DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland  21244-1850 
 
CMCS Informational Bulletin  
 
 
DATE:     January 15, 2021  
 
FROM:     Anne Marie Costello, Acting Deputy Administrator and Director,  
Center for Medicaid and CHIP Services 
 
SUBJECT:   Extension of Grace Period Related to the Four Walls Requirement 
under 42 C.F.R.  440.90 for Indian Health Service and Tribal 
Facilities  
 
The Center for Medicaid and CHIP Services (CMCS) is issuing this Informational Bulletin (CIB) 
to announce that the Centers for Medicare & Medicaid Services (CMS) will extend a grace 
period previously granted to Indian Health Service (IHS) facilities, including those facilities 
operated by Tribes and Tribal organizations under the Indian Self-Determination and Education 
Assistance Act (ISDEAA), Pub. L. No. 93-638.1 This grace period permitted IHS and Tribal 
facilities to continue to claim Medicaid reimbursement under the clinic services benefit at 42 
C.F.R.  440.90 (including at the IHS All Inclusive Rate (AIR)) for services provided outside of 
the four walls of the facility through January 30, 2021. Due to the urgent need to ensure 
continued access to services provided by IHS and Tribal facilities during the COVID-19 
pandemic, and the need for states, IHS, and Tribes to focus limited resources on addressing the 
COVID-19 public health emergency (PHE), CMS is exercising discretion to temporarily extend 
its policy to suspend enforcement of the four walls requirement under 42 C.F.R.  440.90 for 
IHS and Tribal facilities  i.e., to extend the grace period previously granted to IHS and Tribal 
facilities  to October 31, 2021.2 This CIB explains the steps Tribal facilities and states will need 
to take before the extended grace period expires in order for Tribal facilities to continue to 
receive Medicaid reimbursement for services provided outside the four walls of the facility after 
October 31, 2021.  
 
Background  
 
                                                           
1 In this document, we refer to facilities operated by Tribes and Tribal organizations under the ISDEAA as Tribal 
facilities. 
2 We believe that this guidance is a statement of agency policy not subject to the notice and comment requirements 
of the Administrative Procedure Act (APA). 5 U.S.C.  553(b)(A). Due to the urgent need to ensure continued 
access to services provided by IHS and Tribal facilities during the COVID-19 pandemic and the need for states, 
IHS, and Tribes to focus limited resources on addressing the COVID-19 PHE, CMS additionally finds that, even if 
this guidance were subject to the public participation provisions of the APA, prior notice and comment for this 
guidance is impracticable, and there is good cause to issue this guidance without prior public comment and without a 
delayed effective date. 5 U.S.C.  553(b)(B) & (d)(3).  CMCS Informational Bulletin  Page 2 
 
In February 2016, CMS issued a State Health Official (SHO) letter (#16-002) related to Federal 
funding for Medicaid services received through facilities of IHS, whether operated by IHS or 
by Tribes.3 On January 18, 2017, CMS issued Frequently Asked Questions (FAQs),4 to address 
various payment and billing questions triggered by SHO letter #16-002. Medicaid clinic services 
providers generally are not permitted to claim Medicaid reimbursement under 42 C.F.R.  
440.90 for services provided outside of the four walls of the facility.5 The 2017 FAQs explained 
that IHS and Tribal facilities enrolled in Medicaid as clinic services providers are not permitted 
to claim Medicaid reimbursement under 42 C.F.R.  440.90, including reimbursement at the IHS 
AIR,6 for services provided outside of the four walls of the facility. Such claims are not 
permitted under the regulations at 42 C.F.R.  440.90(a), which require that clinic services be 
provided at the clinic  that is, within the four walls of the clinic facility  with an exception at 
42 C.F.R.  440.90(b) for services furnished outside the clinic to people who are homeless. 
Services provided through outpatient departments of a hospital are generally billed as outpatient 
services under 42 C.F.R.  440.20(a), not as clinic services under 42 C.F.R.  440.90, and 
therefore are not affected by the four walls limitation. Such services may be reimbursed at the 
IHS AIR. 
 
The definition of clinic services at 42 C.F.R.  440.90 does not apply to Medicaid Federally 
qualified health center (FQHC) services provided by FQHCs, and therefore FQHCs can claim 
Medicaid reimbursement for FQHC services provided outside of the four walls of the FQHC. 
State Medicaid reimbursement to FQHCs for Medicaid-covered FQHC services must be 
consistent with the requirements specified in section 1902(bb) of the Social Security Act (Act). 
States have two Medicaid reimbursement options for FQHC services. States can opt to reimburse 
FQHC services at the prospective payment system (PPS) rate established under section 
1902(bb)(3) of the Act. The 2017 FAQs explained that Tribal facilities could enroll in Medicaid 
as FQHCs and receive the PPS rate paid to FQHCs in the state. Alternatively, states can adopt an 
alternative payment methodology (APM) under section 1902(bb)(6) of the Act, in lieu of the PPS 
rate. If consistent with section 1902(bb)(6) of the Act, states can adopt the IHS AIR as an APM 
rate for any Tribal facilities that are FQHCs. Below, we refer to this option to convert from a 
Medicaid clinic to an FQHC as the Tribal FQHC option. 
 
In the 2017 FAQs, CMS explained that it did not intend to review claims by Tribal providers of 
clinic services under 42 C.F.R.  440.90 for services furnished outside of the four walls of the 
facility before January 30, 2021 unless there was clear evidence of bad faith efforts to engage in 
improper claiming procedures in violation of the guidance provided in the 2017 FAQs. 
                                                           
3 https://www.medicaid.gov/federal-policy-guidance/downloads/SHO022616.pdf  
4 https://www.medicaid.gov/sites/default/files/federal-policy-guidance/downloads/faq11817.pdf  
5 During the COVID-19 PHE, states can request that CMS provide a time-limited waiver, pursuant to section 
1135(b)(1)(B) of the Social Security Act (Act), to modify the requirement in 42 C.F.R.  440.90 that clinic services 
be provided by a facility that is not part of a hospital but is organized and operated to provide medical care to 
outpatients, to permit services under 42 C.F.R.  440.90 to be provided via telehealth when patients and clinic 
practitioners are in their respective homes or in another location. For more information, see the question and answer 
on page 91 of the COVID-19 FAQs, at https://www.medicaid.gov/state-resource-center/downloads/covid-19-
faqs.pdf .   
6 As relevant here, the IHS AIR is an all-inclusive encounter rate reimbursed to IHS and Tribal facilties for 
Medicaid-covered services and is published in the Federal Register on an annual basis. 
 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any 
way, unless specifically incorporated into a contract.  This document is intended only to provide clarity to the public 
regarding existing requirements under the law. 
  CMCS Informational Bulletin  Page 3 
 
Accordingly, IHS and Tribal facilities have a grace period through January 30, 2021, during 
which they could continue to claim Medicaid reimbursement under 42 C.F.R.  440.90 for 
services furnished outside the four walls of the facility, including at the IHS AIR, without 
converting to FQHC status. During this time, Tribal facilities were expected to work with the 
state Medicaid agency in states where they bill Medicaid for services to decide whether to pursue 
the Tribal FQHC option. The grace period also gave IHS-operated facilities additional time to 
pursue options for working toward compliance with the four walls requirement. CMS also 
recognized that states needed time to implement the Tribal FQHC option; for example, states 
might need time to make legislative or regulatory policy changes, provide public notice of these 
changes, define FQHC services, make changes to their claims and/or provider enrollment 
systems, and potentially make programmatic and staffing changes. 
 
Note that whether a Tribal facility is enrolled in Medicaid as an FQHC or a clinic, the 100% 
Federal medical assistance percentage (FMAP) under section 1905(b) of the Act for state 
expenditures for Medicaid services provided to American Indian and Alaska Native Medicaid 
beneficiaries and received through an IHS or Tribal facility remains available to the state. 
 
Grace Period Extension 
 
Some state Medicaid agencies and Tribal facilities have already adopted the Tribal FQHC 
option, but CMS is aware that other states and Tribal facilities had not done so prior to the 
COVID-19 PHE. Because the COVID-19 PHE has placed additional strain on state and Tribal 
resources, impeding their ability to complete the work needed to make an informed decision and 
take the necessary steps to effectuate the Tribal FQHC option, we are extending the grace period 
for states and Tribal facilities to October 31, 2021. This will allow states to work with Tribal 
facilities and, as applicable, submit a state plan amendment (SPA) to establish the IHS AIR as an 
APM for a Tribal FQHC. To ensure that such a SPA would take effect November 1, 2021, a state 
will need to submit it no later than December 31, 2021. CMS is also extending the grace period 
for IHS-operated facilities to October 31, 2021, to give IHS and states additional time to work 
toward a solution addressing compliance with the four walls requirement for IHS-operated 
facilities. 
 
Steps Required to Implement the Tribal FQHC Option 
 
Whether the Tribal FQHC option is preferable for a given Tribal facility depends on the services 
that the Tribal facility provides, the extent to which it furnishes services outside the four walls of 
its facility, and the facility and states willingness to adopt the IHS AIR as an APM for Tribal 
FQHCs. Below, we explain the steps that Tribal facilities and states should take in order for a 
Tribal facility to be reimbursed as an FQHC at the IHS AIR for provision of services outside the 
four walls of the facility. 
 
Transitioning Tribal Facilities to Tribal FQHC Status 
Because section 1905(l)(2)(B) of the Act defines outpatient health programs or facilities operated 
by a Tribe or Tribal organization under the ISDEAA as FQHCs, converting to FQHC status 
could be relatively simple for Tribal facilities. Under Federal law, the Tribal facility need only 
 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any 
way, unless specifically incorporated into a contract.  This document is intended only to provide clarity to the public 
regarding existing requirements under the law. 
  CMCS Informational Bulletin  Page 4 
 
notify the state Medicaid agency of its desire to change from a clinic services provider to an 
FQHC and the state Medicaid agency will then change the designation of the facility in its 
Medicaid Management Information System (MMIS) from clinic services provider to FQHC. 
Under Federal law, Tribal facilities need not meet any requirement other than being operated by 
a Tribe or Tribal organization under ISDEAA and are not required to re-enroll in the Medicaid 
program as an FQHC. The state Medicaid agency is not required to process a new enrollment or 
re-screen the facility.7  
 
The decision about whether a Tribal facility should convert from a provider of clinic services 
under 42 C.F.R.  440.90 to an FQHC should involve a discussion between the Tribal facility 
and the state Medicaid agency. If the Tribal facility does not provide any services outside of its 
four walls, no further action is needed because the facility can continue to claim Medicaid 
reimbursement under 42 C.F.R.  440.90 consistent with the Federal regulation. If the Tribal 
facility is considering converting to FQHC status, it should work with the applicable state 
Medicaid agency (or agencies, if services are provided in multiple states) to determine which 
services provided by the facility are covered as FQHC services under the state plan. If the Tribal 
facility determines it would be advantageous to convert to FQHC status only if it is reimbursed at 
the IHS AIR, the Tribal facility should work with the state to determine if the state would be 
willing to submit a SPA to establish the IHS AIR as an APM for Tribal FQHCs.  
 
State Adoption of the IHS AIR as an APM for Tribal FQHCs 
If the state Medicaid agency and one or more Tribal FQHCs agree to establish the IHS AIR as an 
APM to reimburse a Tribal facility that elects to convert to FQHC status, the state Medicaid 
agency will need to submit a SPA to designate payment for the Tribal FQHC at the IHS AIR as 
an APM consistent with section 1902(bb)(6) of the Act. States will be required to consult with 
Indian health care providers and Tribes consistent with the state Tribal consultation plan prior to 
submission of the SPA (which may have been accomplished through the discussions between the 
Tribal facilities and state agency described above). In addition, the Medicaid agency will need to 
assign a PPS rate to the Tribal facility, consistent with section 1902(bb)(4) of the Act, so that the 
agency can demonstrate on an annual basis that the APM is at least equal to the PPS rate the 
facility would otherwise receive, consistent with section 1902(bb)(6)(B) of the Act. The Tribal 
facility might not be required to report its costs for purposes of establishing a PPS rate in this 
circumstance.  
 
To date, CMCS has approved nine (9) SPAs that pay the IHS AIR as an APM to Tribally 
operated FQHCs. These SPAs are available on Medicaid.gov; CMS also can provide copies upon 
request.  
 
Technical Assistance 
 
We encourage states needing technical assistance to contact their CMCS state lead and Tribes 
needing technical assistance to contact their CMCS Native American Contact. These CMS 
                                                           
7 It is possible that some states may impose additional screening requirements for Tribal facilities to convert to 
FQHC status, in which case the facility also would need to comply with such requirements.  
 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any 
way, unless specifically incorporated into a contract.  This document is intended only to provide clarity to the public 
regarding existing requirements under the law. 
  CMCS Informational Bulletin  Page 5 
 
contacts are available to provide any additional technical assistance needed in determining 
whether to adopt the Tribal FQHC option. For more information about the four walls limitation 
and the grace period discussed in this CIB, please contact Kitty Marx, Director, Division of 
Tribal Affairs, kitty.marx@cms.hhs.gov.  
 
 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any 
way, unless specifically incorporated into a contract.  This document is intended only to provide clarity to the public 
regarding existing requirements under the law.