Health Centers And Rural Clinics: State and Federal Implementation Issues for Medicaid's New Payment System
GAO-05-452
Published: Jun 17, 2005. Publicly Released: Jun 17, 2005.
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Highlights
The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) established a prospective payment system (PPS) for Medicaid payments to Federally Qualified Health Centers (FQHC) and Rural Health Clinics (RHC), giving providers a financial incentive to operate efficiently. BIPA requires that BIPA PPS rates be adjusted for inflation and changes in scope of services. States also may use an alternative methodology if it pays no less than the BIPA PPS rate. In response to a BIPA mandate, GAO reviewed states' implementation of the new payment requirements, the need to rebase or refine the BIPA PPS, and the Centers for Medicare & Medicaid Services' (CMS) oversight of states' implementation. GAO surveyed the states about their payment methodologies, did a targeted review in four states, and reviewed indexes used to reflect medical care inflation.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress may wish to consider directing CMS to explore the development of an inflation index that better captures the cost of services provided by or price of resources used by FQHCs and RHCs or develop a strategy to periodically assess the adequacy of the Medicare Economic Index as an inflation index for adjusting PPS rates for FQHCs and RHCs. | No action has been taken on this recommendation. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Centers for Medicare & Medicaid Services | To provide for a more appropriate basis for adjusting BIPA PPS payment rates for FQHCs and RHCs, the Administrator of CMS should explore the development of an inflation index that better captures the cost of services provided by or price of resources used by FQHCs and RHCs and propose to Congress, as appropriate, any needed revisions to the statute. |
CMS has not taken any action on this recommendation. On July 30, 2007, CMS indicated that it believed that there was no evidence or data to reflect that a need for a revised inflation factor was warranted. Furthermore, on July 17, 2008, CMS stated that it "...does not believe it is necessary to revise the inflation factor at this time. CMS will take no action." In 2009, after a change in agency administration, CMS indicated plans to discuss the recommendation further with new policy officials. However, as of July 2011, the agency had still not taken action related to this recommendation.
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| Centers for Medicare & Medicaid Services | To better ensure consistent state compliance with the BIPA-mandated Medicaid payment requirements for FQHCs and RHCs, the Administrator of CMS should ensure that states' Medicaid plans provide sufficient information describing their methodologies for paying FQHCs and RHCs for Medicaid services, including, at a minimum, whether the state is using the BIPA PPS or an alternative methodology. |
CMS has taken limited action on this recommendation but has not completely implemented it. Specifically, CMS has indicated that when a state submits an amendment to its Medicaid state plan related to FQHCs and RHCs, then CMS will require that the state plan contain a narrative description of the alternative payment methodology, if used, or an indication that the state is using the BIPA PPS. However, CMS officials indicated that they have not reviewed all states' Medicaid plans to ensure that they contain sufficient information. CMS considers their actions related to this recommendation to be completed and thus, we do not expect the agency to take additional action to fully implement the recommendation.
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| Centers for Medicare & Medicaid Services | To better ensure consistent state compliance with the BIPA-mandated Medicaid payment requirements for FQHCs and RHCs, the Administrator of CMS should develop guidance for states describing what constitutes a change in scope of services provided by FQHCs and RHCs, including the definition of the specific elements that affect such a change. |
On July 30, 2007, CMS indicated that it still believes that its existing guidance on change in scope of services is sufficient to allow states to develop procedures/guidelines. As such, CMS has not taken any action in response to this recommendation. On July 17, 2008, CMS stated: "CMS continues to believe that the guidance issued in September 2001, is sufficient to allow States to develop their own State specific procedures/guidelines for changes in scope of services." On July 2, 2009, CMS reiterated the same sentiment and indicated that it has not taken any action on this recommendation.
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| Centers for Medicare & Medicaid Services | To better ensure consistent state compliance with the BIPA-mandated Medicaid payment requirements for FQHCs and RHCs, the Administrator of CMS should ensure that states' FQHC and RHC BIPA PPS payment rates do not inappropriately exclude the costs of Medicaid-covered services. |
CMS has taken limited action on this recommendation but has not completely implemented it. Specifically, CMS has indicated that when a state submits an amendment to its Medicaid state plan related to FQHCs and RHCs, then CMS will require that the state plan describe the scope of services reimbursed through the prospective payment system. However, CMS officials indicated that they have not reviewed all states' Medicaid plans to ensure that they contain sufficient information. CMS considers their actions related to this recommendation to be completed and thus, we do not expect the agency to take additional action to fully implement the recommendation.
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| Centers for Medicare & Medicaid Services | To better ensure consistent state compliance with the BIPA-mandated Medicaid payment requirements for FQHCs and RHCs, the Administrator of CMS should ensure that states' alternative payment methodologies are paying FQHCs and RHCs at least as much as what would be paid under the BIPA PPS, including any needed adjustments due to a change in scope of services. |
CMS has taken limited action on this recommendation but has not completely implemented it. Specifically, CMS has indicated that when a state submits an amendment to its Medicaid state plan related to FQHCs and RHCs, then CMS will ask the state to describe its process for ensuring that its alternative payment methodology is paying at least as much as what would be paid under the BIPA PPS. However, CMS does not ask states for numerical evidence and has not reviewed all states' Medicaid plans to ensure that their alternative payment methodologies are paying a sufficient amount. CMS officials did indicate that regional offices may undertake targeted reviews if concerns are raised by providers or constituents. CMS considers their actions related to this recommendation to be completed and thus, we do not expect the agency to take additional action to fully implement the recommendation.
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Administrative costsCommunity health servicesCost analysisstate relationsHealth care costsHealth care programsHealth care servicesHealth insurance cost controlMedicaidPaymentsState-administered programsProspective payments