0142_Law

Title 42 U.S.C. Chapter 7: Social Security
Section 1396(a)
(bb) Payment for services provided by Federally-qualified health centers and rural health clinics
(1) In general
Beginning with fiscal year 2001 with respect to services furnished on or after January 1, 2001,
and each succeeding fiscal year, the State plan shall provide for payment for services described
in section 1396d (a)(2)(C) of this title furnished by a Federally-qualified health center and
services described in section 1396d (a)(2)(B) of this title furnished by a rural health clinic in
accordance with the provisions of this subsection.
(2) Fiscal year 2001
Subject to paragraph (4), for services furnished on and after January 1, 2001, during fiscal year
2001, the State plan shall provide for payment for such services in an amount (calculated on a
per visit basis) that is equal to 100 percent of the average of the costs of the center or clinic of
furnishing such services during fiscal years 1999 and 2000 which are reasonable and related to
the cost of furnishing such services, or based on such other tests of reasonableness as the
Secretary prescribes in regulations under section 1395l (a)(3) of this title, or, in the case of
services to which such regulations do not apply, the same methodology used under section 1395l
(a)(3) of this title, adjusted to take into account any increase or decrease in the scope of such
services furnished by the center or clinic during fiscal year 2001.
(3) Fiscal year 2002 and succeeding fiscal years
Subject to paragraph (4), for services furnished during fiscal year 2002 or a succeeding fiscal
year, the State plan shall provide for payment for such services in an amount (calculated on a per
visit basis) that is equal to the amount calculated for such services under this subsection for the
preceding fiscal year——
(A) increased by the percentage increase in the MEI (as defined in section 1395u (i)(3) of this
title) applicable to primary care services (as defined in section 1395u (i)(4) of this title) for that
fiscal year; and
(B) adjusted to take into account any increase or decrease in the scope of such services furnished
by the center or clinic during that fiscal year.
(4) Establishment of initial year payment amount for new centers or clinics
In any case in which an entity first qualifies as a Federally-qualified health center or rural health
clinic after fiscal year 2000, the State plan shall provide for payment for services described in
section 1396d (a)(2)(C) of this title furnished by the center or services described in section
1396d (a)(2)(B) of this title furnished by the clinic in the first fiscal year in which the center or
clinic so qualifies in an amount (calculated on a per visit basis) that is equal to 100 percent of the
costs of furnishing such services during such fiscal year based on the rates established under this
subsection for the fiscal year for other such centers or clinics located in the same or adjacent area

with a similar case load or, in the absence of such a center or clinic, in accordance with the
regulations and methodology referred to in paragraph (2) or based on such other tests of
reasonableness as the Secretary may specify. For each fiscal year following the fiscal year in
which the entity first qualifies as a Federally-qualified health center or rural health clinic, the
State plan shall provide for the payment amount to be calculated in accordance with paragraph
(3).
(5) Administration in the case of managed care
(A) In general
In the case of services furnished by a Federally-qualified health center or rural health clinic
pursuant to a contract between the center or clinic and a managed care entity (as defined in
section 1396u––2 (a)(1)(B) of this title), the State plan shall provide for payment to the center or
clinic by the State of a supplemental payment equal to the amount (if any) by which the amount
determined under paragraphs (2), (3), and (4) of this subsection exceeds the amount of the
payments provided under the contract.
(B) Payment schedule
The supplemental payment required under subparagraph (A) shall be made pursuant to a
payment schedule agreed to by the State and the Federally-qualified health center or rural health
clinic, but in no case less frequently than every 4 months.
(6) Alternative payment methodologies
Notwithstanding any other provision of this section, the State plan may provide for payment in
any fiscal year to a Federally-qualified health center for services described in section 1396d
(a)(2)(C) of this title or to a rural health clinic for services described in section 1396d (a)(2)(B)
of this title in an amount which is determined under an alternative payment methodology
that——
(A) is agreed to by the State and the center or clinic; and
(B) results in payment to the center or clinic of an amount which is at least equal to the amount
otherwise required to be paid to the center or clinic under this section.

Section 1396d, Definitions
(2)
(A) The term ““Federally-qualified health center services”” means services of the type described
in subparagraphs (A) through (C) of section 1395x (aa)(1) of this title when furnished to an
individual as an [3] patient of a Federally-qualified health center and, for this purpose, any
reference to a rural health clinic or a physician described in section 1395x (aa)(2)(B) of this title
is deemed a reference to a Federally-qualified health center or a physician at the center,
respectively.
(B) The term ““Federally-qualified health center”” means an entity which——
(i) is receiving a grant under section 254b of this title,
(ii)
(I) is receiving funding from such a grant under a contract with the recipient of such a grant, and
(II) meets the requirements to receive a grant under section 254b of this title,
(iii) based on the recommendation of the Health Resources and Services Administration within
the Public Health Service, is determined by the Secretary to meet the requirements for receiving
such a grant, including requirements of the Secretary that an entity may not be owned,
controlled, or operated by another entity, or
(iv) was treated by the Secretary, for purposes of part B of subchapter XVIII of this chapter, as a
comprehensive Federally funded health center as of January 1, 1990;
and includes an outpatient health program or facility operated by a tribe or tribal organization
under the Indian Self-Determination Act (Public Law 93––638) [25 U.S.C. 450f et seq.] or by an
urban Indian organization receiving funds under title V of the Indian Health Care Improvement
Act [25 U.S.C. 1651 et seq.] for the provision of primary health services. In applying clause
(ii),[4] the Secretary may waive any requirement referred to in such clause for up to 2 years for
good cause shown.