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Federally Qualified Health Centers FAQ

  • What Is a Federally Qualified Health Center (FQHC)?
  • What Are the Benefits of Being an FQHC?
  • What Are the Fundamental Elements of a Health Center?
  • Who Do health centers serve?
  • What Are the Different Types of Health Centers?
  • How Long Have FQHCs Been Around?
  • How Many FQHCs Are There and How Many Provide Dental Services
  • What Portion of Oral Health Professionals Work Within FQHCs?
  • Can FQHCs Contract With Privalte Dental Practitioners to Provide Dental Services?
  • Must a FQHC Be Located in a Federally Designated Health Professional Shortage Area
  • What Is the Scope of Dental Services Provided in Federally Funded Health Centers?
  • Does This Lack of Current HRSA Oral Health Guidance Affect Health Center Dental Programs?
  • What Are the Revenue Sources for FQHCs?
  • Are Individual Health Centers Able to Access Unlimited Federal 330 Grant Funds?
  • Can Health Centers Accept Self-pay or Private Insurance Patients?
  • What Is the ADA Doing to Promote Greater Collaboration Between Dentists Working in Health Centers and Those Working in Private Practice?
  • In Summary, How Does a FQHC Compare to a Private Dental Practice?
For purposes of this document, the term Federally Qualified Health Center will be used to designate only federally funded facilities participating in the Consolidated Health Centers program run by the Federal government's Bureau of Primary Health Care (BPHC), within the Health Resources and Services Administration (HRSA) of the Department of Health and Human Services (DHHS). Other facilities that do not receive section 330 funds — such as FQHC Look-alikes and centers that receive only local and state funds — are not included under this definition. FQHCs are commonly known and recognized in federal legislation as Health Centers.

2 These statutes are within sections 1861(aa)(4) and 1905(l)(2)(B) of the Social Security Act.

3 NACHC has published a guide, So You Want to Start a Health Center: A Practical Guide for Starting a Federally Qualified Health Center, which is available online at

4 The number of seniors served by health centers is growing. Due to Medicare eligibility, this group does have more "options" for care, but having an interdisciplinary "one stop shop" for their health care needs is very attractive.

i The Consolidated Appropriations Act, P. L. 106-554, incorporates the text of Medicare, Medicaid and Children's Health Insurance Program (CHIP) Benefits Improvement Act of 2000 (BIPA, H.R. 5661) that includes section 702: New PPS for FQHCs and rural health clinics (RHCs). This section repeals the Balanced Budget Act (BBA) of 1997 that would have phased-out the reasonable cost based reimbursement system found in section 1902(a)(13)(C) of the Social Security Act. In its place, the new law establishes a prospective payment methodology to guarantee health centers a minimum per visit payment for services provided to Medicaid beneficiaries.

For Medicaid services provided between January 1, 2001, and September 30, 2001, States are required to reimburse FQHCs and RHCs at 100 percent of the average costs of providing FQHC and RHC services to Medicaid beneficiaries for the 2 previous FYs (1999 and 2000) with adjustments made for changes in the scope of services 7 provided by the FQHC and RHC. Payment amounts are calculated on a per visit basis. For FY 2002 and years thereafter, FQHCs and RHCs will be reimbursed based on the previous year's payments, increased by that year's Medicare Economic Index for primary care and adjusted for changes in a FQHC's and RHC's scope of services.

Those FQHCs and RHCs that are established on or after January 1, 2001, in their first year will be reimbursed in an amount equal to 100 percent of costs for providing Medicaid services. Costs are determined based on rates established by the prospective payment methodology for other FQHCs and RHCs located in the same or adjacent area with a similar caseload. In the absence of such a center or clinic, a newly established FQHC or RHC clinic will be reimbursed in accordance with the prospective payment methodology or on other tests of reasonableness as the Secretary of Health and Human Services may specify.

For those FQHCs and RHCs working within managed care arrangements, BIPA maintains the "wrap-around" payments established by the BBA. The FQHCs and RHCs will receive supplemental payments from the State for the difference between the amount they would have received under the prospective payment methodology and the amount received under contract with the managed care organization. Supplemental payments must be made pursuant to a payment schedule agreed to by the State and the FQHC or RHC and in no case may occur less frequently than every 4 months.

A State may use an alternative payment methodology to reimburse FQHCs and RHCs for services rendered to Medicaid beneficiaries as long as such an alternative methodology reimburses FQHCs and RHCs no less than the amount that they would be reimbursed using the prospective payment methodology and (2) the health center agrees to that methodology.

The law requires the Comptroller General to initiate a study on how to rebase or refine cost reimbursement methodologies for services to FQHCs and RHCs within the fourth year after enactment.

For additional information on Prospective Payment System, see