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FQHCs say payment rules differ from hospitals and urge clarity if reference‑based pricing expands
Summary
Representatives of federally qualified health centers told a committee that FQHCs are paid under a bundled encounter rate and Section 330 grant support, and asked lawmakers to exempt or explicitly account for FQHC payment rules and federal oversight if reference‑based pricing is extended.
Mary Kate Mollman, director of Vermont Public Policy for the Bi‑State Primary Care Association, told the committee that federally qualified health centers (FQHCs) are “paid differently” than hospitals and operate under federal rules that require special treatment in any statutory price‑setting scheme.
Mollman said Medicare and Medicaid pay FQHCs a bundled prospective payment system (PPS) encounter rate for visits, and noted FQHCs also receive federal Section 330 health center grants that support enabling services (sliding‑fee discounts, transportation, case management). She summarized: “FQHCs qualify for this Section 330 funding ... to help FQHCs operate as that sliding fee schedule that they are required to offer.”
Why it matters: the bill under consideration would set reference‑based prices for hospitals and might be read to affect non‑hospital providers. FQHC witnesses urged explicit statutory language to preserve federal compliance, avoid duplicative or conflicting regulation, and protect established payment methods.
Mollman warned of regulatory conflict if the Green Mountain Care Board were given authority over FQHC prices without careful coordination with federal requirements and HRSA oversight. She used an analogy: having overlapping regulators is like “mom and daughter fighting” over which rules apply. The FQHC witness urged lawmakers to account for federal rules that require commercial payers to pay, in aggregate, at least what FQHCs would receive under a Medicaid PPS rate (a requirement that comes from federal law implementing FQHC payment rules).
Blue Cross testimony (Sarah Teachout) agreed that the Board needs flexibility and recommended that any statutory RBP framework explicitly accommodate situations where Medicare does not provide an appropriate benchmark (for example, certain drugs or services). Teachout said insurers generally pay FQHCs either a community/professional fee schedule (insurer fee schedule) or an encounter rate depending on insurer practice and that any state price‑setting should not create conflicts with federal law.
FQHC witnesses also raised operational concerns: FQHCs cannot collectively bargain commercial rates without antitrust risk and have limited leverage in commercial negotiations; the Section 330 grant is an important revenue source that fills gaps when payer revenue does not cover all services; and moving primary‑care funding into a larger rate‑setting regime could increase administrative burden unless the statute preserves clarity and federal compliance.
Committee members asked staff to draft statutory language that would identify how and whether FQHCs are included in any reference‑based pricing structure and to coordinate with HRSA and the Green Mountain Care Board to avoid conflicting regulatory requirements.
