NY's 2022 VBP Roadmap: How FQHCs Can Benefit From Value-Based Care

For Federally Qualified Health Centers (FQHCs) in NY with a grounding in value-based care, 2022's new Value-Based Payment (VBP) Roadmap contains many familiar elements. Potential participants, known as “contracting entities,” will be accountable to a defined set of quality measures intended to reduce avoidable spending, improve patient experiences, and enhance the health of individuals and their communities.

If the contracting entity successfully meets its quality measures and reduces avoidable spending by an agreed-up amount, they will be eligible to receive a portion of those savings. If they don’t meet their goals, they may be liable to repay some of that money back to the MCO, depending on the contract design.

Participants will accomplish their quality and spending targets by choosing a risk model that will govern their activities for a specific population of attributed Medicaid beneficiaries. FQHCs can choose from three levels of risk, each of which includes its own calculation for potential shared savings returned to the contracting entities.

Want to learn more about value-based care for FQHCs in New York? Download our guide.

Summary of Minimum Risk for Contracting Levels

Level 1 contracting level - Upside only risk (retrospective reconciliation)

The minimum risk requirement is the minimum percentage of potential savings to be allocated to the VBP contractor, if all associated quality goals are met, is 40%. There are no shared losses in a Level 1 agreement.

Level 2 contracting level - Upside, and downside risk (retrospective reconciliation)

The minimum risk requirement is the minimum percentage of potential losses to be allocated to the VBP contractor is 20% if cost and quality targets are not met. There is a cap of 3% of the target budget on shared losses in the first year of the level 2 contract and 5% from the second year on. Below these levels, the VBP arrangement is counted as a Level 1 arrangement.

Level 3 contracting level - Upside and downside risk (prospective payments)

In a Level 3 arrangement, the VBP contractor assumes full responsibility for the shared savings as well as losses. The VBP contractor should strongly consider negotiating risk-mitigation strategies with the MCO, such as stop-loss arrangements, reinsurance, withholds, and risk-corridors.

Level 2 and Level 3 arrangements bring higher risks, but potentially higher rewards. However, FQHCs must be aware of certain restrictions.

While FQHCs and rural health centers (RHCs) may continue to enter into Level 1 arrangements as lead contractors, they may not act as primary contracting entities in Level 2 or Level 3 arrangements. This is intended to protect FQHCs from taking on more administrative responsibility and financial liability than they can handle on their own, and by what is required in statute.

That doesn’t mean that FQHCs are not encouraged to jump into more advanced risk-bearing arrangements. In fact, state authorities specifically call out that this plan is not an attempt to back away from adequate reimbursement for FQHCs and other community health centers.

It simply means that FQHCs need to approach these higher-risk contracts as part of a larger legal entity that can conduct successful contracting on their behalf.  To avoid getting shut out of these higher risk, higher reward opportunities, FQHCs will need to find an experienced and dedicated partner to work with.

While the VBP plan borrows many basic building blocks from similar value-based care programs, there are unique features that may be especially attractive to FQHCs.

MCOs and contracting entities are encouraged to design flexible, customized contracts that may augment or modify standard “on-menu” options with additional “off-menu” goals targeted to specific populations or service types.

All arrangements must use state-approved definitions and meet minimum criteria around quality, cost, member centricity, and shared savings splits. But FQHCs are likely to benefit from creative collaboration with MCOs to design contracts that empower FQHCs to meet the varied and challenging needs of their patient groups.

General VBP Contracting Requirements

On-menu arrangements must align to NYS VBP arrangement definitions

MCOs and contracting entities can engage in standardized contracts for pre-defined subpopulations, including HIV/AIDS, Health and Recovery Plan, dual managed long-term care, children, and maternity. These arrangements must align with state definitions of these populations and their needs.

Level of risk and shared savings must match NYS definitions

The state does not mandate a specific shared savings/losses distribution methodology, but all arrangements must adhere to the principles of the Level 1, Level 2, and Level 3 categories of reimbursement and risk.

VBP arrangements must detail attribution methodology

MCOs must be clear and provide details about inclusion and exclusion criteria for attributing individuals to contracting entities.

VBP arrangements must detail the target budget setting methodology

Similarly, MCOs must offer detailed and transparent insights into target budget calculations and cost comparisons.

VBP arrangements must detail their quality measures and must include at least one Category 1 pay-for-performance measure

Contracts will include at least one pay-for-performance measure selected from Category 1 of the NYS-approved Quality Measure Set. The state encourages entities to choose a measure appropriate for the specific targeted population.

Level 2 and Level 3 Contracting Requirements

There are additional requirements for entities participating in Level 2 and Level 3 arrangements, many of which focus on helping communities manage the social determinants of health (SDOH).

Level 2 and Level 3 arrangements shall incorporate interventions around the social determinants of health (SDOHs)

All higher-level risk arrangements must include an intervention that addresses a known SDOH, including housing stability, food insecurity, transportation issues, interpersonal safety and toxic stress, health literacy, and/or economic instability.

Level 2 and Level 3 arrangements must involve at least one non-profit organization and/or community-based organization (CBO)

To extend healthy living further into the community, Level 2 and Level 3 arrangements must incorporate at least one CBO to help address SDOHs within the target population.

The emphasis on social and community health in the more advanced levels should catch the attention of FQHCs.

Most community health providers already engage in formal or informal SDOH interventions, which often include some sort of partnership with community-based organizations. Further building upon this groundwork may give FQHCs a head start with success in the advanced contracting environment, as long as they work with a contracting partner that enables access to these upper level arrangements.

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