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Value-based payment alignment: A case study for oral health

Nov. 1, 2022
The Centers for Medicare & Medicaid Services created value-based payment, health-care reform designed to lower the cost of care through changes in care delivery and payment. Can it work?

The Centers for Medicare & Medicaid Services (CMS) committed to value-based payment (VBP) more than a decade ago.1 The aim of this health-care reform is to improve the health of populations and lower the cost of care through changes in care delivery and payment.

The core driver of CMS’s VBP programs is alternative payment models (APMs).2 APMs are “a payment approach that gives added incentive payments to provide high-quality and cost-efficient care... [for] a specific clinical condition, a care episode, or a population.”3

This contrasts with the fee-for-service (FFS) system that reimburses providers for the volume of services they provide, without a direct connection to quality or improving health outcomes. CMS has developed and evaluated more than 50 APMs through the Centers for Medicare & Medicaid Services’ Innovation Center (CMMI) since the founding of CMMI in 2010.4 Evaluation of these APMs is typically based on three quality outcome measures and cost criteria:5

  1. Quality of care is improved without increasing spending.
  2. Spending is reduced without reduction in quality of care.
  3. Quality of care is improved, and spending is reduced, which is the best-case scenario.

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CMMI has shared lessons from testing APMs the last 10 years and presented a strategy for continued evaluation to demonstrate successful VBP models for prioritization and scale.6 Their strategy for the future direction of APMs focuses on ensuring health equity, streamlining payment models that assist providers in assuming financial risk, enhancing broad provider participation, and encouraging lasting care delivery transformation. Their ultimate vision is “a health system that achieves equitable outcomes through high-quality, affordable, and person-centered care.”

With increased understanding of the link between oral and systemic health, there is much potential for cost savings and better health outcomes.7,8 These depend on a large portion of the dental profession participating in chronic disease prevention and management programs backed by VBP. While there is some APM success in dentistry, the industry has been slow to adopt APMs.9 This is likely because the current dental benefit system is fragmented, dental benefits are difficult to access, Medicaid coverage of dental services varies by state, and provider enrollment is limited.10

To be a part of the “industry” vision of a health system that achieves equitable outcomes, dentistry must participate in payment reform to pursue strategic alignment of model design and evaluation with CMMI. Purchasers (both public and private) and payers can include dentistry in their move toward value-based care. Texas Health and Human Services (HHS) provides an excellent example of commitment to value transformation that includes oral health in Medicaid care and payment reform at the state level.11

Case study of an APM in dentistry: Texas as a leader

In 2012, Texas HHS implemented a pay-for-quality (P4Q) program that gave care organizations (MCOs) and dental maintenance organizations (DMOs) incentives to achieve quality targets and success.12 DMOs were told to delegate performance incentives tied to these quality measures to their provider networks, including the performance of oral evaluations, topical fluoride applications, and sealant placement.

Through its implementation of the first dental home for Child Health Insurance (CHIP) Medicaid program, Texas has been a leader in pursuing quality dental care since 2012 for members ages six to 35 months and is under the P4Q APM incentive design.13 In 2017, Texas HHS included dental programming in its value-based purchasing initiative, encouraging DMOs to use a risk-based alternative payment design.14 Through these incremental builds, Texas has used APMs to enhance early access to care for young children, achieve improvements in access and preventive service delivery among all children, and allow willing dental providers to bear financial risk in pursuing quality goals.

Because of Texas advancing quality care and dental APMs, the CareQuest Institute for Oral Health conducted an evaluation of dental utilization data against the CMMI quality and cost criteria. An analysis was conducted using claims data from DentaQuest, a participating DMO. It used DentaQuest claims associated with Texas Medicaid from January 2016 to September 2021 for two group practices that are part of the risk-based APM program, as well as two comparison group practices with similar claims volumes with an FFS payment model. 

The analysis included members who had been enrolled at these practices for at least 180 days. Capitation payments and FFS payments were calculated by month. Monthly access rates were assessed by calculating the number of unique assigned members who had a claim in the month, using claims data merged with membership data. Additionally, monthly utilization rates of various procedures, including oral evaluations, preventive procedures, surgical procedures, restorations, sealants, stainless steel crowns in primary dentition, and nitrous oxide use were also calculated by assessing the number of members who met study enrollment criteria and had claims with specific codes.

To gain additional insight into APM design and evaluation experience, three DentaQuest employees involved in administering the dental APM in Texas were interviewed virtually by a third party. This evaluation sought to pilot processes for alignment of dental APMs with industry standards for APM evaluation. Lessons learned are presented below.

Evaluation and lessons learned

A decade of learning how to design and evaluate effective APMs by CMMI led to lessons learned, and similar conclusions were observed in this dental case study.

Lesson 1: Infrastructure affects quality

During the past decade, CMMI determined that infrastructure investments and updates (e.g., electronic health records, data support, staff) are often necessary for APM participation.6 Texas successfully implemented P4Q dental measures beginning in 2012 and advanced APMs with support from one DMO, DentaQuest, to move a small percentage of providers to full capitation in 2018, with more in 2019.

COVID-19 caused disruptions in practice infrastructure, such as patient volume and workforce availability, and traditional workflows were significantly altered. Texas HHS suspended the state P4Q program for 2020. This not only affected the ability of providers to deliver care and perform against benchmarks of the APM, but also made it challenging to draw conclusions about provider performance from 2020 to the present.

In fact, difficulties with the full capitation model combined with challenges of the pandemic led the DMO to shift from a full capitation to a hybrid model in mid-2020. According to interviewees, the hybrid model helped address infrastructure challenges and increased access and quality and decrease costs.

One infrastructure challenge that remains for the DMO is the manual APM data reporting and evaluation process. All interviewees recognized that information technology (IT) investments are needed to automate data processes and prolong program sustainability. This recommendation compliments CMMI’s strategy to reduce provider administrative burden for APM participation and scale. Evaluation of both model performance and model environment should direct ongoing infrastructure investments aimed at improving quality.

Lesson 2: APM design affects participation and financial stability

When assessing cost of dental care in the APM arrangement, both group practices showed a relatively stable and even decreased cost per member under the APM compared to FFS. Certain design features, like cost predictability, can be a motivating factor for broad provider participation in APMs.6 Interviewees discussed that the hybrid capitation model was customized for providers, which made the program more desirable.15 They said that because the model is still in its infancy, it’s being continuously evaluated and adjusted. This aligns with CMMI's strategy to drive innovation and scale what works.

Evaluation of reimbursement data showed that both clients received capitation payments during the pandemic, even as patient volume dropped. This helped financial stability in a very uncertain time. This stability was not only helpful during 2020 but may also help the practices that transition to VBP to better prepare for pandemic-related care surges and infrastructure updates (e.g., backlog of patients receiving preventive dental services).16 Interviewees said that the pandemic helped redirect dental providers' attention to value-based care and implementing the APM.

Lesson 3: A paradigm shift is essential for quality

Another challenge that CMMI faces in implementing APMs is that continual participation can be difficult due to model complexity, administrative burden, required care transformation, and lack of long-term strategy. This can cause disruption and breakdowns in the quality of care. The analysis showed that the quality of care outcome under the APM for clients using the Texas P4Q and additional metrics was consistent with the FFS model.

Overall access and use of oral evaluations and preventive services remained at similar percentages under capitation or hybrid capitation arrangements compared to FFS. However, for one group practice, the percentage of invasive restorations placed (specifically stainless-steel crowns) decreased under the full capitation and hybrid capitation arrangements and remained lower than the similar control group. However, due to limitations regarding infrastructure and environmental factors, a direct association of this decrease with the use of capitation or hybrid capitation cannot be deduced.

While one interviewee noted that the APM promotes preventive services and, over time, will lead to healthier outcomes due to high preventive service use, the evaluation results demonstrate that the APM did stabilize or lower spending compared to an FFS model, while comparable results were found in quality of care between the two models.

Even though metrics were in place for preventive measures, a capitation design without a link to a diverse set of quality measures (preventive, restorative, referral, access, health outcomes) can create incentives to lower cost but not to improve the overall quality of care. Successful APMs require that providers embrace a value-based, prevention-focused mindset to care delivery. Additionally, providers must be supported with education, tools, and workflows to match the payment model. This modification of dental operations will require a lot of time, but near-term investments are vital to accomplish the long-term impact on health outcomes.17

Alignment for the future

As CMMI moves forward in their effort to expand VBP, it is critical for dental payers, programs, and practices to align their payment models with CMMIs strategic direction. Because strategic alignment requires evidence of APM functionality in dentistry, CareQuest Institute evaluated cost and quality performance of one dental APM in the Texas Medicaid program. Lessons showcased the necessity of payer investments in supporting infrastructure (e.g., health information technology, administrative aid) as well as the mindset shift of providers through training and tools to transform their care delivery.

It’s important to consider APM design features that affect quality, such as robust quality measures and fixed payments. The basic evaluation criteria of quality and cost for a specific APM must be considered with a broader scope to system transformation, improved patient outcomes, and equity.

Creating a VBP system that operates based on comprehensive health and includes oral health will take strategic action. Adoption of APMs by a diverse set of payers, including public and commercial insurers, is vital to long-term health-care transformation. Federal and state policy makers and advocacy organizations can support inclusion of dentistry in existing APMs (e.g., state-based managed care arrangements) and their infrastructure.

Dental providers should learn from medical success in APM arrangements as well as existing APMs in dentistry to prepare for a business model based on value, and they should be encouraged to take on financial risk as they gain participation experience. Differences in medical and dental industry capacity and operations should also be taken into consideration as dentistry applies lessons from medical APM arrangements.

As evidence of APM design and evaluation success is garnered and expanded, lessons should be available among payers, providers, policy makers, and consumers. Lessons from APM operation by CMMI and the dental industry should be coupled with strategic joint action and organization of resources to drive large-scale system change and improvement in health outcomes.


The authors would like to thank DentaQuest for being a leader in oral health value-based care and payment and for giving CareQuest Institute insight, through data and interviews, into their APM design, implementation, and evaluation.

The authors would also like to thank Tamanna Tiwari, BDS, MDS, MP, assistant professor, Department of Community Dentistry and Population Health; associate director, Center for Oral Disease Prevention and Population Health Research; and program director, DDS/MPH program at the School of Dental Medicine, University of Colorado Anschutz Medical Campus, for conducting the interviews of DMO employees involved in administering the dental APM in Texas.

Editor's note: This article appeared in the October 2022 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.


  1. Fact sheet value-based care state Medicaid directors letter. Centers for Medicare and Medicaid Services. September 5, 2020. Accessed December 4, 2021. cms.gov/newsroom/fact-sheets/value-based-care-state-medicaid-directors-letter
  2. Value-based programs. Centers for Medicare and Medicaid Services. Accessed May 3, 2022. www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Value-Based-Programs
  3. APMs overview. Centers for Medicare and Medicaid Services. Accessed December 4, 2021. https://qpp.cms.gov/apms/overview
  4. Alternative payment models and the quality payment program. Centers for Medicare and Medicaid Services. Accessed December 4, 2021. https://innovation.cms.gov/innovation-models/qpp-information
  5. Social Security Administration. Center for Medicare and Medicaid Innovation. Accessed December 4, 2021. https://www.ssa.gov/OP_Home/ssact/title11/1115A.htm
  6. Driving health system transformation – a strategy for the CMS Innovation Center’s second decade. Centers for Medicare and Medicaid Services. October 20, 2021. Accessed December 4, 2021. https://innovation.cms.gov/strategic-direction-whitepaper
  7. Seidel-Bittke D. The link between oral health and systemic health: a review. Dent Today. December 1, 2004. Accessed December 4, 2021. https://www.dentistrytoday.com/sp-664292614/
  8. Return on investment: healthcare system savings. Centers for Disease Control and Prevention. Accessed December 4, 2021. https://www.cdc.gov/oralhealth/infographics/roi-healthcare.html
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  10. Vujicic M, Fosse C. Time for dental care to be considered essential in US health care policy. 2022;24(1):E57-63. doi:10.1001/amajethics.2022.57 
  11. Sim SC, Carcedo JZ, Rosenbaum S, et al. Building community-oriented Medicaid managed care in Texas and beyond. Health Affairs Forefront. January 11, 2022. Accessed February 14, 2022. https://www.healthaffairs.org/do/10.1377/forefront.20220106.169006
  12. Pay-for-quality (p4q) program. Texas Health and Human Services. Accessed December 4, 2021. https://www.hhs.texas.gov/about/process-improvement/improving-services-texans/medicaid-chip-quality-efficiency-improvement/pay-quality-p4q-program
  13. First dental home. Texas Health and Human Services. Accessed December 4, 2021. https://www.hhs.texas.gov/providers/health-services-providers/texas-health-steps/dental-providers/first-dental-home
  14. Texas delivery system reform incentive payment program transition plan. Texas Health and Human Services. March 2021. Accessed December 4, 2021. https://www.hhs.texas.gov/sites/default/files/documents/laws-regulations/policies-rules/Waivers/medicaid-1115-waiver/value-based-payment-roadmap.pdf
  15. Feely D. The triple aim or the quadruple aim? Four points to help set your strategy. Institute for Healthcare Improvement. November 28, 2017. Accessed December 4, 2021. http://www.ihi.org/communities/blogs/the-triple-aim-or-the-quadruple-aim-four-points-to-help-set-your-strategy
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