Community health centers (CHCs) in California are a core part of the Medi-Cal delivery system. Since January 1, 2014, Medi-Cal enrollment has grown significantly as result of the Affordable Care Act expanding Medicaid. Coupled with California’s continued efforts in shifting populations into the managed care delivery system, these valued safety net providers have absorbed much of the burden to maintain access to primary care services so that care for beneficiaries is delivered in the most appropriate setting.


Recognizing that a changing landscape of patients, access, and health needs requires providers to have flexibility in how they deliver care, CaliforniaHealth+ Advocates worked with the California Department of Health Care Services (DHCS), health plans, and legislature to craft and pass legislation to authorize a delivery system and payment reform program for health centers in California.

Senate Bill 147 (Hernandez) was signed into law in 2015 and authorizes a Payment Reform pilot that will allow select health centers to implement an Alternative Payment Methodology (APM) that translates a pilot site’s current volume-based prospective payment system (PPS) rate into PPS-equivalent, per-member-per-month (PMPM) payments. CaliforniaHealth+ Advocates continues to work to ensure SB 147 can be implemented in the most appropriate manner for health centers.

Why Payment Reform?

  • Move from Volume to Value as a Foundation for Achieving the Triple Aim: Transition away from a payment system that rewards volume to a more practical approach that financially incentivizes health centers to provide the right care at the right time is a necessary platform from which providers can promote cost efficiencies, improve population health, and increase patient satisfaction.

  • Flexibility to Provide Patient-Centered Care: Today health centers only receive payment when there is a traditional encounter with a provider. Current law also prohibits payment for both a primary care visit and behavioral health visit on the same day. With freedom from fee-for-service payment, FQHCs will be able to more fully realize a team-based model of care delivery that allows improved integration of behavioral health and primary care and gives teams the flexibility to deliver care in the most appropriate patient-centered manners.

  • Increased Capacity: With California's Medi-Cal population topping 14 million in 2017, it is critical to improve the capacity of health centers to deliver high-quality care to a population growing in numbers and complexity of needs.

  • Alignment with Managed Care: This reform is a way of increasing alignment between health centers and the managed care financing and delivery systems that covers the majority of California’s Medi-Cal population.

CaliforniaHealth+ Advocates Staff Contact

For questions, please contact Andie Patterson, Director of Government Affairs at Andie@healthplusadvocates.org