Fee-for-Service Reimbursement Models for Community Health Workers
The integration of Community Health Workers (CHWs) into the formal healthcare delivery system represents one of the biggest structural shifts in modern Medicaid policy.
Executive Summary
Reliant on a patchwork of time-limited grants, CHW programs have suffered from a chronic "boom and bust" cycle. The shift toward Medicaid Fee-for-Service (FFS) reimbursement marks a new phase of professionalization. [cite_start]However, states must define who can provide the service, what the service consists of, how it is coded, and how much it is paid[cite: 13, 14, 19].
Download Full Report (PDF)The Mechanics of Reimbursement
Transitioning CHW services from grant funding to FFS reimbursement requires the construction of a complex administrative infrastructure. [cite_start]It is not enough to simply declare that "CHW services are covered." [cite: 17, 18]
The Language of Billing Codes
[cite_start]The selection of billing codes determines the scope of practice and documentation requirements[cite: 24, 25].
CPT 9896x Series
Used in KY & LA
-
[cite_start]
- 98960 Individual patient education (each 30 min) [cite: 29] [cite_start]
- 98961 Group education (2-4 patients) [cite: 31] [cite_start]
- 98962 Group education (5-8 patients) [cite: 32]
Medicare G-Codes
Emerging Standard (2024/2025)
-
[cite_start]
- G0019 CHI Services (first 60 min) [cite: 42] [cite_start]
- G0022 CHI Add-on (each 30 min) [cite: 42]
The "Incident To" Architecture
A defining feature of the FFS models in Kentucky and Louisiana is the reliance on "incident to" billing. [cite_start]This dictates that CHW services are reimbursed as incidental to the professional services of a physician[cite: 48, 49].
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The Billing Provider:
[cite_start]
The entity with the contract (e.g., Hospital, FQHC)[cite: 51].
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The Supervising Provider:
[cite_start]
Licensed clinician (MD, DO, APRN) who orders service and assumes liability[cite: 52].
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The Rendering Provider:
[cite_start]
The CHW[cite: 53].
Friction with this approach
This architecture disadvantages Community-Based Organizations (CBOs). [cite_start]A local food bank cannot bill Medicaid because they do not employ a supervising physician[cite: 56]. [cite_start]It also risks "medicalizing" the workforce—shifting focus from outreach to clinical compliance[cite: 59].
Kentucky: The "Gold Standard"
[cite_start]Kentucky’s confidence in FFS reimbursement is empirical, built on the legacy of Kentucky Homeplace, a CHW initiative established in 1994[cite: 73, 76].
Kentucky Fee Schedule (2024/2025) [cite: 101, 103]
| Code | Description | Rate (30 min) | Notes |
|---|---|---|---|
| 98960 | Individual patient education | $22.53 | Primary code for visits |
| 98961 | Group education (2-4 pts) | $10.88 / pt | Incentivizes small groups |
| 98962 | Group education (5-8 pts) | $8.03 / pt | Diabetes prevention classes |
At $22.53 per 30 mins, hourly revenue is ~$45.06. [cite_start]This margin is thin, requiring high productivity[cite: 106, 108].
The Strategic Role of Local Health Departments
A defining structural innovation in Kentucky is the inclusion of Local Health Departments (LHDs) as eligible billing providers. [cite_start]This ensures CHW services are available even in "medical deserts" where no private clinic exists, effectively creating a public option for CHW access[cite: 117, 120].
Louisiana: The Challenge of Uptake
[cite_start]Louisiana’s experience offers a cautionary tale regarding the complexities of integrating FFS codes into the prospective payment environments of FQHCs[cite: 126].
The FQHC Dilemma
FQHCs are paid a flat "Prospective Payment" (e.g., $150/visit). [cite_start]If CHW services are "incidental," they are bundled into that $150, making the CHW a pure cost center[cite: 129, 132, 134].
The "Add-On" Solution
Louisiana allowed FQHCs to bill CHW codes outside the PPS rate. [cite_start]FQHCs receive their full rate + the CHW fee (~$36), transforming CHWs into revenue generators[cite: 137, 139, 141].
The "Uptake Gap" (2022-2023) [cite: 151, 153]
[cite_start]Providers are "medicalizing" the CHW role—using them for one-off screenings rather than longitudinal coaching[cite: 160, 161].
Structural Innovation: The Community Care Hub
FFS models often exclude small, trusted CBOs that lack billing infrastructure. [cite_start]The Community Care Hub (CCH) model acts as an administrative exoskeleton, aggregating small CBOs into a single contracting entity[cite: 166, 170].
How the Hub Works
Hub holds master contracts with Medicaid/MCOs[cite: 173].
Hub subcontracts with CBOs ("Care Coordination Agencies")[cite: 176].
Hub bills Medicaid, keeps admin fee, pays CBO[cite: 178].
North Carolina
[cite_start]Uses "Network Leads" to manage CBOs under the Healthy Opportunities Pilots (HOP), running on the NCCARE360 platform[cite: 182, 183, 189].
Texas
[cite_start]Harris County Pathways Hub uses the PCHI model to verify "Pathways" are completed before payment, creating revenue for local CBOs[cite: 191, 193].
The MCO Dilemma
Pros: Integration
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[cite_start]
- Flexibility: Can offer "value-added" services without SPA approval[cite: 209, 213]. [cite_start]
- Data Access: Real-time claims data allows rapid deployment to super-utilizers[cite: 218]. [cite_start]
- QI Incentives: Classifying CHW salaries as "Quality Improvement" helps meet Medical Loss Ratio targets[cite: 221, 223].
Cons: Privatization
-
[cite_start]
- Admin Nightmare: CBOs must credential with multiple MCOs[cite: 227]. [cite_start]
- Cream Skimming: MCOs may only target top 1% cost members[cite: 236]. [cite_start]
- Disrupted Care: "Churn" between plans severs CHW-patient relationships[cite: 244].
| State | [cite_start]Approach [cite: 247] | [cite_start]Outcome [cite: 247] |
|---|---|---|
| Texas | MCO-Led | High flexibility but highly variable access. |
| Kentucky | State-Led Floor | Stability; MCOs cannot pay less than FFS rate. |
| Louisiana | Hybrid | Operational delays; "uptake gap" persists. |
Barriers & Solutions
The CBO Exclusion
[cite_start]In "Incident To" models, clinics often retain 15-40% of the reimbursement as overhead when subcontracting with CBOs[cite: 259].
Rate Sufficiency & Medicare Threat
Medicare's new G-codes pay ~$49 vs Medicaid's ~$22-$36. [cite_start]This risks workforce bifurcation where health systems prioritize Medicare patients[cite: 267].
Conclusions & Recommendations
FFS reimbursement is necessary but not sufficient. [cite_start]It provides the fuel, but the engine—the supervision structures and community trust—must be built with care[cite: 289].
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Mandate the FQHC Add-On [cite_start]Without billing outside the PPS rate, safety nets have no incentive to adopt[cite: 281].
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Define Codes Broadly [cite_start]Interpret "patient education" to include resource navigation to avoid the "screening trap"[cite: 283].
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Authorize LHDs and CBOs [cite_start]Allow direct billing to reduce the "overhead tax" of subcontracting[cite: 285].
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Align with Medicare [cite_start]Compete with the $49+ Medicare G-codes to maintain workforce stability[cite: 288].
Works Cited
Rural Project Summary: Kentucky Homeplace - Rural Health Information Hub, accessed December 12, 2025
State Community Health Worker Policies: Kentucky - NASHP, accessed December 12, 2025
Kentucky State Plan Amendment (SPA) #: KY-24-0002 - Medicaid, accessed December 12, 2025
Louisiana Department of Health Informational Bulletin 22-21 Revised July 7, 2022
Uptake of Medicaid Billing for Community Health Worker Services in Louisiana, 2022-2023