When it comes to billing, Medicare reimbursement is a vital revenue stream for most federally qualified health centers (FQHCs). But many centers are missing out on the additional revenue they’re owed for Medicare Advantage patients.
This is a growing concern for FQHCs as an increasing number of patients are choosing Medicare Advantage plans. Over the years, most Medicare beneficiaries opted for traditional Medicare plans, but a growing percentage of patients are enrolling in Medicare Advantage plans instead. In 2022, 45 percent of Medicare beneficiaries were enrolled in Medicare Advantage plans, but this figure is anticipated to surpass 50 percent by 2025—which means federally qualified health centers could be missing out on more potential revenue every year if they don’t submit for these reimbursements.
Many FQHCs have questions about Medicare reimbursement. Here’s what FQHC leaders and billing professionals need to know about these supplemental Medicare payments:
1. What Are Medicare Advantage Supplemental Payments? How Do They Impact FQHC Reimbursement?
As you might anticipate, FQHCs that have a written contract with a Medicare Advantage (MA) plan are paid at the rate specified in their unique contract.
But if that rate is less than the established Medicare Prospective Payment System (PPS) rate, Medicare will pay the FQHC the difference, less any co-pay or other cost-sharing amounts owed by the patient.
This additional amount paid directly by Medicare is called a “supplemental” payment—and often, it can represent substantial additional revenue for the FQHC.
This Prospective Payment System is described as “a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount.” Your FQHC’s rate is adjusted, either higher or lower, based on your geographic location.
2. How Is Each Supplemental Payment Amount for Reimbursement Calculated?
Calculating your supplemental payment reimbursement sum begins by examining the total amount owed by the Medicare Advantage patient. This figure is determined by adding the entire amount owed by the patient—both the copayment and the coinsurance—to the estimated average payment from the Medicare Advantage plan.
Next, this sum is subtracted from your FQHC’s adjusted PPS rate for that covered service, arriving at your reimbursement supplemental payment total.
3. How Does a Health Center Bill Medicare for Supplemental FQHC Reimbursement?
Each FQHC seeking the supplemental payment for the treatment of Medicare Advantage patients must submit two separate claims—one to the Medicare Advantage (MA) plan, and one to traditional Medicare.
When submitting the preliminary Medicare claim, your FQHC should submit via Type of Bill (TOB) 77X using the revenue code 0519 for all lines on the claim to alert Medicare of the intention to submit for additional reimbursement.
One critical FQHC billing detail for those seeking supplemental payments: As an FQHC, you do not have to wait for a patient’s MA plan to process the initial claim submitted to them. You can submit the claim for the supplemental payment at the same time as your initial submission.
4. What Steps Must Billing Leaders Take Before Submitting Claims for FQHC Reimbursement?
When submitting claims for FQHC reimbursement, your billing professionals should first review your MA contracts and fee schedules, and compare these with your adjusted PPS rates.
The next step is to create a utilization and payment report. This report should detail the preceding 6-12 months of treatment for MA patients and include a Current Procedural Terminology (CPT) Code Summary as well as the total number of Patient Encounters.
This will provide your FQHC with the information needed to gauge the opportunity for reimbursement; the difference between your MA payments and the adjusted PPS rates, multiplied by the number of instances for each type of covered service. In most cases, you’ll find significant opportunities for supplemental payments.
The next steps are to:
- Confirm your covered locations.
- Identify your facility’s MA contractor ID number.
- Establish a supplemental payment rate with your fiscal intermediary (FI) or MAC. Typically, the first step is to contact the Provider Audit & Reimbursement department.
An Important Note: These agreements are based on your FQHC itself, not on your individual physician(s)—so you will need the appropriate representative of your FQHC to establish the agreement.
5. Requesting Supplemental Payments Via FQHC Reimbursement Seems Like a Lot of Work. Is It Worth It?
In most cases, it absolutely is – but the only way to know is to conduct the initial assessment.
Given how complex FQHC billing can be, you might find that a better option is to enlist your billing service or Revenue Cycle Management (RCM) partner and let them conduct the assessment on your behalf. If your FQHC decides to take this route, here are a few considerations to keep in mind to ensure the best possible outcome:
- Your FQHC reimbursement assessment should be free. Vendors who charge you for an assessment either don’t understand the realities of FQHC and Medicare reimbursement, or they aren’t confident in their ability to quickly determine whether there’s a real opportunity.
- An FQHC billing or RCM partner should have a clear understanding of all the steps involved in submitting your request for supplemental payments—and they should make the process easy for you and your FQHC team.
- Ideally, these partners should have a proven track record of strengthening Medicare reimbursement and enhancing FQHC revenue. This will ensure they’re hyper-aware of all the reimbursement opportunities available to you. If there’s a more beneficial strategy for you to take— a strategy that makes more financial sense than pursuing these supplemental payments—they’ll understand what that is and help capture it.
Medicare reimbursement is complicated, especially for FQHCs. But with the right strategy and support in place, you can ensure your center is paid every dollar possible for the Medicare patients you serve.
Ready to learn more about how your FQHC can realize healthier revenues? Contact Altruis today.