Value-Based Contracting

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 paradigm is moving away from evaluating and compensating health care providers based on the volume of services delivered, but rather based on the value of those services. Consequently, the state's contract with Medicaid managed care organizations requires these organizations to develop alternate payment structures between them and their health care providers to encourage innovation, quality and efficiency. The goal is to focus on quality and not volume.

MCO Requirement for Value-Based Contracting

The provision related to alternative payment structure for providers is outlined in the HHSC Uniform Managed Care Contract (PDF), Section MCO Value-Based Contracting. The MCOs are required to submit plans to HHSC each year outlining proposed payment methods that encourage achievement of quality outcomes and reduction of inappropriate utilization of services, using the reporting tool provided in the Uniform Managed Care Manual, Chapter 8-10. The plans must include incentive payments to doctors, hospitals and other providers for quality care.

Since the transition to the value-based contracting in 2012, HHSC released annual summaries of the plans submitted by the MCOs. These summaries can be found below:



For more information, email HHSC UMCC Provisions