Billing Solutions for Federally Qualified Health Centers

One size doesn’t fit all medical billing solutions for many Federally Qualified Health Centers (FQHCs), and FQHCs frequently oscillate between different billing models in search for the most effective medical billing solution for their organization.

Many reasons often precipitated the reassessments, including:

  • Complexity of reimbursement requirements
  • Technology changes
  • Financial limitations
  • Increasing consumer expectations about transparent billing

Learn about options for insourcing or outsourcing the revenue cycle management (RCM) process for your FQHC organization, and why the complexity of reimbursement requirements needs close attention.

Common Billing Scenarios

Common medical billing scenarios include:

  • In-house billing through a practice management system with the support of an electronic medical record system.
  • Outsourcing to a medical billing company. Outsourced billing services typically take a percentage of a practice's collections and many recurring monthly fees as payment for managing many aspects of the revenue cycle.
  • A hybrid of both. An organization may go from in-house billing to outsourcing and return to backsourced billing to perform some of the previously outsourced activities themselves. This differs from internalizing an outsourced activity that hasn’t been executed within the organization previously, more commonly known as insourcing.

Not only does revenue cycle management (RCM) performance improve, patient satisfaction and quality scores are also boosted to create the optimal patient billing and health care experience.

What Is Revenue Cycle Management?

Revenue cycle management as defined by the Health Care Financial Management Association (HFMA) is “all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue.”

RCM essentially comprises the entire life cycle of a patient account from registration to claims processing to payments, denials, and appeals.

The challenges around charge capture, clean claims generation, follow-up on denials, and securing payment for resolution of claims is perhaps the most complex and tedious, yet exciting, paradox of a health care organization’s financial health.

What Are FQHCs?

FQHCs are not-for-profit, community-based organizations that provide primary and preventative care services to persons of all ages, regardless of their ability to pay.

Funded by the Health Resources and Services Administration (HRSA), a federal agency of the US Department of Health and Human Services, FQHCs must meet a stringent set of requirements, including providing care on a sliding fee scale based on ability to pay and operating under a governing board that includes patients.

FQHC Examples

  • Community health centers
  • Migrant health centers
  • Health care for the homeless health centers
  • Public housing primary care centers
  • Health center program look-alikes
  • Outpatient health programs or facilities a Tribe or Tribal organization or an urban Indian organization operates

What Qualifies as a FQHC Visit?

FQHC visits must:

  • Be medically necessary
  • Be face-to-face medical or mental health visits or qualified preventive health visits between the patient and an FQHC practitioner—physician, nurse practitioner (NP), physician assistant (PA), certified nurse midwife (CNM), clinical psychologist (CP), clinical social worker (CSW)—during which the practitioner provides one or more qualified FQHC services
  • Include, in certain limited situations, a registered nurse (RN) or a licensed practical nurse (LPN) homebound patient visit
  • Provide, under certain conditions, certified diabetes self-management training/medical nutrition therapy (DSMT/MNT) from a qualified practitioner when the FQHC meets the relevant program requirements to provide these services

FQHC visits may take place:

  • In the FQHC
  • At the patient’s home, including an assisted living facility
  • In a Medicare-covered Part A skilled nursing facility (SNF)
  • At the scene of an accident

FQHC visits can’t take place at:

  • An inpatient or outpatient hospital department, including a critical access hospital (CAH)
  • A facility with specific requirements excluding FQHC visits

How Are FQHCs Reimbursed?

FQHCs play a clear role in the United States’ primary health care safety net, filling in service gaps for vulnerable and disenfranchised populations.

According to data submitted by health centers to HRSA, 5.6 million patients received services at 1,963 sites across the state in 2019.

The unique role of FQHCs were conferred a specific payment methodology, known as the FQHC Prospective Payment System (PPS). This denotes that billing for FQHC is different from conventional medical billing.

FQHCs are reimbursed by Medicare and Medicaid based on an all-inclusive model, with some exceptions where the health centers can bill for services separately.

Although both Medicare and Medicaid get reimbursed using the all-inclusive rate, bundled payment system, states can design and implement an Alternative Payment Methodology (FQHC APM) so long as:

  • The total FQHC APM reimbursement isn’t less than what the FQHC would have received with the FQHC Prospective Payment System (PPS) methodology
  • FQHC individually agrees to the FQHC APM

Consequently, billing in each state can vary.

In general, Medicare pays FQHCs based on the FQHC PPS for medically necessary primary health services and qualified preventive health services from a FQHC practitioner. FQHCs must include an FQHC payment code—HCPCS Codes G0466 to G0470—on their claim. Certain services can be billed for payment outside of the PPS payment rate.

For claims with the 0519 revenue code, the so-called wraparound, or Medicare Advantage (MA) supplemental payment, is based on the PPS rate without comparison to the provider's charge.

For a FQHC visit, Medicare will compare the PPS rate with the MA contract rate. When the MA contract rate is lower than the PPS rate, the contractor will pay the difference, minus any cost sharing amount owed by the beneficiary, as a supplemental wraparound payment.

The FQHC doesn’t qualify for a supplemental wraparound payment when the MA contract rate is higher than the PPS rate.

To appropriately bill for services to Medicaid beneficiaries, the provider will use HCPCS code T1015, in addition to the CPT code of all services rendered.

Patients, regardless of insurance coverage, who meet federal poverty guidelines may quality for sliding fee program offered by FQHCs. The sliding fee program is designed to reduce the cost of primary care for those who meet requirements based on the patient’s income level and their family’s size.

Medical services provided in-house at the clinic such as labs, x-rays, electrocardiograms (EKGs), immunizations, and office visits are eligible for a sliding fee discount. Specialty visits or diagnostics sent to reference labs or hospitals aren’t covered under the sliding fee program.

Why Organizations Move from One Billing Model to Another

Traditionally, health care organizations used outsourcing as a strategic move to combat poor operational and financial performance as well as to gain access to specialized skillsets and technology without having to take on the burden of the maintenance and upgrades.

Activities are outsourced due to staffing limitations, lack of expertise, system capabilities, capacity, or pressures of economic burden, therefore, allowing the organization to focus on their core, value-adding business activities.

Backsourcing on the other hand tends to occur when the performance of an outsourced billing company falls short of expectations or value.

A well-trained internal billing department could perform revenue cycle functions and processes as efficiently and cost-effectively as the average outsourced medical billing company.

Research also shows that higher long run productivity gains occur if activities were retained in-house and it could rival the cost savings that outsourcing would have resulted in.

Common Triggers for Billing Model Changes

  • New leadership. Incoming leaders may have experienced successes in their previous organizations favoring a specific billing model and are the champions of change, accelerating the adoption of the new billing model.
  • Financial and Staffing Complements. Financial implications, cost, and staffing constraints should be considered when making the decision to in-house, outsource, or backsource billing.
  • IT Systems. Limitations in the capabilities of current systems as well as new electronic medical record (EHR) or medical billing system conversions are often the impetus for considering changes to billing models.
  • Affiliated networks or post-merger and acquisition (M&A) integration incentivizing new systems. In bringing two or more companies together in an affiliation or as a new business organization post-M&A, the eventual adoption of the same business process, with the aim of achieving synergies, is inevitable.

Key Considerations When Assessing Your Billing Model

Every billing solution has its upsides and downsides. It’s only through the weighing of the pros and cons of all alternatives that one would be able to ascertain the true gains and losses.

There are special nuances specific to FQHCs. Not many medical billing companies provide FQHC billing services because FQHC medical billing claims can be challenging due to specialized  current procedural terminology (CPT), health care common procedure coding system (HCPCS), revenue, and appropriate “T” codes and wrap-billing requirements unique to FQHCs.

Do You Need to Outsource, Insource, Backsource, or Go Hybrid?

  • Qualifications, expertise, and experience of key billing personnel who understand or can be trained to perform critical billing tasks in-house
  • Capabilities and performance of outsource vendors
  • IT capabilities of the internal billing system modules
  • Complexity of payer mix
  • Visit volume
  • Organizational culture and appetite for change

What Is the Current Health of My Billing Operations Compared with National Benchmarks?

  • Age trial balance–aging of receivables and account volumes
  • Days in accounts receivable current and trends over the past three years
  • Claim rejection and denial rates
  • Billing costs
  • Collection rates

Does My Outsourced Billing Company Meet or Exceed Expectations?

  • Experience in FQHC receivables management
  • A performance guarantee with an agreed commitment to timely claims submission, follow-up, denials, appeals, and payment posting processes
  • An accurate monthly key performance indicator (KPI) report that provides transparency in reporting
  • Continuous process improvement that signals proactive action plans to sustain the financial health of the practice

What Are Benefits of a Third-Party Medical Billing Assessment?

  • Provides an objective assessment of the current state of the revenue cycle
  • Outlines the pros and cons of each billing model under consideration
  • Quantifies costs, in some cases
  • Provides details for consideration to leadership to assist in their decision-making process
  • Some assessments can include a reference guide for revising their current revenue cycle operations

A properly performed assessment by experts with FQHC experience will help indicate feasibility and readiness for an organization to insource, outsource, or backsource their billing department.

The report will allow leaders to evaluate opportunities and roadblocks, potential return on investment (ROI), and provide direction for options currently under consideration.

What’s Included in a Third-Party Assessment?

At a minimum, industry professionals recommend an outside assessment of the current model and potential new models when any or some of the following apply:

  • The organization has a change in leadership, especially in finance and revenue cycle
  • Major changes are made to the IT systems or a system conversion takes place
  • The organization is short staffed, loses key staff, or doesn’t have the resources to keep the billing in-house
  • Costs for the outsource company may outweigh the benefits
  • The key billing performance metrics aren’t in line with industry standard
  • There is a severe, distinct, and unexplained drop in cash collections or a rise in aged accounts receivable

We’re Here to Help

For help making an informed decision about insourcing or outsourcing the RCM process for your FQHC organization, contact your Moss Adams professional.

You can also learn more about our Health Care Practice and additional topics affecting the industry.

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