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Building Guardrails as FQHCs Adopt Alternative Payment Models: An Interview with James Macrae

headshot of James Macrae

James Macrae, M.A., M.P.P.

James Macrae, M.A., M.P.P., is the associate administrator of the Bureau of Primary Health Care, a division of the federal Health Resources and Services Administration that supports the nation’s 1,400 federally qualified health centers (FQHCs). In addition to disbursing the bureau’s $5.6 billion budget, Macrae oversees programs that support data measurement and partnerships among health centers to help them strengthen care. We spoke with Macrae about the potential risks and benefits as more health centers adopt alternative payment models.

Transforming Care: Do you have a rough sense of how many health centers have started on the path toward alternative payment models?

Macrae: While we don’t have a precise number, we estimate that there are probably between 50 to 100 health centers nationally that are working to more fully incorporate value-based payment into their operations, including taking on some level of downside risk. Many more are interested in doing so with appropriate safeguards in place to ensure that the health center model of care and the patient capacity that has been built under the current prospective payment system isn’t threatened by a new payment methodology. We especially don’t want to create a new payment methodology that creates any disincentives to serve some of the most vulnerable patients.

Transforming Care: Where do you expect to see the field in 10 years?

Macrae: I do believe that there will be a new value-based payment methodology established for health centers in the next 10 years, but it is going to take time to develop. We’re going to have to experiment and figure out what makes the most sense. Fundamentally, we need to first determine how best to deliver primary care for our patients and then design a payment methodology that supports and promotes this patient-centered model of care.

Transforming Care: What do you think health centers would do differently if they worked under this value-based model?

Macrae: Having more flexibility around payment and shifting away from the current focus on payment for visits would take a lot of pressure off physicians, nurse practitioners, physician assistants, and others on the care team. More time could be spent with the patient, and care could be more tailored to each patient’s unique needs, which in some cases are medical, but in a lot of cases are related to nutrition, exercise, mental health, housing, and food insecurity that can be better addressed through social or other key patient support services. You could also envision a situation where people come to the health center to do their in-person checkups but manage their chronic health conditions and wellness activities from home and communicate with health teams via phone or text. I think that’s where we are headed.

Transforming Care: What do you think are the biggest challenges to getting there? What sort of supports do health centers need?

Macrae: There are significant technology and data issues that need to be addressed so health centers can become more confident in fully understanding and accurately predicting the true cost of care in their primary care setting — to track not just past performance and costs, but project future costs and what adjustments can be made in their operating models, workforce, and care approaches that will benefit their patient population. Making a shift like this will not happen overnight. Health centers have been very successful to date so the benefits of making such a change have to be really clear. One of the things we’ve tried to do is spotlight health centers that have started to make this transition to show the beneficial impacts on patients, providers, and the entire health care team. There’s a significant level of staff burnout with the current model and more of a recognition that value-based payment is an opportunity to really make a difference in people’s health and wellness; both factors could be huge drivers of change.

Transforming Care: What do you see as the role of the Health Resources and Services Administration in offering assistance to people on this path?

Macrae: We’ve made significant investments over the last several years in health center technology and data, and I think that’s going to continue. We are also exploring with our colleagues in the Department of Health and Human Services the idea of working on some pilots in the value-based space. Let’s test out, pilot, innovate, and then figure out how we take it to scale. There’s already so much innovation happening in primary care, but so much more could happen with the right support and space to innovate.

Publication Details



Martha Hostetter, Consulting Writer and Editor, Pear Tree Communications

[email protected]


Martha Hostetter and Sarah Klein, Building Guardrails as FQHCs Adopt Alternative Payment Models: An Interview with James Macrae (Commonwealth Fund, Jan. 19, 2022).