The Year in Review: Health Center Payment Policy

by Heather Foster, MPH

What a year!  While I only joined NACHC in September, from what I understand this past year was certainly quite a ride.  Despite all the bumps in the road on the path to passage of health reform, the outcome for health centers was overwhelmingly positive.  By any measure, health centers will be in a better position when it comes to financing in the years to come—whether it be payments from private insurance companies, changes to federal Medicaid and Medicare policy, to a smaller number of uninsured patients nationwide.  Kudos to the NACHC grassroots for all your hard work!  That being said, our work is by no means done.  There are key changes from health reform that we will be working to retain throughout the next Congress, and there are others that we will be working to improve.  I know that all of us here at NACHC are gearing up for another incredibly active year on the Hill, but in the meantime, here is the year in review for health center financing and payment policy:

The “Menendez Amendment”:

Perhaps one of the most significant provisions from health care reform that will impact how health centers get paid in the future was an amendment championed by Senator Robert Menendez (D-NJ) ensuring that private health insurance plans operating in the new “Exchanges” (which will go live in 2014) will pay health centers no less than their Medicaid PPS rate.  This provision is vital because it ensures that health centers do not lose revenue when they treat patients with private insurance.  Traditionally, private payers have been amongst the worst payers to health centers, reimbursing health centers at 50 cents on the dollar on average. The Menendez Amendment ensures that health centers can survive in the new health insurance environment where more patients will be covered by private plans offered through the new health insurance exchanges.   

Essential Community Providers:

Concurrent with the “Menendez Amendment” was a provision included in health reform known as the “Essential Community Provider” provision, championed by Senator Barbara Mikulski (D-MD), amongst others.  While the Menendez Amendment ensured that health centers will receive at least their Medicaid PPS rate from private insurers, the Essential Community Provider provision requires that private insurance plans actually contract with safety net providers who are eligible to participate in the 340B drug discount program, including health centers. 

MATCH Act & Medicare Reimbursement:

A recently released GAO report on health center Medicare payments found that 72% of federally qualified health centers (FQHCs) are subject to an administratively-applied Medicare payment cap, resulting in a loss of $58.2 million annually.  The MATCH Act (H.R. 1643/S. 648), championed by Senators Snowe (R-ME) and Bingaman (D-NM), along with Reps. Lewis (D-GA) and Emerson (R-MO),  would have remedied this situation by eliminating the cap for FQHC Medicare payments and instituting a Prospective Payment system (PPS) like the PPS systems for FQHCs in Medicaid and CHIP.  The MATCH Act was unanimously adopted during Senate Finance health reform markup and included in the Senate Finance Committee bill.  However, the MATCH language was changed before moving to the floor.  While still eliminating the caps and instituting a new system, the PPS system ultimately enacted during health reform would function differently from the health center payment system MATCH would have created.  Looking to the 112th Congress, we will continue to work towards  ensuring a true Medicare PPS system.

Medicaid Expansions:

While not solely a health center focused provision, one of the largest impacts on health centers from health reform will be the significant expansions of Medicaid eligibility limits, which will lessen the numbers of uninsured to the tune of 32 million Americans.  Beginning January 1, 2014, Medicaid eligibility will be expanded to all citizens and legal permanent residents under age 65 who have incomes below 133% FPL (including not only children and pregnant women, but also childless adults and parents).  This will not only improve access to insurance for health center patients, it will likely compel many newly insured individuals to seek primary care for the first time, and empower others to access specialty care that was previously out of reach.

Medicaid Health Information Technology Incentive Payments:

Finally, as you will likely remember from last month, there was a flurry of activity surrounding the Medicaid HIT incentive payments right before the 111th Congress adjourned.  We had advocated for a technical change that would require that states pay Medicaid health information technology incentive (HIT) payments directly to health centers, rather than having health centers work with each eligible provider to have the provider reassign such payments over to the health center. While the HIT fix was on the list for inclusion in a draft year-end technical corrections package thanks to the work of the health center grassroots, due to larger politics there was ultimately no year-end corrections package that moved through the Congress.  While we will continue to pursue new legislative opportunities to address this issue, we recommend that you familiarize yourself with the steps you will need to take to reassign provider payments at your health center.

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