Frontier Community Health Integration Project Demonstration - Frequently Asked Questions

Frontier Community Health Integration Project Demonstration - Frequently Asked Questions


1) Is FCHIP a Congressionally mandated Demonstration?

Yes, the Frontier Community Health Integration Project (FCHIP) Demonstration is congressionally mandated. FCHIP is authorized by section 123 of the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008, which authorizes a Demonstration project focused on community health integration models in certain rural communities. The Demonstration was re-authorized and amended by section 3126 of the Affordable Care Act. The legislation authorizes the project to last for three years.


2) What are the requirements for the eligible organizations to participate in the Demonstration?

According to section 123 of MIPPA, Critical Access Hospitals (CAHs) that receive funding through the Rural Hospital Flexibility Program and are located in a State in which at least sixty-five percent of its counties have a population density of six or fewer people per square mile are eligible to participate in FCHIP.  


3) What is the purpose of the FCHIP Demonstration?

CAHs often serve as the hubs for health care in the most sparsely populated areas, where essential services may not be financially viable given low patient volumes. The FCHIP Demonstration aims to support the CAH and local delivery system in keeping within the community patients who might otherwise be transferred to distant providers. The specific objective is to test whether enhanced payments for certain services will enhance access to care for patients, increase the integration and coordination of care among providers, and reduce avoidable hospitalizations, admissions and transfers, therefore improving the quality of care for Medicare beneficiaries and lowering costs. As required by the authorizing legislation, the demonstration is projected to be budget neutral.


4) What Federal agencies are sponsoring the FCHIP Demonstration?

The FCHIP Demonstration is a result of a partnership between CMS and the Federal Office of Rural Health Policy (FORHP), located in the Health Resources and Services Administration (HRSA). CMS and FORHP have collaborated on the development of the delivery models and on outreach to providers and other stakeholders.  CMS is responsible for administering the Medicare payment modifications under the Demonstration, and the two agencies will continue to coordinate on monitoring, technical assistance, and evaluation activities. 


5) What are the changes to Medicare payment rules for the FCHIP Demonstration?

The Demonstration will implement the following three interventions, each of which involves specific changes to Medicare payment rules:

Ambulance Services Payment Change:
Currently, Medicare requires that in order for a CAH or a CAH-owned and operated entity to be paid 101 percent of its reasonable costs of furnishing ambulance services, there can be no other provider or supplier of ambulance services located within a thirty-five mile drive of the CAH. The FCHIP Demonstration allows the selected CAHs to be paid 101 percent of reasonable costs of furnishing ambulance services irrespective of other providers or suppliers of ambulance services located within a thirty-five mile drive of the CAH. All other rules affecting the provision of ambulance services still apply.

Skilled Nursing Facility (SNF)/Nursing Facility (NF) Bed Payment Change:
CAHs are currently required to maintain no more than twenty-five inpatient beds, which can be used to provide acute or swing bed services. The FCHIP Demonstration will allow selected CAHs to maintain up to thirty-five inpatient beds. The ten additional inpatient beds can only be used to provide SNF or NF level of care. Medicare services for SNF or NF level of care shall be paid according to the standard Medicare payment rules for CAHs.

Telehealth Services:
Under current Medicare payment policy, a CAH serving as the originating site for a telehealth encounter is paid a fixed facility fee. The distant site practitioner is paid a separate fee under the physician fee schedule. The FCHIP Demonstration will pay participating CAH originating sites at 101 percent of cost for overhead, salaries, fringe benefits, and the depreciation value of the telehealth equipment instead of the physician fee schedule fixed fee. Medicare payment to distant site practitioners for telehealth services will not change under the Demonstration.


6) What are the start and end dates for the Demonstration?

The Medicare payment changes for the selected CAHs went into effect August 1, 2016.  This is the start date for the Demonstration, which will last three years. The Demonstration is scheduled to end July 31, 2019.  


7) What was the application process?

On January 31, 2014, CMS released a Request for Applications (RFA) for the FCHIP Demonstration.  Applications were due May 5, 2014. Applications could only be submitted by individual CAHs - joint applications by more than one CAH were not allowed. Based on the legislative criteria, only CAHs located in Alaska, Montana, Nevada, North Dakota, and Wyoming were eligible to apply to participate in this demonstration, and CMS selected participants in three of these States based on the feasibility of applicants' delivery system proposals and potential impact on Medicare expenditures.


8) How were sites selected for the Demonstration?

In January 2014, CMS released an RFA for the FCHIP Demonstration. The RFA solicited CAHs in these five eligible States to participate in the Demonstration, identifying four interventions, each with an associated waiver to Medicare payment rules. The waivers applied to the following service categories: 1) Skilled Nursing Facility (SNF) / Nursing Facility (NF) beds within the CAH, 2) telehealth, 3) ambulance, and 4) Home Health.

To apply, CAHs were required to meet the eligibility requirements in the authorizing legislation, and, in addition, to describe a proposal to enhance health-related services that would complement those currently provided by the CAH and better serve the community's needs. Applications were received from CAHs in Montana, Nevada, and North Dakota (although eligible, no CAHs in Alaska and Wyoming applied). Ten CAHs were selected based on feasibility of delivery system proposals and potential impact on Medicare expenditures. Three of the four interventions are represented: SNF/NF beds, telehealth, and ambulance services. Of the applicants selected, none proposed the home health intervention.


9) What States and what interventions will be represented?

The ten selected CAHs represent three of the five States from which applications were allowed: three were selected from Montana, three from North Dakota, and four from Nevada. Six of the CAHs were selected for the telehealth intervention, three for SNF/NF care, and two for ambulance services.

The following CAHs and interventions have been selected for the Demonstration:

Selected Site
Dahl Memorial Healthcare Association
McCone County Health Center
SNF/NF Beds, Telehealth
Roosevelt Medical Center
SNF/NF Beds, Ambulance, Telehealth
Battle Mountain General Hospital
Grover C. Dils Medical Center
Mt. Grant General Hospital
Pershing General Hospital
North Dakota
Jacobson Memorial Hospital Care Center
North Dakota
McKenzie County Healthcare Systems
North Dakota
Southwest Healthcare Services



10) What is the requirement for budget neutrality for the FCHIP Demonstration?

In accordance with the statutory language in section 123 of MIPPA, in conducting the Demonstration program, the Secretary must ensure that the aggregate payments made do not exceed the amount which would have been paid had the Demonstration not been implemented. CMS has interpreted this to mean that the impact of the Demonstration be assessed in terms of the sum of the total CAH costs and expenditures for all participating CAHs and the interventions.


11) How will CMS assess budget neutrality for the FCHIP Demonstration?

CMS will measure the net cost of the FCHIP Demonstration on a quarterly basis, comparing Medicare expenditures as determined by claims against baseline spending projections included in the budget neutrality projections submitted by the participating CAHs during the pre-implementation period.


12) What is the role of Medicaid in the Demonstration?

The FCHIP Demonstration does not authorize any change in payment methodology for Medicaid services.  Medicaid services provided by the participating CAHs will be subject to the State Medicaid agency's payment provisions. CAHs participating in the SNF/NF beds intervention were required to submit a letter of support by the State Medicaid agency.


13) How will the Demonstration be evaluated?

The authorizing legislation requires HRSA to submit two reports to Congress; 1) an interim report due within two years of the start of the Demonstration, and 2) a final report due within one year of the end.  HRSA's effort will be supported by an independent evaluation sponsored by CMS, which will examine the effects of the Demonstration on access to care and other community outcomes, coordination and integration of services, and quality and cost of health care.


14) What is the role of the Montana Health Research and Education Foundation (MHREF) in the FCHIP Demonstration?

The Montana Health Resources and Education Foundation (MHREF) will offer technical assistance to participating CAHs to help in achieving the goals of the Demonstration, including budget neutrality and creating linkages with tertiary providers. MHREF's role is sponsored under a cooperative agreement with HRSA.


15) Will the FCHIP Demonstration pay for new construction?

No, the FCHIP Demonstration will not pay for any new construction.  Specifically, under the SNF/NF beds prong, Medicare payment will apply to services for patients occupying the additional beds in the CAH; however, no funds are available under the Demonstration for new construction. However, Medicare will pay for capital costs (interest, depreciation, etc.) associated with the additional beds using extant Medicare cost report rules.


16) Will the FCHIP Demonstration pay for the acquisition of new telehealth equipment or ambulances?

No funding is available under the Demonstration for the purchase of telehealth equipment or ambulances. However, if the participating CAHs purchase such equipment or vehicles, Medicare payment rules will apply. Payment will include the recovery of capital costs (depreciation, interest, etc.) as well as operating costs (associated staff, overhead, etc.).


17) What beneficiary protections and monitoring of quality of care will there be?

CMS will monitor quality of care through data submitted by the CAHs on core and intervention specific measures. These measures were selected from the Hospital Compare or the Medicare Beneficiary Quality Improvement Program. The monitoring is used to collect information on the intervention plans of the hospitals, implementation timeline, hospital data reporting capacity by intervention, and any potential implementation delays anticipated by the participants. This information will be summarized, shared, and incorporated into CMS' monitoring of the Demonstration outcomes. The measures will be tied to the general programmatic goals and will reflect overall health care delivery and access to care improvement, actual and potential cost savings, and budget neutrality.


18) Are applications still being accepted for the Demonstration?

No. CMS released a Request for Applications (RFA) for the Demonstration in January 2014. Applications were due May 5, 2014. Demonstration participants have been selected and no additional applications are being considered at this time.

Page Last Modified:
09/06/2023 05:05 PM