What is a Federally Funded Health Care Program? Understanding FQHCs and the Health Center Program

Federally funded health care programs are crucial components of the United States healthcare system, designed to ensure access to medical services for underserved and vulnerable populations. Among these programs, the Health Center Program, particularly through Federally Qualified Health Centers (FQHCs), stands out as a vital safety net. If you’re seeking healthcare in a rural or underserved area, understanding these programs is essential. You can locate an FQHC near you by using the Health Resources and Services Administration’s (HRSA) Find a Health Center tool, searching by address, state, county, or ZIP code.

Federally Qualified Health Centers (FQHCs) are community-based health care providers that receive federal funding to offer primary care services in underserved areas. These outpatient clinics play a critical role, especially in rural communities, by providing comprehensive care to individuals regardless of their ability to pay. Recognized under Medicare and Medicaid for specific reimbursement systems, FQHCs encompass Health Center Program award recipients, Health Center Program look-alikes, and certain outpatient clinics connected to tribal organizations.

In 2023 alone, HRSA-funded health centers served over 9.7 million rural residents, highlighting their extensive reach and impact, according to the HRSA Bureau of Primary Health Care (BPHC). But what exactly is a health center within this federally funded framework? HRSA’s What is a Health Center? resource clarifies that these centers are characterized by several key features:

Comprehensive, High-Quality Care for All: Health centers provide a wide array of primary care and preventive services, ensuring quality regardless of a patient’s financial situation. This commitment to care extends to everyone in the community, removing financial barriers to essential health services.
Patient-Centered, Interdisciplinary Teams: Utilizing teams of doctors, nurses, social workers, and other professionals, health centers adopt patient-centric approaches. This team-based model ensures holistic and coordinated care, addressing the diverse needs of each patient.
Care Coordination and Enabling Services: Beyond medical treatment, health centers offer crucial support services like care coordination and transportation assistance. These enabling services are designed to make healthcare more accessible and manageable for patients, particularly those facing socioeconomic challenges.
Community Collaboration: Health centers actively work with other healthcare providers and community programs. These collaborations aim to create a stronger, more connected healthcare ecosystem, improving access to resources and services for the entire community.
Community-Based and Patient-Directed Governance: Rooted in their communities, health centers are governed by boards where patients constitute the majority. This patient-majority governance ensures that the centers are responsive to community needs and preferences, empowering patients in their healthcare decisions.

For a deeper dive into the operational and compliance aspects, HRSA’s Health Center Program Compliance Manual offers detailed information on the requirements and standards that Health Center Programs must adhere to.

To fully understand the landscape of federally funded health care programs in this context, it’s important to distinguish between related terms, as they often overlap but carry specific meanings:

HRSA Health Center Program: This is the overarching federal initiative managed by HRSA’s Bureau of Primary Health Care.
- HRSA-Funded Health Center Program Award Recipient: These are clinics that receive direct grant funding from HRSA under Section 330 of the Public Health Service (PHS) Act. These grants are primarily intended to support comprehensive primary care in underserved areas and for specific vulnerable populations, including migrant and seasonal agricultural workers, individuals experiencing homelessness, and public housing residents.
- Health Center Program Look-Alike: These clinics meet all the rigorous requirements of the Health Center Program, as determined by HRSA, but typically do not receive direct federal award funding. They are still recognized as integral parts of the health center network and contribute to the mission of serving underserved communities.
Federally Qualified Health Center (FQHC): This term specifically refers to HRSA Health Center Program award recipients and look-alikes that have been officially certified by the Centers for Medicare & Medicaid Services (CMS). FQHC status is critical because it allows these health centers to receive enhanced reimbursement from Medicare through a Prospective Payment System (PPS) and from Medicaid, either through PPS or other state-approved Alternative Payment Methodologies (APMs). Importantly, certain outpatient clinics associated with tribal organizations can also be designated as FQHCs, although specific regulations may apply to them under Medicare and Medicaid.
Health Center: This is a general term and doesn’t specify the precise status of a healthcare facility. It could be a Health Center Program award recipient, a look-alike, or an FQHC, or even a facility that does not participate in the federal program. Therefore, while broadly descriptive, it lacks the specificity of the other terms when discussing federally funded health care programs.

In the context of understanding federally funded health care programs, particularly those aimed at underserved communities, the term “health centers” in the remainder of this discussion will primarily refer to HRSA-funded Health Center Program award recipients, look-alikes, and FQHCs, acknowledging their interconnected roles in this critical healthcare safety net.

For organizations interested in joining this network and becoming a health center, resources like Become a Health Center, So You Want to Start a Health Center?, and the Health Center 101 Learning Bundle offer guidance. Additionally, the Health Center Resource Clearinghouse provides a wealth of free technical assistance resources and information to support the operation and development of health centers.

What Benefits Come with FQHC Status?

Achieving certification as an FQHC by CMS unlocks significant advantages for health centers, enhancing their ability to serve their communities effectively. These benefits are integral to the role of FQHCs as federally funded health care program providers:

Enhanced Medicare and Medicaid Reimbursement: FQHCs are eligible for the Federally Qualified Health Center Prospective Payment System (PPS) reimbursement. This system typically provides a higher reimbursement rate for services provided to Medicare and Medicaid beneficiaries compared to standard fee-for-service models, recognizing the comprehensive and essential services FQHCs offer.
340B Drug Pricing Program Access: FQHCs gain access to the 340B Drug Pricing Program, enabling them to purchase outpatient prescription and non-prescription medications at significantly reduced costs. This program is crucial for FQHCs to offer affordable medications to their often low-income patient populations.
Vaccines for Children Program Eligibility: Enrollment in the Vaccines for Children Program ensures that FQHCs can provide vaccinations at no cost to eligible children. This program is vital in preventing childhood diseases and promoting public health within underserved communities.
Automatic Health Professional Shortage Area (HPSA) Designation: FQHCs are automatically designated as Health Professional Shortage Areas (HPSAs). This designation is not merely administrative; it opens doors to apply for National Health Service Corps (NHSC) personnel and to serve as sites for J-1 Visa physicians. These programs help FQHCs recruit and retain healthcare professionals in areas where workforce shortages are common. While auto-approved as NHSC sites, health centers still need to review and sign the NHSC site agreement to finalize participation, as detailed in resources about auto-approved NHSC sites.
HRSA-Supported Training and Technical Assistance: FQHCs benefit from training and technical assistance provided by HRSA. This support is invaluable for continuous improvement, helping health centers optimize their operations, enhance service delivery, and navigate the complexities of healthcare administration and compliance.

Delving into the Health Center Program

The Health Center Program, authorized under Section 330 of the Public Health Service (PHS) Act, is the cornerstone of federally funded health care programs aimed at underserved communities. It’s a funding mechanism that empowers organizations to deliver healthcare services to populations facing significant barriers to care. For a deeper understanding of the advantages for participating health centers, refer to the section on benefits of being a Health Center Program award recipient or look-alike.

HRSA’s Bureau of Primary Health Care manages the Health Center Program and regularly announces funding opportunities for both new and existing health centers. These opportunities are open to public and private nonprofit organizations that meet the stringent Health Center Program Requirements. Successful applicants become stewards of community health, tasked with serving the general population within their defined service area, as well as specific underserved groups mandated by Section 330. These special populations include migratory and seasonal agricultural workers, individuals experiencing homelessness, and residents of public housing—all regardless of their ability to pay.

The full text of Section 330 of the Public Health Service Act provides the legal framework for this program and can be accessed at 42 U.S.C § 254b.

For those specifically interested in the Health Center Program Look-Alike designation, HRSA offers detailed resources explaining the program, its requirements, and the application process in What is a Health Center Program Look-Alike?. Furthermore, HRSA provides Look-Alike Initial Designation Technical Assistance, which includes application instructions and links to support resources.

What are the Advantages for Health Center Program Award Recipients and Look-Alikes?

Health Center Program award recipients and look-alikes are the primary beneficiaries of this federally funded health care program, gaining access to a suite of benefits that bolster their operational and financial stability, and enhance their service capacity:

FQHC Prospective Payment System (PPS) Reimbursement: As previously mentioned, both award recipients and look-alikes are entitled to the FQHC PPS reimbursement for services to Medicare and Medicaid patients. This financial benefit is crucial for sustaining operations and expanding services.
340B Drug Pricing Program Eligibility: Access to discounted drug pricing through the 340B program is a shared benefit, significantly reducing medication costs for outpatients and allowing health centers to stretch their resources further in patient care.
Vaccines for Children (VFC) Program Access: Participation in the VFC program is also extended to both groups, ensuring that children in underserved communities receive necessary vaccinations, regardless of family income.
Automatic HPSA Designation & NHSC Benefits: The automatic designation as a Health Professional Shortage Area (HPSA) is a key advantage, facilitating access to National Health Service Corps (NHSC) personnel. This is vital for staffing health centers in underserved areas with healthcare professionals committed to public service.
HRSA-Supported Training and Technical Assistance: Both award recipients and look-alikes benefit from HRSA’s training and technical assistance, supporting continuous quality improvement and operational excellence.

Award recipients of the Health Center Program receive additional benefits, recognizing their deeper integration with the federal funding structure:

Federal Grant Funding: Award recipients receive direct grant funding under Section 330 of the Public Health Service (PHS) Act. This direct financial support is the cornerstone of the Health Center Program, enabling comprehensive service delivery.
Federal Tort Claims Act (FTCA) Medical Malpractice Coverage: A significant benefit unique to award recipients is the potential for medical malpractice coverage under the Federal Tort Claims Act (FTCA). This federal protection can cover the health center organization, its employees, and eligible contractors, providing a safety net against liability. To gain FTCA coverage, award recipients must apply to HRSA’s Bureau of Primary Health Care and meet specific requirements to achieve deemed status, as detailed in HRSA’s Health Center Program Federal Tort Claims Act (FTCA) resources. It’s important to note that FTCA coverage is exclusively for Health Center Program award recipients and not extended to look-alikes.
Loan Guarantees for Capital Improvements: Award recipients are also eligible for loan guarantees to support capital improvements. This program assists health centers in funding construction, renovation, or expansion projects, ensuring they can upgrade facilities and expand capacity to meet growing community needs.

The following table summarizes the benefits available to Health Program Award Recipients and Look-Alikes:

Benefit	Health Center Program Awardee	Health Center Look-Alike
HRSA Health Center Program Grant Funding	Yes	No
FTCA Medical Malpractice Coverage	Yes	No
Loan Guarantee Program	Yes	No
FQHC Prospective Payment System Reimbursement	Yes	Yes
340B Drug Pricing Program Eligibility	Yes	Yes
Access to the Vaccines for Children Program	Yes	Yes
Recruitment and Retention Assistance for Primary Care through the National Health Service Corps (NHSC)	Yes	Yes
HRSA-supported Training and Technical Assistance	Yes	Yes
Source: About the Health Center Program

How Does a Health Center Achieve FQHC Certification?

The pathway to becoming a Federally Qualified Health Center (FQHC) involves a structured process that begins with establishing eligibility within the Health Center Program. Organizations must first be recognized as either a Health Center Program award recipient or a Health Center Program look-alike. Once this initial step is achieved, health centers can then pursue FQHC certification.

After receiving a HRSA-funded Health Center Program award or a look-alike designation, health centers can apply to CMS for Medicare FQHC certification and to their respective state Medicaid office for Medicaid FQHC certification. It’s worth noting that tribal organizations have a slightly different route; they are not required to first become a Health Center Program award recipient or look-alike and can apply directly to CMS for FQHC certification. Crucially, each health center site must individually enroll to receive FQHC certification and Medicare FQHC reimbursement, ensuring that every service location meets the required standards.

Prospective FQHC enrollees can find detailed guidance in Information on Medicare Participation, Federally Qualified Health Center. This resource outlines the necessary steps and requirements for Medicare participation.

Further information on the certification process is available in the State Operations Manual Chapter 2, specifically section 2826. For details regarding Medicare enrollment for FQHCs, the Medicare Program Integrity Manual Chapter 10 under section 10.2.1.4 – Federally Qualified Health Centers provides essential information.

Where Can Statistics on Health Centers Be Found?

Data and statistics on health centers are crucial for understanding their impact and reach as federally funded health care program providers. HRSA-supported health centers are mandated to report data annually through the Uniform Data System (UDS). This standardized reporting system captures a core set of measures, including patient demographics, services provided, patient utilization, clinical outcomes, staffing, and financial status. Publicly accessible UDS data is available on data.HRSA.gov, offering valuable insights into health center operations and performance.

The data.HRSA.gov site is a central repository for various resources, including:

UDS Mapper: A tool for visualizing and analyzing health center data geographically.
Health Center Program Data and Reporting: Detailed reports and datasets related to the Health Center Program.
Performance Data: Information on health center performance metrics and outcomes.

The National Association of Community Health Centers also compiles and provides access to key data sources, enhancing the availability of information on health centers.

Furthermore, the resources section offers a curated list of materials on Federally Qualified Health Centers (FQHCs). Users can filter this list by topic, such as “Statistics and Data,” to find data from various organizations and perspectives.

How to Apply for a Health Center Program Grant

Applying for a Health Center Program grant is a significant undertaking, requiring thorough planning and robust grant writing capabilities. The application process is known to be complex, and organizations embarking on this journey should approach it with a structured and methodical approach. A helpful resource for navigating this process is So You Want to Start a Health Center?, which outlines key steps in developing a strong grant proposal for a Section 330 PHS Act Health Center Program grant. These steps include:

Compliance Readiness: Ensure the organization can meet all compliance requirements within the timeframe specified for newly funded organizations. The Health Center Program Compliance Manual is the definitive guide for understanding these requirements.
Service Area Eligibility: Confirm that the intended service location or population qualifies as a Medically Underserved Area (MUA) or Medically Underserved Population (MUP). HRSA’s MUA Find tool can be used to verify area designations.
Needs Assessment: Conduct a comprehensive assessment of the health service needs within the target service area. Section 3 of So You Want to Start a Health Center?, specifically page 11, provides guidance on developing a needs assessment.
Community Support: Establish and maintain strong community support by actively engaging community members, healthcare providers, and other local stakeholders in the planning and implementation phases.
Location Suitability: Identify a suitable physical location for the health center, considering accessibility and community needs. Section 4 of So You Want to Start a Health Center?, page 15, offers insights into physical space considerations.
Governing Board Establishment: Form a patient-majority governing board that adheres to federal requirements. The Health Center Program Compliance Manual provides detailed guidelines on board composition and responsibilities.
Staffing Plan: Determine staffing needs and develop policies for employment practices, including strategies for recruiting and retaining qualified provider staff.
Business Plan Development: Create a robust business plan that outlines the population groups to be served, the organizational and management structure, projected service demand, and expected financial expenses and revenues.
Sliding Fee Discount Program: Develop a Sliding Fee Discount Program and other mechanisms to ensure that no patient is denied care due to inability to pay.

Seeking technical assistance can significantly aid the application process. Regional or state Primary Care Associations (PCAs) are HRSA-funded and equipped to provide training and technical assistance to health centers, offering valuable support for growth and development within their respective states.

Specific application procedures for Section 330 awards can be accessed through technical assistance sites for New Access Points or Service Area Competition.

It’s important to note that applications for New Access Points or Service Area Competition (Section 330 federal awards) are only accepted when HRSA announces funding availability. However, applications for Health Center Program Look-Alike Initial Designation are accepted on a rolling basis, providing a continuous pathway to recognition within the Health Center Program framework.

Are Health Center Program Awards Competitive?

Yes, Health Center Program awards are indeed granted on a competitive basis. Funding availability, which is contingent upon federal appropriations, dictates when HRSA announces competitions for New Access Points (NAPs). These NAP competitions support the establishment of new health center sites, which can be satellite locations of existing Section 330 health centers or entirely new health center organizations, including Health Center Program look-alikes.

Furthermore, to ensure ongoing accountability and effectiveness, existing Health Center Program award recipients must undergo a Service Area Competition (SAC) process typically every three years, or more frequently if deemed necessary. If an existing award recipient wishes to continue receiving funding, they must re-apply and compete. It is possible for another organization to be awarded the Health Center Program grant for that service area through the SAC, underscoring the competitive nature of these federally funded opportunities.

Special Populations Served Through Section 330 Funding

Healthcare organizations applying for funding under Section 330 of the Public Health Service Act have the opportunity to focus on serving specific, statutorily defined special populations. These targeted programs are designed to address the unique health care needs of particularly vulnerable groups:

Migratory and Seasonal Agricultural Worker Health Centers: These centers are dedicated to providing comprehensive and culturally competent primary health services to migratory and seasonal agricultural workers and their families. Beyond primary care, these programs also emphasize disease prevention and occupational health and safety, addressing the specific risks faced by this population.
Healthcare for the Homeless Program: This program focuses on serving individuals who are at risk of or currently experiencing homelessness, or those residing in shelters or temporary housing. Services are comprehensive, encompassing primary healthcare, substance abuse treatment, and mental health services, recognizing the complex health challenges associated with homelessness.
Public Housing Primary Care Health Centers: These health centers aim to improve healthcare access for residents of public housing and individuals living in areas immediately adjacent to public housing. Services are often conveniently located within public housing premises or nearby, ensuring easy access to comprehensive primary care for residents.

School-Based Health Centers: An Overview

School-based health centers (SBHCs), also referred to as School-Based Service Sites (SBSS), are a distinct model of healthcare delivery, bringing primary care and other essential services directly into schools or nearby locations. This strategic placement reduces barriers related to scheduling and transportation for students, particularly in communities with higher rates of students eligible for free or reduced-price lunches.

According to the report “Twenty Years of School-Based Health Care Growth and Expansion,” SBHCs commonly offer a range of services, including behavioral health, oral health, mental health, reproductive healthcare, vision services, nutrition education, and health promotion. Many SBHCs also integrate telehealth services to further expand their reach and service offerings.

Staffing in SBHCs typically includes at least a primary care provider, and often a behavioral health professional. Depending on the needs of the student population, SBHCs may also employ dental providers, health educators, dietitians, outreach coordinators, and vision care providers, as detailed in the “Findings from the 2022 National Census of School-Based Health Centers” from the School-Based Health Alliance.

It is important to note that SBHCs are not part of the Health Center Program, although there is significant overlap and collaboration. A 2022 resource from HRSA indicates that 42% of health centers offered school-based services in 2021. Furthermore, the 2022 National Census of SBHCs reported that 63% of surveyed SBHCs were sponsored by an FQHC. However, SBHCs can also be sponsored by other entities, such as local health departments, hospitals, or school systems themselves.

Telehealth has become increasingly integrated into SBHC operations. Approximately 90% of SBHCs offered some services via telehealth in the 2021-2022 school year, a significant increase from 19% in 2016-2017. Around 73% of SBHC respondents offered primary care through a combination of in-person and telehealth services in 2021-2022. Research, such as “The Evidence on School-Based Health Centers: A Review,” suggests that SBHCs are particularly effective in reaching underserved populations, including American Indian and Alaskan Native communities.

Organizations interested in establishing an SBHC can draw upon numerous planning guides and tools. General best practices for starting SBHCs include:

Community Involvement: Engage the community throughout the planning process. This often involves creating a School Health Advisory Committee comprising school leaders, school nurses, students, parents, and other community stakeholders.
Needs Assessment: Conduct a thorough needs assessment to identify the target audience and their primary unmet health needs.
Organizational Structure Definition: Clearly define the SBHC’s organizational structure, including the services to be offered, service delivery locations, staffing models, and integration with the school system. “School-Based Health Centers: A Funder’s View of Effective Grant Making” recommends minimum staffing of a primary care provider and front-office staff, along with adequate space for waiting, exam rooms, and administrative functions. Effective communication channels between the SBHC and school staff, particularly school nurses and counselors, are also crucial.
Funding Plan: Develop a comprehensive funding plan, exploring various sources such as foundation grants for start-up costs, Medicaid and Children’s Health Insurance Program billing for ongoing operational expenses, Section 330 health center funding, Title X of the Public Health Service Act, and state funding. Strategies for obtaining parent/guardian consent for student enrollment are also essential for financial sustainability and service delivery.

Resources for starting a school-based health center include materials from national and state-level organizations focused on school health.

Further information on the intersection of school-based health centers and rural schools can be found in the Rural Schools and Health topic guide, specifically the section on How do school-based health centers and community schools impact population health in rural areas?.

Can For-Profit Clinics Be Health Centers?

No, for-profit clinics are not eligible to become health centers within the Health Center Program framework. To qualify as a health center, an organization must be either a public entity or a private nonprofit organization. This requirement underscores the community-focused and mission-driven nature of federally funded health care programs like the Health Center Program.

Is a Board of Directors Mandatory for Health Centers?

Yes, a governing board of directors is a mandatory requirement for health centers. This board plays a critical role in ensuring that the health center remains community-based and responsive to the healthcare needs of the community it serves. The composition of the board is specifically regulated to reinforce this community orientation.

A majority of the health center board members, specifically at least 51%, must be patients of the health center. Furthermore, these patient board members must be demographically representative of the population served by the health center, ensuring that the board reflects the community’s diversity. The remaining board members are to be selected from the broader community and should bring expertise in areas relevant to health center operations and community needs.

Health centers under the management of American Indian tribes, tribal organizations, or tribal groups are granted an exemption from these specific board composition requirements, recognizing the unique governance structures within tribal communities.

Detailed information regarding board development and management is available in Chapter 20: Board Composition of the Health Center Program Compliance Manual. Additionally, the Health Center Resource Clearinghouse offers a range of resources related to health center governance.

Location Requirements for Health Centers

Health centers participating in the Health Center Program must adhere to specific service area location requirements as outlined in the program’s funding opportunity announcements. A fundamental requirement is that health centers must be located in or serve a designated Medically Underserved Area (MUA) or serve a designated Medically Underserved Population (MUP). This location mandate ensures that federally funded health care programs are directed to communities with the greatest need.

However, there are exceptions to the MUA/MUP restriction for certain types of health centers. Migrant and Seasonal Agricultural Worker Health Centers, Healthcare for the Homeless programs, and Public Housing Primary Care Programs are not required to meet the MUA/MUP criteria, allowing them to focus services directly on their specific target populations, regardless of broader area designations. Health centers can be located in both rural and urban areas, reflecting the diverse landscape of underserved communities across the nation.

Staffing Requirements for Health Centers

While there are no prescriptive staffing ratios or specific staffing mix requirements for health centers, there is an expectation that health centers maintain a core staff capable of delivering the required and additional health services they offer. The composition of this core staff can vary based on the unique needs of the community served and the scope of services provided by the health center.

Flexibility in staffing allows health centers to tailor their workforce to best meet local healthcare demands. Additional information on clinical staffing considerations and demonstrating compliance with program requirements can be found in Chapter 5: Clinical Staffing of the Health Center Program Compliance Manual.

Services Provided by Health Centers

Health centers are mandated to provide comprehensive primary care and preventative health services across all age groups. This broad mandate ensures that health centers function as true community health hubs, addressing a wide spectrum of healthcare needs. In addition to clinical services, health centers must also offer enabling services, such as case management and transportation assistance, to facilitate access to care and address social determinants of health.

Examples of clinical and enabling services that must be provided directly by a health center or through formal agreements with other providers include:

Preventive dental services
Screenings (e.g., cancer, HIV, etc.)
Immunizations
Well-child visits and pediatric care
Obstetrics and prenatal care
Pharmaceutical services
Translation services for patients with limited English proficiency
Health education programs

For a comprehensive overview of service requirements and related guidelines, refer to HRSA’s Health Center Program Compliance Manual.

Minimum Operating Hours for Health Centers

There are no set minimum hours of operation that apply universally to all health centers. However, health centers are required, at an organizational level, to ensure that services are available at times and locations that are accessible and responsive to the needs of their patient population. Health centers must document their hours of operation within their scope of project, specifically on Form 5B.

While there’s no universal minimum hour requirement from HRSA, specific funding opportunities or programs may impose related eligibility criteria that include operational hour expectations. Furthermore, state Medicaid agencies, CMS, and private third-party insurers may have their own policies concerning operational hours and schedules that health centers must comply with to participate in their programs. Each health center bears the responsibility of ensuring compliance with the requirements of all benefit and third-party payer programs they participate in.

Sliding Fee Scale Requirement for Health Centers

Yes, a sliding fee discount program is a mandatory component of health center operations. This program is designed to ensure affordability and access to care for individuals with limited financial resources. Health centers have the option to offer a full discount or implement a nominal charge for individuals and families with incomes at or below 100% of the Federal Poverty Guidelines (FPG).

For individuals with incomes between 100% and 200% of the FPG, health centers are required to provide partial discounts using a sliding fee scale. These discounts are solely based on family size and income, ensuring a standardized and equitable approach to affordability. No sliding fee program discounts are mandated for individuals and families with annual incomes exceeding 200% of the current FPG.

Detailed information about sliding fee scales and nominal charges can be found in Chapter 9: Sliding Fee Discount Program of the Health Center Program Compliance Manual.

Must Health Centers Accept All Patients?

Yes, a fundamental tenet of the Health Center Program is that health centers must accept all patients seeking care within their service area, regardless of their ability to pay or insurance status. This open-access policy is a cornerstone of the health center mission to serve as a safety net for underserved communities and ensure equitable healthcare access for all.

Programs to Attract and Retain Healthcare Providers at Health Centers

Health centers, particularly those in rural and underserved areas, often face challenges in attracting and retaining healthcare providers. Fortunately, a variety of federal programs are available to assist health centers in building and maintaining their workforce. These programs are crucial for ensuring that federally funded health care programs have the necessary personnel to deliver services effectively.

Medicare Reimbursement for Telehealth Services at FQHCs

Historically, Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) faced limitations in billing Medicare for telehealth services. Traditionally, they could only bill Medicare for telehealth when acting as the originating site—the location where a patient receives telehealth services from a provider at a distant site.

However, the COVID-19 pandemic spurred significant policy changes. The Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), enacted in March 2020, temporarily authorized FQHCs and RHCs to furnish distant site telehealth services to Medicare patients at any location, including their homes, during the public health emergency.

The CY 2022 Medicare Physician Fee Schedule Final Rule made permanent the ability of FQHCs and RHCs to receive Medicare reimbursement for mental health visits conducted via interactive, real-time audio-visual and audio-only technology. Since January 1, 2022, these services are reimbursed at the same rates as in-person mental health services.

The American Relief Act, 2025 (P.L. 118-158) further extended the ability of RHCs and FQHCs to serve as distant site providers for non-behavioral health visits through March 31, 2025. Moreover, the CY 2025 Medicare Physician Fee Schedule Final Rule permanently redefined “interactive telecommunication system” to encompass audio-only services for any telehealth visit, provided the practitioner’s site can offer both audio and video but the patient cannot or chooses not to use video.

Data from “Federally Qualified Health Centers Financial and Operational Performance Analysis 2019-2022” indicates the growing role of telehealth in FQHCs. In 2022, rural FQHCs delivered 4 million visits via telehealth, representing 10% of all patient visits at these facilities.

For comprehensive information on FQHC billing and payment for telehealth services, resources such as telehealth.HHS.gov’s Billing Medicare as a Safety-Net Provider and CMS Medicare Learning Network publications like Federally Qualified Health Center and Telehealth Services are invaluable.

Strategies for Behavioral and Dental Health Services in Rural Health Centers

Rural health centers often employ innovative strategies to address the behavioral health and dental health needs of their patient populations, recognizing the unique challenges in accessing these specialized services in rural areas. Common strategies include:

Integrated Behavioral Health Models: Embedding behavioral health professionals directly within primary care settings to facilitate seamless access and coordinated care.
Telebehavioral Health: Utilizing telehealth technologies to deliver behavioral health services remotely, overcoming geographical barriers and expanding access to specialists.
Mobile Dental Clinics: Operating mobile dental clinics to reach remote communities and provide on-site dental care, addressing transportation and access issues.
School-Based Programs: Partnering with schools to offer behavioral and dental health services to students, improving early intervention and preventive care.
Community Partnerships: Collaborating with local organizations and agencies to leverage resources and create a comprehensive network of support services.

Additional resources and examples of these strategies can be found on the Health Center Resource Clearinghouse priority topic page dedicated to Behavioral Health.

Financial and Operational Performance of Health Centers

Understanding the financial and operational performance of health centers is crucial for assessing the sustainability and effectiveness of this federally funded health care program. “Federally Qualified Health Centers Financial and Operational Performance Analysis 2019-2022,” a 2024 report by Capital Link, a HRSA National Training and Technical Assistance Partner (NTTAP), provides valuable insights into urban and rural FQHCs. The report examines various aspects, including patient and payer mix, revenue sources, financial performance, and quality of care.

Key findings from this report include:

Operating Margin Trends: Both rural and urban FQHCs experienced a decline in operating margins between 2021 and 2022, following increases during 2019-2021 attributed to COVID-19 relief funding. However, rural FQHCs consistently maintained higher operating margins than urban facilities throughout this period.
Rural FQHC Margin Range: In 2019, rural FQHC margins ranged from -1.2% (25th percentile) to 8.3% (75th percentile). These margins increased significantly in 2021, ranging from 6.7% to 19.1%, before decreasing in 2022 to a range of 3.2% to 15.3%.
Personnel Expenses: In 2022, rural health centers allocated a median of 66.8% of their operating budgets to personnel-related expenses, slightly lower than the 69.1% median for urban facilities.
Payer Mix Differences: Rural health centers received a lower median percentage of patient revenue from Medicaid (46%) compared to urban centers (70%). Conversely, rural FQHCs had a higher percentage of patient revenue from uninsured patients (6% vs. 3%), Medicare (17% vs. 9%), and private insurance (22% vs. 10%) than their urban counterparts.

The COVID-19 pandemic significantly impacted the financial landscape of rural FQHCs. “Financial Impact of COVID-19 on Rural Federally Qualified Health Centers” estimates that rural FQHCs incurred $1.4 billion in COVID-19 related expenses and $1.7 billion in lost revenue between April 2020 and June 2021. However, the 2019-2022 performance analysis notes that rural FQHCs experienced a substantial increase in operating revenue from grants and contracts—from 5% in 2019 to 27% in 2021. This influx of grant funding helped stabilize operations despite the decline in patient service revenues during the pandemic.

Medicare Administrative Contractors (MACs) and Their Role

Medicare Administrative Contractors (MACs) are integral to the administration of Medicare Part A and Part B benefits for health centers. Selected by CMS, MACs serve as the primary intermediaries between the Medicare Fee-For-Service program and healthcare providers enrolled in Medicare, including those affiliated with FQHCs.

MACs fulfill a range of critical functions to support and work with FQHCs:

Provider Enrollment: MACs manage the enrollment of healthcare providers, including FQHCs and their practitioners, into the Medicare program. Organizations can also utilize the online Provider Enrollment, Chain and Ownership System (PECOS) for Medicare enrollment as an FQHC.
Billing Education: MACs provide education and training to providers on Medicare billing requirements, ensuring accurate claims submission and compliance.
Reimbursement and Auditing: MACs process provider reimbursement claims and conduct audits of institutional provider cost reports to ensure financial integrity.
Appeals Management: MACs handle the initial stages of the claims appeals process, resolving disputes between providers and Medicare.
Local Coverage Determinations (LCDs): MACs establish local coverage determinations (LCDs), which specify the services that Medicare will cover within their jurisdiction.

For more information on MACs, CMS provides an overview of Medicare Administrative Contractors. To identify the MAC for your state, CMS offers a tool to access MAC Websites, Secure Internet Portals, & Electronic Mailing Lists.

Can Other Healthcare Organizations Operate an FQHC?

The question of whether other types of healthcare organizations, such as Critical Access Hospitals (CAHs), can operate an FQHC has specific considerations. Generally, direct operation by another healthcare organization is not permissible. However, there are exceptions: a city- or county-owned public hospital or a 501(c)(3) Critical Access Hospital (CAH) may be eligible to operate an FQHC under certain conditions.

For a CAH or public hospital to operate an FQHC, it must establish a governing body or board of directors that fully meets the Health Center Program requirements. Additionally, the organization must satisfy all other eligibility criteria for the Health Center Program and successfully navigate the application process. This pathway allows certain existing healthcare entities to expand their services and reach by incorporating an FQHC model, provided they align with the program’s governance and operational standards.

FQHCs vs. Rural Health Clinics (RHCs): Key Differences

While both Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) are vital components of federally funded health care programs aimed at underserved populations, they have fundamental differences in their structure, requirements, and operational frameworks.

Key distinctions between FQHCs and RHCs include:

Facility Ownership: FQHCs must be nonprofit or public entities, while RHCs can be for-profit, nonprofit, or public.
Service Scope: FQHCs are required to provide care for all age groups and offer a comprehensive range of services. RHCs must provide some primary care services but have no minimum service requirements beyond that.
Governance: FQHCs must have a board of directors, with at least 51% being health center patients. RHCs are not mandated to have a board of directors.
Location: FQHCs can operate in both non-urbanized and urbanized areas. RHCs, with limited exceptions, must be located in non-urbanized areas as defined by the U.S. Census Bureau.
Service Area Designation: FQHCs must be located in or serve a Medically Underserved Area or Population. RHCs must be in rural areas designated as Health Professional Shortage Areas, Medically Underserved Areas, or Governor-designated shortage areas.
Sliding Fee Scale: FQHCs are required to charge patients based on a sliding fee scale and cannot deny service for inability to pay. RHCs are not required to use a sliding fee scale unless they are National Health Service Corps-approved sites.
Liability Protection: FQHCs are eligible for Federal Tort Claims Act (FTCA) medical malpractice coverage. RHCs are not eligible for FTCA protection.
Operational Hours & Emergency Care: FQHCs require a minimum of 32.5 weekly operating hours for FTCA coverage and must provide after-hours emergency service. RHCs have no minimum hour or emergency coverage requirements.
Quality Assurance: FQHCs must have an ongoing quality assurance program. RHCs are required to conduct biennial program evaluations for quality improvement.
Financial Reporting: Both FQHCs and RHCs must submit annual cost reports. However, FQHCs are required to have audited financial reports if they expend over $750,000 in federal funds annually, while RHCs do not have a mandatory audit requirement.

For a detailed comparison of FQHCs and RHCs, Module 1 – An Introduction to the Rural Health Clinic Program from the National Organization of State Offices of Rural Health’s Rural Health Clinic Technical Assistance Educational Series is a valuable resource.

Federally Qualified Health Centers	Rural Health Clinics
Nonprofit or public facility	For-profit, nonprofit, or public facility
Required to provide care for all age groups	Must provide some primary care services
Required to have a board of directors — at least 51% must be patients of the health center	Not required to have a board of directors
FQHCs may operate in both non-urbanized and urbanized areas	RHCs must be located in non-urbanized areas, as defined by the U.S. Census Bureau.&ast; May retain RHC status if designation of service area changes.
Must be located in or serve an area with a medically underserved population or experiencing a shortage of healthcare providers	Must be located in a rural area designated as a Health Professional Shortage Area, Medically Underserved Area, or Governor-designated and Secretary-certified shortage area.
Minimum services required including, but not limited to, maternity and prenatal care, preventive health and dental services, emergency care, and pharmaceutical services	No minimum service requirements
Required to treat all residents in their service area with charges based on a sliding fee scale, and no patient can be denied service for the inability to pay	Not required to charge based on a sliding fee scale unless a National Health Service Corps-approved site
Eligible for the Health Center Federal Tort Claims Act (FTCA) Medical Malpractice Program through the approval of an annual application to HRSA	Not eligible for FTCA liability protection
Required to be open 32.5 hours a week for FTCA coverage of licensed or certified healthcare providers. Must provide emergency service after business hours either on-site or by arrangement with another healthcare provider	Not required to provide a minimum of hours or emergency coverage
Required to have ongoing quality assurance program	Required to conduct a biennial program evaluation regarding quality improvement
Required to submit an annual cost report and, if more than $750,000 in Federal funds are spent in the fiscal year, audited financial reports	Required to submit an annual cost report; however, auditing of financial reports is not required
&ast;In March 2022, the U.S. Census Bureau published updated criteria informing how it will define urban areas based on the results of the 2020 Decennial Census, including no longer designating urbanized areas as of the 2020 Census. A March 2023 CMS memorandum announced that, until further notice, a location can meet the rural location requirement for the RHC program if it is outside of an urbanized area in the 2010 Census Bureau data OR if it is outside of a urban area in the 2020 Census Bureau data.

Funding Opportunities for Health Center Expansion and Capital Projects

The Health Resources and Services Administration (HRSA) periodically offers grants to support the expansion, renovation, equipment purchase, or new construction of health centers. These capital development grants, when authorized and funded by Congress, are announced on HRSA’s Capital Development Grant Technical Assistance website.

In addition, HRSA administers the Health Center Facility Loan Guarantee Program (LGP). The LGP facilitates health centers’ access to capital funding and reduces financing costs for construction, expansion, renovation, and modernization of health center medical facilities. Capital Link (Capital Link) also receives HRSA funding to provide health centers with resources, tools, and services related to capital funding and capital needs assessment.

Other funding sources may also support health center capital projects. These can be explored in the Funding and Opportunities section of this guide and the Capital Funding for Rural Healthcare guide.

Contact Information for Additional Health Center Information

For further inquiries about health centers and related programs, you can reach out to the following organizations:

Health Resources and Services Administration (HRSA) Bureau of Primary Health Care: The primary federal agency overseeing the Health Center Program. Contact information is available on the HRSA website.
National Association of Community Health Centers (NACHC): A national advocacy organization for community health centers. Their website (www.nachc.org) provides extensive resources and contact information.
State Primary Care Associations (PCAs): PCAs exist in most states and offer state-specific support and technical assistance to health centers. Contact information for your state PCA can be found through HRSA or NACHC.
Health Center Resource Clearinghouse: An online portal with a wealth of information, resources, and technical assistance materials for health centers (www.healthcenterinfo.org).
Capital Link: Provides financial and capital development expertise to health centers (www.caplink.org).

By understanding the intricacies of federally funded health care programs like the Health Center Program and FQHCs, stakeholders can better appreciate their vital role in ensuring equitable access to healthcare for underserved communities across the United States.

Last Updated: 1/10/2025

Last Reviewed: 12/17/2024