FQHC is a federal designation from the Bureau of Primary Health Care (BPHC) and the Center for Medicare and Medicaid Services (CMS) that is assigned to private non-profit or public health care organizations that serve predominantly uninsured or medically underserved populations. FQHCs are located in or serving a Federally designated Medically Underserved Area/Population (MUA or MUP). All FQHCs must operate under a consumer Board of Directors governance structure and provide comprehensive primary health, oral and mental health/substance abuse services to persons in all stages of the life cycle.

FQHCs provide service to all persons regardless of ability to pay, and charge for services on a Board approved sliding-fee scale that is based on patient's family income and size. FQHCs must comply with Section 330 program expectations/requirements and all applicable federal and state regulations.

FAQs: Federally Qualified Health Centers (FQHCs)

1. What are Federally Qualified Health Centers?

Federally Qualified Health Centers (FQHCs) are non-profit, 501 (c)(3) organizations that deliver primary and preventive health services in medically underserved areas and/or to medically underserved populations.    

2. What is the difference between an FQHC, a CHC, and a Health Center?

“Health Center” is an all-encompassing term used by the federal government for a diverse range of public and private non-profit organizations and programs. Health Centers care for people regardless of their ability to pay or their insurance status. They provide primary and preventive health care, as well as enabling services such as transportation and translation. Many Health Centers also offer dental, mental health and substance abuse care.  Four types of Health Centers are funded under Section 330 of the Public Health Service Act. These Health Centers grantees are Community Health Centers (CHC), Migrant Health Centers, Homeless Health Centers, and Public Housing Health Centers.  Each type of Health Center grantee is required by statute to receive a certain portion of the total Consolidated Health Center Program appropriation (See #6—federal funding allocation).  The term “FQHC” originated as a reimbursement designation for the Health Center grantees.  This designation enables grantees to receive a cost-based reimbursement for serving a disproportionate share of Medicaid and Medicare recipients.  In this sense, all Health Center grantees and CHCs are “FQHCs”. 

3. Do FQHCs receive funding from the Federal Government?

Yes, FQHCs receive federal funding under section 330 of the Public Health Services Act.  Operating under this categorical grant program, FQHCs deliver primary and preventive health services in federally designated medically underserved areas and/or to medically underserved populations. These federal grant funds partially subsidize the provision of care to the uninsured and underinsured.

 4. Do FQHCs receive funding from the state of South Carolina?

In 2007, the General Assembly appropriated $1.1 million in non-recurring funds to help FQHCs treat additional uninsured patients. Nationwide, more than 35 states now provide some sort of direct non-Medicaid funding for FQHCs due to the inherent economic value in providing primary and preventive care for the medically underserved.  Medically underserved populations often delay seeking primary care until an illness escalates to the point that they must then seek much more expensive hospital emergency room services for which they are unable to pay.  Current research shows that South Carolina spent $265,008,761 on avoidable emergency room visits in 2006.  Studies support the conclusion that redirecting patients from emergency room care to more appropriate providers, such as FQHCs saves money.  Specifically, data provided by the SC Office of Research and Statistics documents the cost savings to the state resulting from the provision of care provided to diabetic patients through a FQHC compared to other providers. 
 

5. FQHCs have been successfully operating under federal grants in South Carolina for decades.  Why are state funds now necessary?

Federal Health Cluster grants, which make up 30.6% of FQHC revenue statewide, are awarded to FQHCs to enable them to partially subsidize care for uninsured patients.  Over the past several years, the number of uninsured patients treated by FQHCs has seen tremendous growth, but federal funding levels have not kept up with the growth rate.  According to the US Department of Health and Human Services’ Bureau of Primary Health Care data, between 2002 and 2006, the number of uninsured patients increased by 42.86%, while the average federal revenue received to cover this population only increased by 36.65% over the same time period.  FQHCs are seeking state funds in order to continue and increase the provision of care for the state’s growing uninsured population.  Currently, South Carolina ranks last in the amount of state appropriations for FQHCs receiving state dollars in the southeast. 

6. How are federal funds allocated to each FQHC to cover the uninsured?

FQHCs receive a set dollar amount in grant funds through the Bureau of Primary Health Care (BPHC).  This dollar amount is based on the need demonstrated in the original grant proposal.  FQHCs are not reimbursed on a per patient basis; the amount they are given in their federal grant is a set amount that does not change even if the number of uninsured patients increases.  The only exception to this is if Congress appropriates funding for “base adjustments” for FQHCs.  These dollars are given to FQHCs based on their percentage of uninsured, but are capped for every FQHC based on the appropriated amount, not on the FQHCs need.
 

7. What is the total dollar amount South Carolina’s FQHCs receive in federal funding to care for the medically underserved?

In 2006, South Carolina’s FQHCs received $40,400,560 in federal funds under section 330 of the US Public Health Services Act, which provided care to the underinsured and uninsured. 

8. How many uninsured patients are seen by FQHCs in South Carolina?

South Carolina’s FQHCs provided care for 111,193 uninsured patients in 2006.

9. What is the average annual cost for an FQHC of providing care to an uninsured patient?

South Carolina’s FQHCs provide a medical home to an uninsured patient for an entire year at an average cost of $442 per patient.  In 2006, the average FQHC patient visited the center 3.09 times. 

10. How will the state document that its money is being used effectively?

All FQHCs are required by the federal government to submit, on an annual basis, a Uniform Data System (UDS) report.  This report details every aspect of health center care and operations, from costs to patient demographics.  The UDS report will document the additional number of uninsured patients seen as a result of state funding, as well as the cost of that care.  In addition, FQHCs will comply with additional reporting requirements as may be imposed by the General Assembly and/or SC DHHS to document the effectiveness of the funding. 

11. What are FQHC core requirements?

All FQHCs must adhere to federal core requirements that include the following: 

A.  Must be located in a federally designated Medically Underserved Area (MUA) or serve a federally designated Medically Underserved Population (MUP)

B. Must be a non-profit, tax exempt organization or public entit

C. Must offer a sliding fee scale based on family size and income and provide services to all regardless of ability to pay

D. Must have a Board of Directors, a majority of whom are consumers of the FQHCs services

E. Must be subject to periodic reviews that audit compliance with administrative and financial requirements as well as clinical procedures—all FQHCs are required to have an independent financial audit completed annually

F. Must provide for full family care

12. Where do FQHCs obtain funding?

FQHCs receive federal grants which partially support health center services.  33.9% of the support for South Carolina’s FQHCs comes from federal grants, which includes Health Cluster grants; the remaining 66.1% must be generated through patient revenue and other funding sources.
 

13. Why should South Carolina support its FQHCs?

• To increase access to primary and preventive health care for South Carolina’s working uninsured and medically underserved

• Nationwide, more than 35 states now provide some type of direct non-Medicaid funding for FQHCs—South Carolina receives the lowest amount of appropriations for FQHCs receiving state funds in the southeast 

• FQHCs are vital components of the economy in local communities

• The US Office of Management and Budget has cited FQHCs as one of the top ten most cost effective health care programs in the country and ranks them among the highest for best use of public tax dollars

*All figures contained in this document are from the 2006 Uniform Data System report as validated by John Snow, Inc.  with the exception of the annual Emergency Room expenditures, which were obtained from the National Association of Community Health Centers..