The Centers for Medicare & Medicaid Services (CMS) is establishing a Federally Qualified Health Center (FQHC) Prospective Payment System (PPS) with specific payment codes that FQHCs must use in order to ensure payment. implementation begins for cost reporting periods beginning on or after October 1, 2014. FQHCs will remain under the all-inclusive rate (AIR) system until their first cost reporting period beginning on or after October 1, 2014.
Background
Except for services that are paid at 100 percent of costs, Medicare currently pays FQHCs 80 percent of their AIR. MACs reconcile costs and visits at year-end through cost report settlement.
In compliance with the statutory requirements of the Affordable Care Act, CMS established a national encounter-based prospective payment rate for all FQHCs, determined based on an average of the reasonable costs of all FQHCs.
FQHCs will transition to the FQHC PPS based on their cost reporting periods. For FQHCs with cost reporting periods beginning before October 1, 2014, MACs shall continue to pay the FQHCs using the current AIR system. For FQHCs with cost reporting periods beginning on or after October 1, 2014, MACs shall pay the FQHCs using the FQHC PPS.
Under the FQHC PPS, Medicare will pay FQHCs based on the lesser of their actual charges or the PPS rate for all FQHC services furnished to a beneficiary on the same day when a medically-necessary, face-to-face FQHC visit is furnished to a Medicare beneficiary. Medicare will allow for an additional payment when an illness or injury occurs subsequent to the initial visit, or when a mental health visit is furnished on the same day as a medical visit.
The PPS rate will be adjusted when a FQHC furnishes care to a patient who is new to the FQHC or to a beneficiary receiving an initial preventive physical examination (IPPE) or an annual wellness visit (AWV). CMS is establishing specific payment codes to be used under the FQHC PPS based on descriptions of services that will correspond to the appropriate PPS rates.
The PPS rates will also be adjusted to account for geographic differences in the cost of inputs by applying FQHC geographic adjustment factors (FQHC GAFs). In calculating the total payment amount, the FQHC GAF will be based on the locality of the site where the services are furnished. For FQHC organizations with multiple sites, the FQHC GAF may vary depending on the location of the FQHC delivery site.
From October 1, 2014, through December 31, 2015, the F QH C PPS base payment rate is $158.85. Updates to the FQHC PPS base payment rate and the FQHC GAF will be made available through program instruction.
The FQHC PPS rates will be calculated as follows:
Base payment rate x F QH C GAF = PPS rate
If the patient is new to the FQHC, or the FQHC is furnishing an IPPE, initial AWV, or subsequent AWV, the PPS rate will be adjusted by 1.3416. This is a composite adjustment factor and would only be applied once per day. The PPS rate in this case would be calculated as follows:
Base payment rate x F QH C GAF x 1.3416 = PPS rate
To qualify for an encounter-based payment, a FQHC visit must meet all applicable coverage requirements. Additional information on the coverage requirements for FQHC visits can be found in the “Medicare Benefit Policy Manual”, Pub 100-02, Chapter 13.
For additional information such as specific billing codes, basic billing requirements, and more see the Medicare Learning Network article MM8743.
Let nCred help with your provider enrollment needs. Contact us today for more information.
