Federally Qualified Health Centers Alternative Payment Methodology
The Department of Health Care Services (DHCS) is developing the State's new Alternative Payment Methodology (APM) for participating Federally Qualified Health Centers (FQHCs) in a manner as to incentivize delivery system and practice transformation through the flexibilities available under a fully capitated reimbursement model.
FQHCs participating in this APM would be able to move away from the traditional Prospective Payment System (PPS) to a front-loaded reimbursement methodology that more closely aligns with evolving practice needs and the effective delivery of health care services.
Developed by leveraging base year managed care utilization data, each participating FQHC will receive monthly payments equivalent to their total, projected PPS payment entitlement in the form of an APM Per Member Per Month (PMPM) rate, paid across all assigned members attributable to each Managed Care Plan (MCP) with whom the participating FQHC has contracted. Upon implementation, DHCS will be including necessary PMPM rates in monthly capitation paid to MCPs, who will then be expected to remit appropriate PMPM payments to participating FQHCs, who have provided covered services to their Medi-Cal members.
DHCS also will be implementing safeguards to ensure that participating FQHCs receive their full PPS entitlement. On an annual basis, the State will verify that payments made to participating FQHCs are sufficient and comply with all APM requirements, and that participating FQHCs did not experience variation in utilization. In the event the PMPM payments are determined to be inadequate, DHCS will pay the participating FQHC the difference between the total PMPM amount paid and the amount that the entity would have received under the traditional PPS rate methodology.
In order to incentivize enhanced health care quality for impacted Medi-Cal members, the new APM methodology will be linked to specific quality metrics that must be satisfied by the participating FQHC as a condition of continued participation in the APM program.
For further inquiries or questions, please email FQHCAPM@dhcs.ca.gov.
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