When it comes to FQHC 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.
Here’s what FQHC leaders need to know about supplemental Medicare payments:
#1 – What are Medicare Advantage supplemental payments?
FQHCs that have a written contract with a Medicare Advantage (MA) plan are paid at the rate specified in that contract—nothing surprising there.
But if that rate is less than the Medicare PPS rate, Medicare will pay the FQHC the difference, less any co-pay or other cost-sharing amounts the patient owes.
This additional amount paid directly by Medicare is called a “supplemental” payment—and it often represents substantial additional revenue.
What’s PPS? The Prospective Payment System – “a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount.” Each FQHC’s rate is adjusted (higher or lower) based on geographic location.
#2 – How is the supplemental payment amount calculated?
Add the amount owed by the patient (copayment and coinsurance) to the estimated average payment from the Medicare Advantage plan – then subtract the total from your FQHC’s adjusted PPS rate for that covered service.
#3 – How do you bill Medicare for these supplemental payments?
Each FQHC seeking the supplemental payment must submit two separate claims—one to the MA plan, and one to traditional Medicare.
For the Medicare claim, you’ll submit on Type of Bill (TOB) 77X and use revenue code 0519 for all lines on the claim.
Another key detail about FQHC billing for supplemental payments: You don’t have to wait for the MA plan to process the claim you submitted to them. You can submit the claim for the supplemental payment at the same time.
#4 – What steps do FQHC billing leaders need to take before submitting claims for supplemental payments?
- Review your MA contracts and fee schedules, and compare them with your adjusted PPS rates.
- Create a utilization and payment report. This should cover the preceding 6-12 months and include a CPT Code Summary as well as the # of Encounters.
Now you have what you need to gauge the opportunity—the difference between your MA payments and your adjusted PPS rates, multiplied by the number of instances for each type of covered service.
In most cases, you’ll see there’s significant opportunity. Then you’ll need to:
- Confirm your covered locations.
- Identify your MA contractor ID #.
- Establish a supplemental payment rate with your fiscal intermediary (FI) or MAC. Typically, the first step is contacting the Provider Audit & Reimbursement department.
- Note: these agreements are based on the center, not individual physician(s)—so you’ll need the appropriate representative of your center to ink the agreement.
#5 - That sounds 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 hectic FQHC billing can be, you might find that a better option is asking your billing service or RCM partner to conduct the assessment. If you decide to go that route, here are a couple tips:
- The assessment should be free – vendors who charge for it either don’t understand the realities of FQHC and Medicare reimbursement, or aren’t confident in their ability to quickly determine whether there’s real opportunity.
- Your FQHC billing or RCM partner should have a clear understanding of all the steps involved—and make the process easy for you and your team.
- Ideally, they should also have a proven track record of strengthening Medicare reimbursement and enhancing FQHC revenue. This will ensure they’re hyper-aware of other opportunities that may exist. So if there’s a more beneficial strategy for your center than pursuing supplemental payments, they’ll understand what that is and help you capture it.
Medicare reimbursement is complex, 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?