Definition
Federally Qualified Health Center (FQHC)
A Federally Qualified Health Center (FQHC) is a Medicare and Medicaid provider type, defined in Section 1861(aa) of the Social Security Act, for safety-net primary care organizations that are paid under a dedicated FQHC prospective payment system.
1 min readReviewed September 14, 2026
Also known as: Federally qualified health centre, FQHC status, Community health center
Key facts
- Defined in
- Section 1861(aa) of the Social Security Act
- Includes
- Health Center Program awardees, look-alikes, certain tribal and urban Indian clinics
- Medicare payment
- FQHC prospective payment system, starting October 1, 2014
- Medicaid payment
- Prospective payment system or approved alternative, required since 2000
- Related benefits
- 340B eligibility and automatic facility HPSA designation
What is a Federally Qualified Health Center?
Federally Qualified Health Center is a payment designation in Medicare and Medicaid law. It recognizes outpatient organizations that serve underserved communities and pays them differently from ordinary physician practices, reflecting the uninsured and complex patients they treat.
FQHCs can be in urban or rural areas. Most are organizations that participate in the Health Resources and Services Administration (HRSA) Health Center Program, which is why the terms FQHC and community health center are often used interchangeably.
Which organizations qualify as FQHCs
The FQHC category includes:
- Health Center Program awardees: community, migrant, homeless and public housing health centers funded under Section 330 of the Public Health Service Act.
- Health Center Program look-alikes: organizations that meet all program requirements without Section 330 funding.
- Outpatient health programs or facilities operated by a tribe or tribal organization, or by an urban Indian organization.
How FQHCs are paid
Section 10501 of the Affordable Care Act required a Medicare prospective payment system for FQHCs, which began on October 1, 2014. Medicare pays a per-visit national rate adjusted for geography, with an increase when the patient is new to the FQHC or receives an initial preventive physical exam or annual wellness visit.
State Medicaid programs have been required since the Benefits Improvement and Protection Act of 2000 to pay FQHCs under a prospective payment system based on historical costs, or under an alternative method that pays at least as much.
Why FQHC status matters
FQHC status determines visit-level reimbursement, 340B Drug Pricing Program access and automatic Health Professional Shortage Area (HPSA) designation, which in turn affects National Health Service Corps recruitment. For market access and pricing teams, FQHC patient volume signals 340B purchasing. For payer network teams, FQHCs are often essential community providers that must be included for network adequacy.