The FQHC safety net is fraying — here’s what physicians need to know

Federally qualified health centers (FQHCs) treat patients regardless of their ability to pay, providing comprehensive, accessible and affordable care. However, recent legislative and regulatory changes present community health centers with unprecedented hurdles and opportunities.

Here is a look at where FQHCs stand today, what is working, what needs improvement and how private practice physicians can help secure the future of community health.

How do FQHCs fit into the broader primary care landscape?

In the traditional health care ecosystem, care is often siloed: A patient goes to one location for a physician, another for a therapist and another for a pharmacy. The FQHC is the ultimate integrator: By bringing adult and pediatric primary care, maternal health, mental health and even social services under one roof, FQHCs provide coordinated wraparound care. When care is close to home and coordinated, people get healthy and stay healthy.

Why should physicians care about FQHCs’ stability?

When FQHCs are underfunded or unstable, vulnerable populations delay routine care until their conditions become catastrophic. This directly results in overwhelmed hospital emergency departments and exhausted physicians. A stable FQHC catches the prediabetic patient, the hypertensive mother and the individual in a mental health crisis before they require an ICU bed. FQHCs provide a medical home to track the patient, fill their discounted prescriptions at an on-site pharmacy and coordinate their complex care.

Where do FQHCs currently stand after federal budget changes and Medicaid cuts?

Historically, FQHCs have relied on bipartisan support to serve as the backbone of primary care in underserved communities. Today, however, clinics are caught in a financial tug-of-war between short-term funding extensions and long-term safety-net cuts.

• The One Big Beautiful Bill Act cuts an estimated $911 billion from Medicaid. The Commonwealth Fund estimates that 5.6 million current community health center patients could lose their Medicaid coverage due to these changes.
• Millions of newly uninsured Americans will view community clinics with sliding fee scales as their only affordable option for care, straining FQHC capacity.
• The Consolidated Appropriations Act, signed in February 2026, allocated $4.6 billion for the Community Health Center Fund. The reprieve is temporary, extending only through December 2026. Long-term funding insecurity leaves clinics unable to make long-term capital or staffing investments.

How are community clinics adapting via the Medicare Physician Fee Schedule and telehealth extensions?

Despite the threat of severe service cuts, FQHC providers and clinical support staff are staying nimble by leveraging new regulatory channels to manage larger patient volumes.

• The 2026 Medicare Physician Fee Schedule and new federal legislation extend a telehealth lifeline through 2027. These expanded options are vital to maintaining access to behavioral health services and chronic disease management.
• Clinics are jumping on the new Advanced Primary Care Management and remote patient monitoring codes finalized in the 2026 schedule. These codes finally allow FQHCs better compensation for the complex, time-intensive care coordination required for low-income populations.
• To achieve operational efficiencies, centers are embracing artificial intelligence tools to streamline documentation, reserving same-day openings for acute conditions and forming nontraditional partnerships with community-based organizations.

How would the Great Healthcare Plan and the development of Medicare accountable care models affect FQHC operations?

The White House’s Great Healthcare Plan proposals and other federal initiatives are pushing FQHCs to pursue value-based accountable care models that better align provider and insurer interests.

• In accountable care models, compensation shifts toward performance criteria based on risk-adjusted patient panels, rather than pure fee-for-service volume.
• These models provide more stable revenues, allowing for strategic capital investments and programs that improve long-term patient well-being.
• Effective value-based arrangements set a high bar for FQHC data system interoperability and EHR accuracy.

What is the impact of the Rural Health Transformation Program on the broader FQHC network?

Urban and rural environments are distinctly different, but both feel the pressure of the current policy landscape.

• The Rural Health Transformation Program injects capital to prevent hospital closures, expand broadband for telehealth and maintain access across vast geographic distances.
• Urban populations such as our Chicago patients often have high-risk profiles, complex comorbidities and safety concerns or trauma that strike their ability to access care.
• Across both settings, social drivers of health, such as limited transit schedules, can turn a simple medical appointment into a daylong ordeal.

How are FQHCs responding to extreme labor shortages and high drug prices?

Beyond stabilizing funding past 2026, FQHCs must shore up the health care workforce and protect the pharmacy safety net.

• Workforce: The industry has seen a massive exodus as professionals seek better work-life balance. To retain staff, clinics are offering four-day workweeks and remote work options. Individual FQHCs are growing their personnel pipelines, such as university partnerships and workforce training programs for in-demand community health workers.
• Prescription drugs: Federal prescription drug price actions and negotiations have disrupted the 340B Drug Pricing Program. FQHCs rely on 340B drug discounts to subsidize uncompensated care. Policy makers must optimize the 340B program and protect this revenue to ensure patients have access to affordable medications for chronic conditions.

How can private practice physicians partner with and support the FQHC mission?

Private practitioners who share a commitment to community health can make a tangible difference as more families seek care at FQHCs due to Medicaid shifts.

• Advocate for funding: Physicians can inform policy makers about the threat that Medicaid cuts and the looming 2026 funding cliff pose to local safety nets.
• Share information: Private providers can facilitate smooth transitions of care by sharing comprehensive patient histories for individuals who make the tough decision to transfer to an FQHC network due to lost insurance coverage.
• Participate in specialty care: Private physicians can partner with FQHCs to provide on-site clinical services or telemedicine consultations, such as high-risk maternal-fetal medicine.
• Reap mutual benefits: Partnering with a health center can offer private practitioners benefits like access to the National Health Service Corps loan repayment program.

Wendy Thompson is CEO of Friend Health, a federally qualified health center serving more than 40,000 patients across Chicago’s South Side. Thompson is an experienced community health leader, with expertise evaluating risks and opportunities within complex organizational systems. Previously, she served in leadership positions at Chicago Public Schools and Aon Corporation, and began her career at Goldman Sachs. Thompson holds an MBA and a bachelor’s degree in economics from the University of Chicago. Friend Health provides adult medicine, women’s health, children’s health, mental health, substance use disorder treatment and dental services. For more information, visit friendhealth.org.