Federally Qualified Health Center (FQHC)

Definition: A Federally Qualified Health Center (FQHC) is a community-based outpatient clinic that provides comprehensive primary care services to a designated Medically Underserved Area (MUA) or Medically Underserved Population (MUP).¹ Defining characteristics of MUAs and MUPs can include a large elderly population, high poverty, infant mortality rates, or a lack of primary care providers.² The comprehensive services of an FQHC can include preventive care, dental care, chronic disease management, mental health and substance abuse, or hospital and specialty care.³ FQHCs are eligible to receive funding from the Health Resources & Services Administration (HRSA) in addition to reimbursement from Medicare and Medicaid if they meet certain criteria.¹ The criteria for certification as a FQHC includes offering a sliding fee payment scale determined by a patient’s ability to pay for services based on annual income and family size, having an ongoing quality assurance program, and having a governing board of directors.⁴ A variety of health care providers such as physicians, physician assistants, dentists, certified nurse-midwives, clinical psychologists, clinical social workers, and pharmacists can provide services at an FQHC.⁵

How it relates to ACO/PCMH: ACOs and PCMHs prioritize high-quality patient care. Oftentimes, patients may not have access to high-quality comprehensive care due to socioeconomic status and other cost related barriers. As a result, these patients may have poor health outcomes and increased utilization of emergency services, which FQHCs have been shown to address and help mitigate.⁶ Furthermore, FQHCs can offer services (such as case management, language translation, and transportation) which are not typically covered by fee-for-service Medicaid plans and can further enhance accessibility and quality of care.⁷ During a visit, patients typically pay an affordable encounter fee which covers these qualified services.⁸ By coordinating with one another, providers within a FQHC can provide all-encompassing, accessible health care to the patient, which can ultimately improve health outcomes.

Involved organizations/oversight: HRSA, the Centers for Medicare and Medicaid Services, and the FQHC Prospective Payment System (PPS) ensure that FQHCs are providing affordable, patient-centered care to underserved patient populations.^1,7 As previously mentioned, HRSA has defined criteria that must be maintained, while several states are pilot testing value-based payment models to encourage FQHCs to focus on the quality of patient care.^4,7,9 Ensuring that underserved patients have continuous access to health care can improve health outcomes within the community and reduce overall health care costs.

Resources:

1. CMS. Federally qualified health center. CMS.gov. https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/fqhcfactsheet.pdf
2. Health Resources & Services Administration. MUA Find. data.HRSA.gov. https://data.hrsa.gov/tools/shortage-area/mua-find
3. FQHC Associates. What is an FQHC? FQHC.org. https://www.fqhc.org/what-is-an-fqhc
4. HHS. National Health Service Corps site reference guide. HRSA.gov. https://nhsc.hrsa.gov/sites/default/files/nhsc/nhsc-sites/nhsc-site-reference-guide.pdf
5. American Society of Health System Pharmacists. Opportunities for sustainable pharmacy services in Federally Qualified Health Centers (FQHCs): Date of Publication: April 2017. ASHP: Pharmacists advancing healthcare. https://www.ashp.org/-/media/assets/pharmacy-practice/resource-centers/ambulatory-care/pharmacy-services-in-federally-qualified-health-centers.ashx
6. Okeke N, Schmidt C, Alborn S, et al. Implementing value-based primary care delivery in Federally Qualified Health Centers. Popul Health Manag. 2021;41(1):78–85.
7. National Association of Community Health Centers. The facts about Medicaid’s FQHC Prospective Payment System (PPS). NACHC. http://www.nachc.org/wp-content/uploads/2017/03/PPS-One-Pager-noask.pdfj
8. Medicaid and CHIP Payment and Access Commission. Medicaid payment policy for Federally Qualified Health Centers. MACPAC.gov. https://www.macpac.gov/wp-content/uploads/2017/12/Medicaid-Payment-Policy-for-Federally-Qualified-Health-Centers.pdf
9. California Health Care Foundation. How health centers can improve patient care through value-based payment models. California Health Care Foundation. https://www.chcs.org/media/HealthCentersImproveCareValueBasedPayment.pdf

Contributing Authors:

Rachael Lau, final-year PharmD candidate
Chapman University School of Pharmacy

Hindu Rao, PharmD, APh, BCACP
Clinical Assistant Professor of Pharmacy Practice, Chapman University School of Pharmacy

Last reviewed 10/24/2023 by Hindu Rao, PharmD, APh, BCACP