Advanced Payment Reform Policy Leadership
Community health centers already provide coordinated, whole-person care that improves outcomes and lowers costs. But outdated payment systems still reward volume over value, limiting investment in prevention, care management, and long-term health.
ACH is advancing payment reform policies that better reflect how high-quality primary care is actually delivered and sustained.
Advanced Payment Reform Impact
13%-24%
Lower Medicaid costs for health center patients compared with non-health-center Medicaid patients
10
States proposed in ACH's Medicaid Primary Care Innovation Initiative for a voluntary model led by state Medicaid agencies
Up to 250,000
Medicaid patients per state who could be served through advanced primary care payment arrangements under ACH's proposed model
5 years
Recommended model length in ACH's Medicaid Primary Care Innovative Initiative, including a planning and contracting year followed by implementation and evaluation
Why Payment Reform Matters
Community health centers deliver whole-person, community-based primary care that reduces avoidable emergency department use, improves chronic disease management, coordinates care, and addresses the factors that shape health outcomes.
Despite strong outcomes at lower cost, health centers remain underrepresented in value-based care models due to rigid payment systems and limited flexibility. Meanwhile, the current system continues to reward volume over prevention and coordinated care.
As Medicaid financing becomes more constrained, aligning payment with value is essential to protecting access and long-term sustainability.
ACH’s proposed Medicaid Primary Care Innovation Initiative supports policies that:
- Reward value over volume
- Support population-based payment
- Maintain the Prospective Payment System (PPS) as a stable foundation
- Strengthen team-based, whole-person care
Community health centers are already lowering costs and improving outcomes. Modernizing payment models will help sustain and expand that impact.
Today's Payment System Challenges
Health centers consistently deliver high-quality, cost-effective care, yet remain underrepresented in value-based models due to structural and financial barriers.
Key challenges include:
- Rigid payment systems that limit flexibility and innovation
- Variation across state Medicaid programs that creates inconsistency and uncertainty
- Limited access to capital needed to invest in infrastructure and care transformation
At the same time, the current system continues to incentivize higher-cost, episodic care over prevention and coordinated primary care.
Without reform, these misaligned incentives will continue to constrain health centers’ ability to scale value-based care. Advancing payment reform is critical to enabling health centers to deliver better outcomes more efficiently while maintaining stability and access for the communities they serve.
ACH Payment Reform Framework
ACH supports policies that allow community health centers to lead in value-based care and Medicaid transformation.
Shift to Prospective, Accountable Models
Federal and state policymakers should support pathways that shift from encounter-based reimbursement to population-based payment that reflects whole-person care.
Create a Medicaid Primary Care Innovation Initiative
ACH proposes a voluntary five-year model in ten states, led by State Medicaid Agencies, to support CHCs and other advanced primary care providers in taking on full or near-full risk for Medicaid populations.
Enable Health Centers to Lead
Prioritize providers with demonstrated success in patient-centered, coordinated care delivery.
Attribute Patients to Reward Quality and Cost
Participating entities should be responsible for attributed Medicaid beneficiaries under a model that incorporates both quality and cost, ensuring accountability is tied to meaningful outcomes.
Support Participation Pathways
Allow either direct contracting with the state by licensed eligible entities or state-supported pass-through premium arrangements from Medicaid managed care organizations, so states can pursue the model through the pathway that best fits their regulatory environment.
Add Performance Incentives for Chronic Disease Improvement
CMS should consider bonus payments tied to lower costs for chronic condition episodes and achievement of model quality thresholds, strengthening incentives to deliver efficient, high-quality care for patients with chronic disease.
Provide Technical Assistance and Necessary Waivers
CMS should support participating states with ongoing technical assistance and coordinate any necessary waivers to reduce administrative friction and make implementation feasible.
Ensure PPS Rates Reflect True Cost of Care
Recent analysis found significant imbalances in PPS reimbursement, with Medicare and Medicaid payments often failing to reflect the true cost of comprehensive primary care. The study also found that health centers serving patients with higher rates of chronic conditions were often paid less, placing additional financial strain on providers serving the highest-need communities.
ACH Payment Reform Impact
1. Leading Proactive Medicaid Payment Reform
ACH has developed a concrete framework for a Medicaid Primary Care Innovation Initiative that positions community health centers not as optional participants, but as model leaders in advanced primary care payment reform.
Impact: ACH is working on advancing a clear pathway for Medicaid payment transformation.
3. Centering Prevention and Chronic Disease Management in Payment Design
ACH’s framework makes clear that payment reform should reward the services that actually improve health: prevention, care coordination, chronic disease management, and patient-centered primary care.
Impact: CMMI has included health centers as eligible participants in numerous Medicare value-based care models focused on these issues, including LEAD, ACCESS, and ELEVATE.
5. Creating a State-Federal Pathway for Scale
By proposing a ten-state model led by State Medicaid Agencies, ACH has outlined a realistic pathway for scaling advanced payment reform while preserving state flexibility and accountability.
Impact: ACH’s model gives policymakers a practical way to test and expand advanced payment reform in Medicaid.
7. Aligning PPS Rates with Cost of Care
ACH has elevated concerns about PPS reimbursement gaps that fail to reflect the true cost of delivering comprehensive primary care.
Impact: ACH is exploring regulatory solutions to better align PPS payments with the actual cost of care and strengthen the long-term financial sustainability of health centers.
2. Highlighting the Structural Barriers That Hold Health Centers Back
ACH has elevated the policy barriers that prevent health centers from fully participating in advanced risk and payment models, even when they have the experience and infrastructure to succeed.
Impact: The Centers for Medicare and Medicaid Innovation (CMMI) relies on ACH as a trusted advisor on models focused on primary care and the safety net.
4. Framing Health Centers as Cost-Saving, High-Value Providers
ACH’s advocacy reinforces the evidence that health centers can lower Medicaid and Medicare costs while improving care through a comprehensive, patient-centered model.
Impact: This strengthens the case for giving health centers a larger role in future Medicaid and CMMI payment reforms.
6. Building a Payment Reform Agenda for the PPS Around Accountability and Results
ACH’s framework pairs flexibility with accountability by emphasizing attribution, solvency standards, quality measures, chronic disease outcomes, and total cost of care evaluation.
Impact: ACH is advancing a reform agenda around health center payment structures, the PPS, that is both innovative and credible to policymakers seeking measurable results.
8. Scaling Innovation Through Members
ACH convened a Value-Based Care Learning Collaborative to help members accelerate adopt and implement advanced payment models. The collaborative developed and disseminated practical resources to reduce barriers and promote consistency across markets.
Impact: ACH is helping health centers build the operational capacity needed to succeed in value-based care.
About ACH
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