Policy Issues

Medicaid Prospective Payment System

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Medicaid Prospective Payment System

Traditionally, Federally Qualified Health Centers (FQHC) were reimbursed based on their costs. That changed in 2000, with passage of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act (BIPA).

The law put in place what is called the FQHC Prospective Payment System (PPS). It also allowed states to use an alternative payment method (APM), but only if the health centers agreed to it and only if the state payment method didn’t pay health centers less than what they would have gotten under the federal PPS.

For a robust overview of the numerous topic relating to Medicaid PPS reimbursement to FQHCs, purchase NACHC’s Medicaid FQHC PPS Manual.  To access a preview of the manual, click here.  

FQHCs and primary care associations looking for help assessing their current PPS rates should review the Medicaid PPS Checklist.

Register today! Medicaid FQHC PPS webinar on May 10, 2016 at 3pm ET


Medicaid PPS Fundamentals


Change of Scope:


Wraparound Payments:


Same-Day Visits:


Payment Reform

Payment reform efforts can align payments to support innovation and important resources for health centers to achieve their mission and address social determinants of health in their communities. See NACHC’s latest publications and resources on health centers and payment reform below and visit NACHC’s Payment Reform Community for more. 


Payment Reform Readiness Assessment Tool:

Find out if your health center is ready to participate in value-based arrangements with the help of NACHC's Payment Reform Readiness Assessment Tool! This free resource is designed to help health centers assess their current state of readiness for successful engagement in the most prevalent and emerging payment reform models. 

Learn more about the tool and how to complete it:


Complete the tool:

  1. Designate a process lead
  2. Organize a team
  3. Complete the paper version individually
  4. Discuss answers as a team
  5. Identify agreed upon answers
  6. Submit online


Medicaid PPS Reimbursement by Service

Behavioral Health:






Obstetrical Services:


Children's Health Insurance Program (CHIP) & PPS



09-01-2007   State Policy Report #17 (309kb)
2007 Update on the Status of the Medicaid Prospective Payment System in the States

09-01-2006   State Policy Report #11 (279kb)
Update on the Status of the Medicaid Prospective Payment System in the States

08-01-2004   State Policy Report#4 (472kb)
A Closer Look: Surverys of Primary Care Associations and State Medicaid Agencies Provide Insight on the Implementation of Medicaid Prospective Payment System for Health Centers

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