CMS and FQHC Grants for Health Nonprofits: Programs and Compliance

The CMS-FQHC funding ecosystem is one of the most distinct in federal grantmaking because it combines a HRSA-administered grant program (Section 330), a CMS-administered reimbursement methodology (FQHC PPS), state Medicaid agency administration of Medicaid FQHC payments, and a layered compliance framework that spans HRSA’s Compliance Manual and CMS reimbursement rules. For a nonprofit health center, the operational reality is that grant compliance and reimbursement compliance are continuously interacting - Section 330 grant funds must cover the gap between cost and reimbursement, sliding fee schedule administration affects both grant compliance and CMS cost reporting, and the Uniform Data System reports both to HRSA for grant compliance and indirectly to CMS through state Medicaid reconciliation.

What HRSA and CMS fund

HRSA Section 330 grants are the foundational federal funding for community health centers.

Section 330 base grant. The largest single recurring grant, supporting comprehensive primary care services for underserved populations. Base grants typically range from $700,000 for small rural single-site grantees to $20 million or more for large urban multi-site organizations. Base grants are awarded for three-year project periods with annual continuation applications.

Section 330 special populations supplements. Section 330(g) Migrant Health Center funding, Section 330(h) Health Care for the Homeless funding, and Section 330(i) Public Housing Primary Care funding are competitive supplements for grantees serving these populations. Each carries population-specific service requirements.

Capital funding. The Capital Development program funds construction, renovation, and major equipment purchases on competitive cycles when appropriated.

Workforce. Provisions of the National Health Service Corps, the Teaching Health Center Graduate Medical Education program, and various behavioral health workforce programs support FQHC clinical staffing.

New Access Point and Service Area Competition. When Section 330 funding becomes available for new service areas or for service area recompetition, HRSA opens specific opportunities. New Access Point opportunities are how new FQHCs typically enter the program; Service Area Competition (SAC) opportunities are how existing service areas are recompeted on three-year cycles.

CMS’s role is reimbursement, not grantmaking, but several CMS programs interact with FQHC operations.

FQHC Prospective Payment System. Under 42 CFR Part 405 Subpart X, CMS sets Medicare FQHC PPS rates based on each center’s reasonable costs. State Medicaid agencies administer Medicaid FQHC PPS, with rates established under state plan amendments approved by CMS.

Demonstration and quality programs. FQHCs participate in CMS demonstration programs including the FQHC Advanced Primary Care Practice Demonstration (concluded), the Comprehensive Primary Care Plus model, the Primary Care First model, and the Medicare Diabetes Prevention Program. The Quality Payment Program affects Medicare FQHC reimbursement through MIPS or Advanced APM participation.

Application requirements

For Section 330 grants:

Prerequisites. Active SAM.gov registration with valid UEI; Grants.gov Workspace account; current indirect cost rate documentation (NICRA or 10% de minimis election); evidence of organizational eligibility under 42 CFR Part 51c.

Application package. New Access Point and SAC applications include the SF-424, project narrative, Service Area Map and demographics, Need narrative, Service Plan, Clinical Staffing Plan, Operating Plan, Financial Capability Plan, Governance documentation (board roster, bylaws, board policies), and program-specific attachments. New Access Point applications are typically the most competitive HRSA opportunity in any given year - preparation typically begins 6-12 months before NOFO release.

Look-Alike designation. Organizations seeking FQHC Look-Alike designation submit through HRSA’s Look-Alike application process, which evaluates compliance with all 19 program requirements without involving competition for grant funds. Look-Alike designation must be renewed every three years.

For CMS FQHC enrollment:

Medicare enrollment. Submit a Medicare enrollment application (CMS-855A for institutional providers) through your Medicare Administrative Contractor. Once enrolled, file an initial cost report; CMS sets your Medicare FQHC PPS rate based on the cost report.

Medicaid enrollment. Enroll with each state Medicaid agency where your service area extends. The state PPS rate-setting process follows the state’s Medicaid plan provisions for FQHC PPS administration.

Compliance specifics

FQHC compliance combines HRSA Health Center Program requirements with CMS reimbursement requirements.

The 19 HRSA Health Center Program requirements. Organized into four chapters of the Compliance Manual: Need, Services, Management and Finance, and Governance. Operational Site Visits (OSVs) conducted by HRSA every three years assess compliance with each requirement. Conditions or progressive actions may be imposed for noncompliance, up to and including grant termination.

Sliding fee discount schedule. Section 330 grantees and Look-Alikes must offer a sliding fee discount based on income for patients at or below 200% of the Federal Poverty Level, with full nominal fee for patients at or below 100% FPL. The schedule must apply to all required services. Administration must include written policies, intake screening, application of the discount at point of service, and ongoing patient communication.

Governance. Boards must have at least 51% patient majority, must include broadly representative community members, and must operate according to bylaws meeting Compliance Manual requirements. Board minutes must demonstrate active oversight of finance, programs, and CEO performance.

Cost reporting. Section 330 grant funds, FQHC PPS reimbursement, sliding fee discount adjustments, and patient-paid revenue interact in the cost reporting process. Medicare FQHC cost reports are filed annually with the Medicare Administrative Contractor. Medicaid cost reports follow state-specific cycles.

Uniform Guidance. Section 330 grant administration is subject to 2 CFR Part 200 (Uniform Guidance) as adopted at 45 CFR Part 75. Procurement, time-and-effort, indirect cost, and audit requirements all apply.

Reporting cadence. SF-425 Federal Financial Reports for Section 330 grants are semi-annual (some special populations supplements are quarterly). The Uniform Data System (UDS) report is annual, due February 15. Annual continuation applications are due according to HRSA’s annual schedule. Operational Site Visit cycles are every three years, with focused visits possible at any time.

Single Audit. A nonprofit FQHC expending $1,000,000 or more in federal awards in a fiscal year (which is essentially every Section 330 grantee) must obtain a Single Audit under 2 CFR 200 Subpart F.

340B Drug Pricing Program. FQHCs are 340B-covered entities, eligible for discounted drug pricing. 340B compliance is administered by HRSA’s Office of Pharmacy Affairs and includes registration, recertification, contract pharmacy oversight, and audit risk that is largely independent of Section 330 grant compliance but operationally interconnected.

Deadlines and NOFO cadence

• Service Area Competition (SAC) - three-year cycle; HRSA recompetes specific service areas when their project periods end.
• New Access Point (NAP) - episodic, when funding becomes available; typically 60-90 day application windows.
• Special Populations supplements (g, h, i) - periodic competitive opportunities for current Section 330 grantees.
• Capital funding - when appropriated, with competitive cycles.
• Look-Alike designation - three-year renewal cycle, with rolling intake for initial applications.
• Annual continuation applications - annual according to HRSA schedule.
• UDS annual report - due February 15 every year.

The HRSA Bureau of Primary Health Care funding opportunities page lists current and upcoming opportunities. Subscribe to the Health Center Program email updates to receive NOFO announcements.

Common mistakes

Recurring failure modes for FQHCs:

1. Sliding fee schedule administration gaps. The discount must be offered, documented, and applied. Documentation gaps surface in Operational Site Visits and may trigger conditions.
2. Board composition lapses. Patient majority below 51% even temporarily is a serious compliance issue.
3. UDS data quality issues. Late or inaccurate UDS submissions affect grant compliance, peer benchmarking, and CMS-related rate-setting accuracy.
4. 340B compliance failures. Diversion, duplicate discounts, and contract pharmacy oversight gaps draw HRSA OPA audit attention.
5. Cost report errors. Misallocation of costs between Section 330 funded services and other services affects PPS rate setting and grant cost reasonableness.

Where to go next

The HRSA Section 330 reporting guide walks through UDS, financial, and compliance reporting in detail. The practical guide to 2 CFR Part 200 covers the cost principles framework that governs Section 330 grant administration. Review federal grant reporting requirements before your first SF-425 cycle. The common single audit findings write-up identifies what auditors look at first in FQHC audits. The free grant compliance checklist walks through the documentation set Section 330 grantees should maintain through closeout.

DEFINITION

Federally Qualified Health Center (FQHC)

A nonprofit or public community health center that receives HRSA Section 330 grant funding and meets the operational and governance requirements in the HRSA Health Center Program Compliance Manual. Eligible for FQHC Prospective Payment System reimbursement from CMS for Medicare and Medicaid services.

DEFINITION

FQHC Look-Alike

An organization that meets all HRSA Health Center Program requirements but does not receive Section 330 grant funding. Eligible for FQHC PPS reimbursement from CMS. Designation is renewed every three years through the HRSA Look-Alike application process.

DEFINITION

Uniform Data System (UDS)

The annual reporting system through which all HRSA Section 330 grantees and FQHC Look-Alikes report patient demographics, services delivered, clinical quality measures, staffing, costs, and revenue. Due February 15 each year. The largest source of national community health center performance data.

DEFINITION

FQHC Prospective Payment System (PPS)

The CMS-administered reimbursement methodology under Section 1834(o) of the Social Security Act and 42 CFR Part 405 Subpart X. Sets all-inclusive per-visit rates for Medicare and Medicaid services delivered at FQHCs and FQHC Look-Alikes, based on reasonable costs.