Federally Qualified Health Centers: how they operate, what they provide and the funding threats they face

Mary Kate Mollman, director of Vermont public policy at BiState Primary Care Association, told the Health Care Committee on Jan. 8 that Federally Qualified Health Centers are designed to be community safety-net providers that offer primary care, oral and mental health services, school-based care and enabling services such as transportation and nutrition support.

"FQHCs are intended to serve everyone," Mollman said. "We provide primary and preventive care, and we must participate in Medicaid and offer a sliding-fee scale up to at least 200 percent of the federal poverty level." She added that FQHC governing boards must be patient-majority, a requirement intended to root governance in community needs.

Mollman said FQHCs rely heavily on patient revenue and modest grants: "About 75 percent of our funding is patient revenue and roughly 25 percent is grants and other sources," she said, arguing that centers operate on a "razor-edge margin." She warned that federal actions — including prospective changes to 340B contract pharmacy arrangements and flat or reduced Section 330 grant funding — could reduce FQHCs' ability to deliver current services.

Committee members pressed for details about clinical coordination with hospitals and electronic medical records. Mollman said FQHCs use a variety of electronic medical records systems and that interoperability remains a challenge: "We don't all use the same EMR," she said. She offered to bring a member FQHC representative to show how information flows in regions with tighter hospital–FQHC collaboration, citing Gifford as an example of close cooperation.

On workforce, Mollman said priorities include recruitment and training across roles — physicians, nurses, nurse practitioners, dentists, behavioral health clinicians and clerical staff — and that BiState operates a recruitment center to support providers in Vermont and New Hampshire. She also said investments under the rural health transformation program could fund administrative aids (including AI scribes), EMR upgrades and interoperability work intended to lower long-term costs and support coordinated care.

Mollman credited recent state progress — including Medicaid rate increases and exemptions from some prior-authorization rules — but emphasized that federal policy remains a major vulnerability. She urged continued state attention to sustain FQHC operations while longer-term system changes are pursued.

The committee asked for follow-up materials, including Mollman’s slides and a more detailed explanation of hospital–FQHC information sharing and the financial impacts of recent rate changes; Mollman agreed to provide that information and to arrange a member presentation on care-coordination mechanisms.

The committee is expected to seek additional briefings on interoperability and workforce implementation as part of its ongoing oversight work.