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CMS final rule to increase Medicare payments to FQHCs

By Kyle Murphy, PhD

Federally qualified health centers (FQHCs) could be in line for a significant increase their payments from the Centers for Medicare & Medicaid Services (CMS). A final rule to be published on the Federal Register later this week aims to implement a prospective payment system (PPS) for a subset of Medicare services delivered by FQHCs.

Beginning Oct. 1, 2014, payment for FQHC services covered under Medicare Part B will use a newly-established set of payment codes tailored for FHQC services and take into account the “type, intensity, and duration of services.”

Additionally, the encounter-based payment rate will factor in geographic differences in costs through the use of geographic practice cost indices (GPCIs) and whether a patient is receiving care for the first time or for an annual visit. A CMS factsheet provides details about the encounter-base per diem rate:

Geographic adjustment: The encounter-based per diem rate will be adjusted for geographic differences in the cost of services by using the FQHC Geographic Adjustment factor (FQHC GAF), which is adapted from the Geographic Practice Cost Indices used to adjust payment under the physician fee schedule (PFS).

New patient, IPPE, and AWV adjustment: The encounter-based per diem rate will be adjusted for greater intensity and resource use when an FQHC furnishes care to a patient that is new to the FQHC or to a beneficiary receiving an initial preventive physical examination (IPPE) or an annual wellness visit (AWV).  For such visits, FQHCs will receive a payment that is 34 percent higher than the encounter-based rate.

“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 a public statement. “These FQHCs are essential to countless patients in local communities who depend on them for getting their primary and preventive care.”

According to CMS and the final rule, these Medicare payments to FQHCs have the potential to increase by 32 percent:

In the proposed rule, we estimated the overall impact, based on the estimated PPS rate, would increase total Medicare payments to FQHCs by approximately 30 percent, with an annualized cost to the federal government between $183 million and $186 million, based on 5 year discounted flows using 3 percent and 7 percent factors. Based on current data, our final estimate is an overall impact of increasing total Medicare payments to FQHCs by 15 approximately 32 percent, based on payment at the FQHC PPS.

The final rule also introduces changes to contracting policies for rural health clinics (RHCs) and proficiency testing (PT) under the Clinical Laboratory Improvement Amendments (CLIA). RHCs meeting statutory requirements for employment of nurse practitioners (NPs) and physician assistants (PAs) can now contract with non-physician practitioners. This final rule fully implements the Taking Essential Steps for Testing (TEST) Act that uses a three-tried category system of sanctions to impose penalties for PT referrals.





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