Telehealth services have the potential to improve access to care, especially in rural or urban areas with scarce health care resources. Despite the potential benefits, telehealth has not been fully adopted by health centers. This study examined factors associated with and barriers to telehealth use by federally funded health centers. We analyzed data for 2016 from the Uniform Data System using a mixed-methods approach. Our findings suggest that rural location, operational factors, patient demographic characteristics, and reimbursement policies influence health centers' decisions about using telehealth. Cost, reimbursement, and technical issues were described as major barriers. Medicaid reimbursement policies promoting live video and store-and-forward services were associated with a greater likelihood of telehealth adoption. Many health centers were implementing telehealth or exploring its use. Our findings identified areas that policy makers can address to achieve greater telehealth adoption by health centers.