Value-based care (VBC) has been a buzzword in healthcare for more than a decade. The idea is simple: instead of paying providers for how many visits they complete or procedures they perform, value-based payment (VBP) models aim to reward outcomes: higher quality care, improved patient experience, and lower overall costs.
For Federally Qualified Health Centers (FQHCs), which care for over 30 million patients across 15,000 sites in the U.S., the conversation around VBC is particularly important
These centers are the bedrock of the healthcare safety net, yet they operate under enormous financial pressure. So what does the shift to value-based care mean for FQHCs, and how can leaders approach this proposed shift?
The Promise of Value-Based Care
When designed well, value-based payment models can create meaningful opportunities for health centers:
- Flexibility in care delivery. Unlike the Prospective Payment System (PPS), which reimburses only face-to-face encounters, VBP can support services like telehealth visits, home visits, nutrition counseling, and behavioral health integration
- Investment in infrastructure. States piloting VBP programs have shown how upfront payments and shared savings can fund care coordination, data systems, and expanded care teams. Minnesota’s FQHC Urban Health Network, for example, used VBP resources to develop a data warehouse that allowed real-time care coordination, reducing hospital admissions by 26%
- Better outcomes. Programs tied to quality benchmarks have improved screening rates, chronic disease management, and patient engagement, while helping FQHCs address social determinants of health such as housing and food insecurity.
The Current Reality for FQHCs
Despite these benefits, the shift toward value-based care has been slow in community health centers. Experts note that while some state-led pilots are showing promise, VBP currently makes up only a small share of FQHC funding. One researcher described it as “a teacup in a roaring sea” compared to much larger financial forces like Medicaid redeterminations, inflation, and disappearing COVID-19 relief funds
Key challenges include:
- Workforce shortages. Over 70% of FQHCs report physician and nurse shortages, and 77% face a shortage of mental health providers, making it difficult to expand new care models.
- Fragmented funding streams. Most centers juggle multiple sources of funding (sometime as high as 10-15), each with unique reporting requirements. This complexity makes it harder to implement standardized VBP models.
- PPS misalignment. The PPS, designed to stabilize Medicaid payments, often fails to reflect the actual cost of care. Some states have not updated rates in years, leaving FQHCs underfunded while asking them to assume risk under new models.
Financial Implications for FQHCs
For CFOs and financial leaders, navigating value-based care requires balancing promise with pragmatism. While early results from pilots like Oregon’s APCM and Illinois’ Medical Home Network show savings and improved outcomes, scaling these models nationally is complicated.
Key financial considerations include:
- Risk vs. reward. Some VBP models include risk. Without adequate reserves, entering these arrangements could destabilize already fragile budgets.
- Infrastructure needs. Effective VBP requires strong data systems and care coordination. Leaders at FQHCs and CHs may need to prioritize partnerships, grants, or reinvestment strategies first to build capacity before jumping into new care models.
- Long-term sustainability. While grants may fluctuate, value-based contracts can provide steadier revenue streams but only if designed to fit the unique scope of FQHC services, including behavioral health, social supports, and preventive care.
Preparing for the Future
The shift toward value-based care is not optional, it is a central part of CMS’ 2030 vision for healthcare. But for FQHCs, success depends on whether payment models reflect the realities of their work and the populations they serve.
Practical steps FQHC leaders can take now include:
- Monitor state-level pilots and participate where possible.
- Assess organizational readiness for VBP (staffing, data, reporting).
- Prioritize investments in care coordination and technology that can demonstrate value.
- Advocate (if it makes sense for your organizational mission) at the state and federal levels for PPS updates and VBP models that recognize the full scope of FQHC services.
Final Thoughts
Value-based care holds promise for FQHCs, offering flexibility, new funding pathways, and better patient outcomes. But without thoughtful design and adequate support, these models risk adding complexity without financial relief.
As we approach the end of 2025, FQHC leaders must weigh both the opportunities and challenges, positioning their organizations to adapt strategically while continuing their mission of providing high-quality, accessible care for underserved communities.