Federally Qualified Health Centers (FQHC) and Rural Health Clinics (RHC) provide covered services to MHCP recipients in a manner similar to other physician clinics. However, federal mandates and guidelines apply specifically to FQHCs and RHCs.
The Benefits Improvement and Protection Act (BIPA) of 2000, section 702, deleted federal cost-based reimbursement provisions and created a prospective payment system (PPS) for FQHCs and RHCs. BIPA allows states to offer alternative payment methods (APMs) that must pay at least what the center or clinic would receive under PPS. Minnesota has three different APMs. Complete an annual election form, Alternative Payment Methodology Election for FQHCs and RHCs (DHS-3903) (PDF), to indicate the chosen payment level for the year. It is only necessary to complete the form again when changing the APM selection.
Methodology and payment information
Payment Rate Methodology
Prospective Payment System (PPS)
Rate Jan. 1–Dec. 31, 2001:
Alternative Payment Method (APM I)
Historical cost-based methodology
Alternative Payment Method (APM II)
PPS rate plus 2 percent
Alternative Payment Method (APM III)
200 percent when medical and mental health are provided to recipient on the same date of service
For fiscal year 2002 and succeeding fiscal years, the PPS rate is increased by the percentage increase in the Medicare Economic Index (MEI) and any increases or decreases in the scope of services.
Claims for services provided on or after January 1, 2001, are retroactively adjusted to the applicable PPS rate when a rate adjustment is determined after the effective date.
PPS and APM rates for FQHCs and RHCs include a rate for dental services, if provided, and a medical rate for all other FQHC or RHC services. The all-inclusive medical payment rate (PPS or APM) is the same whether a physician, nurse midwife, nurse practitioner, or physician assistant performs the service.
An FQHC or RHC has the option of being paid under one of the APMs. At a minimum, the FQHC or RHC must be paid an amount equal to the FQHC and RHC PPS rate.
For the specific reporting period, an FQHC or RHC that elects payment under APM I and participates in the Medicare program is required to submit the following:
The reporting period must coincide with Medicare's reporting requirements.
After the end of the fiscal year, an FQHC or RHC choosing payment under APM I must provide a copy of the finalized Medicare cost report, Medicare's rate determination letter and the facility’s audited financial statements to the DHS Payment Policy Section.
If an FQHC does not have Medicare FQHC status, or if Medicare does not desk-audit the RHC facility, and the FQHC or RHC chooses to be paid under APM I, the clinic should provide the following to MHCP:
MHCP will desk-audit the financial information submitted and establish the finalized APM I encounter rate(s) for the cost reporting period. Desk-audit rates may be subject to adjustments for Medicare appeal settlements, amendments and on-site audit adjustments by Medicare or MHCP.
An FQHC or RHC already receiving an APM I rate in a previous period will continue to be paid the APM I rate until new rates are established using the updated historical cost information from the most recent finalized reporting period. If the PPS rate for the period exceeds the APM I rate, FQHC and RHC services will be at the PPS rate. If the facility's current cost per visit differs significantly from the established APM I interim rate, MHCP will consider adjusting the APM I interim rate. To establish a new APM I interim rate, the FQHC or RHC must present to MHCP the cost estimate and updated statistical information for the non-historical items that affect the cost per visit calculation.
For both PPS and the APMs, legislative increases provided for fee-for-service items such as obstetric, pediatric, physician and dental services are not applicable to the FQHC or RHC for MA services.
Under BIPA, after January 1, 2001, DHS Payment Policy staff will assign the payment rate of an existing center or clinic in the area, or adjacent area with similar caseload, to a new FQHC or RHC. MHCP uses provider service and utilization information to identify those providers who are considered to have a similar caseload to that of the new center or clinic.
If an FQHC or RHC has a change in the scope of services provided, the DHS Payment Policy staff will adjust the PPS rates. The FQHC or RHC must do the following:
If you have questions about this process, call the DHS Payment Policy Unit at 651-431-2537 or 651-431-2539.
Some services do not require a face-to-face visit with an FQHC or RHC provider (for example, laboratory, x-ray, pharmacy) and may not affect the number of encounters.
Examples of changes in scope of services include adding or discontinuing one of the following:
Examples of items that are not considered changes in scope of services include:
Calculating Rate Adjustment for Change in Scope of Services
MHCP uses the same Medicare formula employed on the Form CMS-222 (in the Medicare Provider Reimbursement Manual) as modified for MA covered services, and used to establish PPS rates for January 1, 2001. It is necessary to identify the 1999 and 2000 costs used to calculate the PPS rate. For each year prior to the year of the change, the Medicare Economic Index (MEI) inflates these costs. The inflated costs are then adjusted for budgeted costs. The resulting increase or decrease in encounters, related to the change in scope of services determines the rate impact of the change. Since the costs are distributed among all of the encounters, in some instances the PPS rate decreases. Detailed worksheets are available to enable FQHCs and RHCs to calculate the impact of a change in the scope of services. If a provider does not have a record of the 1999 and 2000 costs used to establish their PPS rate, DHS Payment Policy can provide a copy for them to establish a rate.
Adjustments to the clinic’s PPS rate for changes in the scope of services will be effective on the first day of the month following the change in scope of services. MHCP will conduct a “look back” after the new services have been in place for a year and will revise the PPS rate according to the actual costs and encounters directly related to the change in scope of services. When determination of the revised PPS rate is completed, MHCP will settle-up to the new rate by making retroactive adjustments for paid claims back to the effective date of the revised rate.
In the event of a PPS or APM rate change, MHCP will make retroactive adjustments for paid claims back to the effective date of the revised rate. MHCP adjusts FQHC or RHC paid claims through an individual claim adjustment process.
Providers that meet the definition of an FQHC or RHC must enroll as an FQHC or RHC with MHCP to receive payment at the PPS or APM rate level. Providers who qualify may elect to enroll as another type of fee-for-service clinic provider, instead of electing FQHC or RHC status. See the Enrollment web page for more information about enrolling.
Individual providers within the enrolled FQHC or RHC may include the following:
MHCP covers one medical and one dental encounter per day for federally funded MA and MinnesotaCare recipients with major program codes FF, JJ, KK and LL. A medical encounter does not prohibit a dental encounter from being incurred on the same day. Encounters with more than one health professional and multiple encounters with the same health professional that take place on the same day and at a single location constitute a single visit, except when after the first encounter, the patient suffers illness or injury requiring additional diagnosis or treatment.
MHCP covered services descriptions
Provide in compliance with dental service guidelines
Drugs and biologicals
Incidental to an FQHC or RHC professional service only if they cannot be self-administered
FQHC or RHC professional services inpatient visits
Services provided to FQHC or RHC patients if covering inpatient hospital visits
FQHC or RHC surgical services
Provided to FQHC or RHC patients if surgical services are directly provided by the center or clinic
RN or LPN part-time or intermittent nursing care
In an area in which a shortage of home health agencies exists, part-time or intermittent nursing care by a registered nurse or licensed practical nurse to a homebound person under a written plan of treatment, either established and reviewed by a physician every 60 days or established by a nurse practitioner or physician assistant and reviewed at least every 60 days by a supervising physician
Provided in compliance with mental health guidelines
Obstetrical or perinatal
Provided by an FQHC or RHC professional in compliance with medical service guidelines
Provided by an FQHC or RHC in compliance with pharmacy guidelines
Services and supplies
Incidental to FQHC or RHC professional services; covered by the encounter rate if they are:
Incidental to FQHC or RHC professional services.
In addition, MA coverage of services furnished by an FQHC or RHC includes all other ambulatory services covered under the Minnesota State Plan that are furnished by the FQHC or RHC. Non-dental ambulatory services are part of the medical encounters and are included in developing the medical encounter payment rate for both PPS and Minnesota’s APMs.
Services covered by the Consolidated Chemical Dependency Treatment Fund (CCDTF) are not covered as FQHC or RHC services.
Services that MHCP does not cover are not covered as FQHC or RHC services.
Payments on MCO Enrollees Encounter (effective January 1, 2015)
2014 legislation mandated reform of the supplemental payment process for FQHC and RHC services covered under managed care contracts. Legislation states that FQHC and RHC services are no longer included in the managed care capitated rates. FQHC and RHC providers have until December 31, 2016, to identify specific concerns with pre-2015 supplemental payment processing and submit the detailed information to MHCP. MHCP has until June 30, 2017, to settle the pre-2015 supplemental payment periods.
Effective January 1, 2015, FQHCs and RHCs submit claims for MCO enrollees to the MCO and the MCO submits payable claim lines to MHCP for payment.
Follow these guidelines:
Void or Replacement Claim
When submitting void or replacement claims to the MCO, include the MHCP TCN (LOOP 2300/REF, F8 qualifier) if MHCP processed an original carve-out claim for the person and date of service. Include the MCO internal control number (ICN) in the 837 header claim note L2300/NTE02, under the “situational claim information,” section.
FQHC and RHC MCO Carve-Out
The following are the carve-out process exclusions:
Global Procedure Service Date Reporting for Services Rendered before January 1, 2015
Certain procedure codes may represent services provided on more than one service date. Each service date with a qualifying face-to-face encounter with an FQHC or RHC professional is eligible for supplemental payment at the FQHC and RHC rate. Without revenue code 0519, global procedure service date reporting from the FQHC or RHC, MHCP will recognize only one service date for payment.
For MHCP to collect information for supplemental payments processing, we require FQHCs and RHCs to submit revenue code 0519 claims for procedures billed as global package procedures to MCOs. Submit these claims using the 837I claim format. MHCP will deny these 0519 claims with the following two remark codes:
In MN–ITS Interactive, MHCP will apply the following claim status codes during claim validation and submission:
Submitting 0519 claims is not for immediate reimbursement. After MHCP receives information from MCOs about global procedure encounters, we will include the 0519 encounters to settle up with FQHCs and RHCs.
If the conditions below apply, review the FQHC/RHC Global Encounters for MCO Enrollees examples (PDF) and follow the instructions to report the global package procedure encounter service dates to MHCP.
Conditions for services and instructions for claims and reporting
Conditions for services rendered before January 1, 2015
If you submitted a claim to a managed care organization (MCO) for an MA recipient enrolled in an MCO and the following apply:
Then, refer to the instructions in the next column.
Current billing procedure: To comply with electronic transaction requirements to create uniform electronic health care billing standards, MHCP requires FQHC and RHCs to use the following guidelines when billing:
Note: the above claim format instructions do not apply to Medicare crossover claims.
FQHC and RHC Medicare Crossover Claims
MHCP will deny FQHC and RHC Medicare-denied (for non-coverage) 837I crossover claims with remark code N34. FQHCs and RHCs must resubmit 837I Medicare-denied crossover claims using the 837P format.
The following sections apply to services on or after January 1, 2015.
Dentures and Partials
Refer to the following guidelines for denture and partial services on or after January 1, 2015:
Billing MHCP Directly
To correctly identify and report pharmacy copays, submit pharmacy services through point-of-sale (POS). DHS will provide pharmacy copay information to the pharmacist and will track the monthly copay obligation. Because pharmacy services are part of the medical encounter, MHCP does not make a separate pharmacy payment. MHCP will post reason code 89 with a cutback and adjust the claim amount to $0. For MA payments to reflect the applicable pharmacy copays, recognition of copay amounts that apply to FQHC and RHC services will occur during the payment cycle in which the pharmacy service occurred. Collect copays at the time of the visit or bill the recipient according to office policy.
Billing for MCO Enrollees Services on or after January 1, 2015
Submit claims to the MCO pharmacy. Pharmacy costs are built into the FQHC and RHC rates, so MCO pharmacy claims will pay at $0. Copay information is provided in real time to the FQHC or RHC through the MCO point-of-sale transaction. The MCO will track copays and process though quarterly reporting to MHCP. MHCP makes payments at the full encounter rate, and creates gross adjustments quarterly to recoup copays from the provider.
Bill the MHCP encounter rate preoperative and postoperative care on the 837P using each pre- and postoperative date of service.
When providing the surgical procedure only, modify the surgical procedure code based on the procedure code description.
When providing the preoperative or postoperative care only, submit E & M procedure codes that best describe the level of care. The preoperative and postoperative management modifiers are not required on E & M procedure codes.
Provider Based RHC and Free-Standing RHC Billing MHCP Hospital Services
RHC Professional-fee on the 837P claim format:
Hospital Facility fee on the 837I claim format:
Hospital Ancillary Services
Hospital Pharmacy = Pharmacy NPI
If a mid to high level practitioner provides a low level, non-encounter generating procedure, such as a dentist providing hygiene services or a physician providing an ultrasound, and the covered service requirements for MA or MinnesotaCare are met, the provider must indicate this as follows in order to receive payment at the PPS or APM rate level:
Claims Submission Procedure – Dental
On the 837D, include the word “PROFESSIONAL” in upper case letters in the claim note field when the dentist has provided a lower level service, like hygiene.
(For batch claims submission, claim note description is located in loop 2300, NTE02)
837D example: A dentist provides adult prophylaxis, D1110. Claim line 1 contains the CPT D1110.
Claim notes: PROFESSIONAL
Claims Submission Procedure –Medical
On the 837P, include the word “PROFESSIONAL” in upper case letters in the line note field for the service provided by the doctor.
(For batch claims submission, line note description is located in loop 2400, NTE02)
837P example: Doctor performs ultrasound, 76801. Claim line 3 contains the CPT 76801. Venipuncture, 36416, and Hemoglobin, 85014 CPTs are also included on this claim on line 1 and 2.
Line level notes: PROFESSIONAL
FQHC: A Federally Qualified Health Center (FQHC) is a facility that meets one of the following:
Rural Health Clinic: A Rural Health Clinic is a freestanding or provider based facility certified under Code of Federal Regulations, title 42, part 491.
Dental Encounter: Services provided during a dental visit by a dentist. Certain services provided by a dental therapist or advanced dental therapist also qualify.
Medical Encounter: Services provided during a medical visit, including but not limited to the following:
Provider-Based Facility: A clinic that is an integral part of a hospital, skilled nursing facility, or home health agency that is participating in Medicare and is used, governed and supervised with other departments of the facility.
Minnesota Rules 9505.0250 (physician clinic)
42 CFR 491 (RHC)
42 USC 1396d (RHC)
Minnesota Statutes 256B.0625, subd.29 (FQHC)
42 CFR 491 (FQHC)
Title XIX, Section 1905(l) of the Social Security Act, CR 4210 (PDF) (RHC & FQHC)
Minnesota Statutes 256B.0625, subd. 30