health centers are expected to assist approximately 35 million patients by
2020.73 Accordingly, there is substantial growth and opportunity in this
Common characteristics of Section 330-supported community health
centers are that they ( 1) serve a designated medically-underserved area or
population, ( 2) are governed by patient-directors representing the majority on
the board of directors, ( 3) offer comprehensive primary care, preventive care,
and enabling services, and ( 4) serve all residents of their service area
regardless of ability to pay or insurance status. 74 Community health centers
are primarily private non-profit organizations, with some community health
centers operating as public entities, where a government entity collaborates
with an independent community health center board to run a clinic. 75
Organizations may obtain FQHC status in one of three ways: be awarded
a Section 330 grant to become a “grantee,” enter a sub-recipient arrangement
with an existing grantee, or apply for FQHC Look-Alike status. 76 FQHC
status brings multiple benefits including possible grant funding, safe harbor
protection under the Anti-Kickback Statute (for grantees and subrecipients),
eligibility for Federal Tort Claims Act coverage for medical malpractice
claims (for grantees and subrecipients), cost-related payment for the
provision of services to Medicaid and Medicare beneficiaries, and eligibility
– as has been established in the above sections of this paper – to participate
in the 340B Program. 77
Regardless of the approach to obtain FQHC status, all FQHCs must
comply with the legal requirements set forth under Section 330, its
implementing regulations, and agency policy from the HRSA. 78 Among
these requirements are mandates that are frequently implicated in 340B
contract pharmacy arrangements, such as the requirement that community
health centers must offer a sliding fee scale discount to eligible patients but
ECON. REV. 1067, 1069–70 (Mar. 2015).
73. NAT’ L.ASS’N OFCMTY.HEALTHCTRS.,FREQUENTLYASKEDQUESTIONS–THE
HEALTH CEN TER FUNDING CLIFF AND NACHC’S PROPOSED SOLUTION, http://www.nachc.com/
client/Frequently%20Asked%20Questions%20HC%20Cliff.pdf (last visited Nov. 9, 2015).
74. Jacqueline C. Leifer, Community Health Centers, FELDESMAN TUCKER LEIFER
FIDELL, https://www.feldesmantucker.com/programs/community-health-centers/ (last visited
Nov. 4, 2015).
75. What is a Health Center?, HEALTH RES. & SERV. ADMIN., http://bphc.hrsa.gov/about/
what-is-a-health-center/ index.html (last visited Nov. 9, 2015).
76. CTRS. FOR MEDICARE AND MEDICAID SERVS., U.S. DEP’T OF HEALTH & HUMAN SERV.,
FEDERALLY QUALIFIED HEALTH CENTER (Jan. 2013), https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/fqhcfactsheet.pdf.
77. NA T’L ASS’N OF CM T Y. HEAL TH CTRS., AFFILIA TIONS BE T WEEN HEALTH CEN TERS AND
OTHER COMMUNITY-BASED PROVIDERS 5–6 (Aug. 2004), http://bphc.hrsa.gov/archive/