The 2016 Medicare Physician Fee Schedule Final Rule: How It Affects FQHCs

By Published On: November 19, 2015

On October 30, 2015, the Centers for Medicare and Medicaid Services (“CMS”) released the calendar year 2016 physician fee schedule (“PFS”) final rule.  That rule, which determines how providers are reimbursed under Medicare, is relevant to federally-qualified health centers (“FQHC”) in several respects.

The PFS is designed to establish payments for services rendered under Medicare Part B based on national uniform relative value units that attempt to account for the relative resources used in performing a service.  CMS publishes yearly “cost year” revisions to the PFS to keep rates current.  To calculate the rate for a specific service, the components of the fee schedule are adjusted by geographic cost indices, and then converted into a rate expressed as a dollar value.

Normally, the PFS establishes reimbursement for Part B suppliers, rather than Part A providers (such as FQHCs), but on occasion, aspects of the PFS rulemaking impact FQHCs.  Three aspects of the 2016 PFS rule impact FQHCs specifically.

Chronic Care Management

The 2016 PFS Final Rule provides a mechanism for FQHCs to be reimbursed for chronic care management (“CCM”) services in Medicare.  CCM services include physician or non-physician practitioner care related to management of chronic diseases, such as post-discharge care management services and care coordination services.

CMS began to reimburse Part B suppliers for CCM services in 2014.  When this change was made, CMS explained that FQHCs could not be reimbursed for CCM services under their prospective payment system (“PPS”) payment methodology.  This was because FQHCs can only bill for face-to-face encounters between a patient and a Medicare FQHC provider, and much of the care provided under CCM does not involve face-to-face contacts or services provided by FQHC billable clinicians.  In its 2015 PFS rulemaking, CMS sought public comment on how it could change policy to reimburse FQHCs for CCM.

CMS announced its solution in the 2016 PFS Final Rule.  Effective January 1, 2016, FQHCs will be able to bill Medicare for CCM according to the national average non-facility payment rate for the CCM CPT code (for the first quarter of 2015 this amounted to $42.91 per beneficiary per calendar month).  To receive the payment, the FQHC must provide at least 20 minutes of qualifying CCM services during a calendar month to a patient with multiple chronic conditions that are expected to last at least 12 months and which place the patient at significant risk.  Medicare will only make one CCM payment per beneficiary, per month, and the 20 minute requirement must be met by a single FQHC practitioner or staff member.

The FQHC will bill Medicare for CCM under its Part A provider number.  The amount of the CCM payment will be added to an FQHC’s Medicare PPS payments, and will not be made as a separate PFS payment.  In order to qualify for payment, an FQHC must also meet various scope of service and documentation requirements, including obtaining patient consent, as well as following specified electronic health record standards.

Advance Care Planning

Advance care planning (“ACP”) is a process of communication between individuals and their health care providers to understand and discuss plans for future healthcare decisions that may need to be made at a time when the individual is unable to make his or her own healthcare decisions.  Up until now, Medicare would provide reimbursement for ACP only as a component of the “welcome to Medicare” visit for new beneficiaries.  In the proposed 2016 PFS rule issued earlier this year, CMS proposed to add standalone PFS reimbursement for ACP for Part B suppliers.

In the public comment period on the proposed 2016 PFS rule, commenters suggested that if Part B suppliers are able receive reimbursement for ACP services under Medicare, FQHCs should also be able to do so.

In response, in the 2016 final rule, CMS stated that it would modify the list of HCPCS/CPT codes that it considers support allowable FQHC visits under the FQHC PPS to include the code associated with standalone ACP.   In order for ACP to be billable as a “visit” under the FQHC PPS, all other requirements for a Medicare billable visit must be met (e.g. qualified clinician; face-to-face visit).

Grandfathered Tribal FQHCs

The third aspect of the 2016 PFS Final Rule that impacts FQHCs relates to payment of grandfathered trial FQHCs that were provider-based clinics on or before April 7, 2000.  By way of background, new requirements included in the 2001 Hospital Outpatient Final Rule effectively made it impossible for FQHCs to newly qualify for provider-based status for purposes of Medicare reimbursement.  However, CMS declined to apply those criteria to Indian Health Service (“HIS”) or tribal facilities.  CMS’s rationale was to prevent IHS and tribal facilities from running afoul of hospital Conditions of Participation requirements simply because a tribe took over administration of the facility but not the affiliated hospital.  CMS will now allow those facilities, when they undergo a change in status from Indian Health Service to tribal operation, or vice versa (or a realignment or change in structure), to instead become certified as “grandfathered tribal FQHCs.”

Effective January 1, 2016, grandfathered tribal FQHCs will be reimbursed at the lesser of their actual charges or the grandfathered tribal FQHC PPS rate of $307, rather than the Medicare PPS rate that applies to other FQHCs.  Grandfathered tribal FQHCs will be required to meet all FQHC certification and payment requirements.  The facilities will be paid for all services included in the Medicare PPS benefit.   To become certified as an FQHC, a tribal organization will need to submit a Medicare FQHC application (form 855A), meet all Medicare FQHC site certification requirements, and become certified with the applicable Medicare Administrative Contractor.   Essentially, a grandfathered tribal FQHC will be subject to different payment and billing requirements, but will in all other respects serve as an FQHC in a tribal or Indian Health setting.

In sum, FQHCs will be affected by the 2016 PFS in three primary ways.  Please contact us if you would like further information about any of the changes described above.


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