Senate Health Bill Keeps Federally Qualified Health Centers on the Gravy Train

Unlike virtually every other entity in US health care, Federally Qualified Health Center clinics can bill the government for their costs rather than for market prices or negotiated fees. By law, state Medicaid programs “shall provide for payment for such services in an amount (calculated on a per visit basis) that is equal to 100 percent of the average costs of the center or clinic of furnishing such services…” Medicare also pays Federally Qualified Health Centers “an all-inclusive per visit payment amount based on reasonable costs as reported on its annual cost report.”

Because the federally qualified clinics are paid on the basis of their costs, Medicaid pays them more for the same service than it pays private doctors. Many of the clinics are hospital-based. Since many private physicians limit their participation in Medicaid because regular Medicaid reimbursement rates are below cost, Medicaid patients may have little choice but to get their medical care from the clinics. They might prefer to use the higher reimbursement level to pay for a private physician, but the government denies them that choice.

Unsurprisingly, the health centers have been huge boosters of Medicaid expansion and, in isolated cases, have not been overly scrupulous in checking that the patients that they bill for actually are eligible for Medicaid.

The special payments enjoyed by the clinics are expanded in the Senate (Harry Reid) health reform bill. Although the bill instructs Medicare to develop a prospective payments system for the clinics, it requires that the payments equal 103 percent of what the clinic would have received under the cost reimbursement. In this way, Medicare will be paying cost plus — buying health care the same way the Pentagon buys weapon systems.

The Senate bill also bestows liberal grants on Federally Qualified Health Centers, totaling almost $3 billion in 2010 and climbing to more than $8 billion in 2015.

The gravy train continues in 2016 and beyond, with the size of the grants escalating in line with increases in the number of patients served and the average cost per patient.

In addition to the grants and the special payment rates, the clinics already enjoy many advantages denied private physicians. These include non-profit status, special drug pricing, access to the National Health Service Corps, and advantageous malpractice coverage through the Federal Tort Claims act.

The non-profit clinics that manage to lower their average cost will receive less in grants, while those that manage to raise their average cost will receive more. So what do you think is going to happen to the cost of care at these establishments?

Comments (9)

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  1. Larry C. says:

    Very interesting post. George W. was a big fan of these clilnics and I think they were greatly expanded under King George’s rule. Just shows that Republicans can be as bad as Democrats on these issues.

  2. Stephen C. says:

    If we could just give these clinics a pile of money and let then help poor people any way they choose — with no strings attached — they would probably work very well. They would find their market niches and provide services not being provided — or at least not being provided conviently — by others.

    I think all their problems arise from the fact that Washington wants to dictate how they operate.

  3. Linda Gorman says:

    No, we should give the poor people a pile of money for health care and let them spend it where they choose.

    What if the poor want private medicine rather than clinic care?

  4. claira says:

    Very informative blog for health care. Do want to know more on medical billing training visit

  5. Bret says:

    We should give the poor a pile of money, provided we don’t care what they do with it. But what if the givers (taxpayers) do care? Then free care clinics seem to be not such a bad idea, provided they are free to deliver care efficiently and not follow guidelines written by people miles away in some distant place.

  6. Luther Ruckerson says:

    Disclosure: I work at an FQHC.

    I really wonder how much the author of this article knows about FQHCs. FQHCs provide primary care to under-served populations in under-served areas that would not likely receive primary medical care. This means that rather than waiting until a health care problem becomes an crisis, it can be dealt with early on when it is still manageable. It is true that FQHCs receive a higher reimbursement from Medicare and Medicaid than other providers. However, it has been shown that FQHCs’ role in keeping people out of the ER is an over all money saver in the communities they serve.

    At my job I see people every day who have lost their insurance after losing their jobs and who therefore lose access to meaningful health care. I also see people on a regular basis who have lost their house and gone into bankruptcy because of medical bills. I just recently saw a patient who lost his leg to diabetes because he had no meaningful access to medical care.

    I have lived in my hometown my my whole life, and before this FQHC was here, people who did not have insurance simply didn’t get healthcare until it was an emergency or until it was too late.

    Of course I am biased, but from where I sit I would like to see a lot more FQHCs in a lot more places where people still don’t have meaningful access to health care.


  7. Katrina says:

    FQHCs do not get 100% of their costs reimbursed. The author should do valid research before publishing misleading information about a meaningful way to deliver healthcare. Many of the clinic’s operating costs are not eligible for reimbursement and that is why these clinics have to raise anywhere from 30-60% of total expenses through grants and fundraising. If you truly cared about how these clinics work in the communities they serve, spend a few minutes in one and you will be a supporter as well. I salute Luther and all other professionals who choose to work at these community health centers because it is meaningful work for humanity.

  8. Katrina says:

    $23B Medicaid cost savings from $10B investment in community health centers to reduce ER and other costs based on an independent study at George Washington University:
    We need to have informed discussions, not misleading or inflammatory statements to move our nation toward a healthcare solution

  9. Family and General Practice in Florida says:

    Very interesting post. George W. was a big fan of these clilnics and I think they were greatly expanded under King George’s rule. Just shows that Republicans can be as bad as Democrats on these issues.