Community health centers provide primary and preventive care to millions of Californians, especially those with low incomes.

Community health centers is a broad term referring to community-based health care organizations that deliver comprehensive and culturally competent primary and preventive care services to California’s medically underserved populations without regard to a patient’s ability to pay for care.

Federally Qualified Health Centers (FQHCs) are a specific type of community health center and are paid for the care they provide to Medi-Cal enrollees through prospective payment system reimbursement, a complicated structure governed by state and federal law.

This issue brief examines existing community health center and FQHC payment methods in Medi-Cal, including the prospective payment system. It also includes a high-level overview of alternative payment models — financial incentives for the provision of high-quality and/or cost-efficient care — as one strategy to help modernize the payment system for FQHCs. An appendix outlines an emerging Medi-Cal initiative known as FQHC APM 2.0.

This paper is a companion to a second CHCF publication, Medi-Cal Explained: What Are Alternative Payment Models?