Alternative Payment Methodology

South Dakota Medicaid offers Federally Qualified Health Centers the option to be reimbursed under an Alternative Payment Methodology. Effective July 1, 2026, providers may elect to receive payment under the APM or continue to receive reimbursement under the Prospective Payment System.

The APM is an enhanced encounter rate informed by statewide cost-based weighted-average encounter rates. The APM is updated annually by the Medicare Economic Index and will be re-evaluated at a minimum every five years through provider cost report analysis. Providers that do not elect the APM will continue to be reimbursed under their existing PPS methodology.

APM Election Form

Please review and return the completed election form to DSSFinancePRA@state.sd.us..

Note: The Alternative Payment Methodology is subject to approval by the Centers for Medicare & Medicaid Services. Reimbursement may be adjusted if CMS requires modifications to the methodology.

Alternative Payment Methodology Cost Reporting Instructions

FQHC providers participating in the Alternative Payment Methodology are required to submit cost reporting information to the Department of Social Services. Cost report information is used to evaluate encounter costs, support annual updates, and perform periodic reviews of the APM methodology.

Submission of required cost reporting information is necessary to maintain participation in the APM program.

Dental Supplemental Cost Report

The Dental Supplemental Cost Report is used to identify dental-only costs for Federally Qualified Health Centers. The report allows the Department to separate dental costs from medical costs reported on the CMS-224-10 Cost Report and supports the development and maintenance of the Alternative Payment Methodology.

Submission of the Dental Supplemental Cost Report is required annually for all FQHC dental providers and must be submitted at the same time as the CMS-224-10 Cost Report. Both reports must be submitted no later than five months following the end of the provider's fiscal year.

Dental Supplemental Cost Report Instructions and Form

The Department uses information reported on the Dental Supplemental Cost Report to identify and remove dental costs from the CMS-224-10 Cost Report for purposes of calculating medical and dental encounter rates. Submission of this report does not independently adjust a provider's APM rate; however, submission is required to continue receiving APM reimbursement.

If you have questions, please contact Provider Reimbursement and Audits at 605.773.3643 or DSSFinancePRA@state.sd.us.