Chapter 16: Billing and Collections


Section 330(k)(3)(E), (F), and (G) of the PHS Act; and 42 CFR 51c.303(e), (f), and (g) and 42 CFR 56.303(e), (f), and (g)


  • The health center must prepare a schedule of fees for the provision of its services consistent with locally prevailing rates or charges and designed to cover its reasonable costs of operation.
  • The health center must assure that any fees or payments required by the center for health care services will be reduced or waived in order to assure that no patient will be denied such services due to an individual’s inability to pay for such services.
  • The health center must establish systems for eligibility determination and for billing and collections [with respect to third party payors].
  • The health center must make every reasonable effort to enter into contractual or other arrangements to collect reimbursement of its costs with the appropriate agency(s) of the State which administers or supervises the administration of:
    • A State Medicaid plan approved under title XIX of the Social Security Act (SSA) [42 U.S.C.1396, et seq.] for the payment of all or a part of the center's costs in providing health services to persons who are eligible for such assistance; and
    • The Children’s Health Insurance Program (CHIP) under title XXI of the SSA [42 U.S.C. 1397aa, et seq.] with respect to individuals who are State CHIP beneficiaries.
  • The health center must make and continue to make every reasonable effort to collect appropriate reimbursement for its costs on the basis of the full amount of fees and payments for health center services without application of any discount when providing health services to persons who are entitled to:
    • Medicare coverage under title XVIII of the SSA [42 U.S.C. 1395 et seq.];
    • Medicaid coverage under a State plan approved under title XIX of the SSA [42 U.S.C.1396 et seq.]; or
    • Assistance for medical expenses under any other public assistance program (for example, CHIP), grant program, or private health insurance or benefit program.
  • The health center must make and continue to make every reasonable effort to secure payment for services from patients, in accordance with health center fee schedules and the corresponding schedule of discounts.

Demonstrating Compliance

A health center would demonstrate compliance with these requirements by fulfilling all of the following:

  1. The health center has a fee schedule for services that are within the HRSA-approved scope of project and are typically billed for in the local health care market.
  2. The health center uses data on locally prevailing rates and actual health center costs to develop and update its fee schedule.
  3. The health center participates in Medicaid, CHIP, Medicare, and, as appropriate, other public or private assistance programs or health insurance.
  4. The health center has systems, which may include operating procedures, for billing and collections that address:
    • Educating patients on insurance and, if applicable, related third-party coverage options available to them;
    • Billing Medicare, Medicaid, CHIP, and other public and private assistance programs or insurance in a timely manner, as applicable;1 and
    • Requesting applicable payments from patients, while ensuring that no patient is denied service based on inability to pay.
  5. If a health center elects to offer additional billing options or payment methods (for example, payment plans, grace periods, prompt or cash payment incentives), the health center has operating procedures for implementing these options or methods and for ensuring they are accessible to all patients regardless of income level or sliding fee discount pay class.
  6. The health center has billing records that show claims are submitted in a timely and accurate manner to the third party payor sources with which it participates (Medicaid, CHIP, Medicare, and other public and private insurance) in order to collect reimbursement for its costs in providing health services2 consistent with the terms of such contracts and other arrangements.
  7. The health center has billing records or other forms of documentation that reflect that the health center:
    • Charges patients in accordance with its fee schedule and, if applicable, the sliding fee discount schedule;3 and
    • Makes reasonable efforts to collect such amounts owed from patients.
  8. The health center has and utilizes board-approved policies, as well as operating procedures, that include the specific circumstances when the health center will waive or reduce fees or payments required by the center due to any patient’s inability to pay.
  9. If a health center provides supplies or equipment that are related to, but not included in, the service itself as part of prevailing standards of care4 (for example, eyeglasses, prescription drugs, dentures) and charges patients for these items, the health center informs patients of such charges (“out-of-pocket costs”) prior to the time of service.5
  10. If a health center elects to limit or deny services based on a patient’s refusal to pay, the health center has a board-approved policy that distinguishes between refusal to pay and inability to pay and notifies patients of:
    • Amounts owed and the time permitted to make such payments;
    • Collection efforts that will be taken when these situations occur (for example, meeting with a financial counselor, establishing payment plans); and
    • How services will be limited or denied when it is determined that the patient has refused to pay.

The following points describe areas where health centers have discretion with respect to decision-making or that may be useful for health centers to consider when implementing these requirements:

  • The health center determines how to consider both locally prevailing charges and actual costs for services when setting the fee schedule, as well as the data used to determine locally prevailing charges (for example, Medicare, Medicaid, private providers, or commercial sources).
  • The health center determines whether to charge a single fee for related health center services, medically-related supplies, and/or equipment. Examples include, but are not limited to, charging a single fee for a well-child visit and the immunizations provided during that visit or combining all prenatal care visits and labs into a single fee.
  • The health center determines whether to participate in a specific insurance plan based on its patient population and the costs and benefits of such participation.
  • If a health center has a funding source that subsidizes or covers all or part of the fees for certain services for specific patients (in accordance with the terms and conditions of such funding sources), the health center may use such funding sources to support discounts greater than those available through the health center’s sliding fee discount program.6
  • If a health center elects to provide its patients access to supplies or equipment (for example, eyeglasses, prescription drugs, dentures) that are related to, but not included in, the service itself as part of prevailing standards of care, the health center determines how to charge its patients for such supplies or equipment (for example, flat discounts, at cost, sliding fee discounts).
  • If a health center limits or denies services to patients based on refusal to pay, the health center determines how and when such patients may be permitted to rejoin the practice.


  1. For information on Federal Tort Claims Act (FTCA) coverage in cases where health centers are using alternate billing arrangements in which the covered provider is billing directly for services provided to covered entity patients, refer to the FTCA Health Center Policy Manual (PDF - 435 KB), Section I.E: Eligibility and Coverage, Coverage Under Alternate Billing Arrangements.
  2. This includes services that the health center provides directly (Form 5A: Services Provided, Column I) or provides through a formal written contract/agreement (Form 5A: Services Provided, Column II).
  3. See Chapter 9: Sliding Fee Discount Program for more information on the sliding fee discount schedule.
  4. These items differ from supplies and equipment that are included in a service as part of prevailing standards of care and are reflected in the fee schedule (e.g., casting materials, bandages).
  5. See Chapter 15: Financial Management and Accounting Systems for related information on revenue generated from such charges.
  6. Health centers that have questions on the appropriate use of other Federal, state, local, or private funds should refer to those program sources for additional guidance. See Chapter 9: Sliding Fee Discount Program for information on the Health Center Program requirements related to the sliding fee discount program.

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Date Last Reviewed:  January 2018

Health Center Compliance Manual

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