CMS is implementing a Prospective Payment System (PPS) for FQHC’s.  This means that, instead of being reimbursed 100% for their all-inclusive rates (AIR) for certain services and 80% for their AIR for all other services, FQHC’s will now be reimbursed based on a rate determined by the average rates for all facilities.

This transition will go into effect based on the FQHC’s cost reporting period.  For facilities with cost reporting periods beginning before October 1, 2014, the reimbursement will still be paid using the current AIR system.  For facilities with cost reporting periods beginning on or later than October 1, 2014, reimbursements will be paid based on a PPS system.

FQHC’s will be PPS reimbursed by Medicare based on the lesser of their charges or the PPS rate.  This applies to all FQHC services which a beneficiary receives on the same day that there is a medically-necessary, face-to-face FQHC visit for a Medicare beneficiary.  Additional payment will be allowed when an illness or injury occurs after the initial visit, or when there is a mental health visit on the same day as a medical visit.

The PPS rate will be adjusted when a FQHC furnishes care to a new patient or to a patient receiving an initial preventive physical examination (IPPE) or an annual wellness visit (AWV).  CMS is establishing specific payment codes to be used which will correspond to the appropriate PPS rates.

The PPS rate will be adjusted to account for geographic differences in costs by applying FQHC geographic adjustment factors (FQHC GAFs).  The GAFs will be calculated based on the location of the site.  If there is a FQHC organization with several sites, the GAF may vary from site to site.

From October 1, 2014 through December 31, 2015, the FQHC PPS base payment rate is $158.85.  Updates will be made available through program instruction.

Thus, the calculation would be as follows:

Base payment rate x FQHC GAF = PPS rate

If the patient is a new patient, or is being furnished with an IPPE or an AWV, the PPS rate will be adjusted by 1.3416, which is an adjustment factor which would only be applied once per day.  In this case, the PPS rate would be:

Base payment rate x FQHC GAF x 1.3416 = PPS rate

The official instruction, CR 8743, issued to your MAC regarding this change is available on the CMS website.

A listing of the toll-free numbers for MACs is available on the CMS website under How Does It Work.

Make sure to follow our webinar schedule, so that you can keep abreast of the latest FQHC requirements!

Webinar this week!  Tuesday, January 13th!

http://www.ppsassistant.com/cost-report-webinars