2014 Update on Implementation of the FQHC Prospective Payment System (PPS) in the State
The Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of
2000 (BIPA) replaced the traditional cost-based reimbursement system for federally qualified health centers (FQHCs) with a new prospective payment system (PPS).1 The PPS reestablishes the Federal requirement that FQHCs be reimbursed at a minimum rate for services provided to Medicaid patients. This payment baseline is not nationwide but rather is based on the average of each FQHC's FY1999 and FY2000 reasonable costs per visit rates - therefore, it is a unique payment rate for each FQHC. For existing FQHCs, a baseline per visit rate was established for services provided between January 1, 2001 and September 30, 2001, and then adjusted to take into account any change in the scope of services during that year. For FY2002 and the years thereafter, the per visit rate equals the previous year's per visit rate, adjusted by the Medicare Economic Index (MEI) for primary care and any change in the FQHC's scope of services.2 While the PPS establishes a Medicaid per visit payment rate floor, it does not require states to reimburse FQHCs using the PPS methodology. States may choose to implement an alternative payment methodology (APM), including continuation of reasonable cost reimbursement, as long as it does not pay less than what FQHCs would have received under PPS and the affected FQHCs agree to the APM.
This year’s report includes a closer look at same day billable visits and service specific rates. Additional reports are underdevelopment regarding wrap-around, change in scope, and billable providers.