Cole. 

Last year, Washington became the second state in the country to implement a capitated Alternative Payment Methodology (APM), a forward-thinking payment model that removes the tie between payment and face-to-face visits and allows health centers greater flexibility in the care and services they provide. Medicaid currently pays health centers via the Prospective Payment System (PPS), a payment methodology operating on a per-visit rate. However, to provide greater flexibility, the law also allows states to design and implement an APM. An APM can dissolve the link between payment and the face-to-face visit with the state’s eligible list of providers and reimburses health care organizations on a capitated per member, per month (PMPM) basis. By implementing an APM, FQHCs hope to provide an even higher quality of care at a lower cost.

The State of Washington, Washington health centers, and the Washington Association for Community & Migrant Health Centers all had many specific goals in their implementation of this new APM, known as “APM4.” One of the most important was supporting the care health centers provide outside of the four walls of the health centers – all the phone calls, emails, outreach, video visits, and other touch points with patients that promote health but do not fall within the realm of traditional visits. All of these varied touch points help support alternatives to emergency room use, which in turn helps save the health care system money. For example, by making it feasible for a health center to offer nurse triage, patients are more inclined to contact a nurse before heading to an emergency room. Ultimately, the principle goal of Washington’s APM4, and of most APMs, is to enhance the quality of care by focusing on the patient while simultaneously lowering system-wide health care costs.

The state of Oregon was the first state in the country to implement a capitated APM. With a key focus on quality of care, Oregon FQHCs made several major changes. Health centers redesigned providers’ daily schedules to include longer visits per patient and time for care coordination and communication among team members. Although this means fewer patients can be seen every day, providers still meet patients’ needs through practices that go beyond a face-to-face visit, such as phone visits and the use of online portals as well as diversified visits like group visits and education sessions. Oregon FQHCs found that the flexibility provided under an APM allowed them to innovate in ways that would directly benefit the patient and open the door for new innovations to come forth (Cottrell et al., JACM Oct-Dec 2017).

Last year, health centers in Washington followed the lead of Oregon to create a capitated FQHC APM that links quality metrics to payment and encourages innovative care models that align payment with practice. As Washington health centers continue a long-established trajectory of patient-centered care models, they are also working to plan an additional roster of services that could be better supported via the APM including greater use of telehealth services. As more states look to Washington and Oregon as pioneers in alternative payment plans, FQHCs will move towards a future of patient-centered care with a foundation in quality over quantity.

To learn more about the implementation of APM4 in Washington, check out NACHC’s new case study on Washington’s APM4 here.