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The Texas Health And Human Services Commission

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Overview

The Texas Health and Human Services Commission (HHSC) is required by federal law to ensure federally qualified health centers (FQHCs) are reimbursed no less than their Prospective Payment System (PPS) rate for services provided in the Medicaid and CHIP programs (42 U.S.C. 1396a).

Prior to September 2011, Medicaid Managed Care Organizations (MCOs) paid FQHCs a fee-for-service rate and HHSC reimbursed FQHCs the difference between the rate paid by the MCO and the FQHC PPS rate in quarterly wraparound payments. Pursuant to budget riders starting in the 2012-2013 General Appropriations Act, and continuing through the current appropriations bill, HHSC Rider 62 (HB1, 84nd Regular Session, 2015), MCOs were required to pay the full PPS rates to FQHCs up front. The stated intent of Rider 62 was to reduce HHSC administrative costs. The administrative cost was associated with the Texas Medicaid and Healthcare Partnership (TMHP), an HHSC contractor, calculating and disbursing the wrap payment to each FQHC. By moving responsibility for the wrap payment to the MCO, the administrative cost to HHSC was eliminated. Rider 62 did not contemplate a reduction in appropriate FQHC utilization.

The FQHC PPS encounter rate includes the cost for all services FQHCs provide to Medicaid and CHIP patients, including medical, dental, behavioral health and pharmacy. HHSC is required to set MCO premium rates to sufficiently cover the costs of the FQHC reimbursement rate; that is done

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