Medicare Payment Changes Garner Approval of FQHC Advocates

Under the proposed prospective payment scheme, Medicare will pay Federally Qualified Health Centers a single encounter rate per beneficiary per day for all services provided, with some exceptions.

Community health advocates are applauding the federal government's newly announced plan to boost Medicare payments to Federally Qualified Health Centers by as much as 32%.

"Generally we are very pleased with it," says Dan Hawkins, senior vice president of policy at the National Association of Community Health Centers.

"CMS clearly sees this as a fair payment for the comprehensive services that health centers provide to Medicare beneficiaries and they are aware that this new PPS system they are proposing is very similar to the PPS under which health centers are paid under Medicaid."

CMS Releases 2015 IPPS Proposal

The Centers for Medicare & Medicaid Services recently issued the final rule for the new Medicare prospective payment scheme that was outlined under the Patient Protection and Affordable Care Act, which mandates consideration of factors such as the type, intensity, and duration of services provided in these settings. The new payment system will be implemented on Oct. 1, and FQHCs will transition to it throughout 2015, CMS said.

"The new payment system helps increase the ability and capacity of federally qualified health centers to provide essential and affordable services for even more patients who need care," CMS Administrator Marilyn Tavenner said in prepared remarks. "These FQHCs are essential to countless patients in local communities who depend on them for getting their primary and preventive care."

Health centers provide care to more than 22 million people, of whom 1.7 million are Medicare beneficiaries. By law no one can be denied care based on an inability to pay. A 2010 report from the Government Accountability Office found that most FQHCs health centers lose money on Medicare patients.

"Under the old payment system, health centers were subject to restrictions and an overall payment cap that reduced the Medicare payment to about 60% of their costs. They were losing 40 cents on the dollar every time they saw a Medicare beneficiary," Hawkins says.

Under the new PPS, Medicare will pay FQHCs a single encounter rate per beneficiary per day for all services provided, with some exceptions.

The rate will be adjusted for geographic variation in costs, for higher costs associated with furnishing care to new patients at FQHCs, and when FQHCs furnishes an initial preventive physical examination or an annual wellness visit to a Medicare beneficiary. Services paid for by Medicare in the past will continue to be covered under the new system, CMS said.

The initial proposal floated by CMS last September raises concerns among community health center advocates, but Hawkins says many of those concerns have been addressed.

"They eliminated the payment cap," Hawkins said.

"Yes, this will put it on a prospective payment system and the payment adjuster will be limited because the Medicare Economic Index is only about 2% or 3% annually increased. So it is not going to keep up with healthcare costs. But at the start, it is going to get close to 80% of costs and from the old 60% and in that context it is a much more fair payment rate and will allow health centers not to have to dip into the grants and other funding they get to serve their uninsured patients in order to subsidize Medicare underpayments. So in that sense it is a very good rule."

The feds also struck out a provision that would allow only one visit per day of any kind.

"We noted that there are a good number of folks who have a comorbidity such as depression associated with their medical condition. In this final rule they changed that and would allow health centers to bill for more than one visit in a single day," he says.

"You can appreciate, for seniors especially, asking them to come back on a separate day when they are there for care for one condition. It not only inconveniences them, but also increases the chances that they may not come back for that second service."

The final rule was published in the Federal Register on Friday, May 1 and CMS has asked for public comments on modifications of proposals including:

• A simplified method for calculating coinsurance when a preventive and non-preventive service is on the same claim;
• The establishment of Medicare-specific payment codes to be used for Medicare encounter-based payment under the new PPS; and
• Ways in which payment for chronic care management services could be adapted for FQHCs and rural health clinics.

The comment period closes on July 1, with the final rule to be issued later in the year.