On April 29, 2014, the Centers for Medicare & Medicaid Services (“CMS”) in close collaboration with the Health Resources and Services Administration (“HRSA”) published the final rule titled “Medicare Program; Prospective Payment System for Federally Qualified Health Centers; Changes to Contracting Policies for Rural Health Clinics; and Changes to Clinical Laboratory Improvement Amendments of 1988 Enforcement Actions for Proficiency Testing Referral.” The primary purpose of this final rule is to implement a Prospective Payment System (“PPS”) for Medicare Part B payments to Federally Qualified Health Centers (“FQHCs”).
Medicare and Medicaid statutes define FQHCs, which include all organizations receiving grants under section 330 of the Public Health Service Act. FQHCs are community-based and patient-directed organizations that provide comprehensive primary and preventive healthcare services to low income populations, the uninsured, and other individuals with limited access to healthcare. HRSA administers the Health Center Program.
Currently, Medicare pays FQHCs an all-inclusive rate for the professional component of qualified primary and preventive health services furnished to the same beneficiary on the same day. Under the new FQHC PPS system, Medicare will pay FQHCs a single encounter rate, generally, per-beneficiary per-day for all services provided. This rate will be determined based on an average of reasonable costs for all FQHCs. The final rule instructs that FQHCs will be paid the lesser of their actual charges for services or a single encounter-based rate for professional services furnished per beneficiary per day.
According to CMS, the new Medicare FQHC PPS aims to take into consideration the type, intensity, and duration of FQHC services; and to allow for other adjustments, such as the geographic variation in cost. For services provided to a new patient, or “an initial preventive physical examination or an annual wellness visit,” the FQHCs will receive a 34 percent higher payment than the encounter-based rate. As stated by CMS, Medicare will cover the same FQHCs’ services as in the past.
Section 1834(o)(2)(A) of the Social Security Act added by the Affordable Care Act section 10501(i)(3)(A) requires implementation of the new FQHC PPS with cost reporting periods beginning on or after October 1, 2014—this means FQHCs will transition into the PPS based on their cost reporting periods. The claims processing system will maintain the current system and the PPS until all FQHCs transition to the PPS. The FQHC PPS also will be transitioned to an annual update beginning January 1, 2016, like many of the Physician Fee Schedule (PFS) rates that are updated on a calendar year basis.
This final rule also establishes policy that allows rural health clinics (“RHC”) to contract with nonphysician practitioners consistent with statutory requirements in section 1861(aa) of the Social Security Act that require at least one nurse practitioner or physician assistant to be employed by the RHC (and makes other technical and conforming changes to the RHC and FQHC regulations). Finally, this final rule amends the Clinical Laboratory Improvement Amendments of 1998 by fully implementing the “Taking Essential Steps for Testing Act of 2012” and adding three categories of sanctions for Proficiency Testing referral based on the severity and extent of the violation.
CMS will accept comments until July 1, 2014 regarding how Chronic Care Management policies for physicians billing under the PFS can be adapted for FQHCs; the establishment of Medicare-specific payment codes to be used for Medicare encounter-based payment under the new PPS; and any modification that would simplify the methodology for calculating coinsurance—proposed to be 20 percent of the lesser of the actual charge or the PPS rate—when a preventive and non-preventive service is on the same claim.