Published March 27, 2024

Medicare Payment Primer: Federally Qualified Health Centers Prospective Payment System

This Insight is part of our Medicare Payment Primers series.

Federally Qualified Health Centers (FQHCs) are non-profit outpatient clinics that serve medically underserved areas and populations. FQHCs include community health centers, migrant health centers, healthcare for the homeless centers, public housing primary care centers, health center program “look-alikes,” and programs or facilities operated by a tribe or tribal organization or by an urban Indian organization.

FQHCs are reimbursed under a prospective payment system (PPS) for services and supplies furnished as part of an FQHC visit. Each visit is billed under one of the following FQHC-specific payment codes:

  • G0466 – FQHC visit, new patient
  • G0467 – FQHC visit, established patient
  • G0468 – FQHC visit, Initial Preventive Physical Exam (IPPE) or Annual Wellness Visit (AWV)
  • G0469 – FQHC visit, mental health, new patient
  • G0470 – FQHC visit, mental health, established patient

For each payment code, the Centers for Medicare & Medicaid Services (CMS) maintains a list of Healthcare Common Procedure Coding System (HCPCS) codes that comprises the qualifying visits for that code. The appropriate HCPCS code for the qualifying visit is listed on the claim along with the codes for any additional services or supplies furnished to the beneficiary. An FQHC receives a PPS payment for each visit that reimburses the FQHC for all services and supplies associated with that visit.

Base Payment 

Medicare reimbursement for all FQHC visits is based on one national, unadjusted “base” PPS rate. The PPS rates were designed to reflect the cost of all services and supplies that the FQHC furnishes to a patient as part of an FQHC visit.  

The FQHC base rate is updated annually by the percentage increase in the FQHC market basket reduced by a productivity adjustment. The market basket considers the increased costs of goods and services and reflects input price inflation from one year to the next. These updates can be found at the CMS FQHC Center.

Payment Adjustments

Market Differences: The FQHC PPS is adjusted for geographic differences in the cost of services by a geographic adjustment factor (GAF) based on the delivery site where the services are furnished. FQHC PPS GAFs are updated periodically, and the updates can be found at the CMS FQHC Center.

Patient/Case-Specific Adjustments

Service Complexity/Case Mix: The FQHC PPS rates are not adjusted at the individual patient level to address the complexity of the individual patient’s healthcare needs, the length of an individual’s visit, or the number or type of practitioners involved in the patient’s care.

New Patients: The FQHC PPS rate is increased by 34 percent when the FQHC furnishes care to a patient who is new to the clinic or to a beneficiary receiving an initial preventive physical examination or who has an annual wellness visit.

Other Services

CMS also reimburses FQHCs for other services at different rates, including specified care management services (billed with HCPCS G0511), psychiatric collaborative care model services (billed with HCPCS G0512), and communication technology-based services (billed with HCPCS G0071). Through the end of 2024, FQHCs will continue to receive reimbursement for medical telehealth services (billed with HCPCS G2025).

Additional Payments Through the Cost Report

FQHCs file cost reports on an annual basis (refer to PYA Medicare Cost Report Primers). Through the cost report, FQHCs receive interim payments for graduate medical education, bad debt, vaccines, and administrative costs.


Centers for Medicare and Medicaid Services Federally Qualified Health Centers Center

This Insight is part of our Medicare Payment Primers series. If you have questions about reimbursement, strategy and transactions, compliance, or valuation, our executives are happy to assist. Please contact them via email or by calling (800) 270-9629.

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