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Elimination of Productivity Requirements for Iowa Federally Qualified Health Centers

on Monday, 5 November 2018 in Health Law Advisory: Zachary J. Buxton, Editor

On September 28, 2018, the Iowa Department of Human Services issued an informational letter (Informational Letter No. 1953-MC-FFS-D) to all Federally Qualified Health Centers (“FQHCs”) that eliminated the productivity requirements that had previously applied to FQHCs in Iowa. The change is effective for cost reporting periods ending on or after June 30, 2018. The Department also advised that it had made changes to the Medicaid FQHCs Cost Report Form (Form 470-3749) to reflect that productivity standards no longer apply.

Productivity standards were previously applied to limit cost-based reimbursement to FQHCs whose providers could not reach the required productivity levels. Under Part B of the Cost Report Form, line item 3 had incorporated a “Minimum Medical Team Productivity” Standard, which required multiplying the total number of clinical FTEs in the FQHC by 4,200 visits. Under the “Minimum Medical Team Productivity” standard in the IME cost report form, if a provider only met 90 percent of the productivity standard (i.e., 3,780 visits per FTE), then the provider would only be reimbursed 90 percent of its allowable costs. The term “visits” was not specifically defined in the Cost Report Form, but had been defined in Medicare guidance to mean all face-to-face patient encounters for the provider.

In understanding the reasonableness of the former productivity requirement of 4,200 patient visits, it is helfpul to consider that under Medical Group Management Association (“MGMA”) survey data for family medicine physicians (without OB), 4,200 or more encounters was only reported for physicians whose production was at or above the 75th percentile. Total encounters for family practice physicians (without OB) at the median level of productivity was 3,502, which is only 83% of Iowa’s Medicaid former 4,200 productivity requirement. See MGMA DataDive Physician Total Encounters, Family Medicine (Without OB), 2018 Provider Compensation and Production Report Based on 2017 Survey Data).

The removal of the productivity requirements is a positive step that reflects that FQHCs often treat complex patients with multiple medical issues and should not be held to unrealistic productivity standards. In addition, FQHCs frequently are active in accepting students and residents for primary care clinical training programs, which, while it has a negative impact on productivity, is crucial for the training of the future generations of primary care providers.

Kimberly A. Lammers

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