Read this if you’re a CFO, billing manager, or revenue cycle professional at an FQHC or RHC.
On July 1, 2025, Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) transitioned from cost report-based to claim-based Medicare reimbursement for influenza, pneumococcal, COVID-19, and Hepatitis B vaccines. This important policy change enables real-time payment, improving cash flow and making vaccine administration more financially viable for health centers and clinics.
Importantly, while the billing method is changing, reimbursement for these vaccines remains based on reasonable cost principles. Health centers and clinics must still track vaccine-related costs and report them in the annual Medicare cost report, which will be used to reconcile reasonable costs to the payments received through claims processing.
Why the change matters
Prior to the change, Medicare reimbursed FQHCs and RHCs for vaccines and their administration through the annual cost report and they were not allowed to be billed and reimbursed when the services were provided.
As a result, health centers and clinics had to cover both the vaccine and administration costs upfront, potentially waiting up to 18 months or more for reimbursement due to the timing of cost report submissions and Medicare contractor settlement processes.
This delay posed a significant challenge for FQHCs and RHCs, which typically operate with tight cash flow and limited working capital.
Real-time payments improve cash flow
The July change allows FQHCs and RHCs to bill Medicare for vaccines and their administration on a claim-by-claim basis. Health centers will now receive payment shortly after submitting the claim, rather than waiting for year-end cost report settlements to come through.
Claims must include:
Notably, vaccines and administration can be billed regardless of whether a face‑to‑face encounter with a provider occurs. Services provided by qualified staff, such as nurses, are billable even without a provider visit on the same day.
Accurate and timely claim submission will be critical to support compliant reimbursement and minimize processing delays or denials.
New reimbursement for Hepatitis B vaccines
Effective January 1, 2025, Medicare began allowing FQHCs and RHCs to be reimbursed for Hepatitis B vaccines and their administration. This is a change from prior policy, which did not permit payment for these vaccines in these settings.
From January 1 through June 30, 2025, reimbursement for Hepatitis B vaccines will occur via the cost report, the same as the other reimbursable vaccines. Health centers and clinics should accumulate and report these costs accordingly when filing their 2025 cost report. Starting July 1, 2025, Hepatitis B vaccines will transition to claim-based reimbursement, joining influenza, pneumococcal, and COVID-19 vaccines in the new billing structure.
Making on-site vaccinations financially feasible
The long delay in Medicare reimbursement for vaccines has led some health centers and clinics to refer Medicare beneficiaries to local pharmacies for their vaccinations. With this regulatory change, providing vaccines on-site becomes much more viable, both financially and operationally.
Medicare reimbursement will be as follows:
For most FQHCs and RHCs, claim-based reimbursements are comparable with amounts received through the cost settlements, with the key difference of quicker cash payment.
What about the reconciliation process?
Because vaccine reimbursement remains cost-based, FQHCs and RHCs must continue to track and report vaccine costs in their Medicare cost reports. The real-time payments received through claims will be reconciled against the actual reasonable costs reported annually.
If total claim-based reimbursements exceed reasonable costs calculated in the cost report, the excess reimbursement will be required to be repaid to Medicare with the submission of the cost report. For most health centers and clinics, this variance is expected to be minimal. However, larger clinics with high vaccination volume could experience larger variances. Periodically throughout the year, FQHCs and RHCs should compare the vaccine acquisition price to the AWP and if acquisition prices are less than AWP, consider the need to complete an interim cost settlement and establish a reserve for amounts due to Medicare.
A win for FQHCs, RHCs, and patients
Real-time reimbursement reduces administrative burden, improves financial predictability, and enables health centers and clinics to better manage care for Medicare patients. Offering vaccines in-house enhances convenience, increases vaccine uptake, and improves public health outcomes.
Health centers and clinics are better positioned to integrate vaccination into routine care, eliminating the need to refer patients elsewhere and strengthening continuity of care.
How BerryDunn can help
As the healthcare landscape evolves, FQHCs and RHCs must adapt to policy changes while continuing to meet the needs of their communities. BerryDunn’s healthcare consultants work closely with FQHCs and RHCs to:
Whether you need support implementing these changes or optimizing broader business strategies, BerryDunn is here to help. Learn more about BerryDunn’s team and services.
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