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Primary care association briefs House panel on Medicaid alternative payment methodology for health centers
Summary
The Michigan Primary Care Association outlined a planned change from visit-based Medicaid reimbursement to a monthly alternative payment methodology (APM) for federally qualified health centers, describing goals, pilot timing and guardrails and asking for transition funding.
The Michigan Primary Care Association told the House Appropriations Subcommittee on Medicaid and Behavioral Health that an alternative payment methodology (APM) will convert part of federally qualified health centers’ Medicaid reimbursement from per-visit payments to a predictable monthly amount tied to assigned patients, with guardrails to protect quality and budget neutrality.
Philip Bergquist, CEO of the Michigan Primary Care Association (MPCA), said the APM’s purpose is to change “how” health centers are paid so teams—physicians, nurses, community health workers and others—can deliver population-health and team-based care without being constrained by a per-visit billing model.
Bergquist reviewed the rationale and timeline. He said Michigan and federal policy have relied on the prospective payment system (PPS) for roughly 25 years and that Michigan adopted the federal approach in 02/2001. He told the committee that, under the current PPS structure, health centers are reimbursed at levels that increasingly lag the cost of delivering care—an average shortfall of about $99 per Medicaid visit as calculated by MPCA’s cited data—and that the APM is intended to preserve total reimbursement while shifting the payment design.
MPCA described the initial, legislatively authorized funding and phased rollout. Bergquist said the fiscal year 2024 budget included $6 million in one-time funding to begin APM implementation: about $2 million to the Department of Health and Human Services (DHHS) for system and policy changes and roughly $4 million to support the first group of health centers that will transition to the APM. MPCA’s design timeline calls for an initial cohort of roughly five implementing health centers in 2026 and another five in 2027; the association said a larger one-time appropriation would be needed to scale the model to approximately 75 percent of health centers statewide.
Bergquist summarized five APM goals: enable team-based and population-health practice, maintain or improve quality and patient satisfaction, reduce pressure on visit volume for clinicians, decrease administrative burden and increase predictability of Medicaid reimbursement. He said guardrails will ensure a health center participating in the APM cannot receive less overall Medicaid reimbursement than under the prior model and that performance measures—such as the share of assigned patients with at least one annual visit—will trigger corrective action plans or removal from the model if targets are not met.
The MPCA also discussed cost and system implications. Bergquist cited a Michigan State University analysis of Medicaid claims that, he said, shows health centers save about $612 per Medicaid member served compared with other providers—about $170 million annually in aggregate—mainly through lower inpatient use and shorter stays. He said the one-time transition funds would be used primarily for staff retraining, process redesign and some technology improvements (electronic health records and practice-management interfaces). On average, Bergquist estimated health centers’ APM transition costs allocate about one-quarter of their internal APM spending to technology upgrades.
Committee members asked operational questions about assignment, capitation mechanics and safeguards. Representative Green asked whether a health center would be paid for assigned patients who never come in; Bergquist confirmed payment would continue but said assignment carries an outreach and service expectation and that state monitoring and performance metrics are designed to prevent misuse. Representative Glanville asked whether the one-time funds were primarily IT costs; Bergquist said a portion is technology but the larger share will support training, redesign of workflows and other transition expenses.
MPCA emphasized the APM is budget-neutral to Medicaid overall and that the design process includes monitoring to keep overall program costs aligned with prior reimbursement levels. Bergquist also noted some services—school-based or dental care—typically involve different assignment rules and are likely to remain reimbursed under the traditional per-visit model.
The presentation concluded without a committee vote; MPCA said the aim is to pilot the model with a small group, learn from the pilots, and request additional one-time funds for broader scale-up if pilot results support expansion.
