Risk & Compliance in Federal

Section 1557 Language Access Annual Notice Year 1 Anniversary — July 5, 2026 Compliance Window

HHS Section 1557 Annual Notice of Availability (free language assistance services in English + 15 most common LEP languages in the state) has been in effect since July 5, 2025. Year 1 compliance review window approaching July 5, 2026. CA's 15 LEP languages include Spanish, Chinese, Vietnamese, Tagalog, Korean, Armenian, Russian, Persian, Arabic, Punjabi, Khmer, Hmong, Hindi, Japanese, Mon-Khmer. All FQHCs taking Medicare/Medi-Cal must have posted, distributed, and translated the Notice — pairs with the May 11, 2026 WCAG 2.1AA deadline as a compounding civil rights compliance window for FQHCs. Two HHS OCR rules with overlapping enforcement risk in the same 8-week window.

HRSA 340B Rebate Model ICR Burden Comment Window Closes April 27 — Second Window for FQHCs After April 20 Main Deadline

HRSA released a supplemental Information Collection Request (ICR) specifically on the administrative burden of the 340B Rebate Model Pilot Program. Comments on operational impact — pharmacy workflow, staff time costs, IT integration — are due April 27, 2026. This is a distinct window from the April 20 main rebate policy comment deadline. FQHCs that missed the April 20 deadline should use this second window to document pharmacy workflow and staff time cost impact. Burden comments can meaningfully shape the final rule's administrative mechanics.

Section 504 / WCAG 2.1AA 'Red Alert' — Enforcement Interpretation May Be Contested in Final Weeks Before May 11

A Converge Accessibility 'Red Alert' published April 22 warns that HHS Section 504 Rule enforcement interpretation 'is in danger' of regulatory contest in the final weeks before the May 11, 2026 WCAG 2.1AA deadline. The underlying non-discrimination obligation has been in effect since July 8, 2024 — but the technical benchmark date is what enforcement hangs on. FQHCs with 15+ employees should NOT bet on a delay: remediate website/mobile accessibility now and document good-faith compliance in case enforcement posture shifts unfavorably mid-year.

DOJ Extends ADA Title II Web Accessibility 1 Year — But HHS Section 504 May 11 Deadline UNCHANGED

DOJ published an interim final rule April 20 extending ADA Title II web accessibility deadlines for state/local governments — to April 26, 2027 (50K+ population) and April 26, 2028 (under 50K). Critically, HHS did NOT match: the parallel HHS Section 504 rule still becomes enforceable May 11, 2026 (15 days). AHA News (April 22), Jackson Lewis, and Duane Morris all confirm HHS Section 504 deadlines 'remain unchanged.' Confusion risk: many FQHCs may incorrectly assume the DOJ extension applies to them — it does NOT. FQHCs are HHS-funded entities governed by Section 504, not Title II. Converge Accessibility published an April 22 'Red Alert' suggesting the HHS rule itself may be at risk of reconsideration, but legal advisors continue to recommend assuming the deadline holds.

NCQA Issues Temporary Scoring Modifications to Health Equity Accreditation — REL/SOGI Data Requirements Paused

NCQA issued temporary scoring modifications in April 2026 (effective through June 30, 2026) to its Health Equity Accreditation program, narrowly focused on requirements organizations may struggle to meet under shifting federal policy on DEI programs and gender identity data. The modifications affect REL/SOGI demographic data collection, language services, and disparity-reduction requirements — all core CLAS-aligned standards. FQHCs pursuing or maintaining NCQA Health Equity Accreditation should review which scoring elements are paused and recalibrate compliance plans through June 30.

4th Circuit Rules for Pharma: Maryland's 340B Contract Pharmacy Access Law Vacated — State-Level Protections Weakened

The U.S. Court of Appeals for the Fourth Circuit vacated the lower court ruling that had upheld Maryland's 340B contract pharmacy access law, siding with AbbVie, Novartis, and AstraZeneca. The ruling weakens the state-law backstop strategy — where states pass their own 340B protections when federal enforcement stalls. A competing 5th Circuit ruling (upholding Mississippi's similar law) creates a circuit split that may push the issue to the Supreme Court. California FQHCs are protected by H.R. 7391 (340B FQHC Protection Act, 35 cosponsors) at the federal level, but this ruling signals pharma is winning in the courts against state-level protections nationally.

AbbVie Files Landmark Lawsuit to Narrow 340B 'Patient' Definition — Directly Targeting FQHC Contract Pharmacy Arrangements

AbbVie sued HRSA to challenge the 30-year-old 340B patient definition, proposing a four-part test requiring direct care connection, clinical encounter, active care management, and 12-month recency. AbbVie flagged Barrio Comprehensive Family Health Care Center (TX FQHC) — 340B purchases of Humira/Skyrizi/Rinvoq up 119% (2021-2022), 71% dispensed through out-of-state pharmacies. If successful, this would dramatically shrink FQHC 340B eligibility for contract pharmacy and telehealth prescribing. Post-Chevron (Loper Bright) makes this challenge viable for the first time.

HRSA Being Absorbed into New 'Administration for a Healthy America' — 25% of Staff Already Departed

HRSA is being merged into the new Administration for a Healthy America (AHA) alongside SAMHSA, ATSDR, and NIOSH. Approximately 700+ employees (25% of staff) have departed since February, including grant managers, auditors, and compliance analysts. The FY2026 budget proposes eliminating HRSA as a standalone agency. This directly impacts OSV scheduling, 340B audits, and Health Center Program compliance oversight. FQHCs may face delayed operational site visits, slower conditions-of-award processing, and reduced technical assistance.

Ninth Circuit Opens Door to FCA Liability for 340B Overcharges — New Legal Pathway for FQHCs

The Ninth Circuit unanimously reversed a dismissal in United States ex rel. Adventist Health System v. AbbVie, ruling that qui tam False Claims Act suits can proceed against pharmaceutical manufacturers that allegedly overcharge 340B covered entities above the statutory ceiling price. This creates a new private enforcement mechanism — previously only HRSA could enforce 340B ceiling price compliance. FQHCs can now pursue treble damages against manufacturers overcharging on 340B drugs.

HRSA Expands FY2026 340B Audit Scope with 'Furnished' Language Change

HRSA's updated Data Request List for FY2026 340B audits now includes 'furnished' alongside 'administered or dispensed,' broadening how covered entities must document drug transactions. Additional changes indicate increased scrutiny on locations receiving 340B-priced drugs and demonstration of covered entity ownership. FQHCs should update internal documentation and audit preparation procedures.

HRSA Accelerates Operational Site Visits: 30% More FQHCs Audited in FY2026

HRSA's Bureau of Primary Health Care has increased OSV frequency, with 30% more site visits scheduled in FY2026 compared to FY2025. Focus areas include governance documentation (42 CFR 330.304), sliding fee compliance, and clinical quality reporting. FQHCs with incomplete board policies or missing conflict-of-interest disclosures face progressive compliance actions including conditions of award and potential scope reductions.

Federal Court Overturns HRSA 340B Child Site Registration Requirement

A federal district court vacated HRSA's requirement that off-site facilities (child sites) must appear on a hospital's Medicare cost report and be registered in OPAIS before purchasing drugs at 340B prices. This effectively returns pandemic-era flexibilities and may expand 340B purchasing eligibility for FQHCs with satellite locations.

OCR Settles $1.5M HIPAA Breach Case with Community Health Network

HHS Office for Civil Rights reached a $1.5M settlement with a multi-site community health center for a breach affecting 28,000 patient records. Root cause: unencrypted email containing PHI sent to third-party vendor without a current Business Associate Agreement. Settlement requires 3-year corrective action plan including annual risk assessments, workforce training, and BAA remediation. Pattern consistent with FQHCs that lack formalized HIPAA compliance programs.

OIG Reports $4.7B in Healthcare Fraud Recoveries — FQHCs Face Increased Billing Scrutiny

The HHS Office of Inspector General recovered $4.7B in healthcare fraud in FY2025, with community health centers facing increased scrutiny on PPS billing practices. Key risk areas: same-day billing errors, upcoding visit complexity, and inadequate documentation for ECM/CCM services. OIG recommends FQHCs implement internal billing audits, provider documentation training, and automated coding compliance checks. Three California FQHCs received subpoenas in Q4 2025.

OCR Begins Enforcing 42 CFR Part 2 for Substance Use Disorder Records — FQHCs with MAT/SUD Programs Must Comply

OCR has begun enforcement of the updated 42 CFR Part 2 regulations as of February 16, 2026. The updated rule aligns Part 2 with HIPAA but adds enhanced protections for substance use disorder treatment records. FQHCs operating MAT, SUD treatment, or behavioral health programs must ensure their consent forms, breach notification procedures, and information-sharing agreements comply with the new requirements. Non-compliance risks both OCR enforcement and patient trust erosion. Most CA FQHCs have behavioral health programs affected by this change.

OCR Launches Civil Enforcement for Substance Use Disorder Patient Records — FQHCs with BH Programs Now in Scope

HHS Office for Civil Rights began enforcing confidentiality protections for substance use disorder (SUD) patient records under 42 CFR Part 2, now aligned with HIPAA penalty tiers. FQHCs operating behavioral health or SUD treatment programs must ensure their consent forms, EHR configurations, and staff training comply with the new enforcement framework. Noncompliance can trigger monetary settlements, corrective action plans, or civil money penalties.

340B Contract Pharmacy Audits Double: HRSA Targets Compliance Gaps at FQHCs

HRSA has doubled 340B program audits targeting contract pharmacy arrangements, with 47 covered entities under review in Q1 2026. Common violations include duplicate discounts, inadequate patient eligibility verification, and missing contract pharmacy agreements. FQHCs operating 340B programs must demonstrate real-time eligibility checks, split-billing compliance, and complete audit trails for every 340B transaction. Non-compliance can result in program repayment and suspension.

Federal Court Vacates 340B Rebate Model Pilot — Preserves Upfront Discount for FQHCs (For Now)

In AHA v. Kennedy, the U.S. District Court for the District of Maine vacated HRSA's 340B Rebate Model Pilot Program, finding the agency's administrative record 'threadbare' and that it failed to consider the financial burden on providers of paying full price upfront and waiting for rebates. HRSA published a Request for Information (comments due April 20, 2026) as it reconsiders. NACHC plans to submit comments on detrimental impact to community health centers. The ruling preserves the current upfront 340B discount model — critical for FQHC pharmacy revenue.

Third Circuit Rules Drug Manufacturer 340B Contract Pharmacy Restrictions Are Legal

The U.S. Court of Appeals for the Third Circuit unanimously ruled that manufacturer restrictions on 340B contract pharmacy access are lawful and HRSA’s policy prohibiting them is unlawful. 18 manufacturers now restrict contract pharmacy access. Devastating for FQHCs without in-house pharmacies who rely on contract pharmacy arrangements for 340B savings. Combined with the rebate pilot court-ordered pause and expanded audit requirements, 340B contract pharmacy revenue faces pressure from three directions.