Value-Based Care

Fee-for-service payment models are generally seen by health care experts to incentivize volume and not necessarily promote quality. Therefore, the current health care quality strategy is moving away from evaluating and compensating health care providers based on the volume of services delivered, to that based on the value of care they provide. Consequently, the state's contract with Medicaid managed care organizations (MCOs) and dental contractors (DCs), requires these organizations to develop alternative payment models (APMs) between them and their health care providers to encourage innovation, quality improvement and increased efficiency. The goal is to focus on quality of care and not on volume, within a value-based care (VBC) system.


Since 2012, HHSC has required that each MCO and DC submit an annual report on its VBC activities with providers for HHSC information and planning purposes. HHSC instituted a significant change for calendar year 2018, when it added to the managed care contracts two types of VBC targets that the MCOs and DCs must meet. Starting with CY 2018, 25 percent of the MCO’s and DC’s payments to providers must be APMs, increasing to 50 percent in 2021, for each MCO by program type (STAR, STAR+PLUS, CHIP), and DC by main program (Medicaid and CHIP), with certain exceptions. A portion of these APMs are required to include downside financial risk for providers: 10 percent of MCO payments and 2 percent for DC payments in 2018, increasing to 25 percent and 10 percent, respectively, by 2021, with certain exceptions.

HHSC also included contractual requirements that the MCOs and DCs adequately resource their VBP activities, by establishing and maintaining data sharing processes with providers, developing Provider Performance Reports, and dedicating resources to evaluating the impact of APMs on utilization, quality, and cost.

HHSC uses the nationally recognized Healthcare Payment Learning and Action Network (HCP LAN) Alternative Payment Model (APM) Framework to guide this effort and to align definitions. This framework describes a range of APM concepts, encompassing varying degrees of risk on providers.

MCO Requirement for Value-Based Contracting

The provision related to alternative payment models for providers is outlined in the HHSC Uniform Managed Care Contract (PDF), Section ”MCO Alternative Payment Models with Providers”. The MCOs are required to submit annual reports to HHSC outlining past and proposed APMs that use quality measures to improve health outcomes and reduce inappropriate utilization of services, using the reporting tool provided in the Uniform Managed Care Manual, Chapter 8-10, Value-Based Contracting Data Collection Tool (Excel). The reports must include incentive payments to doctors, hospitals and any other providers for quality care.

Starting in 2014, HHSC released annual summaries of the value-based contracting arrangements submitted by the MCOs. In 2016, these summaries showed the types of APMs each Medicaid/CHIP MCO had in place with providers in a state fiscal year, including the quality measures employed to develop the respective payment model. Beginning in 2017, the summaries indicated the volumes of APMs by calendar year and added information for dental contractors (DCs) alternative payment models.  Below are the summaries for calendar years 2017 and 2018. Previous year’s summaries are available by request. Email HPCS UMCC Provisions to request a summary.

Value-Based Payment and Quality Improvement Advisory Committee

The Value-Based Payment and Quality Improvement Advisory Committee (also known as The Quality Committee) provides a forum to promote public-private, multi-stakeholder collaboration in support of quality improvement and value-based payment initiatives for Medicaid, other publicly funded health services and the wider health care system.

Texas Healthcare Learning Collaborative Data Portal

The Texas Healthcare Learning Collaborative (THLC) portal serves as a public reporting platform, contract oversight tool, and a tool for Medicaid and CHIP MCO quality improvement efforts. The portal was developed for use by HHSC, MCOs, providers, and the public to obtain up-to-date MCO and hospital performance data on key quality of care measures, including potentially preventable events (PPEs), Healthcare Effectiveness Data and Information Set (HEDIS®), and other quality of care information. These data may serve as an important tool for providers to engage MCOs on value-based contracting.

More information on the THLC portal along with a user guide and Tableau-ready file formats on the Quality Data & Reports webpage.

Delivery System Reform Incentive Payment (DSRIP) Program and Value-Based Payment Roadmap

The Delivery System Reform Incentive Payment (DSRIP) program in the Texas Healthcare Transformation and Quality Improvement Medicaid 1115 Demonstration (Waiver) benefits Texans and the Texas healthcare delivery system. DSRIP participating providers work to enhance quality of health care and health systems, access to services, cost-effectiveness, and the health status of Texans served and earn incentive payments for achieving selected outcomes. When the Centers for Medicare and Medicaid Services (CMS) renewed the Waiver in December 2017, it authorized DSRIP funding through September 30, 2021 with a Waiver end date of September 2022.

HHSC has developed a Transition Plan to identify specific strategies and interventions to achieve sustainable and effective delivery system reform beyond DSRIP funding. One milestone of the draft Transition Plan is to update the Texas VBP Roadmap to incorporate strategies to sustain key DSRIP initiative areas, including data sharing and transparency among HHSC, health plans, and providers to promote VBP.

Health Information Exchange (HIE) Connectivity Project

The Texas Medicaid HIE Connectivity Project, a key part of the Health Information Technology (Health IT) Strategic Plan, will increase the adoption and use of HIEs by providing connectivity and infrastructure within the state’s Medicaid system and HIETexas. This project will allow for Texas healthcare providers to exchange clinical data electronically to increase interoperability, which will improve the coordination and quality of care for Medicaid clients throughout the state.



For more information, email HPCS UMCC Provisions.