Relying on intuition rather than research is a dangerous approach to health policy; seemingly good ideas may not translate into slam-dunk policy solutions. That’s what makes a new study in Health Affairs that examined a shift away from fee-for-service reimbursement in Oregon community health centers so encouraging: it provided robust evidence of how changing a reimbursement approach can indeed lead to changes in spending.

Researchers from Oregon Health & Science University and OCHIN, Inc. analyzed data from the state’s 2013 introduction of the “Alternative Payment and Advanced Care Model” in Medicaid, which replaced fee-for-service reimbursement with a per-patient rate, comparing spending by community health centers before and after the model was introduced in 2013. The researchers found that the APCM model resulted in a 42.4% reduction in price-weighted traditional primary care services compared to non-participating clinics. Researchers attributed the results to a decline in imaging services, demonstrating a change in financial incentives as a result of the new payment reform.

Why it matters: While community health centers that provide a primary-care medical home might, on the surface, be thought of as a strategy for transforming care, the care approach alone isn’t enough to drive down costs. Looking more closely, the new research makes clear that the right financial incentives are critical to ensuring that high-value care is enabled. With clinics being reimbursed per visit, it exposed the additional services – common under fee-for-service – that may not have been needed. As the Oregon researchers noted, the state’s actions could inform future payment reforms for other state programs that aim to enhance quality of care in Medicaid.