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Medicaid and FQHC Patient Revenue

Monday, April 15, 2019  
Posted by: Thomas Johnson
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In 2017, 55% of all health center patients in Region X were covered through Medicaid. In this article, I explore how the amount that FQHCS have charged to Medicaid has changed over time, as well as how the payments health centers have received relate to their total amount of patient-related revenue.

This is a complicated subject, with a lot of significance for health centers, and I'll go into greater depth on some of the topics introduced here in the next article. But for now let's look at total FQHC charges and revenue by payer type for each state in our region.

The chart below shows the total amount of money that FQHCs billed and collected from each type of payer (stratified by state and year). Each square represents $2.5 million, with unfilled squares representing money that was billed but not collected (or offset by some other form of payer revenue, such as wraparound payments or quality improvement awards).

FQHC Charges by Payer Type

Each square represents $2.5 million in FQHC charges. Uncollected charges are represented by unfilled squares

Note: Click to change state and year



Source: Uniform Data System, 2012 - 2017

As you can see, the total amount of charges billed to Medicaid has increased dramatically since 2012. This is unsurprising for Alaska, Oregon, and Washington, which have all expanded Medicaid. But even in Idaho (where lawmakers are still in the midst of passing legislation to expand their state's program) the total amount being charged by FQHCs to Medicaid has doubled.

Also worth noting is that the total sum of dollars received by FQHCs from Medicaid has consistently met the total amount charged (with exceptions occurring for some years in Alaska, where high medical costs can frequently exceed a health center's reimbursement rate). This is attributable to the prospective payment system (PPS) that Medicaid is required by law to follow for FQHC reimbursement.

Medicaid PPS, and in some states Alternative Payment Models, ensure that health centers do not need to rely on FQHC grant funding from HRSA to cover costs associated with serving Medicaid patients. From the individual clinic perspective, this consistency means that FQHCs that see a greater portion of Medicaid patients are more likely to have earned more dollars in patient-related-revenue as a percentage of their total charges for the year.

This fact is highlighted in the chart below. Between 2012 and 2017, each health center is plotted according to the percent of Medicaid patients seen (vertical axis) and the percent of total charges that are that offset by payer revenue (horizontal axis).

FQHCs That Serve More Medicaid Patients Have Increased Revenue per Charge

Each dot represents a health center

Note: Click to change year


Source: Uniform Data System, 2012 - 2017

The upward slant of the distribution suggests that when health centers see more Medicaid patients they are more likely to receive more revenue per charge. This makes sense considering that FQHCs more consistently receive payment for charges billed to Medicaid than for other types of payers (as illustrated above).

That the distribution's shape becomes more pronounced over time also makes sense. Since 2012, the states in our region have gradually increased the number of people enrolled in Medicaid, shifting the distribution of charges billed by FQHCs in that direction as well.

These charts illustrate just how important Medicaid is to health centers. If federal or state policy changes to reduce Medicaid enrollment (by either turning the program into a block-grant and/or introducing work requirements for enrollees), the effect on health centers may be overall reduced patient revenue.

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