Starting a Federally Qualified Health Center

What Are Federally Qualified Health Centers?

Federally Qualified Health Centers (FQHCs)—often referred to as community health centers (CHCs)—are nonprofit, community-directed health care providers serving low income and medically underserved communities. Created by Congress, the national network of community health centers provides high-quality, affordable primary and preventive care for those whom other providers do not serve, regardless of an individual’s ability to pay.

In order to achieve the “federally qualified” status, CHCs must adhere to the following 
key health center requirements:

Be located in or serve a high need community (designated Medically Underserved Area or Population).

Find MUAs and MUPs

Be governed by a community board composed of a majority (51 percent or more) of health center patients who represent the population served.

More about health center governance

  • Provide comprehensive primary health care services, as well as supportive services (education, translation and transportation, etc.) that promote access to health care.
  • Provide services available to all with fees adjusted based on ability to pay.

  • Meet other performance and accountability requirements regarding administrative, clinical and financial operations.

What Are the Benefits of Becoming a FQHC?

Federal grants to offset the costs of uncompensated care and other key enabling services (health center program grantees receive these grant funds).

Access to free medical malpractice coverage under Federal Tort Claims Act (FTCA).

More about the Federal Tort Claims Act

Prospective Payment System reimbursement for services to Medicaid patients.

Cost-based reimbursement for services to Medicare patients.

Drug pricing discounts for pharmaceutical products under the 340B Program.

More about the 340B Drug Pricing Program

Federal loan guarantees for capital improvements.

Reimbursement by Medicare for “first dollar” of services because deductible is waived if FQHC is providing services.

Access to Vaccines for Children Program for uninsured children.

Access to National Health Service Corps (NHSC) medical, dental and mental health providers.

More about the National Health Service Corps

National network of similar organizations committed to improving the mission.

What Are the Benefits to the Community?

A medical home for underserved people, improved public health, reduced burden on hospital emergency rooms, and the provision of needed services, such as free immunizations for uninsured children.

A voice (through the consumer majority board of directors) in the operation of the community health center.

Broader health insurance coverage through assistance by health center staff in enrolling uninsured patients in Medicaid, CHIP and other public assistance programs.

Less costly care for Medicare patients, whose Medicare deductible costs are waived for FQHC-provided services.

Who is IPHCA?

Established in 1982, IPHCA is a nonprofit trade association of community health centers (CHCs) that operate more than 350 primary care sites statewide and in neighboring Iowa. These CHCs serve in excess of 1.2 million patients annually. IPHCA strives to improve the health status of medically underserved populations by fostering the provision of high-quality, comprehensive health care that is accessible, coordinate, community-directed, culturally-sensitive, and linguistically-competent.

IPHCA’s Organizational membership is comprised of 36 FQHCs, five FQHC “Look-Alikes,” and two non-FQHC health centers of long standing. Together, these organizations provide health care to over one million patients annually at more than 350 locations in underserved areas throughout Illinois.


How Do I Apply to Become a FQHC?

Public and private non-profit health care organizations may apply for FQHC grant funding where open funding opportunities are listed. In addition, an organization may apply for Look-Alike status (see below) at any time. . The application package includes detailed instructions, required forms and complete information on program requirements. Interested parties are encouraged to visit

New FQHC grant opportunities are announced on the HRSA newsroom site ( and may be found on (

What is a FQHC Look-Alike?

Public and private non-profit health care organizations may apply to become a FQHC Look-Alike (designation without FQHC funding) at any time. The review process takes about four months. FQHC Look-Alikes must meet the same program requirements as FQHCs that receive Federal funding and are eligible for many of the same benefits. 

However, Look-Alikes are not eligible for Federal Tort Claims Act (FTCA) medical malpractice coverage or federal loan guarantees for capital improvements. Look-Alikes do they receive federal grant funds, however, they are eligible to apply and are well-positioned to be successful.


The table below compares the federal support available to FQHCs and Look-Alikes.


Comparison of Federal Support for Section 330 Health Centers and FQHC Look-Alike Health Centers


Section 330 Health Centers

FQHC Look-Alikes

Competitive application process



Receive direct funding from Federal government



Located in medically underserved area



Provide services based on ability to pay



At least 51 percent of governing board members represent active users of the health center

Yes [unless the requirement is waived]


Provide a detailed scope of primary health care and enabling services



Enhanced Medicaid/Medicare reimbursement



Access to National Health Services Corp/J-1 Visa Waiver programs



FTCA coverage



340B drug pricing program



Federal loan guarantee program



Comply with BPHC Uniform Data System (UDS) and Performance Review Protocols




How Do I Apply to Become a FQHC Look-Alike?

HRSA provides a Look-Alike website with multiple resources:  Look-Alike Website

The most recent version of the Look-Alike designation application and instructions are also available from this page: Technical Assistance

What is the Uniform Data System (UDS)?

The Uniform Data System (UDS) is a core set of information reported to the BPHC annually for reviewing the operation and performance of health centers. The UDS tracks a variety of information, including patient demographics, services provided, staffing, clinical indicators, utilization rates, costs, and revenues. UDS data are collected, aggregated and reported at the grantee, state, and national levels.

Additional Information & Resources

The National Association of Community Health Centers (NACHC) serves as the national association for FQHCs, much like IPHCA does in Illinois. NACHC provides a broad range of services, including advocacy and training.  NACHC created A Practical Guide for Starting a Federally Qualified Health Center in January 2005 to assist those interested in starting a federally qualified health center. In addition, NACHC has developed a webpage – Health Center Growth/Development – which includes a broad range of information on FQHC grant requirements, governance, data, clinical services and more that goes beyond the information provided by HRSA.

HRSA has published a data resource guide that helps identify disparity data sources for your application. It references high poverty counties in the title, but the content states that this will be the reference for all future New Access Point (NAP) efforts.

IPHCA has compiled a list of grant writing resources that are helpful to grant seekers, whether apply for FQHC designation or other funding.  

Source:  Takach, M. (2008). Federal community health centers and state health policy: A primer for policy makers. National Academy for State Health Policy. Retrieved April 20, 2010, from


IPHCA Springfield Office
500 S. Ninth St., Springfield, IL 62701
(217) 541-7300

IPHCA Chicago Office

542 S. Dearborn St., Suite 300, Chicago, IL  60605
(312) 692-3000