Section 25. Reimbursement for federally qualified health centers (FQHCs) and rural health clinics (RHCs)

A. Consistent with the Benefits Improvement and Protection Act (BIPA) of 2000, Section 702, DMAS adopts the alternative payment methodology. This alternative payment methodology continues established reasonable cost reimbursement using Medicare principles of reimbursement. The Commonwealth shall make interim payments on a per visit basis and shall reconcile to actual costs via the year-end cost report. The methodology used to determine the payment amount is: (i) agreed to by the Commonwealth and the center or clinic and (ii) results in payment to the center or clinic of an amount that is at least equal to the PPS payment rate.

1. Newly qualified FQHCs/RHCs adopting the alternative payment methodology after federal fiscal year 2000 will have initial payments established through pro forma cost reporting methods.

2. At the end of the cost reporting cycle, the Commonwealth shall compare the alternative per visit rate to the PPS rate and reimburse the center/clinic the higher of the alternative rate or the PPS rate for the number of visits recorded during the reporting period.

B. In the event a FQHC/RHC does not select the alternative payment methodology, DMAS shall provide payment consistent with the new Prospective Payment System (PPS) as prescribed by the BIPA of 2000, Section 702.

1. Baseline PPS rate methodology. The PPS baseline payment period (January 1, 2001 - September 30, 2001) rate shall be determined by averaging 100% of the FQHCs/RHCs reasonable costs of providing Medicaid-covered services during the providers' 1999 and 2000 fiscal years, adjusted to take into account any increase or decrease in the scope of services furnished during provider FY 2001 by the FQHC/RHC (calculating the payment amount on a per visit basis). Beginning October 1, 2001, and for each fiscal year thereafter, each FQHC/RHC shall be entitled to the payment amount (on a per visit basis) to which the center or clinic was entitled under BIPA of 2000 in the previous fiscal year, adjusted by the percentage change in the Medicare Economic Index (MEI) for primary care services, and adjusted to take into account any increase or decrease in the scope of services furnished by the FQHC/RHC during its fiscal year.

2. For new FQHCs/RHCs that qualify on or after fiscal year 2000, DMAS will compare the new center/clinic to other centers/clinics in the same or adjacent areas, as defined by the current U.S. Department of Commerce, Bureau of Economic Analysis, Metropolitan Statistical Area Component County List, issued by the Office of Management and Budget, with similar case loads for purposes of establishing an initial payment rate. If no comparable center/clinic exists, DMAS will compute a center/clinic-specific rate based upon the clinic's pro forma budget or historical costs adjusted for changes in scope of services. At the end of the first fiscal year, initial payments will be reconciled to equate to 100% of costs. After the initial year, payment shall be increased or decreased using the MEI and adjusted for changes in the scope of services as described in this section.

C. Supplemental payments. As specified in the BIPA of 2000, Section 702, in the case of services furnished by FQHC/RHC pursuant to a contract between the center and a managed care entity (MCE), provision is hereby made for payment to the center or clinic at least quarterly by the Commonwealth of a supplemental payment equal to the amount (if any) by which the amount determined under subsection A or B of this section exceeds the amount of the payments provided under such HMO contract.

1. Supplemental payments for FQHCs/RHCs selecting the alternative methodology. FQHCs/RHCs that provide services under a contract with an MCE will receive quarterly state supplemental payments for the cost of furnishing such services that are an estimate of the difference between the payments the FQHC/RHC receives from the MCE or MCEs and the payments the FQHC/RHC would have received under the alternative methodology. At the end of the FQHC's/RHC's fiscal year, the total amount of supplemental and MCE payments received by the FQHC/RHC will be reviewed against the amount that the actual number of visits provided under the FQHC's/RHC's contract with MCE or MCEs would have yielded under the alternative methodology. If the alternative amount exceeds the total amount of supplemental and MCE payments, the FQHC/RHC will be paid the difference between the amount calculated using the alternative methodology and actual number of visits, and the total amount of supplemental and MCE payments received by the FQHC/RHC. If the alternative amount is less than the total amount of supplemental and MCE payments, the FQHC/RHC will refund the difference to DMAS between the alternative amount calculated using the actual number of visits and the total amount of supplemental and MCE payments received by the FQHC/RHC.

2. Supplemental payments for FQHCs/RHCs selecting the PPS methodology. FQHCs/RHCs that provide services under a contract with an MCE will receive quarterly state supplemental payments for the cost of furnishing such services that are an estimate of the difference between the payments the FQHC/RHC receives from MCEs and the payments the FQHC/RHC would have received under the BIPA PPS methodology. At the end of each FQHC's/RHC's fiscal year, the total amount of supplemental and MCE payments received by the FQHC/RHC will be reviewed against the amount that the actual number of visits provided under the FQHC's/RHC's contract with MCE would have yielded under the PPS. If the PPS amount exceeds the total amount of supplemental and MCE payments, the FQHC/RHC will be paid the difference between the PPS amount calculated using the actual number of visits and the total amount of supplemental and MCE payments received by the FQHC/RHC. If the PPS amount is less than the total amount of supplemental and MCE payments, the FQHC/RHC will refund to DMAS the difference between the PPS amount calculated using the actual number of visits and the total amount of supplemental and MCE payments received by the FQHC/RHC.

D. These providers shall be subject to the same cost reporting submission requirements as specified in 12VAC30-80-20 for cost-based reimbursed providers.

Historical Notes

Derived from Volume 18, Issue 21, eff. August 1, 2002.

Statutory Authority

§ 32.1-325 of the Code of Virginia.