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As the threat of significant Medicaid cuts loom, the urgency to control costs while maintaining or improving quality in the safety net has never been greater. Value-based payment (VBP) models offer a clear path forward by shifting incentives from volume to value, rewarding providers for improving patient outcomes rather than simply delivering more services. By focusing on preventive care, care coordination, and reducing avoidable hospitalizations, VBP can help control costs while ensuring that patients—especially those in underserved communities—receive high-quality care. Community Health Centers (CHCs), which provide care to more than 31 million people in these communities, are well-positioned to lead this transition.
Despite growing VBP adoption in the health care sector, CHCs have faced significant barriers to fully engaging in these models. Many operate on tight margins, as illustrated by CHC closures in the aftermath of the recent federal funding freeze, and lack the resources needed to invest in the infrastructure necessary for success. Without targeted federal and state policy interventions, CHCs will struggle to transition to VBP, limiting their ability to help control costs while improving care for vulnerable populations. However, with relatively modest investments to support this shift, CHCs can take on a greater role in reducing overall healthcare spending by preventing costly complications, hospitalizations, and emergency visits. By ensuring that CHCs have the resources to succeed in VBP, policymakers can achieve long-term cost savings while strengthening the healthcare safety net.