On April 29, 2014, The Centers for Medicare and Medicaid Services (CMS) published a final rule that proposes a new reimbursement system that increases payments to Federally Qualified Health Centers (FQHC’s) by as much as $1.3 billion over the next 5 years.
Medicare patients, including the elderly and disabled individuals, account for 9% percent of the total patients served by community health center. The new Prospective Payment System (PPS), which was directed by the Affordable Care Act, includes a single daily fee of about $155 per patient for all the services they provide to Medicare beneficiaries. The fee will vary depending on the clinic’s location and other factors, like whether the patient is new to the clinic. The new plan will result in an increase to Medicare payments to FQHC’s by as much as 32%.
In a statement from the National Associate of Community Health Centers, Dan Hawkins, Sr. Vice President of Policy, said the organization, who lobbied for the new plan, appreciates the “recognition of the importance of ensuring health centers receive fair payment in order to best serve their Medicare patients.” The current Medicare reimbursement plan is based on an all-inclusive, per encounter rate that is capped by a payment limit. A 2010 Government Accountability Office (GAO) Report actually found that FQHC’s were losing money with each Medicare patient served due to the government’s outdated payment methodology. A n additional factor that contributes to the center’s financial loss when serving these patients is the limited number of services for which they are currently reimbursed. Since centers are not paid on all services they provide to Medicaid patients, the collect reimbursement on just 69% of their actual Medicare costs on average.
The rule will also cap co-insurance for Medicare beneficiaries at 20% of the lesser of the provider’s charge or the PPS encounter rate. Another change to contracting policies for Rural Health Clinics will allow them to contract with non-physician practitioner. Finally, the rule implements changes to the Clinical Laboratory Improvement Amendments (CLIA) regulations regarding enforcement actions for proficiency testing referrals.
The rule (which has been published for public comment) and subsequent new payment plan would take effect on October 1, 2014. The entire rule can be viewed here, or you can view the CMS Fact Sheet here.
