California Abortion Access and the Role of the FQHC

Post-Dobbs, reproductive healthcare providers across California have been trapped in a regulatory thicket of state and federal rules posing new questions about how to compliantly ensure timely access to abortion services. With abortion access limited or banned in nearly half the states, these new questions make it difficult for some providers to feel confident about providing care to the thousands of out-of-state patients who continue to pour into California seeking abortion services. Some providers, such as federally qualified healthcare centers (“FQHCs”), have additional compliance issues to navigate given their reliance on federal grants and the long-standing ban on using federal dollars to fund abortion services (known as the Hyde Amendment).  

While Gov. Newsom has signed legislation to help protect patients and in-state providers from abortion-related civil liabilities, uncertainty remains for FQHCs and others on how their federal funding impacts their ability to provide these badly needed and time-sensitive services.   

The good news: there is no federal or state law that prohibits an FQHC from offering and providing abortion services. However, navigating the appropriate course to ensure continued federal funding for comprehensive reproductive healthcare services can be tricky. Here’s what California’s FQHCs need to know. 

Establishing an Other Line of Business

Simply put, FQHCs can provide abortions.

An FQHC that elects to provide abortion services would be doing so outside of its approved scope of work. The federal Health Resources and Services Administration (“HRSA”), which regulates FQHCs and is the entity that approves an FQHC’s scope of work, would therefore consider abortion services an “other line of business” (OLB) – a term used to describe any service provided by an FQHC that falls outside of its approved scope of work. HRSA provides guidance in the FQHC Compliance Manual about how to provide and document costs/revenues associated with any OLB service, and this guidance would apply to abortion services as equally as it applies to any other service provided by an FQHC that falls outside of its approved scope of work. To be clear: as long as no federal dollars are used, directly or indirectly, to support an abortion service line, there is nothing prohibiting an FQHC from providing abortion services as an OLB.

This would seem to conflict with the Hyde Amendment, a legislatively enacted federal funding restriction originally enacted in 1977 that bars the use of federal funds, like those spent on state Medicaid programs, for abortions except in the rare cases where, for example, the pregnancy endangers a patient’s life or arises from incest or rape. In these rare cases, the Hyde Amendment does not bar an FQHC or any other provider from using federal funds to provide abortion services. However, outside of those rare instances, a deep dive into the FQHC Compliance Manual and related policy guidance suggests that offering abortion services as an OLB is the work-around.

Establishing, providing, accounting for, and appropriately billing abortion services as an “other line of business” is critical in ensuring continuation of federal funding and patient access to care.

Overcoming Primary Challenges

Offering abortion services means FQHCs need to set up the service line as a true OLB, with total financial and operational separation from federal funds. These operations will not be able to participate in the national prospective payment system (PPS) rate and will not receive protections under the Federal Tort Claims Act (FTCA). 

To navigate these concerns, FQHCs need to be strategic and thoughtful in their approach. 

• Financial and operational separation 

OLBs must have all costs, revenues, and operations segregated from the Section 330-supported program. Revenues and expenses involved in providing abortion services must be tracked in separate accounts in a general ledger, and the FQHC must be able to show federal funds (including Title X and Section 330 funds) are not paying for these expenses. Additionally, there must be sufficient revenue from the OLB or other out of scope activities to support all direct and indirect costs of the abortion service line – including a proportionate share of overhead to ensure federal funds are not inappropriately used to support costs. 

Separate entities can be established for this purpose but are not required (and may not always be advisable). Similarly, common staff is not prohibited, but the FQHC must be able to demonstrate when staff time is used on federally funded programs and when staff time is used on abortion care. Supplies should also be separated, either physically or through accounting practices (proration and allocation). 

Costs of shared facilities must be properly prorated and allocated, and there should be careful analysis of where federal grants might be used to purchase or improve facilities and/or equipment. For example, real property can become a federally “tainted” resource. The federal government likely retains reversionary interest in all real property acquired or improved with federal funds. If property is no longer needed for the original purpose, the FQHC must obtain written approval from the federal grantor (e.g., the U.S. Department of Health and Human Services) to use the federally sponsored projects or asset in a manner other than the original intent of the grant.

To determine if federal interest restricts a FQHC’s ability to provide services outside of a Section 330-supported program, consider reviewing:

• Language of the funding opportunity announcement;
• General and specific terms of notice of the grant award; and/or
• Recording requirements and restrictions in the recorded notice.
• PPS rates

FQHCs are not permitted to draw down their PPS for OLB services. Until recently, there was no clear pathway in California for FQHCs to bill Medi-Cal for abortion services without drawing down the PPS rate. However, the California Department of Health Care Services recognized the need to create such a pathway, and it recently published guidance indicating that effective for services rendered on or after Oct. 1, 2022, FQHCs can bill on a fee-for-service (FFS) basis for all abortion services. This may look like:

• $536.48 bundled rate for medication abortion services. Includes all services and follow-up visits except the cost of medication.      
• $250.85 abortions in the first 12-14 weeks of gestation (aspiration and D&C). 
• $354.43 for abortions after 12-14 weeks of gestation (D&E).
• FTCA coverage

FTCA coverage does not extend to OLB services. As such, health centers will need to purchase supplemental malpractice insurance for abortion services. 

The path for FQHCs to provide abortion services does exist, but it’s a bumpy one. Beyond the primary hurdles outlined, there are additional, practical considerations to keep in mind, such as unique patient and staff confidentiality/privacy concerns, restrictive private agreements, ongoing political adversity, and an influx of out-of-state patients. Now more than ever, access to safe, quality reproductive healthcare is something that California, and many other states, is looking to protect. 

As the back-and-forth on reproductive rights continues, it is necessary for FQHCs to understand their legal parameters to be able to move forward in delivering critically needed reproductive services. With so much at risk, consulting a legal resource who is experienced in healthcare and reproductive matters is always the best way to forge ahead.