RICHMOND, Va. (WRIC) — Fifteen nonprofit health centers are accusing Virginia of violating federal law by consistently paying them less than they're owed for Medicaid services over the course of more than two decades. On Friday, Dec. 19, the health centers filed a lawsuit against Virginia's Depar tment of Medical Assistance Services (DMAS) and its director, Cheryl Roberts. All health centers bringing forth the suit are designated as Federally Qualified Health Centers (FQHC), meaning they receive federal funds to serve medically underserved areas. The suit alleges that the state government violated federal law for more than two decades by providing insufficient reimbursement for Medicaid services. The health centers claim that DMAS is paying less than the average cost per visit for services to Medicaid patients, hurting the FQHCs' other funding avenues. "The purpose of the FQHC rights at issue are to provide mandatory and medically necessary care to Virginia's most vulnerable residents," the lawsuit states. "And the ongoing violation of those federal rights is causing irreparable harm to the health centers and the patients [they] serve." These new Virginia laws go into effect on Jan. 1, 2026 Collectively, Virginia FQHCs served 422,000 patients annually, including about 149,315 DMAS Medicaid patients, per court documents. Per court documents, the state’s inadequate reimbursements have forced health centers to use federal funding designated for uninsured patients for Medicaid patients. “To be clear: the Health Centers had no choice under federal law but to bring this action,” the lawsuit stated. Under federal law, FHQCs are reimbursed for services using the Prospective Payment Systems (PPS) set by the Centers for Medicare and Medicaid Services. Medicaid agencies can offer health centers an Alternative Payment Methodology (APM) in an amount equivalent to or more than the PPS rate. Virginia State Police releases new inspection stickers for 2026 PPS includes Rural Health Clinics (RHCs), which are also part of the same framework as FHQCs. Per court documents, DMAS “set arbitrarily low PPS reimbursement” rate compared to the cost of actual services the health centers provided for Medicaid patients. DMAS then offered FQHCs an APM rate that’s lower than the “properly calculated PPS rate,” which is a violation of federal requirements. Three of the named health centers -- Vernon J. Harris East End Community Center, a facility of Capital Health Area Network (CAHN), Central Virginia Health Services and The Daily Planet -- are based in Richmond. Vernon J. Harris received a PPS rate of $96.54 per visit from DMAS last year, according to court documents. DMAS offered the health center an APM rate of $178.39. Respiratory illness cases spike in Virginia: Virginia Department of Health Both rates are lower than the maximum allowed cost per visit -- which is the amount of Medicaid services that are eligible for reimbursement -- for the facility. Court documents show that the amount was $544.81 in 2024. Central Virginia Health Services and The Daily Planet also received PPS and APM rates lower than their allowable cost in 2024. Court records show that initial federal reimbursement requirements for FQHCs and RHCs were established prior to 2001. Medicaid, Medicare and what became known as the Children's Health Insurance Program Reauthorization Act (CHIPRA) of 2009 changed the payment requirements for FQHCs and RHCs, according to court documents. Report: Richmond area data center inventory increased sevenfold in first half of 2025 The health centers argue that the state government has not accounted for the required changes in reimbursement rates and adjustments, and demand that the state program change its methods for Medicaid payment. The suit comes amid broader financial strain on health providers worldwide. Many rural hospitals faced financial hits across the U.S. in the summer of 2025 following the passage of President Donald Trump’s “One Big Beautiful Bill,” which resulted in a massive $1 trillion in Medicaid cuts over 10 years. In early February, CAHN, a non-profit organization, announced its plans to shut down three Richmond medical centers until further notice, initially due to “unforeseen circumstances.” However, in March, the organization cited the reason behind the three closures was “federal restrictions with the new Presidential Administration.” PREVIOUS: Capital Area Health Network shuts down wellness program for Richmond patients In May 2025, Health Brigade, one of Virginia’s oldest free and charitable clinics, also reported losing more than $850,000 due to federal funding cuts, calling it “one of the most serious threats in our history.” DMAS declined 8News’s request for comment, citing pending litigation.  8News has reached out to the East End Community Health Center, CAHN and the Greater Prince William Community Health Center, but has not yet received a response. ...read more read less