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CMS Finalizes Medicare PPS for FQHCs

Wednesday, April 30, 2014  
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On April 29, 2014, the Centers for Medicare and Medicaid Services (CMS) released the Federally Qualified Health Center (FQHC) Medicare Prospective Payment System (PPS) final rule (with comment period for some sections) in the Federal Register. The rule can be read in its entirety in the Register and CMS has prepared a more concise fact sheet summarizing key provisions. Click here to read a response from the National Association of Community Health Centers.

The new FQHC Medicare PPS is built on the premise of a single encounter-based payment per beneficiary per day with two notable exceptions: 1) when an illness or injury occurs after the initial visit, 2) when a mental health and medical visit are furnished on the same day. The base encounter rate will be adjusted using a FQHC Geographic Adjustment factor (FQHC GAF) and when an FQHC furnishes care to a new patient or to a beneficiary receiving an initial preventive physical examination (IPPE), initial annual wellness visit (AWV), or subsequent AWV.

Reimbursement for FQHCs will be made based on 80% of the lesser of the actual charge or the PPS rate. Similarly, beneficiary coinsurance will be 20% of the lesser of the actual charge or the PPS rate. For claims with a mix of preventive (where coinsurance is waived) and non-preventive services, CMS has proposed basing the beneficiary coinsurance amount on either the FQHC’s total charge or PPS rate minus the dollar value of the preventive service line item(s). CMS has also proposed establishing a new system of HCPCS G-codes for FQHCs to report and bill FQHC visits to Medicare under the PPS.

Services not paid at the encounter rate (e.g. lab tests, technical components, etc.) will continue to be billed separately to Medicare Part B using a professional claim and flu and pneumonia vaccines will continue to be reimbursed at 100% of reasonable costs through the cost report process. (Other Medicare-covered vaccines will be paid as part of the encounter rate.)

FQHCs will transition into the new PPS system beginning with the cost reporting period on or after October 1, 2014. The Medicare PPS will be updated (adjusted based either on the Medicare Economic Index or a percentage increase in a market basket of FQHC goods and services) on a calendar year basis beginning January 1, 2016.

MPCA anticipates CMS will schedule a briefing on the PPS final rule in the next several weeks. In the meantime, if you have questions about the final rule or would like to more precisely ascertain the impact on your Health Center please contact Phillip Bergquist.

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