Taking action in a time of uncertainty: how community health centers can survive Medicaid cuts

By Cesar Herrera, co-founder and CEO, Yuvo Health

We’re facing unprecedented upheaval and disruption to community health. Federally Qualified Health Centers (FQHCs) and Community Health Centers (CHCs) are used to being asked to do more with less, but the situation today is different. Health centers feel threatened. 

And the threat is real. A planned $880 billion cut over the next ten years would mean significant reductions to Medicaid, CHIP, and other safety net programs. Up to 20 million Americans could lose coverage and countless providers across the nation could be forced to close their doors. To all of us in the community health center ecosystem, 20 million isn’t a cold statistic. It represents people we know. 

But, working side-by-side with CHC partners, I’ve seen how they’re deeply rooted in their social justice ethos and they’re not afraid to fight. So, how can they effectively fight in a world where the rules of the game are completely changing? Value-based care offers an option that gives CHCs more power to shape their future with access to more financial resources previously unavailable to them. 

Shifting the status quo with value-based care

CHCs, unlike other providers, are uniquely positioned to navigate this moment of upheaval. Born out of the Civil Rights Movement of the 1960s, at a time when healthcare access was a privilege, not a right, health centers have always fought for radical change. They were built for resilience, created in a time of unrest, and have spent decades proving that hardship fuels reinvention.

I stood with hundreds of health center leaders on Capitol Hill in February, as they joined the National Association of Community Health Centers (NACHC) to advocate for the protection of federal funding. And just this month several members of our team joined New York CHCs and the Community Health Association of New York State (CHCANYS) in Albany to make a similar case at the state level. There is a palpable energy in the community health movement, unlike any I’ve seen before. Now, let’s use that energy to drive real change.   

The real danger for CHCs isn’t the loss of traditional funding; it’s relying exclusively on that traditional funding. The status quo isn’t cutting it; 20 million people lack access to care while health centers are overworked and under-resourced.  

Value-based care not only introduces an alternative payment model with more secure, long-term funding for CHCs and better outcomes for patients, it remains widely supported by federal and state leaders.  

Community health centers are already providing whole-person, preventative care at lower costs, which is rewarded in value-based care. In fact, CHCs, on average, achieve a 24% savings in health care costs per Medicaid beneficiary when compared to other providers. With value-based care, health centers can finally earn their rightful share of these savings. 

Joining in new value-based care agreements is a path forward that many CHCs can’t afford to miss out on.

As it stands today, CHCs have access to a very small portion of Medicaid funding (an estimated 3%), with 92% going directly to Medicaid Managed Care Organizations (MCOs) and other healthcare entities, such as home and acute care. As traditional funding sources shrink, health centers must shift their focus. Instead of fighting to protect their limited share, they need to claim a stake in the majority or risk losing everything.

A shared opportunity for health plans and health centers

Payers don’t like what they’re hearing from DC, either.  

Medicaid Managed Care Plans are already under immense pressure, forced to stretch thinner margins to cover an incr pasingly vulnerable population. If tens of millions of beneficiaries lose coverage amidst the cuts, then health plans will need to significantly increase their margins just to stay afloat. Right now, they need providers who can manage high-risk patients, reduce hospitalizations, and improve long-term health outcomes. That’s exactly what health centers do best.

The reality is health plans need providers who can manage complex populations and help control costs. And with the current administration committed to value-based care as a means to reduce costs, now is an opportune time for CHCs to leverage their value in value-based care. 

This is, of course, a long-term investment and one that Yuvo helps CHCs achieve. In addition to taking on the risk associated with VBC agreements, Yuvo gives health centers extensive bargaining power, provides hands-on help to prepare for operational and technological changes, and helps them unlock multiple new revenue-earning opportunities.

Rather than continuing to rely on traditional funding models, which may not be protected, CHCs should seize the opportunities that VBC provides. 

With the power dynamic shifting, CHCs have the chance to build strategic alliances, dictate the terms of their own sustainability, and take on a leadership role in shaping the future of healthcare.

The moment to act is now. ‍

Learn more about how to approach the shift from a fee-for service to value-based care model.