Federal Health Centers
Elayne J. Heisler
Analyst in Health Services
January 10, 2013
Congressional Research Service
7-5700
www.crs.gov
R42433
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Federal Health Centers
Summary
Appropriations for the health center program have increased over the past decade, resulting in
more centers and more patients served. From FY2000 through FY2012 the health center
program’s appropriation increased by 48%. Over this same time period, the number of health
center sites increased by 59%. The program also received supplemental appropriations through
the American Recovery and Reinvestment Act (P.L. 111-5) in FY2009. The program’s expansion
may continue under the Patient Protection and Affordable Care Act of 2010 (P.L. 111-148, ACA),
which permanently authorized the health center program and created the Community Health
Center Fund (CHCF) that included a total of $9.5 billion for health center operations to be
appropriated in FY2011 through FY2015. However, it is not clear whether these funds will be
used to expand the health center program because in FY2011, FY2012, and the FY2013
continuing resolution, these funds were or will be used to augment discretionary appropriation
reductions to the health center program.
Health centers are required to provide health care to all individuals regardless of their ability to
pay and are required to be located in geographic areas that have few health care providers. These
requirements make health centers part of the health safety net—providers that serve the
uninsured, the underserved, or those enrolled in Medicaid. Data compiled by HRSA demonstrate
that health centers serve the intended safety net population as the majority of patients are
uninsured or enrolled in Medicaid. Some research also suggests that health centers are a cost
effective way of meeting this population’s health needs because researchers have found that
patients seen at health centers have lower health care costs than those served in other settings. In
general, research has found that health centers, among other outcomes, improve health, reduce
costs, and provide access to health care for populations that may otherwise not obtain health care.
This report provides an overview of the federal health center program including its statutory
authority, program requirements, and appropriation levels. The report then describes health
centers in general, where they are located, their patient population, and some outcomes associated
with health center use. It also describes some federal programs available to assist health center
operations including the federally qualified health center (FQHC) designation for Medicare and
Medicaid payments. The report then concludes with a brief discussion of issues for Congress such
as the potential effects of the ACA on health centers, the health center workforce, and financial
considerations for health centers in the context of changing federal and state budgets. Finally, the
report has two appendixes that describe (1) FQHC payments for Medicare and Medicaid
beneficiaries served at health centers; and (2) programs that are similar to health centers but not
authorized in Section 330 of the PHSA.
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Contents
Introduction ...................................................................................................................................... 1
What Is the Federal Health Center Program? .................................................................................. 4
Statutory Authority and General Requirements ......................................................................... 4
Location Requirements ....................................................................................................... 5
Fee Schedule Requirements ................................................................................................ 5
Medicaid Coordination and Reimbursement Requirements................................................ 5
Governance Requirements .................................................................................................. 6
Health Service Requirements .............................................................................................. 6
Reporting and Quality Assurance Requirements ................................................................. 7
Licensing and Accreditation Requirements ......................................................................... 8
Grants that Support Federal Health Centers .............................................................................. 8
Types of Grants Available to Support Health Centers ......................................................... 8
Grant Eligibility and Awarding Criteria .............................................................................. 9
What Is the Health Center Program’s Appropriation? ............................................................. 10
What Are the Other Sources of Funding for the Health Center Program? .............................. 13
What Are Health Centers? ............................................................................................................. 14
What Types of Health Centers Exist? ...................................................................................... 14
Community Health Centers ............................................................................................... 14
Health Centers for the Homeless ....................................................................................... 14
Health Centers for Residents of Public Housing ............................................................... 15
Migrant Health Centers ..................................................................................................... 15
Who Uses Health Centers? ...................................................................................................... 16
Where Are Health Centers Located? ....................................................................................... 17
What Outcomes Are Associated with Health Center Use? ...................................................... 18
Health Outcomes ............................................................................................................... 19
Cost Outcomes .................................................................................................................. 19
Access to Health Care ....................................................................................................... 21
Quality ............................................................................................................................... 21
Which Federal Programs Are Available to Health Centers? .................................................... 22
National Health Service Corps Providers .......................................................................... 22
J-1 Visa Waivers ................................................................................................................ 23
Federally Qualified Health Center Designation ................................................................ 23
340B Drug Pricing Program .............................................................................................. 23
Vaccines for Children Program ......................................................................................... 24
Federal Torts Claims Act Coverage ................................................................................... 24
Ryan White HIV/AIDS Treatment Grants......................................................................... 24
Other Federal Grant Programs .......................................................................................... 25
Issues for Congress ........................................................................................................................ 25
Health Centers and Health Insurance Expansion in the ACA ................................................. 26
Health Centers and Medicaid Expansion .......................................................................... 27
Health Centers and ACA Private Insurance Expansions ................................................... 28
Health Center Workforce ......................................................................................................... 29
National Health Service Corps Providers .......................................................................... 29
Teaching Health Centers ................................................................................................... 30
Financial Considerations ......................................................................................................... 31
Health Center Appropriations and the Community Health Center Fund........................... 31
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Health Center Appropriations and the Budget Control Act ............................................... 32
Health Center Funding and ACA Care Coordination Initiatives ....................................... 32
Health Center Funding and State Funding Availability ..................................................... 33
Concluding Observations ............................................................................................................... 34
Figures
Figure 1. Health Center Grantee Sites ........................................................................................... 18
Tables
Table 1. Examples of Services Provided and the Number of Patients Served by Health
Centers (2011) .............................................................................................................................. 7
Table 2. Health Center Grants Awarded in FY2011 ....................................................................... 10
Table 3. Health Center Appropriations and Sites, FY2002-FY2013 (Continuing
Resolution).................................................................................................................................. 12
Table 4. Health Center Revenue Sources (FY2011) ...................................................................... 13
Table 5. Comparison of Health Center Types ................................................................................ 16
Table 6. Health Centers’ Patients’ Profile, 2011 ............................................................................ 17
Appendixes
Appendix A. Other Federal Programs that May Provide Primary Care to the Underserved ......... 35
Appendix B. Medicare and Medicaid Payments and Beneficiary Cost Sharing for Health
Center Services ........................................................................................................................... 39
Contacts
Author Contact Information........................................................................................................... 42
Acknowledgments ......................................................................................................................... 42
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Federal Health Centers
Introduction
The federal health center program awards grants to support health centers: outpatient primary
care facilities that provide care to primarily low-income individuals. The program is administered
by the Health Resources and Services Administration (HRSA)—within its Bureau of Primary
Care—within the Department of Health and Human Services (HHS). The federal health center
program is authorized in Section 330 of the Public Health Service Act (PHSA) and supports four
types of health centers: (1) community health centers; (2) health centers for the homeless; (3)
health centers for residents of public housing; and (4) migrant health centers.
According to HRSA data there are over 9,064 unique health center sites (i.e., individual health
center facility locations);1 the majority are community health centers (CHCs). CHCs serve the
general low income or otherwise disadvantaged population whereas the remaining three types of
health centers provide care to more targeted low income or otherwise disadvantaged populations
(e.g., migrant health workers). Regardless of type, health centers are required, by statute, to
provide health care to all individuals regardless of their ability to pay and are required to be
located in geographic areas that have few health care providers.2 These requirements make health
centers part of the health safety net—providers that serve the uninsured, the underserved, or those
enrolled in Medicaid.3 Data compiled by HRSA demonstrate that health centers serve the
intended safety net population as the majority of patients are uninsured or enrolled in Medicaid.4
Some research also suggests that health centers are a cost effective way of meeting this
population’s health needs because researchers have found that patients seen at health centers have
lower health care costs than those served in other settings.5 Others have found that areas with
health centers have lower emergency room use and fewer hospital stays.6 Researchers have also
found that care provided in emergency departments and physicians’ offices is generally more
costly than care provided at health centers.7 In general, research has found that health centers’
presence is associated with several outcomes, most notably improved health, reduced costs, and
increased access to, and improved quality of, health care for populations that may otherwise not
obtain health care.8
1 The Health Resources and Services Administration regularly updates health center data. This report uses the number
of sites as of 12/17/2012, see http://datawarehouse.hrsa.gov/sitesdetail.aspx; hereinafter HRSA Data Warehouse.
2 42 U.S.C. §254b.
3 Lewin, Marion Ein and Altman, Stuart, America’s Health Care Safety Net: Intact but Endangered, Institute of
Medicine, Washington, DC, 2000, p. 21, http://www.nap.edu/catalog.php?record_id=9612; for more information on the
Medicaid program, see CRS Report RL33202, Medicaid: A Primer, by Elicia J. Herz.
4 Health Resources and Services Administration, Bureau of Primary Care, Uniform Data System, 2010 National
Summary Report, Rockville, MD, July 27, 2011, http://bphc.hrsa.gov/uds/doc/2010/National_Universal.pdf.
Hereinafter, 2011 UDS Report.
5 Patrick Richard et al., “Cost Savings Associated with the Use of Community Health Centers,” Journal of Ambulatory
Care Management, vol. 35, no. 1 (2012), pp. 50-59.
6 George Rust, et al. “Presence of a Community Health Center and Uninsured Emergency Department Visits Rates in
Rural Counties,” The Journal of Rural Health, vol.25, no. 1 (Winter 2009), pp, 8-16; Betty Smith-Campbell,
“Emergency Department and Community Health Center Visits and Costs in an Uninsured Population,” Journal of
Nursing Scholarship, (First Quarter 2005), vol.37, no. 1; and Jack Hadley and Peter Cunningham, “Availability of
Safety Net Providers and Access to Care for Uninsured Persons,” Health Services Research, vol. 39, no.5 (October
2004), pp. 1527-1546.
7 Ibid.
8 This research is summarized in the report section below: “What Outcomes Are Associated with Health Center Use?”
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Section 330 grants—funded by the health center program’s appropriation—are estimated to only
cover one-fifth of an individual health center’s operating costs; however, individual health centers
are eligible for grants or payments from a number of federal programs to supplement their
facilities’ budgets.9 These federal programs provide (1) incentives to recruit and retain providers;
(2) access to higher reimbursement rates from the Medicare, Medicaid, and State Children’s
Health Insurance (CHIP) programs;10 (3) access to additional funding through federal programs
that target populations generally served by health centers; and (4) in-kind support such as access
to discounted or free services that a health center may otherwise have to purchase at a higher rate
(e.g., prescription drug discounts or medical malpractice insurance). These additional programs
are important for individual health centers because more than one-third of all health center
program grantees rely on a federal program to recruit providers,11 and Medicaid is the largest
source of health center reimbursements.12 Other federal grants (i.e., non-330 grants) are also an
important source of financial support for health centers; in FY2011 health centers funded under
the health center program received approximately $230 million—which is roughly equivalent to
9% of the program’s annual appropriation13—in other federal grants.14
Appropriations to support the health center program have increased over the past decade. These
increases began in 2000 and continued with supplemental funding appropriated under the
American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) and the Patient Protection
and Affordable Care Act of 2010 (ACA, P.L. 111-148).15 Congress has appropriated additional
funds for the program, which have generally been used to award grants to create new centers.16 In
addition, ARRA and the ACA appropriated funds have supported health center construction and
renovation. Some ARRA funds were also used to increase services provided at existing centers.17
The ACA also appropriated funding for health centers to train medical residents and provided
9 U.S. Department of Health and Human Services, Health Resources and Services Administration, Bureau of Primary
Health Care, Efforts to Expand and Accelerate Health Center Program Quality Improvement, Report to Congress,
Rockville, MD; hereinafter, Health Center Quality Improvement Report.
10 These payments are discussed in more detail in Appendix B; payments are considered to be “higher” than the
payment rates that physician practices receive because they are cost-based and reflect a broader range of services, than
do payments to physician practices. See, for example, Department of Health Policy, School of Public Health and Health
Services, The George Washington University, Quality Incentives for Federally Qualified Health Centers, Rural Health
Clinics and Free Clinics: A Report to Congress, Washington, DC, January 23, 2012.
11 Roger A. Rosenblatt et al., “Shortages of Medical Personnel at Community Health Centers: Implications for Planned
Expansion,” Journal of the American Medical Association, vol. 295, no. 9 (March 2006), pp. 1042-1049.
12 2011 UDS Report.
13 See Error! Reference source not found. and Table 4.
14 See Table 4.
15 The ACA was subsequently amended by the Health Care and Education Reconciliation Act (HCERA, P.L. 111-152).
These two laws are collectively referred to as the ACA in this report. Previous CRS reports on the Patient Protection
and Affordable Care Act used the acronym PPACA to refer to the statute. This report will use “ACA,” in conformance
with the more widely-used acronym for the law.
16 See discussion in CRS Report R40181, Selected Health Funding in the American Recovery and Reinvestment Act of
2009, coordinated by C. Stephen Redhead, and CRS Report R41278, Public Health, Workforce, Quality, and Related
Provisions in PPACA: Summary and Timeline, coordinated by C. Stephen Redhead and Erin D. Williams. The ACA
also authorized new grant programs to provide funding for facilities that are similar to health centers—nurse managed
health clinics and school-based health centers. These facilities provide care to populations similar to those served by
health centers, but are not authorized in PHSA Section 330. These facilities and other facilities that are similar to health
centers are summarized in Appendix A.
17 CRS Report R40181, Selected Health Funding in the American Recovery and Reinvestment Act of 2009, coordinated
by C. Stephen Redhead.
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funding for care coordination initiatives.18 Although the program’s appropriations increased by
48% since FY2000, the additional appropriated funds have generally been used to expand the
number of centers—which increased by 59%19—while funding awarded to individual centers
increased less rapidly over the time period.20
The ACA aims to expand insurance coverage to the uninsured, which may have a number of
effects on health centers. Specifically, the law aims to reduce the number of uninsured by
expanding the Medicaid program and by providing subsidies for certain low income individuals
to purchase health insurance coverage.21 These changes may have a number of effects on
individual health centers. First, they may mean that more individuals may seek care at health
centers. This may occur because health centers are a source of care for the uninsured and those
enrolled in Medicaid because they are required to accept all patients regardless of ability to pay.22
Health centers may continue to serve those who obtain insurance under the ACA because some
may choose to remain with their providers and because health centers are located in areas with
few health care providers. It is also possible that health center reimbursements may increase as
fewer people remain uninsured.23 The ACA also includes a new direct appropriation that is a
significant investment in health centers, which may help these health centers provide care to an
18 CRS Report R41301, Appropriations and Fund Transfers in the Patient Protection and Affordable Care Act (ACA),
by C. Stephen Redhead, and CRS Report R41278, Public Health, Workforce, Quality, and Related Provisions in
PPACA: Summary and Timeline, coordinated by C. Stephen Redhead and Erin D. Williams. HHS has also awarded
grants to health centers to support care coordination initiatives, in particular medical homes; see U.S. Department of
Health and Human Services, “Affordable Care Act Funds to Enhance Quality of Care at Community Health Centers,”
press release, September 27, 2012, http://www.hhs.gov/news/press/2012pres/09/20120927b.html.
19 See Error! Reference source not found.. These calculations do not include FY2013 because, as of the date of this
report’s publication, final FY2013 appropriations have not been made.
20 CRS analysis of HRSA Budget documents.
21 CRS Report R41664, ACA: A Brief Overview of the Law, Implementation, and Legal Challenges, coordinated by C.
Stephen Redhead. On June 28, 2012, the United States Supreme Court issued its decision in National Federation of
Independent Business v. Sebelius, finding that the individual mandate in §5000A of the Internal Revenue Code (as
added by § 1501 of the Patient Protection and Affordable Care Act (ACA)), is a constitutional exercise of Congress’s
authority to levy taxes. However, the Court held that it was not a valid exercise of Congress’s power under the
Commerce Clause or the Necessary and Proper Clause. With regard to the Medicaid expansion provision, the Court
held that the federal government cannot terminate current Medicaid program federal matching funds if a state refuses to
expand its Medicaid program to include non-elderly, non-pregnant adults under 133% of the federal poverty level. If a
state accepts the new ACA Medicaid expansion funds, it must abide by the new expansion coverage rules, but, based
on the Court’s opinion; it appears that a state can refuse to participate in the expansion without losing any of its current
federal Medicaid matching funds. All other provisions of ACA, including the entire Health Care and Education
Reconciliation Act (HCERA), remain intact. The Supreme Court’s decision—i.e., that states are not required to expand
their Medicaid programs—may impact the federal health center program because Medicaid is the largest source of
funding for health centers, and some had predicted that the Medicaid expansion would have meant a larger Medicaid-
enrolled population seeking care at health centers. This in turn was predicted to increase health center revenues because
of increased reimbursements. This issue will be discussed further below, see “Health Centers and Medicaid
Expansion.”
22 They are also a major source of care for Medicaid patients because some providers will not accept Medicaid because
of low reimbursements rates or administrative requirements of the program, see Jack Hadley and Peter Cunningham,
“Availability of Safety Net Providers and Access to Care of Uninsured Persons,” Health Services Research, vol. 39, no.
5 (October 2004), pp. 1527-1546 and Peter J. Cunningham and Ann S. O'Malley, “Do Reimbursement Delays
Discourage Medicaid Participation by Physicians?” Health Affairs, vol. 28, no. 1 (November 18, 2008), p. w17–w28.
23 The Supreme Court’s decision on Medicaid expansion may impact the amount of reimbursements that individual
health centers will receive from Medicaid because some states may choose not to implement the full Medicaid
expansions, thereby reducing the number of new Medicaid enrollees. This will be discussed further below, see “Health
Centers and Medicaid Expansion.”
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expanded population; however, given recent fiscal concerns, these funds have not been used to
significantly expand the health center appropriation.24
This report provides an overview of the federal health center program including its statutory
authority, program requirements, and appropriation levels. The report then describes health
centers in general, where they are located, their patient population, and some outcomes associated
with health center use. It also describes the federal programs available to assist health center
operations including the federally qualified health center (FQHC) designation for Medicare and
Medicaid payments. The report then concludes with a brief discussion of issues for Congress such
as the potential effects of the ACA on health centers (both the program and individual health
centers), the health center workforce, and financial considerations for health centers in the context
of changing federal and state budgets. Finally, the report has two appendices that describe (1)
FQHC payments for Medicare and Medicaid beneficiaries served at health centers; and (2)
programs that are similar to health centers but not authorized in Section 330 of the PHSA.
What Is the Federal Health Center Program?
The federal health center program awards grants to support outpatient primary care facilities that
provide care to primarily low income individuals. The program is authorized in Section 330 of the
PHSA, which also includes definitions of the four types of health centers25 and program
requirements. This section describes the statutory authority for the federal health center program
(also called the health center program); program requirements; types of grants awarded in support
of the health center program; the health center program’s appropriation; and other
funding/revenue that health centers receive.
Statutory Authority and General Requirements26
Section 330 of the PHSA authorizes grants for health centers and includes the requirements for
entities to receive a health center grant. Section 330 requires health centers to provide services to
the entire population of their service area regardless of ability to pay. Health centers are also
required to document the health needs of the residents in their service area and to update their
service area if needed. Health center grantees must (1) be located in specific geographic areas; (2)
have an established fee schedule that meets certain requirements; (3) collect reimbursements for
individuals enrolled in public or private insurance programs; (4) have appropriate governance; (5)
offer specific health services; (6) meet certain reporting and quality assurance requirements; and
(7) license providers and seek accreditation. HRSA is required to determine whether health center
grantees meet these requirements; a recent GAO report raised some concerns that the agency may
not be providing sufficient oversight of the program and that some health centers may not be
24 See discussion of CHCF in “What Is the Health Center Program’s Appropriation?” and U.S. Government
Accountability Office, Health Center Program: 2011 Grant Award Process Highlighted Need and Special Populations
Merit Evaluation, 12-504, May 2012, p.3.
25 These definitions and more information about the number and types of services that the four types of health centers
provide are discussed in the report section “What Types of Health Centers Exist?”
26 HRSA details the program’s requirements on its website at http://bphc.hrsa.gov/about/requirements/index.html. The
subsections that follow refer to this website in addition to the citations noted below.
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meeting these requirements.27 This report does not evaluate whether health centers meet program
requirements; rather, it describes the program’s requirements.
Location Requirements
PHSA Section 330 requires that a health center be located in an area that is designated as
medically underserved or as serving a population designated as “Medically Underserved” (see
text box).28
Medically Underserved Areas/Populations
Medically Underserved Areas (MUA): Areas of varying size—whole counties, groups of contiguous counties,
civil divisions, or a group of urban census tracts—where residents have a shortage of health care services.
Medically Underserved Populations (MUPs): Groups that face economic, cultural, or linguistic barriers to
accessing health care.
Source: HRSA, Bureau of Primary Care, Shortage Designations, at http://bhpr.hrsa.gov/shortage/index.htm.
Fee Schedule Requirements
Health centers must establish their own fee schedules that take into account local rates for health
services and the costs that the health center incurs providing services. The health center is then
required to establish a separate discounted fee schedule, which is then further discounted or
waived based on a patient’s ability to pay. Ability to pay is determined by the patient’s income
relative to the federal poverty level. The statute requires that individuals whose income is above
200% of the federal poverty level pay full charges, while individuals whose incomes are at, or
below, 100% of the federal poverty level pay only nominal fees.29
Medicaid Coordination and Reimbursement Requirements
Health centers are required to coordinate with state Medicaid and CHIP plans to provide services
to beneficiaries enrolled in these programs. They are also required to seek reimbursement from
third party payers such as private insurance plans, Medicare, Medicaid, and CHIP. Health centers
are further required to have systems to obtain reimbursements including those used for billing,
credit, and collections. These collections provide nearly two-thirds of the health center program’s
revenue (see Table 4).
Although health centers collect reimbursements, the Government Accountability Office (GAO)
found that Medicare payments did not cover the full cost of health center services in nearly two-
27 U.S. Government Accountability Office, Health Center Program: Improved Oversight Needed to Ensure Grantee
Compliance with Requirements, 12-546, May 2012.
28 Section 5602 of the Patient Protection and Affordable Care Act (ACA, P.L. 111-148) required the Secretary of HHS
to revise the criteria and methodology used to designate health professional shortage areas (HPSAs) and MUPs. The
ACA also required that HHS appoint a committee to undertake this revision and publish a final rule with the new
criteria. The Committee released a report on October 1, 2011, but the committee’s report was not unanimous; therefore,
the Secretary is not required to use the report when drafting the new rule. For report, see http://www.hrsa.gov/
advisorycommittees/shortage/nrmcfinalreport.pdf. HRSA is currently drafting an interim final rule, but has not, as of
the date of this report’s publication, released a final rule.
29 42 C.F. R. 51c.303(f) and Section 330(k)(3)(G)(i) of the Public Health Service Act (PHSA).
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thirds of the visits they examined.30 Similarly, the National Association of Community Health
Centers (NACHC)—the advocacy group for health centers—reports that the amount received in
reimbursements is not sufficient to cover the cost of the health services provided.31 They found
that Medicaid reimbursements covered 81% of the cost of providing services, while Medicare and
private insurance reimbursements cover approximately two-thirds.32 The NACHC also found that
the PHSA Section 330 grant amount received per patient—$273—was less than the average
health center cost per patient of $630.33
Governance Requirements
Health centers are required to have a governing board that is primarily made up of health center
patients. The governing board provides input on center operational issues including the center’s
budget, operating hours, management, and oversight. It is required to meet monthly, and must
approve the center’s director and must approve grant applications submitted by the center.34
Health Service Requirements
Health centers are required to provide primary care services (as defined in Section 330 of the
PHSA and discussed below) and may also provide behavioral health services, case management,
and specialty care services. This section discusses the required services, certain optional services,
and then presents some data on services provided at health centers in 2011 (see Table 1).
Health centers are required to provide primary health services and preventive and emergency
health services.35 Primary health services are those provided by physicians36 or physician
extenders (physicians’ assistants, nurse clinicians, and nurse practitioners) to diagnose, treat, or
refer patients. Primary health services include relevant diagnostic laboratory and radiology
services. Preventive health services include well-child care, prenatal and postpartum care,
immunization, family planning, health education, and preventive dental care. Emergency health
services refer to the requirement that health centers have defined arrangements with outside
providers for emergent cases that the center is not equipped to treat and for after-hours care.
Health center providers must also have admitting privileges at one or more hospitals located near
the health center. This requirement is to ensure care continuity for hospitalized health center
patients. In instances where a health center physician does not have admitting privileges at a
30 U.S. Government Accountability Office, Medicare Payments to Federally Qualified Health Centers, GAO-10-576R,
July 30, 2010. Appendix B describes ACA changes to Medicare FQHC payments that may more closely align
Medicare payments to the costs of providing services. The Centers for Medicare & Medicaid Services, the agency that
administers the Medicare program, disagreed with GAO’s findings; see Enclosure III of U.S. Government
Accountability Office, Medicare Payments to Federally Qualified Health Centers, GAO-10-576R, July 30, 2010.
31 See National Association of Community Health Centers, A Sketch of Community Health Centers, Chartbook,
Washington, DC, 2012, http://www.nachc.com/client//Chartbook2012.pdf; hereinafter, 2012 Health Center Chartbook.
32 Ibid.
33 Ibid; these amounts were for 2010.
34 42 U.S.C. §254b; some governance requirements may be waived for migrant health centers, health centers for the
homeless, and health centers for residents of public housing.
35 42 CFR 51c.102(h).
36 The regulation further specifies that these services should be provided by primary care physicians who are defined as
physicians in family practice, internal medicine, pediatrics, or obstetrics and gynecology or, where appropriate, that
these services may be provided by physician assistants, nurse practitioners, or nurse midwives.
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nearby hospital, the health center is required to establish other arrangements to ensure care
continuity. In addition to these three types of services (primary, preventive, and emergency),
health centers must provide diabetes self-management training for patients with diabetes or renal
disease.37
Health centers are also required to provide enabling services such as transportation for individuals
residing in each center’s service area who have difficulty accessing the center, translation
services, and health education. Health centers may also provide supplemental services such as
additional dental care, mental health services, or substance abuse treatment.38 Table 1 describes
some specific services tracked in the Uniform Data System (UDS) 2011 data.
Table 1. Examples of Services Provided and the Number of Patients Served by
Health Centers (2011)
Service Provided
Number of Patients Served
Medical Services
17,354,833
Dental Services
4,037,384
Enabling Services
1,873,745
Mental Health Services
932,950
Substance Abuse Services
105,084
Source: HRSA, Uniform Data System (UDS) Report, UDS, National Rollup Report, 2011 at http://bphc.hrsa.gov/
uds/doc/2011/National_Universal.pdf and National Total Summary Data http://bphc.hrsa.gov/uds/view.aspx?year=
2011; hereinafter, 2011 UDS Report.
Reporting and Quality Assurance Requirements
Health centers are required to report to HRSA certain information and to have quality
improvement and assurance plans in place. First, health centers are required to report patient
demographics, services provided, staffing information, utilization rates, costs, and revenue to
HRSA’s UDS. Second, within the UDS, health centers must report on certain clinical outcomes to
assess quality.39 These outcomes are similar to those examined in other health care settings. They
include, for example, the percentage of children receiving recommended immunizations by the
age of two; percentage of women who were screened for cervical cancer; and the percentage of
patients whose body mass index was assessed and were referred to appropriate services if found
to be obese.40 Finally, health centers are required to have quality improvement systems in place
that include clinical services, management, and patient confidentiality assurances. To meet this
37 This requirement was added by P.L. 109-171, effective January 1, 2006.
38 For specific types of health centers (see “What Types of Health Centers Exist?”) some of supplemental services may
be required.
39 Such as performance measures and clinical outcomes commonly used by the Medicare and Medicaid programs, and
health insurance and managed care organizations. For more information, see http://bphc.hrsa.gov/policiesregulations/
performancemeasures/index.html.
40 Ibid. HRSA also submitted a report to Congress about ongoing health center quality improvement efforts; see U.S.
Department of Health and Human Services, Health Resources and Services Administration, Bureau of Primary Care,
Report to Congress: Efforts to Expand and Accelerate Health Center Program Quality Improvement, Rockville, MD,
April 26, 2011, http://bphc.hrsa.gov/ftca/riskmanagement/healthcenterqualityimprovement.pdf; herein after, Health
Center Quality Improvement Report.
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requirement, health centers must have a clinical director who reports on quality improvement and
assurance activities and conducts periodic assessments of the health center’s services to evaluate
the quality and appropriateness of services provided. The HHS Inspector General found that more
than two-thirds of the health centers they examined conducted quality assessments.41 HHS has
also awarded grants to health centers to implement quality initiatives such as care coordination
through mechanisms like medical homes.42
Licensing and Accreditation Requirements
Health center providers must be properly licensed in the state in which they practice. They must
also have admitting privileges at hospitals that health center patients would likely be referred to
(see “Health Service Requirements”). Furthermore, they must maintain proper credentials during
their health center employment.
Health centers are not required to be accredited by a national accreditation agency, but HRSA
encourages health centers to seek accreditation. Specifically, the agency encourages health
centers to seek accreditation from either the Accreditation Association for Ambulatory Health
Care (AAHC) or The Joint Commission (TJC). HRSA will pay some of the costs of seeking and
maintaining accreditation from one of these two accrediting entities.43
Grants that Support Federal Health Centers
HRSA awards five types of Section 330 authorized grants to support health centers: (1) grants for
new health centers; (2) grants to expand services at existing health centers; (3) grants for
construction and renovation; (4) planning grants; and (5) grants to reduce infant mortality.44 This
section describes these types of grants, the entities that are eligible to receive grants, and the
factors taken into consideration when awarding grants.
Types of Grants Available to Support Health Centers
The first type of grant awarded is called New Access Point (NAP) grants and permits existing
grantees to establish new sites or new grantees to establish new health centers. ACA funds were
used to support these grants in FY2012.45 The second type of grant is called Increased Demand
for Services (IDS) or Expanded Service (ES) grants. These grants are for health centers to expand
41 Stuart Wright, Deputy Inspector General for Evaluation and Inspections, Memorandum Report: Quality Assurance
and Care Provided at HRSA-Funded Health Centers, Department of Health and Human Services, Office of Inspector
General, OE-09-06-00420, Washington, DC, March 2, 2012.
42 U.S. Department of Health and Human Services, “Affordable Care Act Funds to Enhance Quality of Care at
Community Health Centers,” press release, September 27, 2012, http://www.hhs.gov/news/press/2012pres/09/
20120927b.html.
43 For more information, see http://bphc.hrsa.gov/policiesregulations/accreditation.html/.
44 The section also authorizes the Secretary to make grants to health centers to plan and develop managed care
networks and plans and practice management networks, and to guarantee loans that health centers may incur for these
purposes.
45 U.S. Department of Health and Human Services, “HHS Awards Affordable Care Act Funds to Expand Access to
Health Care,” press release, August 9, 2011, http://www.hhs.gov/news/press/2011pres/08/20110809a.html and U.S.
Department of Health and Human Services, “Health Care Law Expands Community Health Centers, Serves More
Patients,” press release, June 20, 2012, http://www.hhs.gov/news/press/2012pres/06/20120620a.html.
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the number of patients they serve or to provide additional types of services. The third type of
grants is awarded through the Capital Improvement Program (CIP) and provides funding for the
construction and renovation of health centers. These grants were supported with ARRA
appropriated funds and with ACA appropriated funds in FY2011 and FY2012.46 The fourth type
of grants is for entities that are not health centers, to plan and develop health centers. Funds
awarded may be used for assessing the health needs of the proposed service population and
developing linkages with the community and with health providers in the proposed service area.
ACA funds supported these grants in FY2011.47 The fifth grant program supports activities that
aim to reduce infant mortality. These grants have not been awarded in recent years; instead,
HRSA supports other infant mortality reduction programs.48
Grant Eligibility and Awarding Criteria
Public and non-profit entities are eligible to apply for Section 330 grants to operate health centers.
The majority of health center grantees operate facilities at more than one site and may operate
more than one type of health center.49 Grants are awarded competitively based on an assessment
of the need for services in a given area and the merit of the application submitted. Grants may
also be awarded based on certain funding priorities such as creating a rural-urban balance in
health center locations.50 Under statute, HRSA must allocate certain percentages of its budget to
grants that support health centers serving special populations (migrant workers, the homeless,
residents of public housing). Specifically, the health center program’s budget must be allocated as
follows:
46 See discussion in CRS Report R40181, Selected Health Funding in the American Recovery and Reinvestment Act of
2009, coordinated by C. Stephen Redhead, and CRS Report R41278, Public Health, Workforce, Quality, and Related
Provisions in PPACA: Summary and Timeline, coordinated by C. Stephen Redhead and Erin D. Williams, and U.S.
Department of Health and Human Services, “HHS Announces Affordable Care Act Funding Opportunity to Create
Jobs by Building, Renovating, and Repairing Community Health Centers,” press release, September 9, 2011,
http://www.hhs.gov/news/press/2011pres/09/20110909a.html and U.S. Department of Health and Human Services,
“Health Care Law Helps Community Health Centers Build, Renovate Facilities, Service More Patients,” press release,
May 1, 2012, http://www.hhs.gov/news/press/2012pres/05/20120501a.html.
47 In FY2011, ACA-appropriated funds were also used to support planning grants for entities seeking to become health
centers; see U.S. Department of Health and Human Services, “HHS Awards Affordable Care Act Funds for
Organizations to Become Community Health Centers,” press release, September 15, 2011, http://www.hhs.gov/news/
press/2011pres/09/20110915d.html. ACA funds have also been used to support quality improvement activities at health
centers, see U.S. Department of Health and Human Services, “Affordable Care Act to Support Quality Improvement
and Access to Primary Care for More Americans,” press release, September 29, 2011, http://www.hhs.gov/news/press/
2011pres/09/20110929b.html. Health center funding has also been used to support training and technical assistance for
health centers; see U.S. Department of Health and Human Services, “$8 Million in Affordable Care Act Funds to Help
Develop and Modernize Community Health Centers,” press release, November 19, 2010, http://www.hhs.gov/news/
press/2010pres/11/20101119b.html; U.S. Department of Health and Human Services, “HRSA Awards $231,8000 to
Provide Training and Technical Assistances to Improve Care for the Elderly Amount Safety Net Providers,” press
release, September 8, 2011, http://www.hrsa.gov/about/news/pressreleases/110908elderly.html; and U.S. Department
of Health and Human Services, “HRSA Awards $248,000 to Create a National LGBT Health Training and Technical
Assistance Center for Community Health Centers” press release, September 6, 2011, http://www.hrsa.gov/about/news/
pressreleases/110906lgbttraining.html.
48 For more information about these programs, see CRS Report R41378, The U.S. Infant Mortality Rate: International
Comparisons, Underlying Factors, and Federal Programs, by Elayne J. Heisler.
49 Health Center Quality Improvement Report.
50 Department of Health and Human Services, Health Resources and Services Administration, Justification of
Estimations for Appropriations Committees, FY2012, Rockville, MD; hereinafter, HRSA FY2012 Budget Justification
and Department of Health and Human Services, Health Resources and Services Administration, Justification of
Estimations for Appropriations Committees, FY2013, Rockville, MD; hereinafter, HRSA FY2013 Budget Justification.
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• 8.6% for grants to centers serving migrant or farmworkers,
• 8.7% for grants to centers serving homeless individuals, and
• 1.2% for grants to centers serving residents of public housing.51
A health center may be of more than one type, for example, a community health center may also
operate a migrant health center, but must devote at least 25% of its HRSA grant funding to
migrants to be considered to be serving a “special population.” In addition to these funding
requirements, HRSA is also required to give special consideration, within the competitive grant
process, to applications that are for centers that would serve sparsely populated areas, defined as
areas with seven or fewer residents per square mile.52GAO found that in order to ensure that these
percentages are met, HRSA may adjust funding awarding criteria, thereby funding some
applications that may not have scored as high in the competitive process.53
Grant recipients are not required to provide matching funds, but are required to use grant funds to
supplement and not supplant funding that had been available prior to the grant. Grant amounts
awarded are determined based on the cost of proposed grant activity (see Table 2). An entity may
receive funding for multi-year projects, but amounts awarded in subsequent years are contingent
on (1) congressional appropriations and (2) the entity’s compliance with applicable statutory,
regulatory, and reporting requirements.54 At the end of the application period, health centers are
required to compete for continued funding.55
Table 2. Health Center Grants Awarded in FY2011
Grants
FY2011
Total 1,134
Average Size
$2 million
Range of Awarded Amounts
$250 thousand-$13 million
Source: HRSA FY2013 Budget Justification.
What Is the Health Center Program’s Appropriation?
The health center program’s appropriation has increased over the past decade, resulting in more
centers and more patients served. From FY2000 through FY2012 (the last year of final
appropriation information available) the health center appropriation increased by 48%. Over this
same time period, the number of health center sites increased by 59%. Beginning in 2002, the
George W. Bush Administration began a multi-year effort to expand the health center program by
51 42 U.S.C. §254(b)(r)(2)(B).
52 Ibid and 42 U.S.C. §254b(p).
53 U.S. Government Accountability Office, Health Center Program: 2011 Grant Award Process Highlighted Need and
Special Populations Merit Evaluation, 12-504, May 2012.
54 As discussed above, GAO has raised some concerns with HRSA’s oversight of health center grants, see U.S.
Government Accountability Office, Health Center Program: Improved Oversight Needed to Ensure Grantee
Compliance with Requirements, 12-546, May 2012.
55 HRSA FY2013 Budget Justification.
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providing funding for new or expanded health centers for 1,200 communities.56 The program’s
expansion continued during the Obama Administration. In FY2009, under the Obama
Administration, the health center program received $2 billion under ARRA. Specifically, ARRA
provided $500 million for new sites and expanded services at existing sites. It also provided $1.5
billion for construction, renovation, equipment, and health information technology. The
program’s expansion may continue under the ACA, which permanently authorized the health
center program; appropriated a total of $1.5 billion for health center construction and repair; and
created the Community Health Center Fund (CHCF) that included a total of $9.5 billion for health
center operations to be appropriated in FY2011 through FY2015. However, it is not likely that
these funds will be used to expand the health center program because in FY2011, FY2012, and
the FY2013 six-month continuing resolution, these funds were or would be used to augment
reductions to discretionary appropriations to the health center program.57
Error! Reference source not found. presents the health center program’s appropriation from
FY2002 through the FY2013 six-month continuing resolution.58 The table also includes amounts
appropriated under ARRA and the ACA and the number of grantees in each fiscal year.
56 Department of Health and Human Services, Budget in Brief, FY2007, pp. 5-6 and 21.
57 Under the ACA, the CHCF was required to be used to increase the health center appropriation level above the
FY2008 appropriations level; however, P.L. 112-10, which provided full-year funding in FY2011, removed this
requirement for FY2011 and some of the CHCF was used to augment discretionary funding for the health center
program. The same thing occurred in FY2012 and in FY2013 under the 6-month continuing resolution.
58 P.L. 112-175.
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Table 3. Health Center Appropriations and Sites, FY2002-FY2013 (Continuing Resolution)
(Dollars in Millions)
2009
2011
2013
2013
ARRA
ACA
ACA
2013
ACA
2002 2003 2004 2005 2006
2007
2008
2009
Fundsa 2010 2011 CHCFb 2012 CHCFb C.R.c CHCFd
Appropriation
$1,343 $1,505 $1,617 $1,735 $1,785
$1,988 $2,065 $2,190
$2,000
$2,185 $2,581e $1,000 $2,767d $1,200 $2,223d $1,500
Change in
appropriation
from previous
year +$174 +$162 +$112 +$118 +$50
+$203 +$77
+$2,126e N/A -$2,005 +$396d N/A +$186d +$200d N.A.f +300d
Approx.
number of
sites 3,488 3,578 3,651 3,745 3,831
__g 6,208 7,892 7,892 8,156 8,501h N/A 8,746h N/A 8,746h N/A
Source: Compiled by CRS from Health Resources and Services Administration budget documents and H.Rept. 112-331 on P.L. 112-74.
Notes: Appropriated amounts include federal tort claims funds.
a. American Recovery and Reinvestment Act (ARRA, P.L. 111-5).
b. Community Health Center Fund (CHCF) refers to amounts transferred from the CHCF that was created in Section 10503 of the Patient Protection and Affordable
Care Act of 2010 (ACA, P.L. 111-148).
c. C.R. is the six-month continuing resolution enacted in P.L. 112-175; see Department of Health and Human Services, Health Resources and Services Administration:
Operating Plan for FY2013, Washington, DC, November 15, 2012.
d. Includes CHCF transfer.
e. Includes ARRA funding.
f.
Change in annual appropriation is not calculated because annual appropriation is not finalized.
g. Number not included in HRSA budget documents.
h. Number estimated in the FY2013 HRSA Budget Justification.
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What Are the Other Sources of Funding for the Health Center
Program?
In addition to amounts received from grants authorized under the program’s annual appropriation
(i.e., Section 330 grants), health centers receive funding from reimbursements and funding from
other sources (e.g., state and local grants). The relative contribution of each of these sources to an
individual health center’s budget varies by center. However, the HRSA compiles this information
for the health center program. Table 4 presents data for FY2011, the most recent year of final
data available. The table shows that Medicaid is the largest source of health center revenue (38%)
and that Section 330 grants provide approximately 20% of the program’s revenue. The table also
shows that amounts received from grants and contracts from state, local, and private foundations
provided nearly 17.6% of the program’s total revenue in FY2011. (See Table 4.)
Table 4. Health Center Revenue Sources (FY2011)
(Dollars in Millions)
Percent of
Funding Sources
Dollars
Program Revenue
Section 330 Authorized Grants
Section 330 Grants
2,480.9
19.5
Total (Section 330 authorized grants)
2,480.9
19.5
Reimbursements
Medicaid
4,830.0
38.0
CHIP
760.0
6.0
Medicare
300.0
2.4
Other third party payers (e.g., private insurance)
1,100.0
8.7
Patient Feesa
765.0
6.0
Total (Reimbursements)
7,755.0
61.0
Other Federal Grants
Other Federal Grants
230.0
1.8
Total (Other Federal Grants)
230.0
1.8
State, Local, and Private Grants and Contracts
State, Local, Other
2,240.0
17.6
Total (State, Local, and Private Grants and
2,240.0 17.6
Contracts)
Total (all sources)
12,705.9
N/A
Source: HRSA FY2013 Budget Justification.
Note: Percentages may not sum to 100% due to rounding.
a. This refers to amounts collected from self-pay patients.
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What Are Health Centers?
This section describes health center facilities funded under the health center program
appropriation. It includes a discussion of the four types of health centers funded and compares the
services offered and population served by each center type. The section also describes (1) the
populations served by the four types of health centers; (2) where health centers are located; and
(3) outcomes associated with health center use.59
What Types of Health Centers Exist?
There are four types of health centers: (1) community health centers; (2) health centers for the
homeless; (3) health centers for residents of public housing; and (4) migrant health centers. The
majority of health centers are community health centers (CHCs), which serve a generally
underserved population. The other three types of health centers serve more targeted populations,
including the homeless, residents of public housing, and migrant workers (Health Centers for the
Homeless, Health Centers for Residents of Public Housing, and Migrant Health Centers,
respectively). This section describes each type of health center, the population targeted by these
centers, and the specific services that each type of center must provide.60
Community Health Centers
The majority of health centers are CHCs because these facilities serve the general population with
limited access to health care. CHCs are required to serve all residents who reside in the area that
the CHC serves (this is also known as the catchment area). CHCs are required to provide
“primary health services” (see “Health Service Requirements”). The CHC-required services are
the baseline services that all types of health centers are required to provide. The other three types
of health centers may be required to provide certain supplemental services that aim to meet the
specific needs of the population they serve. The majority of health center program grant funding
is allocated to support CHCs. By statute, 18.5% of the budget must be reserved for grants that
support health centers serving special populations; this means that a maximum of 81.5% of the
health center program budget may be used to support CHCs.61
Health Centers for the Homeless
Health Centers for the Homeless (HCHs) provide services to homeless individuals; it is the only
federal health program that targets this generally uninsured population.62 Section 330 defines
59 The outcomes discussed are not exhaustive; instead, the discussion focuses on some of the more commonly
considered outcomes: improved health, reduced costs, and improved access.
60 There are a number of outpatient facilities that provide care to underserved populations that are similar to health
centers, but do not receive grants authorized in PHSA Section 330. These facilities are described in Appendix A.
61 CRS calculations based on requirements in 42 U.S.C. §254(b)(r)(2)(B) and discussion in U.S. Government
Accountability Office, Health Center Program: 2011 Grant Award Process Highlighted Need and Special Populations
Merit Evaluation, 12-504, May 2012.
62 National Coalition for the Homeless at http://www.nationalhomeless.org/factsheets/health.html.Information on other
programs available to the homeless population can be found in CRS Report RL30442, Homelessness: Targeted Federal
Programs and Recent Legislation, coordinated by Libby Perl.
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homeless individuals as those who lack permanent housing or live in temporary facilities or
transitional housing.63 In addition to the services required of all health centers, HCHs are required
to provide substance abuse services and supportive services that aim to meet the health needs of
the homeless population. HCHs may also provide mobile services and aim to connect homeless
individuals with supportive services such as emergency shelter, transitional housing, job training,
education, and some permanent housing. Grants are also available for innovative programs that
provide outreach and comprehensive primary health services to homeless children and children at
risk of homelessness. By statute, HRSA must allocate 8.7% of its budget to support these
centers.64
Health Centers for Residents of Public Housing
Health centers for residents of public housing65 are located in public housing and aim to provide
primary care to individuals who reside in public housing. These centers provide the services
required of CHCs and are not required to provide specific supplemental services. These centers
were authorized in 1990 because of congressional concern that public housing residents had
worse health than similar (by demographic and economic status) individuals who did not reside in
public housing.66 By statute, HRSA must allocate 1.2% of its budget to support these centers.67
Migrant Health Centers
Migrant health centers provide care to migratory farm workers (persons whose principal
employment is in agriculture on a seasonal basis and who establish temporary residences for work
purposes) and seasonal farm workers (persons whose principal employment is in agriculture on a
seasonal basis and who are not migratory agricultural workers).68 HRSA estimates that they
provide care to more than one-quarter of all migrant and seasonal farmworkers.69 In addition to
the general health center requirements, migrant health centers are required to provide certain
services specific to their service population’s health needs such as supportive services,
environmental health services, accident prevention, and prevention and treatment of health
conditions related to pesticide exposure.70 Migrant health centers may be exempt from providing
all required services, and may only operate during certain periods of the year. By statute, HRSA
must allocate 8.6% of its budget to support these centers.71
63 P.L. 104-299 Section 330(h)(4)(A).
64 42 U.S.C. §254(b)(r)(2)(B).
65 As defined by 42 U.S.C. §1437 et. seq.
66 P.L. 101-527, see also National Center for Health in Public Housing, “Public Housing Primary Care Program
(PHPC),” press release, July 28, 2011, http://www.nchph.org/healthcenterprofiles.html.
67 42 U.S.C. §254(b)(r)(2)(B).
68 42 U.S.C. 254b.
69 Health Center Quality Improvement Report.
70 42 CFR 56.102(g).
71 42 U.S.C. §254(b)(r)(2)(B).
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Comparison of Health Center Types
Table 5 describes the four types of health centers, their target populations, the services they are
required to provide, and the populations they serve. Additional services are assessed relative to
the CHC service requirements (see “Health Service Requirements”).
Table 5. Comparison of Health Center Types
(2011)
Health Center
Target
Number of
Additional
Population
Type
Population
Sites
Requirements
Characteristicsa
Community
All individuals who
8,054 Not
Applicable.b 18,415,662c
Health Centers
live in service area
Health Centers
Homeless
2,559 Prevention
and 825,295 homeless
For the
individuals
treatment services for
patients seen.
Homeless
substance abuse.
Approximately 33% of
the patient population is
African American.
Health Centers
Individuals who
782
Must consult with
187,992 patients seen.
for Residents of
reside in or near
public housing residents Approximately 44% of
Public Housing
public housing
prior to applying for a
the patient population is
grant.
African American and
33% is Hispanic or
Latino.
Migrant Health
Migrant,
1,747 Environmental
health
795,808 patients seen.
Centers
agricultural
services including
Approximately 90% of
workers
sanitation services; and
the patient population is
services related to the
Hispanic or Latino.
prevention and
treatment of pesticide
exposure.
Source: HRSA’s Data Warehouse at http://datawarehouse.hrsa.gov/sitesdetail.aspx and HRSA, UDS, National
Rollup Report 2010.
a. Refers to the 2011 patient population.
b. CHC-required services are considered the baseline; therefore, additional requirements are assessed relative
to the requirements for CHCs.
c. HRSA does not report number of patients seen at CHCs; this number was estimated by subtracting the
number seen at the three other types of health centers from the total number of patients seen
(20,224,757).
Who Uses Health Centers?
According to HRSA, health centers served 20.2 million patients in 2011. These patients were
generally socioeconomically disadvantaged and uninsured or underinsured.72 The majority of
health center patients have incomes at or below the federal poverty level.73 Nearly a quarter of
72 2011 UDS Report.
73 The 2011 federal poverty level was $11,484 for an individual living alone; $14,657 for a two-person family; and
$23,021 for a family of four. For more information, see CRS Report RL33069, Poverty in the United States: 2011, by
Thomas Gabe.
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patients are treated in a language other than English and the majority of health center patients are
racial or ethnic minorities. In 2011, nearly one-third of health center patients were identified as
African-American and/or Hispanic/Latino. Both of these rates are more than double the
proportion of these groups in the overall U.S. population. Table 6 presents some demographic
characteristics of the health center patient population in 2011 including age, race, ethnicity, and
insurance status.
Table 6. Health Centers’ Patients’ Profile, 2011
Demographic Characteristics of Patients Percentage of Patients Served
Income at or below the federal poverty level
55.4%
Enrolled in Medicaid
38.7%
Uninsured
36.4%
Age 18 and younger
35.0%
Hispanic/Latino 34.5%
African-American 20.6%
Enrolled in Medicare
7.8%
Age 65 and older
6.9%
Source: Department of Health and Human Services, Health Resources Services and Administration’s website:
http://bphc.hrsa.gov/healthcenterdatastatistics/index.html, 2011 Data Snapshot; and HRSA website: “What is a
Health Center” at http://bphc.hrsa.gov/about/.
Where Are Health Centers Located?
Figure 1 shows the locations of health centers funded with PHSA Section 330 grants. These
include some school-based health center locations because some grantees use Section 330 funds
to support this health center type. The map generally shows, as expected, that the majority of sites
are community health centers. It also shows that a number of health centers receive grants to
operate multiple health center types in the same geographic area.
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Figure 1. Health Center Grantee Sites
(Data as of June 2011)
Source: HRSA Geospatial Data Warehouse.
Notes: Some entities use PHSA Section 330 funds to operate School Based Health Center even though these
centers are not explicitly authorized in PHSA Section 330. The ACA created a separate grant program to
support School-Based Health Centers. This program is discussed in Appendix A.
What Outcomes Are Associated with Health Center Use?
Researchers have found that access to health centers can improve health outcomes and reduce
costs for the populations and areas they serve.74 Research has also found that health centers may
increase access to health care for generally underserved populations such as those enrolled in
Medicaid and racial and ethnic minorities. This section briefly summarizes the research on the
effects of health centers on health, costs, access, and quality.
74 This research is summarized in report sections “Health Outcomes” and “Cost Outcomes.”
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Health Outcomes
Health centers focus on preventive care and attempt to manage patients’ chronic conditions. This
focus may improve health by preventing disease and disease-related complications.75 Research
has found that health center patients are more likely to receive preventive health services—
including pap tests and influenza vaccinations—and more likely to receive preventive
screenings—including mammograms and colonoscopies—when compared to non-health center
patients of similar socioeconomic status.76 Health center patients are also more likely to have their
chronic conditions—like diabetes—managed.77 Finally, health centers aim to increase prenatal
care use in low income pregnant women to reduce outcomes associated with infant mortality such
as low birth weight. HRSA has found that health centers have succeeded in this effort because an
increasing number of health center patients initiate prenatal care in their first trimester. This has
resulted in fewer health center patients—when compared to the national average—having low
birth weight babies—a major cause of infant death.78
Cost Outcomes
Researchers have found that health centers may lower health care costs by reducing more costly
emergency department visits. GAO found that, on average, treatment at health centers is nearly
one-seventh the cost of treatment of the same condition in an emergency department.79 Given
these differences in cost, health centers that are successful at reducing emergency department use
may reduce health care costs. One study found that counties with health centers have lower
emergency room use and that individuals who live near health centers use emergency rooms
less.80 In addition, GAO found that health centers attempt to lower emergency department use in
75 U.S. Government Accountability Office, Hospital Emergency Departments: Health Center Strategies that May Help
Reduce Their Use, GAO-11-414R, April 11, 2011.
76 Leiyu Shi et al., “Racial/Ethnic and Socioeconomic Disparities in Access to Care and Quality of Care for US Health
Center Patients Compared with Non-Health Center Patients,” Journal of Ambulatory Care Management, vol. 32, no. 4
(October-December 2009), pp. 342-350 and Leiyu Shi and Gregory D. Stevens, “The Role of Community Health
Centers in Delivering Primary Care to the Underserved,” Ambulatory Care Management, vol. 30, no. 2 (April-June
2007), pp. 159-170 and L. Elizabeth Goldman et al., “Federally Qualified Health Centers and Private Practice
Performance on Ambulatory Care Measures,” American Journal of Preventive Medicine, July 2012, pp. 1-8. Despite
higher rates of preventive health services and vaccinations, the HHS Inspector General found that not all health center
patients received the recommended preventive services or appropriate vaccinations. See Stuart Wright, Deputy
Inspector General for Evaluation and Inspections, Memorandum Report: Quality Assurance and Care Provided at
HRSA-Funded Health Centers, Department of Health and Human Services, Office of Inspector General, OE-09-06-
00420, Washington, DC, March 2, 2012.
77 Marshall H. Chin et al., “Quality of Diabetes Care in Community Health Centers,” American Journal of Public
Health, vol. 90, no. 3 (March 2000), pp. 431-434.
78 FY2012 HRSA Budget Justification and CRS Report R41378, The U.S. Infant Mortality Rate: International
Comparisons, Underlying Factors, and Federal Programs, by Elayne J. Heisler.
79 See research summarized in U.S. Government Accountability Office, Hospital Emergency Departments: Health
Center Strategies that May Help Reduce Their Use, GAO-11-414R, April 11, 2011.
80 Md. Monir Hossain and James N. Laditka, “Using Hospitalization for Ambulatory Care Sensitive Conditions to
Measure Access to Primary Health Care: An Application of Spatial Structural Equation Modeling,” International
Journal of Health Geography, vol. 8, no. 51 (August 2008) and Janice C. Probst et al., “Association Between
Community Health Center and Rural Health Clinic Presence and County-Level Hospitalization Rates for Ambulatory
Care Sensitive Conditions: An Analysis Across U.S. States,” BMC Health Services Research, vol. 9, no. 134 (July
2009).
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the communities in which they operate by educating patients about services offered at health
centers and by offering same day and afterhours appointments.81
Health centers may also reduce health care costs by preventing unnecessary hospitalizations. A
number of studies have examined “ambulatory sensitive conditions,” which are conditions that
potentially can be treated in an outpatient setting thus avoiding a hospitalization. These studies
have found that in communities with health centers, individuals with these conditions were less
likely to be hospitalized.82 Health center patients enrolled in Medicaid were also less likely to be
hospitalized and less likely to have an emergency room visit.83
Researchers have also found that patients who receive the majority of their care at health centers
had lower medical costs (41% lower on average) than those who receive the majority of their care
through another source.84 Another study found the difference to be 24%,85 while a North Carolina
study found that health center users’ annual health care spending was 62% less than similar
patients (matched by demographic characteristics and health status) who were served in other
outpatient settings.86 Regardless of the magnitude of the difference, there appears to be consensus
that health centers provide less costly health care than other outpatient settings.87 The reasons that
health centers provide less costly care are debated. The authors of the North Carolina study
suggest that health centers provide health care at a lower cost because they can offer discounted
services through federal programs (see “Which Federal Programs Are Available to Health
Centers?”). They also suggest that health centers may provide less costly care because their
providers work on a salaried basis, and so do not have financial incentives to order additional
tests. In other outpatient settings this may not be the case because providers generally work under
a fee-for-service model where they may receive additional remuneration for providing more
services.88 Other studies note that differences in the cost of services do not explain the difference
because health centers are paid the FQHC rate, which should likely be comparable to, or higher
than, the rates reimbursed in other outpatient settings. Given differing explanations on how health
centers may reduce health care costs, the researchers state that health center costs may be lower
because they avert more costly emergency room visits, specialty care, or hospital stays.89
81 U.S. Government Accountability Office, Hospital Emergency Departments: Health Center Strategies the May Help
Reduce Their Use, GAO-11-414R, April 11, 2011.
82 The study measured “ambulatory care sensitive conditions,” which are conditions for which hospitalization could
have been prevented with timely primary care. These conditions are used as a measure of access to health care and this
measure has been endorsed by the Institute of Medicine, among others. See MD Monir Hossain and James N. Laditka,
“Using Hospitalization for Ambulatory Care Sensitive Conditions to Measure Access to Primary Health Care: An
Application of Spatial Structural Equation Modeling,” International Journal of Health Geography, vol. 8, no. 51
(August 2008).
83 Health Center Quality Improvement Report.
84 Ibid.
85 Patrick Richard et al., “Cost Savings Associated with the Use of Community Health Centers,” Journal of Ambulatory
Care Management, vol. 35, no. 1 (2012), pp. 50-59.
86 Patrick Richard, et al., Bending the Health Care Cost Curve in North Carolina: The Experience of Community
Health Centers, Geiger Gibson/RCHN Community Health Foundation Research Collaborative, Policy Research Brief
#24, Washington, DC, August 9, 2011.
87 See, for example, discussion in HRSA FY2012 Budget Justification and HRSA FY2013 Budget Justification.
88 Patrick Richard, et al., Bending the Health Care Cost Curve in North Carolina: The Experience of Community
Health Centers, Geiger Gibson/RCHN Community Health Foundation Research Collaborative, Policy Research Brief
#24, Washington, DC, August 9, 2011.
89 Patrick Richard et al., “Cost Savings Associated with the Use of Community Health Centers,” Journal of Ambulatory
(continued...)
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Access to Health Care
Health centers aim to provide care to underserved populations and, in doing so, may increase
health care access. By definition, health centers are located in areas with few providers including
rural and inner city areas. These locations may provide to access for populations that are
otherwise underserved, for example, because of geography or income. Health centers also serve a
more diverse population than do office-based physicians; health center patients were more likely
to be Hispanic or African American.90 Health centers may also increase access for specific racial
and ethnic groups. For example, one study found that health centers increase health care access
for Asian Americans, Native Hawaiians, and other Pacific Islanders.91 Some research has
suggested that because health centers provide care to a population that might otherwise have
difficultly accessing health care, health centers may reduce health disparities.92
Health centers are more likely to accept new patients and patients who are unable to pay for
services (i.e., charity patients). Health center patients are also more likely to be enrolled in
Medicaid or CHIP. As noted above health centers are required to coordinate with Medicaid and
CHIP plans and are required to accept all patients regardless of their insurance status or ability to
pay. Some researchers have found that private providers may not accept Medicaid patients
because of the program’s administrative requirements or low reimbursements rates.93 Given this
possibility, health centers may provide access to Medicaid and CHIP patients who would
otherwise have difficulty finding care.
Quality
Recent evaluations have compared the quality of care provided at health centers to that provided
in physician offices. One study examined 18 quality measures and found that health centers
performed better on 6 measures (related to treatment for congestive heart failure, coronary artery
disease, depression, and screening), no differently on 11 measures, and worse on 2 measures
(related to diet counseling for at risk adolescence). This was observed despite the study’s finding
that health centers treat a population with higher rates of comorbidities that may make it more
difficult to provide care that meets the criteria required by the quality measures examined.94 Other
studies have examined how health centers manage chronic conditions; for example, one study
(...continued)
Care Management, vol. 35, no. 1 (2012), pp. 50-59.
90 Esther Hing, Roderick S. Hooker, and Jill J. Ashman, “Primary Health Care in Community Health Centers and
Comparisons with Office-Based Practice,” Journal of Community Health, vol. 36, no. 3 (2011), pp. 406-413.
91 Rosy Chang Weir, “Use of Enabling Services by Asian American, Native Hawaiian, and Other Pacific Islander
Patients at 4 Community Health Centers,” American Journal of Public Health, vol. 100, no. 11 (November 2010), pp.
2199-2205.
92 Health Center Quality Improvement Report.
93 Jack Hadley and Peter Cunningham, “Availability of Safety Net Providers and Access to Care of Uninsured
Persons,” Health Services Research, vol. 39, no. 5 (October 2004), pp. 1527-1546 and Peter J. Cunningham and Ann S.
O'Malley, “Do Reimbursement Delays Discourage Medicaid Participation by Physicians?” Health Affairs, vol. 28, no.
1 (November 18, 2008), p. w17–w28.
94 L. Elizabeth Goldman et al., “Federally Qualified Health Centers and Private Practice Performance on Ambulatory
Care Measures,” American Journal of Preventive Medicine, July 2012, pp. 1-8.
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found that health centers that implemented quality improvement teams to manage asthma
succeeded in reducing hospitalizations and emergency department visits due to asthma.95
Which Federal Programs Are Available to Health Centers?
Section 330 grants, on average, cover approximately one-fifth of the cost of operating a health
center;96 the federal government provides other assistance—for example, provider recruitment
and financial assistance—that may support individual health center operations. To assist with
operations, health centers may employ members of the National Health Service Corps (NHSC), a
program that provides scholarships and loan repayments in exchange for a period of service at a
health center.97 The federal government also provides financial support to health centers. For
example, it designates health centers as Federally Qualified Health Centers (FQHCs), thereby
making these facilities eligible for higher Medicare and Medicaid reimbursement rates.98
Medicaid is the largest source of reimbursements, providing nearly 38% of all revenue for the
health center program (see Table 4). While the amount received by an individual health center
varies by the percentage of the patient population that is enrolled in Medicaid, the NACHC
estimates that more than one-third of all health center revenue is from Medicaid
reimbursements.99 Health centers are also eligible for discounted prescription drugs and vaccines.
Health centers may also receive additional support from grants and loans offered through other
federal programs.
National Health Service Corps Providers
Health centers are automatically designated as health professional shortage areas (HPSAs) and
are therefore eligible for National Health Service Corps (NHSC) providers. The NHSC provides
scholarships or loan repayments to health professionals working at specific facilities in HPSAs.
About half of Corps members serve in health centers,100 making the program an important
mechanism for health centers to recruit providers. In addition to the NHSC, some states may
operate loan repayment programs for health professionals providing care in state designated
shortage areas.101
95 Lob, Sibylle H. et al., “Promoting Best-Care Practices in Childhood Asthma: Quality Improvement in Community
Health Centers,” Pediatrics, vol. 128, no. 1 (July 2011), pp. 20-28.
96 Health Center Quality Improvement Report.
97 They may also fulfill their National Health Service Corps (NHSC) commitment at other types of facilities that
provide care to the underserved.
98 These payments are discussed in more detail in Appendix B; payments are considered to be “higher” than the
payment rates that physician practices receive because they are cost-based and reflect a broader range of services, than
do payments to physician practices. See, for example, Department of Health Policy, School of Public Health and Health
Services, The George Washington University, Quality Incentives for Federally Qualified Health Centers, Rural Health
Clinics and Free Clinics: A Report to Congress, Washington, DC, January 23, 2012.
99 2012 Health Center Chartbook.
100 For more detailed information on the NHSC, see HRSA FY2013 Budget Justification.
101 National Association of Community Health Centers, The Struggle to Build a Strong Workforce at Health Centers,
Fact Sheet #0609, Washington, DC, 2009.
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J-1 Visa Waivers
Health centers may also be able to obtain providers temporarily through special waivers for J1
visa physicians. In general, foreign medical graduates who entered the country on a J-1 student
visa must return to their home country for two years after they have completed their medical
training (medical school and residency). J-1 visa waivers permit the two year foreign residency
period to be waived if the J-1 visa holder practices primary care in a HPSA.102 Because health
centers are designated as HPSAs, a number of centers may rely on this program to recruit
physicians.103
Federally Qualified Health Center Designation104
Health centers are automatically designated as Federally-Qualified Health Centers (FQHCs),105
but must enroll as a provider in the Medicare and/or Medicaid programs to receive the higher106
reimbursement rates for services provided to patients enrolled in these programs.107 This higher
reimbursement rate is an important source of health center revenue because more than one-third
of the patients seen at health centers are enrolled in Medicaid.108 Specific FQHC Medicare and
Medicaid reimbursement methodology, including recent payment changes, are described in
Appendix B.
340B Drug Pricing Program109
Federal health centers are eligible to participate in the 340B Drug Pricing program, which
requires drug manufacturers to provide drug discounts or rebates to 340B eligible facilities. The
program is free for health centers and provides drugs at discount prices—ranging from 13% to
23% below average manufacturer price depending on the type of drug. HRSA reports that 340B
eligible facilities, between FY2010 and FY2011, will receive an estimated $3 billion in drug
discounts through the program.110
102 CRS Report RS22584, Foreign Medical Graduates: A Brief Overview of the J-1 Visa Waiver Program, by Karma
Ester and http://www.raconline.org/topics/hc_providers/j1visafaq.php.
103 This program provides a limited number of visa waivers and requires that the applicant have a three-year
employment contract. For more information, see http://www.raconline.org/topics/hc_providers/j1visafaq.php.
104 Because all health centers are eligible to be designated as Federally Qualified Health Center (FQHCs) some refer to
FQHCs and health centers interchangeably.
105 Entities that receive PHSA Section 330 funds directly or through a contract with a Section 330 grantee, may be
designated as Federally Qualified Health Centers (FQHCs). When FQHCs were first established in 1989, entities that
received PHSA Section 329 and Section 340 grants were also eligible to become FQHCs. The latter program is no
longer authorized and the former is not currently funded.
106 These payments are discussed in more detail in Appendix B; payments are considered to be “higher” than the
payment rates that physician practices receive because they are cost-based and reflect a broader range of services, than
do payments to physician practices. See, for example, Department of Health Policy, School of Public Health and Health
Services, The George Washington University, Quality Incentives for Federally Qualified Health Centers, Rural Health
Clinics and Free Clinics: A Report to Congress, Washington, DC, January 23, 2012.
107 Health Resources and Services Administration, Program Assistance Letter: Process of Becoming Eligible for
Medicare Reimbursements under the FQHC Benefit, Rockville, MD, March 8, 2011.
108 Health Center Quality Improvement Report.
109 HRSA FY2012 Budget Justification.
110 Ibid.
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Vaccines for Children Program111
Health centers are eligible to participate in the Vaccines for Children Program (VFC), which
provides vaccines for low income children who may not be vaccinated because of costs. The
program is administered by the Centers for Disease Control and Prevention (CDC) and partially
funded by Medicaid. The CDC buys the vaccines and distributes them to health departments that,
in turn, distribute them to VFC providers including health centers. VFC provides free vaccines to
Medicaid enrolled children and VFC eligible children (those who are uninsured, underinsured,112
or those who are American Indian or Alaska native). Health centers are a VFC eligible provider,
and provide vaccinations as part of their mission to provide primary and preventive services. The
VFC program enables health centers to provide these vaccines at a lower cost to the patients and
to the health center.
Federal Torts Claims Act Coverage
Health center employees and board members do not need to carry medical malpractice coverage
because they are covered under the Federal Tort Claims Act (FTCA).113 Under this program,
health center employees and contractors cannot be sued for medical malpractice for care they
provided that was within the scope of their health center employment. According to HRSA, in
FY2010, 103 claims were paid through the FTCA program totaling $52.6 million.114 This
program provides financial support to health centers because the center would otherwise have to
pay for this coverage and would be responsible for payment and rate increases that may
accompany claims made against health center providers.115
Ryan White HIV/AIDS Treatment Grants116
Health centers are eligible to receive grants authorized under parts A and C of the Ryan White
AIDS program. Part A authorizes grants for primary care, access to antiretroviral therapies, and
other health and supportive services. These grants are awarded to certain metropolitan areas and
are used to provide care for low-income, underserved, uninsured, or underinsured individuals
living with HIV/AIDS. Part C grant funds are awarded to entities to provide medical services
such as testing, referrals, and clinical and diagnostic services to underserved and uninsured
people living with HIV/AIDS in rural and frontier communities. In 2011, health centers received
approximately $74 million in Ryan White AIDS program grants.117
111 This paragraph is drawn from Centers for Disease Control and Prevention, Vaccines for Children Operations Guide,
Atlanta, GA, February 2, 2011, http://www.cdc.gov/vaccines/programs/vfc/downloads/vfc-op-guide/vfc-op-guide-all-
chaptr-files.pdf.
112 Underinsured refers to children who have private insurance coverage that does not cover vaccination or where
vaccination coverage is capped at a certain amount. VFC coverage for underinsured children is only available at health
centers and rural health clinics.
113 CRS Report 95-717, Federal Tort Claims Act (FTCA), by Vivian S. Chu.
114 HRSA FY2013 Budget Justification.
115 This responsibility could include both the cost of the claims and the legal costs resulting from defending providers
against these claims.
116 For more information about this program, see CRS Report RL33279, The Ryan White HIV/AIDS Program, by Judith
A. Johnson.
117 2011 UDS Report.
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Other Federal Grant Programs118
Health centers are eligible to apply for a number of federally funded grant programs including
programs that seek to improve rural health and health care;119 increase mental health and
substance abuse services availability;120 provide services to high-risk pregnant women and their
infants;121 increase health professional training at health centers;122 and increase access to family
planning services for low income families.123 The majority of these programs are funded by
discretionary appropriations and are competitive grant programs authorized in the PHSA.
Programs specific to rural areas may also be administered by the U.S. Department of Agriculture
(USDA) and are authorized in other acts. For example, health centers in rural areas may be
eligible for USDA programs that may assist facilities with acquiring equipment or space through
loan guarantees and with acquiring broadband access.124 Health centers may also use General
Services Administration resources to acquire real estate and dispose of property125 and may use
the Department of Housing and Urban Development’s insurance program to finance facility repair
and improvement.126
Issues for Congress
There are a number of issues facing health centers that may be of concern to Congress. These
include (1) the role of health centers in health insurance expansions under the ACA; (2) the
adequacy of the health center workforce; and (3) financial challenges that health centers may
face. These challenges may also be interrelated; for example, health centers may be affected by
the mandatory budget reductions that may be required as part of the Budget Control Act (P.L.
112-25),127 and such budget reductions may impact the ability of health centers to provide access
to care for the newly insured when the ACA is fully implemented. This section briefly
summarizes these issues and discusses how some ACA changes may alleviate or exacerbate
health center concerns.
118 In addition to federal support and amounts collected from reimbursements, health centers may also receive support
from private foundations and state or local government grants and contracts; see 2010 UDS Report.
119 HRSA FY2013 Budget Justification; for programs through the U.S. Department of Agriculture, see
http://www.rurdev.usda.gov/RD_Grants.html.
120 For more information about the Substance Abuse and Mental Health Services Administration, see
http://www.samhsa.gov/.
121 Health Resources and Services Administration, Maternal and Child Health Bureau, “Healthy Start,”
http://mchb.hrsa.gov/programs/healthystart/index.html and CRS Report R42428, The Maternal and Child Health
Services Block Grant: Background and Funding, by Amalia K. Corby-Edwards.
122 CRS Report R41390, Discretionary Spending in the Patient Protection and Affordable Care Act (ACA), coordinated
by C. Stephen Redhead, and CRS Report R41301, Appropriations and Fund Transfers in the Patient Protection and
Affordable Care Act (ACA), by C. Stephen Redhead.
123 CRS Report RL33644, Title X (Public Health Service Act) Family Planning Program, by Angela Napili.
124 For description of these programs, see United States Department of Agriculture Rural Development, accessed
October 14, 2011, http://www.rurdev.usda.gov/HCF_CF.html.
125 See General Services Administration, Federal Real Property Utilization and Disposal at https:///
propertydisposal.gsa.gov and Personal Property for Reuse and Sale at http://www.gsa.gov/portal/category/21045.
126 See U.S. Department of Housing and Urban Development, Property Improvement Loan Insurance (Title I) at
http://www.hud.gov/offices/hsg/sfh/title/title-i.cfm.
127 These budget reductions will be required if spending exceeds certain levels. For more information, see CRS Report
R41965, The Budget Control Act of 2011, by Bill Heniff Jr., Elizabeth Rybicki, and Shannon M. Mahan.
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Health care access has traditionally been an issue of congressional concern. For example, GAO,
at congressional request, has examined Medicare and Medicaid beneficiary access to health care
providers.128 In addition, one of the purposes of ACA Title V was to improve access to and the
delivery of health care services for all individuals, particularly low income, underserved,
uninsured, minority, health disparity, and rural populations.129 The health workforce and its role in
providing access to traditionally underserved populations has also been an area of congressional
interest. For example, one of the four mechanisms that Title V of the ACA included to improve
health care access was to “increase the supply of a qualified health care workforce.” The title also
reauthorized a number of programs in Titles VII and VIII of the PHSA both of which focus on the
workforce.
Congress, through the appropriations process for the health center program and for programs that
support health centers, has an interest in the financial circumstances that health centers face.
Congress may also be interested in how deficit reduction efforts and other policy changes (for
example, changes in Medicare and Medicaid payments or eligibility) may affect the health center
program and the financial circumstances of individual health centers. Finally, Congress may
consider program changes—such as making changes to granting preference or program
requirements—as a way of addressing some of the challenges that health centers face.
Health Centers and Health Insurance Expansion in the ACA
The ACA, by expanding health insurance coverage, may increase the number of health center
patients and may increase the amount of reimbursements received. The ACA aims to expand
insurance coverage by expanding Medicaid eligibility and by providing subsidies for certain
individuals to obtain private insurance.130 These changes may increase the number of individuals
who access health centers and may increase the amount of reimbursements that health centers
receive. Although health centers are available to the uninsured and Medicaid patients prior to the
full implementation of the ACA, patients are required to pay for services based on their income
(see “Fee Schedule Requirements”). Individuals who obtain private health insurance or Medicaid
coverage under the ACA may have lower out of pocket costs for services received at health
centers. These lower costs could increase the number of health center patients.131 There is also
128 For discussion of Medicare beneficiary access, see U.S. Government Accountability Office, Medicare Physician
Services: Utilization Trends Indicate Sustained Beneficiary Access with High and Growing Levels of Service in Some
Areas of the Nation, 09-0559, August 28, 2009, http://www.gao.gov/new.items/d09559.pdf; for Medicaid, see U.S.
Government Accountability Office, State and Federal Actions Have Been Taken to Improve Children’s Access to
Dental Services, but More Can Be Done, GAO-10-112T, October 7, 2009, http://www.gao.gov/products/GAO-10-
112T.
129 P.L. 111-148. The populations included in the purpose of this title are those that are traditionally served by health
centers.
130CRS Report R41664, ACA: A Brief Overview of the Law, Implementation, and Legal Challenges, coordinated by C.
Stephen Redhead. The June 28, 2012 United States Supreme Court’s decision in National Federation of Independent
Business v. Sebelius found that, with regard to the Medicaid expansion provision, the federal government cannot
terminate current Medicaid program federal matching funds if a state refuses to expand its Medicaid program to include
non-elderly, non-pregnant adults under 133% of the federal poverty level. If a state accepts the new ACA Medicaid
expansion funds, it must abide by the new expansion coverage rules, but, based on the Court’s opinion; it appears that a
state can refuse to participate in the expansion without losing any of its current federal Medicaid matching funds. This
aspect of the decision may mean that some states may choose not to implement the Medicaid expansion, which may
mean that the potential effects of the ACA on health centers would differ by states. The discussion in “Health Centers
and Medicaid Expansion” includes analyses of both instances where the Medicaid program is and is not expanded.
131 Kaiser Commission on Medicaid and the Uninsured, Community Health Centers: Opportunities and Challenges of
(continued...)
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evidence that individuals use more health services after obtaining insurance coverage. If this
occurs after the ACA is implemented, it would also increase health center use.132 Evidence from
Massachusetts, which implemented health insurance expansions similar to those included in the
ACA, suggests that health center use will increase after implementation. Massachusetts health
centers reported that their patient case load increased by 7% after the state’s health insurance
expansions were implemented.133 The ACA health insurance and Medicaid expansion, by
potentially increasing the health center patient base, may also strain health centers’ capacity to
provide services. These changes may affect health care access in general and health care access
for Medicaid beneficiaries in particular. This section discusses the potential impacts of Medicaid
and private insurance expansion on health centers.
Health Centers and Medicaid Expansion
The ACA aims to increase health insurance coverage, in part, by expanding Medicaid
enrollment.134 Medicaid beneficiaries may seek care at health centers because some private
providers may not accept Medicaid because of low reimbursement rates or administrative
requirements,135 whereas health centers are required to accept Medicaid patients. Some have
speculated that the ACA’s investment in health centers—in particular through the CHCF—was, in
part, in recognition of the potential for an expanded health center population base.136 Should
health centers provide care to an expanded Medicaid population this would likely benefit health
centers because more health center patients will have services reimbursed by Medicaid.137 The
expanded service population may strain health centers’ capacity to provide services, as discussed
below. Under the United States Supreme Court’s decision in National Federation of Independent
Business v. Sebelius, states have the option to implement the Medicaid expansion and some state
governors have indicated that they will not choose to do so.138 In these states, individuals who are
(...continued)
Health Reform, Issue paper, Washington, DC, August 2010.
132 U. S Department of Health and Human Services, Health Resources and Services Administration, Bureau of Health
Professions, The Physician Workforce: Projections and Research into Current Issues Affecting Supply and Demand,
December 2008,ftp://ftp.hrsa.gov/bhpr/workforce/physicianworkforce.pdf.
133 Kaiser Commission on Medicaid and the Uninsured, How is the Primary Care Safety Net Faring in Massachusetts?
Community Health Centers in the Midst of Health Reform, Issue paper, Washington, DC, March 2009.
134CRS Report R41664, ACA: A Brief Overview of the Law, Implementation, and Legal Challenges, coordinated by C.
Stephen Redhead.
135 Peter J. Cunningham, State Variation in Primary Care Physician Supply: Implications for Health Reform Medicaid
Expansions, Center for Studying Health System Change, No 19, Washington, DC, March 2011. The ACA increases
Medicaid payments to primary care providers in 2013 and 2014; this payment increase may make some private
providers more willing to accept Medicaid patients. For information on the ACA required payment increases, see CRS
Report R41210, Medicaid and the State Children’s Health Insurance Program (CHIP) Provisions in ACA: Summary
and Timeline, by Evelyne P. Baumrucker et al.; for discussion of impact on health centers, see Jessamy Taylor,
Changes in Latitudes, Changes in Attitudes: FQHCs and Community Clinics in a Reformed Health Care Market,
National Health Policy Forum, Issue Brief No. 848, Washington, DC, December 18, 2012.
136 Kaiser Commission on Medicaid and the Uninsured, Community Health Centers: Opportunities and Challenges of
Health Reform, Issue paper, Washington, DC, August 2010 and Patrick Richard et al., “Cost Savings Associated with
the Use of Community Health Centers,” Journal of Ambulatory Care Management, vol. 35, no. 1 (2012), pp. 50-59.
137 Ibid.
138 CRS Report R41664, ACA: A Brief Overview of the Law, Implementation, and Legal Challenges, coordinated by C.
Stephen Redhead and The Advisory Board Company, Where Each State Stands on ACA’s Medicaid Expansion, The
Daily Briefing, Washington, DC, December 12, 2012, http://www.advisory.com/Daily-Briefing/2012/11/09/
MedicaidMap.source for states not implementing Medicaid expansion.
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currently uninsured, but who do not qualify for private insurance subsidies under the ACA, will
likely remain uninsured.139 Health centers would still be a source of care for these individuals,
who would pay according to their income and the health center’s sliding scale fee schedule.
Should the amounts paid be less than the cost of services, then health centers may be strained to
provide services to the population that remains uninsured. The extent to which this will occur and
its effect on individual health centers is not yet known and will vary by state and by health center.
Health Centers and ACA Private Insurance Expansions
Health centers are also a source of care for the uninsured, some of whom may obtain private
insurance coverage under the ACA. There are some who suggest that once health center patients
who were previously uninsured gain insurance coverage, they may seek private providers, which
would reduce the health center service population. However, evidence from Massachusetts, which
has already expanded insurance coverage, does not suggest that this will occur. Researchers found
that Massachusetts health centers retained their patients after Massachusetts’s insurance
expansion was implemented.140 Should this occur after the ACA insurance expansions, it would
likely benefit health centers because more health center patients will have services reimbursed by
private insurance,141 which should increase health center revenue. Experts project that 9.2% of
health center patients will be covered by a private insurance plan offered through the new health
insurance exchanges and that this percentage should grow over time.142
The ACA also requires that private insurance policies offered through the newly created
exchanges include access to “essential community providers”—providers that serve
predominately low-income and medically underserved individuals, including health centers.143
This would mean that health centers would be included as providers in all health insurance plans
offered through the exchanges; however, some health centers are concerned that health insurance
plans in the exchange are not required to contract with them. Instead, they are required to provide
access to essential community providers. Health centers are also concerned about the payment
rates they may receive from exchange plans and that they may have little leverage to negotiate
rates.144 This requirement may mean that some newly insured who were not previously health
center patients may consider becoming health center patients.
The impact of the ACA when fully implemented on the health center patient base and revenue is
not yet known. Furthermore, as will be discussed below, health centers face other challenges that
139 CRS Report R41664, ACA: A Brief Overview of the Law, Implementation, and Legal Challenges, coordinated by C.
Stephen Redhead.
140 Mary Takach, Community Health Centers and Health Reform: Highlights from a National Academy for State Health
Policy Forum, National Academy for State Health Policy, Washington, DC, October 2008.
141 Kaiser Commission on Medicaid and the Uninsured, Community Health Centers: Opportunities and Challenges of
Health Reform, Issue paper, Washington, DC, August 2010 and National Association of Community Health Centers,
Expanding Health Centers Under Health Care Reform: Doubling Patient Capacity and Bringing Down Costs,
Washington, DC, June 2010.
142 Ibid.
143 42 U.S.C. §13031.
144 See discussion in Jessamy Taylor, Changes in Latitudes, Changes in Attitudes: FQHCs and Community Clinics in a
Reformed Health Care Market, National Health Policy Forum, Issue Brief No. 848, Washington, DC, December 18,
2012. For regulations, see U.S. Department of Health and Human Services, “Patient Protection and Affordable Care
Act; Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers; Final Rule and
Interim Final Rule,” Federal Register, 77, no. 59, (March 27, 2012), pp. 18309-18475.
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may make it difficult to provide care to an expanded population. For example, an expanded
patient base could strain health centers’ capacity to provide care because some health centers have
provider shortages. It is also possible that an expanded patient base may exacerbate some of the
financial challenges that health centers face as reimbursements may not cover the cost of
providing care145 and some patients will remain uninsured.146
Health Center Workforce
One of the major challenges that health centers face is employing and retaining health care
providers. The National Association of Community Health Centers (NACHC)—the advocacy
group for health centers—estimates that, in 2008, health centers had 1,800 too few primary care
providers (physicians, nurse practitioners, and certified nurse midwives) and 1,400 too few
nurses. The organization further estimated that staffing needs would increase with health center
expansion resulting in a shortage of between 15,000 and 19,000 primary care providers and
between 11,000 and 14,000 nurses in 2015.147 Health centers may have challenges recruiting and
retaining staff because they are located in rural and remote areas; because there are generally
declining numbers of primary care providers;148 and because private practice options are generally
more lucrative for providers.149 Health centers have traditionally relied on the National Health
Service Corps (NHSC) to recruit providers; this section discusses some of the advantages and
disadvantages of that strategy. The section also discusses the advantages and disadvantages of a
new ACA-authorized program—teaching health centers—to increase provider training at health
centers.
National Health Service Corps Providers
To lessen the health center provider shortages, the federal government makes NHSC providers
available to health centers. Recent expansions of the NHSC150 may help health centers fill
vacancies; however, appropriations in FY2011, FY2012, and the FY2013 six-month continuing
resolution indicate that these expansions may not continue.151 More than half of all NHSC
145 See discussion below for “Financial Considerations” and discussion above (“Medicaid Coordination and
Reimbursement Requirements”) for information on how reimbursed rates relate to the cost of care.
146 Although the ACA will expand insurance coverage some will remain uninsured even if full implementation occurs.
Health centers will continue to provide access to this population and may have to rely on grant funding and sliding
scale fees because some of the remaining uninsured population will not be eligible for Medicaid, may live in a state
where the full Medicaid expansion was not implemented, or may not be eligible for ACA subsidies for private plans
offered through the exchange.
147 National Association of Community Health Centers, The Struggle to Build a Strong Workforce at Health Centers,
Fact Sheet #0609, Washington, DC, 2009.
148 CRS Report R42029, Physician Supply and the Patient Protection and Affordable Care Act, by Elayne J. Heisler
and Amanda K. Sarata.
149 Roger A. Rosenblatt et al., “Shortages of Medical Personnel at Community Health Centers: Implications for Planned
Expansion,” Journal of the American Medical Association, vol. 295, no. 9 (March 2006), pp. 1042-1049.
150 U.S. Department of Health and Human Services, “HHS Announces Record Number of National Health Service
Corps Members,” press release, October 13, 2011, http://www.hhs.gov/news/press/2011pres/10/20111013a.html and
U.S. Department of Health and Human Services, “Health Care Law Increases Access to Primary Care Through the
National Health Service Corps,” October, 12, 2012, http://www.hhs.gov/news/press/2012pres/10/20121011a.html.
151 See discussion in HRSA section and Appendix 1 of CRS Report R41737, Public Health Service (PHS) Agencies:
Overview and Funding, FY2010-FY2012, coordinated by C. Stephen Redhead and Pamela W. Smith. Under the
FY2013 continuing resolution (in P.L. 112-175), no discretionary funds were appropriated to support the National
(continued...)
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providers fulfill their service commitment in health centers, making this program an important
component of the health center workforce. However, the reliance on the NHSC may create
instability in the health center workforce, because the NHSC offers scholarships and loan
repayments in return for a service commitment for a defined period of time. Some NHSC
providers will stay beyond their service commitment; however, not all will, which may mean high
turnover among health center providers. This can lead to discontinuity in care, and additional
costs for health centers because of the need to continuously recruit and train providers.
Teaching Health Centers
The ACA authorizes a new program to increase medical residency training at health centers,
which may help health centers recruit physicians, but may also challenge the health centers that
operate these programs. The ACA authorizes teaching health centers: medical residency training
programs that are located at outpatient facilities including health centers.152 Prior research has
found that medical residents who train at health centers are more likely to be employed at health
centers after they complete their training.153 Teaching health centers may help health centers
recruit physicians; however, health centers may face a number of challenges when operating
residency programs. Case studies of pre-ACA teaching health centers found that operating a
training program requires provider time and may reduce the number of patients a health center
can see, thereby reducing health center reimbursements. These case studies also found that health
centers do not receive graduate medical education payments in amounts that are high enough to
support the full costs of the resident training and supervision. These case studies did show some
benefits from operating training programs. For example, teaching health centers were, as
expected, an important recruitment tool for health centers. These programs also connected non-
primary care providers (i.e., medical specialists) with health centers because some specialists may
supervise health center residents in other settings. The involvement of medical specialists in the
health center may expand health center services.154
The ACA appropriated funding for teaching health center graduate medical education payments
through FY2015. This funding may assist health centers in operating residency training programs,
because programs have stated that graduate medical education payments are generally not high
enough to support the cost of residency training.155 However, these payments are time limited
(through FY2015). In addition, although the ACA authorized funding for grants to develop
teaching health centers, no funds have been appropriated. Given that funding for teaching health
(...continued)
Health Service Corps ( see Department of Health and Human Services, Health Resources and Services Administration:
Operating Plan for FY2013, Washington, DC, November 15, 2012). The program will receive $300 million in FY2013
from the Community Health Center Fund created in the ACA.
152 A recent research article discussed the programs established with ACA funding. See Candice Chen, Frederick Chen,
and Fitzhugh Mullan, “Teaching Health Centers: A New Paradigm in Graduate Medical Education,” Academic
Medicine, vol. 87, no. 12 (December 2012), pp. 1-5.
153 Krystal Knight et al., Health Centers’ Contributions to Training Tomorrow’s Physicians, National Association of
Community Health Centers, Washington, DC, August 2010.
154 Ibid.
155 U.S. Department of Health and Human Services, Health Resources and Services Administration, “HHS Announces
New Teaching Health Centers Graduate Medical Education Program,” press release, January 25, 2011,
http://www.hrsa.gov/about/news/pressreleases/110125teachinghealthcenters.html.
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center graduate medical education payments is limited and uncertain, the ACA’s teaching health
center program may have limited effects on health center provider recruitment and retention.
Financial Considerations
Individual health centers may have a number of financial considerations including current and
future program appropriations which, in turn, affects the size of the individual health center’s
grant and the individual center’s ability to receive continued grant funding, the impact of federal
deficit reduction efforts on health centers, changes in state funding available for health centers,
and the potential effects of ACA care coordination efforts on health centers. Between 2000 and
2010, the health center program’s appropriation increased; however, given recent focus on deficit
reduction, it is unclear whether these expansions will continue. Whether the health center
program should be expanded or contracted is difficult to assess. Further, assessments about the
appropriate size of the health center program may also change depending on ACA
implementation, economic conditions in general, and a number of other factors. Given these
challenges, it is beyond the scope of this report to assess whether the size of the health center
program is appropriate. Instead, this section discusses changes in federal funding for health center
program and state funding for individual health centers and how the ACA may affect individual
health center finances.156 Specifically, state and local funding is a large source of support for
health centers (see Table 4), although the amount of funding an individual health center receives
varies. A number of states face fiscal challenges and have reduced their financial support of health
centers, but the ACA may provide additional support to health centers in the form of increased
reimbursements and reimbursements for care coordination, which many health centers currently
provide, but without reimbursement.
Health Center Appropriations and the Community Health Center Fund
The ACA included the CHCF, but it is unclear whether this will increase health center
appropriation levels. As shown in Error! Reference source not found., the health center program
has grown in the past decade. This growth included funding increases for individual centers and
funding for more centers. ARRA continued these expansions, but appropriations for health centers
may no longer be increased as occurred in FY2011, FY2012, and in the first six-months of
FY2013 under the continuing resolution.157 As discussed above, the ACA appropriated CHCF
may be used in place of the amounts that had been appropriated for the health center program
through the annual appropriations process. To a certain extent this occurred in FY2011, FY2012,
and the first half of FY2013 when, as part of budget reduction efforts, funds from the CHCF were
used as part of the health center appropriation. Advocates note that this phenomenon resulted in
fewer New Access Point grants (i.e., grants to establish new health centers) being awarded as
HRSA used appropriated funds to support health centers already in existence including those
created using ARRA funds.158 This may indicate that the federal government’s focus has shifted to
156 State funding for health centers varies by state and the number of health centers also varies; therefore, it is not
possible to assess the amount of state funding provided to health centers relative to a health center’s total budget.
157 Funding increases discussed do not take into account inflation nor do they take into account medical inflation, which
is generally higher than general inflation.
158 Sara Rosenbaum and Peter Shin, Community Health Centers and the Economy: Assessing Center’s Role in
Immediate Job Creation Efforts, Geiger Gibson/ RCHN Community Health Foundation Research Collaborative, Policy
Research Brief #25, Washington, DC, September 14, 2011. In August of 2010, HRSA announced that there would be
up to $250 million available to support New Access Point grants and estimated that it would support 350 new health
(continued...)
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maintaining the program—rather than continuing program expansions—as congressional concern
has increasingly focused on deficit reduction.
Health Center Appropriations and the Budget Control Act
Health center appropriations may also be affected by the possibility of budget reduction
provisions contained in deficit reduction proposals. The Budget Control Act (BCA, P.L. 112-25)
required that a deficit reduction plan be enacted to avoid mandatory budget reductions (called
sequestration). No such plan was enacted, so mandatory reductions are set to begin in 2013.159
Although the reduction for the CHCF funds are limited to 2%; the discretionary health center
appropriation would be subject to the full percentage of the sequester.160 In addition, the sequester
would reduce the budgets of some of the programs that provide financial or in-kind support to
health centers, such as the NHSC and the Ryan White HIV/AIDS Program. Should sequestration
occur, health centers could be affected both by reductions to their program budgets and by
reductions to programs that provide additional revenue, staffing, or services to health centers.
Health Center Funding and ACA Care Coordination Initiatives
The ACA may provide additional reimbursements to support care coordination. Health centers
may coordinate care in ways that reduce health care costs to the system overall, but may have
little or no monetary benefit to the health center doing the care coordination. For example, GAO
found that health centers employ a number of strategies to reduce emergency department use,
which, as noted above, is more expensive than care provided in a health center.161 Reduced
emergency department use may yield savings to third party payers or hospitals, but would not
yield savings to health centers. The opposite may actually be true, whereby health centers employ
strategies such as care coordination and case management, which may not be reimbursed by third
party payers. Some health centers are concerned about sustaining these efforts,162 and funding
constraints may make it more difficult for health centers to provide these services. However, the
ACA may make it more feasible for health centers to sustain these efforts because the law
includes programs that may provide additional reimbursements for care coordination activities.163
(...continued)
center delivery sites in FY2011. However, in August of 2011, HRSA announced that it had awarded $28.8 million for
New Access Point grants. See U.S. Department of Health and Human Services, “HHS Announces Availability of
Health Center New Access Point Grants,” press release, August 9, 2010, http://www.hhs.gov/news/press/2010pres/08/
20100809a.html, and U.S. Department of Health and Human Services, “HHS Awards Affordable Care Act Funds to
Expand Access to Health Care,” press release, August 9, 2011, http://www.hhs.gov/news/press/2011pres/08/
20110809a.html.
159 CRS Report R41965, The Budget Control Act of 2011, by Bill Heniff Jr., Elizabeth Rybicki, and Shannon M.
Mahan. Under the terms of the Budget Control Act, sequestration was effective January 2, 2013; however, H.R. 8
postponed the sequester until March 1, 2013.
160 See discussion of the health centers program in CRS Report R42050, Budget “Sequestration” and Selected
Program Exemptions and Special Rules, coordinated by Karen Spar.
161 U.S. Government Accountability Office, Hospital Emergency Departments: Health Center Strategies that May Help
Reduce Their Use, GAO-11-414R, April 11, 2011.
162 Ibid.
163 See discussion of these efforts in CRS Report R41474, Accountable Care Organizations and the Medicare Shared
Savings Program, by Amanda K. Sarata, and section on “PPACA Provisions Targeting Physician Productivity” in CRS
Report R42029, Physician Supply and the Patient Protection and Affordable Care Act, by Elayne J. Heisler and
Amanda K. Sarata. HHS has also awarded grants to health centers to support care coordination initiatives, in particular,
(continued...)
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Specifically, health centers are eligible for increased reimbursements under Medicare to increase
primary care and care coordination164 and may participate in accountable care organizations that
aim to increase care coordination across health providers.165
Health Center Funding and State Funding Availability166
As discussed above, future federal funding for health centers is in flux; in addition, a number of
states are reducing their funding for health centers because of state-level fiscal constraints. As
shown in Table 4, state funding is an important source of revenue for health centers; however,
state funding available for health center varies by state and is declining. Specifically, in
November of 2010, the NACHC, in a letter to the Secretary of HHS, noted that state funding for
health centers had declined 42% since 2008. The organization also noted that some state
policymakers have argued that less state funding is needed for health centers because of the
federal government’s investment in the program through ARRA and ACA appropriations. In
contrast, advocates argue that such state funding is still needed and that these state funding
reductions coupled with the uncertainty of the CHCF may mean reductions in the services that
health centers can provide. Advocates also argue that much of the reduced health care costs
attributed to health center usage accrues to Medicaid—a joint federal-state program—so states
realize some cost savings from health centers, which should justify state investment in health
centers. A November 2011 report indicates that states continue to reduce their funding for health
centers. The report surveyed state funding levels for state FY2012 and found a 15% decline from
state FY2011. In addition, some states that have historically supported health centers have,
because of state budget concerns, withdrawn this support.167 Advocates argue that these recent
declines in state funding for health centers may continue and, when coupled with decreasing
federal appropriations for health centers, may strain health center finances.
(...continued)
medical homes, see U.S. Department of Health and Human Services, “Affordable Care Act Funds to Enhance Quality
of Care at Community Health Centers,” press release, September 27, 2012,
http://www.hhs.gov/news/press/2012pres/09/20120927b.html.
164 Rebecca Adams, “HHS Announces Community Health Center Grant Opportunity,” CQ HEALTHBEAT NEWS, June
6, 2011 and U.S. Department of Health and Human Services, “Affordable Care Act to Support Quality Improvement
and Access to Primary Care for More Americans,” press release, September 20, 2011, http://www.hhs.gov/news/press/
2011pres/09/20110929b.html.
165 CRS Report R41474, Accountable Care Organizations and the Medicare Shared Savings Program, by Amanda K.
Sarata.
166 Unless otherwise noted, this paragraph is drawn from National Association of Community Health Centers,
Calculating the Cost: State Budgets and Community Health Centers, State Policy Report #39, Washington, DC,
November 2011 and Letter from Tom Van Coverden, President and CEO, National Association of Community Health
Centers, to Honorable Kathleen Sebelius, Secretary, U.S. Department of Health and Human Services, December 3,
2010, http://www.nachc.com/client/Leter%20to%20Secretary%20Sebelius%20-%20120310.pdf.
167 Seven states increased their funding; 20 states reduced their funding; 8 states kept funding level; and 14 states (and
the District of Columbia) did not provide funding. See National Association of Community Health Centers, Calculating
the Cost: State Budgets and Community Health Centers, State Policy Report #39, Washington, DC, November 2011,
and Figure 7.10 in 2012 Health Center Chartbook.
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Concluding Observations
Health centers serve a predominantly low-income medically underserved population who have
limited or no access to health care. Research has shown that health centers improve health care
access and improve health for the underserved populations they target. In doing so, health centers
may reduce the use of more costly emergency department services thereby reducing health care
costs. The federal government supports health centers through the health center program that
awards grants to plan, operate, and expand health centers and through programs that provide
recruitment and financial incentives including increased reimbursements through the FQHC
designation. Health center appropriations have increased over the past decade, but it is unclear
whether these increases will continue. There are a number of issues facing both the health center
program and individual health centers that may be of concern to Congress. On the program side,
Congress may be concerned about the program’s appropriation level and the impact of federal
deficit reduction efforts on the health center program. For individual health centers, Congress
may be concerned about provider vacancies and the role that individual health centers may play
in providing health access when the ACA is fully implemented.
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Appendix A. Other Federal Programs that May
Provide Primary Care to the Underserved
The federal government supports facilities that provide primary care to low-income or otherwise
medically underserved populations through a number of facilities that are similar to health
centers, but are not authorized in PHSA Section 330. For example, the ACA authorized funding
for school-based health centers and nurse-managed health clinics. Both of these facilities serve
underserved populations, but have different requirements than facilities authorized in PHSA
Section 330. The federal government also provides support for facilities that provide care to
targeted populations such as American Indians and Alaska Natives and Native Hawaiians,
facilities located in rural areas, facilities that provide mental health services, and facilities that
provide free care. This appendix describes these types of facilities, their authorization, and
program requirements.
School-Based Health Centers
School-based health centers (SBHCs) are facilities located on or near school grounds that provide
age-appropriate comprehensive primary health care services to students regardless of their ability
to pay.168 SBHCs may be located at public, private, charter, or parochial schools and must open, at
a minimum, during school hours.169 Prior to ACA, HRSA funded SBHCs through its Section 330
appropriation.170 ACA authorized separate SBHC grants in Section 339Z-1 of the PHSA and
appropriated $200 million ($50 million annually) from FY2010 to FY2013 to support grants for
SBHC construction and renovation.171 Although ACA authorized grants for SBHC operation,
funding was not appropriated in FY2011 or FY2012, and is not included in the six-month
continuing resolution for FY2013.172 Despite the lack of an explicit SBHC operating grant
program, some Section 330 grantees may operate SBHCs. HRSA estimates that there are 1,114
SBHCs.173
168 U.S. Government Accountability Office, School-Based Health Centers: Available Information on Federal Funding,
11-18R, October 8, 2010, http://www.gao.gov/new.items/d1118r.pdf.
169 Section 2110(c)(9) of the Social Security Act defines a sponsoring facility as: a) a hospital; b) a public health
department; c) a community health center; d) a non-profit health care agency; e) a local educational agency; or f) a
program administered by the Indian Health Service or the Bureau of Indian Affairs or operated by an Indian tribe or a
tribal organization.
170 HRSA recognizes children as an underserved population and permitted SBHCs to apply for health center funding.
See Budget Period Renewal Non-Competing Continuation Funding Under the Consolidated Health Centers Program
Announcement Number: 5-H80-06-001, Catalog of Federal Domestic Assistance (CFA) No. 93.224, Program
Guidance, Fiscal Year 2006. U.S. Department of Health and Human Services, Health Resources and Services
Administration, Bureau of Primary Health Care, July 7, 2005, p. 3 (footnote 1) and page 4, at
ftp://ftp.hrsa.gov/bphc/docs/2005pins/2005-20.pdf
171 U.S. Department of Health and Human Services, “HHS Announces New Investment in School-Based Health
Centers: December 19, 2012, http://www.hhs.gov/news/press/2012pres/12/20121219a.html; U.S. Department of Health
and Human Services, “Affordable Care Act Support for School-Based Health Centers Will Create Jobs, Increase
Access to Care for Thousands of Children, “ December 8, 2011, http://www.hhs.gov/news/press/2011pres/12/
20111208a.html; and U.S. Department of Health and Human Services, “HHS Announces New Investment in School-
Based Health Centers,” July 14, 2011, http://www.hhs.gov/news/press/2011pres/07/20110714a.html.
172 HRSA FY2013 Budget Justification and Department of Health and Human Services, Health Resources and Services
Administration: Operating Plan for FY2013, Washington, DC, November 15, 2012.
173 HRSA Data Warehouse.
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Nurse-Managed Health Clinics
Nurse-Managed Health Centers (NMHCs) are centers that provide comprehensive primary care
and wellness services to underserved populations where nurses provide the majority of health
services. NMHCs are required to serve the entire population in the area in which they are located
and must have an advisory committee similar to those required for Section 330 health centers.
NHMCs provide wellness services, prenatal care, disease prevention, management of chronic
conditions like asthma, hypertension and diabetes, and health education. Some also provide
dental and mental health services.174 ACA authorized grants to support NMHCs in PHSA Section
330A-1. In FY2010, HHS awarded $15 million to provide three years of support for 10
NHMCs.175 Grantees are required to submit a sustainability plan for operation after the federal
grant period is complete in 2013.176
Community Mental Health Centers
Community mental health centers (CMHC)177 are licensed facilities that provide mental health
services. These facilities are required to provide mental health services that are tailored to the
needs of children and adults (including the elderly) who have a serious mental illness. These
facilities are also required to provide services to individuals that have been discharged from
inpatient treatment at a mental health facility. Among the required services, CMHCs must provide
emergency services; day treatment or other partial hospitalization services; psychosocial
rehabilitation services; and screening for admission into state mental health facilities. The ACA
required that CMHCs provide less than 40% of its services to Medicare beneficiaries.178
CHMCs received funding from Substance Abuse and Mental Health Services Administration
(SAMHSA) block grants. These include SAMHSA substance abuse prevention and treatment
block grants and community mental health services block grants.179 They are also eligible for
HHS grants awarded through the Social Service Block Grant.180 CMHCs also receive
reimbursements from Medicare and Medicaid for covered services provided to beneficiaries
enrolled in these programs.
174 Tina Hansen-Turton, NNCC 2010 Annual Report, National Nursing Centers Consortium, Philadelphia, PA,
http://www.nncc.us/site/pdf/publications/2010AnnualReport.pdf.
175 Department of Health and Human Services, “Sebelius Announces New $250 Million Investment to Strengthen
Primary Health Care Workforce,” press release, June 16, 2010, http://www.hhs.gov/news/press/2010pres/06/
20100616a.html.
176 Ibid.
177 As defined in 42 U.S.C. §1395x.
178 P.L. 111-152 added this requirement effective April 1, 2011. CMS is also proposing to establish conditions of
participation—requirements for Medicare providers—for new CMHCs. See Medicare Press Release. “Medicare
proposes new standards for Community Mental Health Centers.” June 16, 2011, http://www.cms.gov/apps/media/press/
release.asp?Counter=3982&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=
0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&
year=&desc=false&cboOrder=date.
179 For more information about the Substance Abuse and Mental Health Services Administration block grants, see
http://www.samhsa.gov/.
180 CRS Report 94-953, Social Services Block Grant: Background and Funding, by Karen E. Lynch.
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Native Hawaiian Health Care
The federal government supports the Native Hawaiian Health Care System (NHHCS), which is
composed of five grantees and the Papa Ola Lokahi, a consortium of health care organizations
that provide primary care, health promotion, and disease prevention services to Native Hawaiians.
This population often faces cultural, financial, and geographic barriers to accessing health care
services. The NHHCS was originally authorized under the Native Hawaiian Health Care Act of
1988 (P.L. 100-579), which was reauthorized through FY2019 in the ACA.181 The NHHCS is not
a grant program under Section 330 of the Public Health Service Act, but the system receives
funding through the health center appropriation.182 In FY2010, NHHCS provided medical and
enabling services, such as transportation and translation services, to more than 8,400 people.183
Tribal Health Centers
Indian Tribes (ITs), Tribal Organization (TOs), and Urban Indian Organizations (UIOs)184 may
receive funds from the Indian Health Service (IHS) to operate health centers for American Indians
or Alaska Natives. Although tribal health centers may be similar to health centers funded under
Section 330 grants they are not subject to Section 330 requirements. For example, they are not
required to provide services to all individuals in their service area. They are also not required to
seek payments or reimbursements on behalf of the clients they see because IHS provides services
to all eligible American Indians and Alaska Natives free of charge. Tribal health centers—those
operated by an IT, a TO, or a UIO—may be designated as Federally Qualified Health Centers
(FQHCs)185 and receive the Medicare and Medicaid FQHC payment rate (See Appendix B).
ITs, TOs, and UIOs may also apply for and receive funds under Section 330 of the PHSA;
however, should an entity receive Section 330 funds it would be subject to all Section 330
requirements (i.e., would be require to provide services to non-American Indians and Alaska
Natives). Tribal health centers that receive Section 330 grants are also required to ensure that
funds received from IHS are only used to provide services to IHS-eligible individuals.
Rural Health Clinics
Rural health clinics (RHCs) are outpatient primary care facilities located in rural and medically
underserved areas. These facilities receive higher Medicare and Medicaid payments—similar to
the FQHC payment rate—for services provided to beneficiaries enrolled in the Medicare and
181 This program was reauthorized, through FY2019, in the ACA, see CRS Report R41630, The Indian Health Care
Improvement Act Reauthorization and Extension as Enacted by the ACA: Detailed Summary and Timeline, by Elayne J.
Heisler.
182 The NHHCS program has funded from the Consolidated Health Centers budget line annually since 1997. Personal
correspondence with HRSA’s Office of Legislation on January 20, 2011.
183 Health Resources and Services Administration, The Health Center Program: Special Populations at
http://bphc.hrsa.gov/about/specialpopulations/index.html and HRSA FY2013 Budget Justification.
184 Indian Tribes and Tribal Organizations must be operating facilities under the authority of the Indian Self-
Determination and Education Assistance Act (P.L. 93-638); and Urban Indian Organizations must receive grants
authorized under Title V of the Indian Health Care Improvement Act. For more information, see CRS Report R41630,
The Indian Health Care Improvement Act Reauthorization and Extension as Enacted by the ACA: Detailed Summary
and Timeline, by Elayne J. Heisler.
185 These facilities received the ability to be designated as FQHCs in P.L. 103-66.
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Medicaid programs. RHCs are similar to health centers except that they (1) do not receive federal
grants; (2) may be operated by for-profit entities, (3) are not required to provide services to
individuals regardless of ability to pay; and (4) are not required to offer a sliding scale fee
schedule.186
Free Clinics
Free clinics are outpatient facilities that provide medical, dental, and behavioral health services to
underserved populations that are primarily uninsured. Free clinics are tax-exempt organizations
that provide health care to individuals regardless of their ability to pay and are not permitted to
charge for services.187 In general, free clinic funding comes from donations (both monetary and
in-kind), religious groups, foundations and corporations.188 There are more than 1,200 free
clinics189 that provide services to a population that is similar to that served by health centers.190
Free clinics do not receive funding from HRSA, but may participate in the Free Clinics Medical
Malpractice Program administered by HRSA that provides liability coverage to health care
providers at free clinics.191
FQHC Look-Alikes
FQHC look-alikes are facilities that meet the criteria to receive a health center grant, but do not
receive a grant because Section 330 funding is not available.192 The FQHC look-alike program
was authorized in 1990 to support the demand for new health centers.193 HRSA and CMS can
designate certain facilities as “FQHC look-alikes,” making these facilities eligible for certain
federal programs (e.g., the NHSC and the 340B drug discount program)194 available to health
centers and for the FQHC payment rate. To be designated as an FQHC look-alike, a facility
submits an application to HRSA, the agency reviews the application and then recommends to
CMS which facilities should be designated as FQHC look-alikes. As of January 2012, HRSA
reported that there were 107 FQHC look-alikes.195
186 Health Resources and Services Administration, Department of Health and Human Services, Comparison of the
Rural Health Clinic and Federally Qualified Health Center Programs, Revised, Rockville, MD, June 2006,
http://www.ask.hrsa.gov/downloads/fqhc-rhccomparison.pdf.
187 42 U.S.C. §233.
188 Ibid.
189 See http://www.freeclinics.us/.
190 Darnell, Julie S. “Free Clinics in the United States: A Nationwide Survey.” Archives of Internal Medicine, vol. 170
(June 2010), pp. 946-953.
191 See http://bphc.hrsa.gov/ftca/freeclinics/; this coverage is similar to the Federal Torts Claims Act coverage
discussed above, see “Federal Torts Claims Act Coverage.”
192 A number of look-alikes subsequently obtain health center grants, as HRSA found that between 2002 and 2007,
approximately 36% of look-alikes that applied for health center grants were successful. See U.S. Department of Health
and Human Services, Health Resources and Services Administration, Health Centers: America’s Primary Care Safety
Net, Reflection on Success, 2002-2007, Rockville, MD, 2008,
ftp://ftp.hrsa.gov/bphc/HRSA_HealthCenterProgramReport.pdf.
193 Section 1905 of the Social Security Act for Medicaid; and Section 1861(aa)(4) of the Social Security Act for
Medicare.
194 See descriptions of these programs in the report sections “National Health Service Corps Providers” and “340B
Drug Pricing Program.” FQHC look-alikes are not eligible for “Federal Torts Claims Act Coverage.”
195 Email from HHS, Office of Legislation, January 26, 2012.
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Federal Health Centers
Appendix B. Medicare and Medicaid Payments and
Beneficiary Cost Sharing for Health Center Services
All health centers can be designated as federally qualified health centers (FQHCs)196 upon
enrolling as a provider in the Medicare and Medicaid programs.197 The FQHC designation makes
Section 330 grantees (among
others, see text box) eligible for
Social Security Act FQHC Definition
Medicare and Medicaid
FQHC means (1) an entity that is receiving a PHSA Section 330 grant or is
reimbursements rates that are
receiving funding through a contract with a PHSA Section 330 grant
generally higher than the
recipient; (2) an entity that meets the requirements to receive a PHSA
Section 330 grant as determined by HRSA; (3) an entity that was treated by
reimbursement rates for
the Secretary of HHS as a comprehensive federally funded health center
comparable services provided
for the purposes of Medicare Part B as of January 1, 1990; or (4) an
in a physician’s office.198 The
outpatient program or facility operated by an Indian Tribe, Tribal
FQHC designation was created
Organization, or Urban Indian Organization receiving funds authorized in
to ensure that Medicare and
the Indian Health Care Improvement Act.
Medicaid reimbursements
Source: §18611(aa)(4 of the Social Security Act, 42 U.S.C. §1395x and
cover the costs of providing
§1905(l)(2)(B), 42 U.S.C. §1396d.
services so that Section 330
grant funds are not used to subsidize these costs.199 This appendix describes Medicare and
Medicaid payments to FQHCs and ACA-required changes to Medicare FQHC payments.
196 The Medicaid payment designation began in 1990 in the Omnibus Budget Reconciliation Act (OBRA) of 1989 (P.L.
101-239). The FQHC payment rate for Medicare was implemented in 1992 in Department of Health and Human
Services, “Medicare Program: Payment for Federally Qualified Health Center Services,” 57 Federal Register 24,961,
June 12, 1992 and 61 Federal Register 14,640, April 3, 1996.
197 A Section 330 grantee can operate facilities at multiple sites, each of these sites must enroll as an FQHC. See Health
Resources and Services Administration, Program Assistance Letter: Process of Becoming Eligible for Medicare
Reimbursements under the FQHC Benefit, Rockville, MD, March 8, 2011.
198 These payments are considered to be “higher” than the payment rates that physician practices receive because they
are cost-based and reflect a broader range of services, than do payments to physician practices. See, for example,
Department of Health Policy, School of Public Health and Health Services, The George Washington University,
Quality Incentives for Federally Qualified Health Centers, Rural Health Clinics and Free Clinics: A Report to
Congress, Washington, DC, January 23, 2012.
199 See discussion in National Association of Community Health Centers, Emerging Issues in the FQHC Prospective
Payment System, Washington, DC, September 2011 and U.S. Government Accountability Office, Medicare Payments
to Federally Qualified Health Centers, GAO-10-576R, July 30, 2010.
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Medicare Payments to Health Centers
Health centers are paid an all-inclusive payment rate for most services provided to Medicare
beneficiaries. It is intended to reflect the cost of all services provided to a beneficiary during a
“covered visit”
regardless of the
What Is a Covered Visit?
specific services
Medicare pays FQHCs an all-inclusive rate for most services received during a “covered visit.”
provided (see
text box).200 The
Medicare defines a “visit” as a face-to-face encounter between a patient and a provider (physician,
all-inclusive
physician assistant, nurse practitioner, nurse midwives, visiting nurse, clinical psychologist, or clinic
social worker) where an FQHC service is provided (e.g., a medical, mental health service, diabetes self-
payment rate is
management training, or medical nutrition therapy). A “visit” may include services received from more
calculated by
than one health professional in a single day at the same location; however, a patient may have more
dividing the
than one visit type. For example, a patient can have a medical visit and a mental health visit in the same
total estimated
day or may have a medical visit and a diabetes self-management training visit in the same day. The
allowable costs
facility may receive a separate all-inclusive payment rate for each of these visit types.
(with certain
Source: U.S. Department of Health and Human Services, Center for Medicare and Medicaid Services,
limits that take
Medicare Claims Process Manual, Chapter 9- Rural Health Clinics/Federally Qualified Health Centers,
Baltimore, MD, November 12, 2010, p. 16, https://www.cms.gov/manuals/downloads/clm104c09.pdf.
into account the
reasonable costs
for providing a service, productivity, and payment limits) by the number of total number of visits
for services (see text box for definition of visits). The rate includes services provided by
physicians and other providers and the supplies used to provide these services.201 The all-
inclusive rate does not apply for certain preventive services including pneumococcal and
influenza vaccines and their administration; instead these services are billed separately and
reimbursed at 100% of the reasonable cost of providing the service. The all-inclusive payment
rate also does not include certain diagnostic tests such as x-rays and laboratory tests, which are
billed separately.202 FQHCs are reimbursed based on estimated costs; this payment is then
adjusted at the end of the year to account for the actual costs of providing services. These
reconciled amounts are subject to payment limits, which are updated each year by a measure of
price inflation. The all-inclusive payment rate is also updated annually and is adjusted to take into
account urban and rural differences in the costs of providing care.203
Medicare beneficiaries are subject to different deductible and cost sharing requirements for
services provided at FQHCs. Specifically, the Medicare Part B deductible does not apply for
200 Health Resources and Services Administration, Program Assistant Letter: Process for Becoming Eligible for
Medicare Reimbursements Under the FQHC Program Benefit, 2011-4, Rockville, MD, March 8, 2011. For general
discussion of Medicare payment to FQHCs; see Medicare Payment Advisory Commission, Chapter 6: Federally
Qualified Health Centers, Report to Congress: Medicare and the Health Care Delivery System, Washington, DC, June
2011.
201 U.S. Government Accountability Office, Medicare Payments to Federally Qualified Health Centers, GAO-10-
576R, July 30, 2010.
202 Ibid.
203 For example, the 2012 urban per visit payment for an FQHC is $126.98 while the rural per visit payment limit is
$109.90. See CMS Transmittal 2343, SUBJECT: Announcement of Medicare Rural Health Clinics (RHCs) and
Federally Qualified Health Centers (FQHCs) Payment Rate Increases, November 4, 2011, http://www.cms.gov/
transmittals/downloads/R2343CP.pdf. CMS Manual System. Note: If the FQHC is located within a Metropolitan
Statistical Area (MSA) or New England County Metropolitan area (NECMA), then the urban limit applies. If the
FQHC is not in an MSA or NECMA and cannot be classified as a large or other urban area, the rural limit applies.
Rural FQHCs cannot be reclassified into an urban area (as determined by the Bureau of Census) for FQHC payment
limit purposes.
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Federal Health Centers
FQHC services.204 Beneficiaries—with some exceptions205—must pay the 20% copayment for
Medicare services.
ACA Payment Changes
Recent studies have indicated that Medicare reimbursements may not be sufficient to cover the
costs of providing services;206 therefore, the ACA requires changes to how FQHCs are paid for
services provided to Medicare beneficiaries. Specifically, the ACA required that Medicare
develop a prospective payment system (PPS) for FQHCs that, when implemented in 2014, would
eliminate the all-inclusive payment rate and may better align Medicare payments with the cost of
providing services. In order to develop this system, the ACA required that, as of January 1, 2011,
FQHCs report every service provided during a Medicare-covered patient visit using the
appropriate Healthcare Common Procedure Coding System (HCPCS) code.207 The HCPCS codes
will then be used to develop a PPS that reflects the cost of providing services to Medicare
beneficiaries.
The ACA also required that Medicare preventive services and the initial exam for new Medicare
beneficiaries be provided without copayments.208 This differs from the general Medicare
beneficiary copayment of 20% of the fee charged by the health center.
Mental Health Service Payment Changes
The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275) also
changed Medicare reimbursement for mental health services at FQHCs. Previously, Medicare
reimbursements were limited at 62.5% of the reasonable costs for outpatient mental health
services; however, this limit will be phased out by January 1, 2014.209
204 For discussion of FQHC services, see discussion in report section “Health Service Requirements”.
205 FQHCs can waive collection of all or part of the coinsurance, depending upon the beneficiary’s ability to pay.
206 See discussion in report section “Medicaid Coordination and Reimbursement Requirements,” and U.S. Government
Accountability Office, Medicare Payments to Federally Qualified Health Centers, GAO-10-576R, July 30, 2010. Note
that CMS disagreed with GAO’s data and findings, see discussion on p. 153 of Medicare Payment Advisory
Commission, Chapter 6: Federally Qualified Health Centers, Report to Congress: Medicare and the Health Care
Delivery System, Washington, DC, June 2011.
207 Healthcare Common Procedure Coding System (HCPCS) is used to standardize the identification of medical
services, supplies and equipment. It is used when billing the Medicare and Medicaid programs. Source:
https://www.cms.gov/MedHCPCSGenInfo/20_HCPCS_Coding_Questions.asp
208 CRS Report R40978, Medicare Coverage of Clinical Preventive Services, by Sarah A. Lister and Kirsten J. Colello,
and CRS Report R41196, Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA): Summary
and Timeline, coordinated by Patricia A. Davis.
209 U.S. Department of Health and Human Services, Center for Medicare and Medicaid Services, Medicare Claims
Process Manual, Chapter 9- Rural Health Clinics/Federally Qualified Health Centers, Baltimore, MD, November 12,
2010, p. 18, https://www.cms.gov/manuals/downloads/clm104c09.pdf and CRS Report RL34592, P.L. 110-275: The
Medicare Improvements for Patients and Providers Act of 2008, coordinated by Hinda Chaikind.
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Medicaid Payments
Medicaid uses a PPS to reimburse FQHCs for services provided to Medicaid beneficiaries.210 The
PPS establishes a predetermined per-visit payment rate for each FQHC based on costs of services.
The PPS was established based on cost report data in FY1999 and FY2000 and is updated
annually for medical inflation.211 The state, in turn, receives the appropriate federal matching
amount. States are also required to adjust PPS payment rates based on any changes in the scope of
services provided at the FQHC. States are not required to use the PPS to reimburse FQHCs, but
they may not reimburse an FQHC less than it would have received under the PPS.212 In 2010,
approximately 20 states did not use the PPS and instead used an alternative payment methodology
(APM) to reimburse FQHCs under Medicaid.213 States are also required to supplement FQHCs
that subcontract (directly or indirectly) with Medicaid Managed Care Entities (MCEs). These
supplemental payments are supposed to make up the difference, if any, between the payment
received by the FQHC from the MCE and the Medicaid payment that the FQHC would be
entitled to under the PPS or the APM.214 The ACA did not include changes in Medicaid FQHC
reimbursement policy.
Author Contact Information
Elayne J. Heisler
Analyst in Health Services
eheisler@crs.loc.gov, 7-4453
Acknowledgments
This report benefited from comments received from Barbara English, Paulette C. Morgan, and Amanda K.
Sarata.
210 This was established under the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA), P.L. 106-554); see CRS Report RL30718, Medicaid, SCHIP, and Other Health Provisions in H.R. 5661:
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, by Jean Hearne and Evelyne P.
Baumrucker. Prior to the PPS, Medicaid used an all-inclusive rate.
211 U.S. Government Accountability Office, Medicare Payments to Federally Qualified Health Centers, GAO-10-
576R, July 30, 2010.
212 Ibid.
213 National Association of Community Health Centers, Emerging Issues in the FQHC Prospective Payment System,
Washington, DC, September 2011.
214 See a CMS issued letter providing initial guidance on the new Medicaid prospective payment system, Jan. 19, 2001
at http://www.cms.hhs.gov/smdl/downloads/smd011901d.pdf
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