Federal Health Centers
Elayne J. Heisler
Analyst in Health Services
December 24, 2013
Congressional Research Service
7-5700
www.crs.gov
R42433
Federal Health Centers
Summary
The federal health center program is authorized in Section 330 of the Public Health Service Act
(42 U.S.C. §§201 et. seq.) and administered by the Health Resources and Services Administration
(HRSA) within the Department of Health and Human Services. It awards grants to support
outpatient primary care facilities that provide care to primarily low-income individuals or
individuals located in areas with few health care providers. Federal 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 with 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.
Section 330 grants—funded by the health center program’s appropriation—are only one funding
source for federal health centers. They 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. These
federal programs provide (1) incentives to recruit and retain providers; (2) access to the federally
qualified health center (FQHC) designation that entitles facilities to higher reimbursement rates
from Medicare and Medicaid; (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 drug discounts or medical malpractice insurance.
Appropriations for the health center program have increased over the past decade, resulting in
more centers and more patients served. The program expansion occurred partially through the
Patient Protection and Affordable Care Act of 2010 (P.L. 111-148, ACA), which 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. Despite recent program increases, it is
not clear that the program’s budget will continue to increase. In recent years, funds from the
CHCF were used to augment discretionary appropriation reductions to the health center program
and have made up nearly half of the health center’s appropriation. As the CHCF ends in FY2015,
continued program funding may be of congressional concern.
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 FQHC designation for Medicare and Medicaid payments. The report
concludes with a brief discussion of issues for Congress such as the potential effect 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? .................................................................................. 2
Statutory Authority and General Requirements ......................................................................... 2
Location Requirements ....................................................................................................... 2
Fee Schedule Requirements ................................................................................................ 3
Medicaid Coordination and Reimbursement Requirements................................................ 3
Governance Requirements .................................................................................................. 4
Health Service Requirements .............................................................................................. 4
Reporting and Quality Assurance Requirements ................................................................. 5
Licensing and Accreditation Requirements ......................................................................... 6
Grants that Support Federal Health Centers .............................................................................. 6
Types of Grants Available to Support Health Centers ......................................................... 6
Grant Eligibility and Awarding Criteria .............................................................................. 7
What Is the Health Center Program’s Appropriation? ............................................................... 8
What Are the Other Sources of Funding for the Health Center Program? .............................. 11
What Are Health Centers? ............................................................................................................. 12
What Types of Health Centers Exist? ...................................................................................... 12
Community Health Centers ............................................................................................... 12
Health Centers for the Homeless ....................................................................................... 12
Health Centers for Residents of Public Housing ............................................................... 13
Migrant Health Centers ..................................................................................................... 13
Who Uses Health Centers? ...................................................................................................... 14
What Outcomes Are Associated with Health Center Use? ...................................................... 17
Health Outcomes ............................................................................................................... 18
Cost Outcomes .................................................................................................................. 18
Access to Health Care ....................................................................................................... 20
Quality ............................................................................................................................... 20
Which Federal Programs Are Available to Health Centers? .................................................... 21
National Health Service Corps Providers .......................................................................... 22
J-1 Visa Waivers ................................................................................................................ 22
Federally Qualified Health Center Designation ................................................................ 22
340B Drug Pricing Program .............................................................................................. 23
Vaccines for Children Program ......................................................................................... 23
Federal Torts Claims Act Coverage ................................................................................... 23
Ryan White HIV/AIDS Treatment Grants......................................................................... 24
Other Federal Grant Programs .......................................................................................... 24
Issues for Congress ........................................................................................................................ 25
Health Centers and Health Insurance Expansion in the ACA ................................................. 26
Health Centers and Medicaid Expansion .......................................................................... 26
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
Health Center Appropriations and the Budget Control Act ............................................... 32
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Health Center Funding and ACA Care Coordination Initiatives ....................................... 32
Health Center Funding and State Funding Availability ..................................................... 33
Concluding Observations ............................................................................................................... 34
Figures
Figure 1. Community Health Center Grantee Sites ....................................................................... 16
Figure 2. Selected Other Health Center Sites ................................................................................ 17
Tables
Table 1. Examples of Services Provided and the Number of Patients Served by Health
Centers (2012) .............................................................................................................................. 5
Table 2. Health Center Grants Awarded (FY2012) .......................................................................... 8
Table 3. Health Center Appropriations and Sites, FY2003-FY2014 (President’s Budget
Request) ...................................................................................................................................... 10
Table 4. Health Center Program Revenue Sources (FY2012) ....................................................... 11
Table 5. Comparison of Health Center Types ................................................................................ 14
Table 6. Health Centers’ Patients’ Profile, 2012 ............................................................................ 15
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 ........................................................................................................................... 40
Contacts
Author Contact Information........................................................................................................... 43
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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)—specifically by its Bureau of
Primary Care—within the Department of Health and Human Services (HHS).1 The federal health
center program is authorized in Section 330 of the Public Health Service Act (PHSA)2 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, over 9,340 unique health center sites (i.e., individual health center
facility locations) exist;3 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.4 These requirements make health
centers part of the health safety net—providers that serve the uninsured, the underserved, or those
enrolled in Medicaid.5 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.6
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 concludes with a brief discussion of issues for Congress such as
the potential effects of the Patient Protection and Affordable Care Act of 2010 (ACA)7 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
1 For more information about the Health Resources and Services Administration (HRSA), see CRS Report R43304,
Public Health Service Agencies: Overview and Funding, coordinated by Amalia K. Corby-Edwards and C. Stephen
Redhead.
2 42 U.S.C. §§201 et. seq.
3 HRSA regularly updates health center data. This report uses the number of sites as of 11/5/2013, see
http://datawarehouse.hrsa.gov/sitesdetail.aspx; hereinafter HRSA Data Warehouse.
4 42 U.S.C. §254b.
5 Lewin, Marion Ein and Altman, Stuart, America’s Health Care Safety Net: Intact but Endangered, Institute of
Medicine, Washington, DC, 2000, p. 21; for more information on the Medicaid program, see CRS Report RL33202,
Medicaid: A Primer, by Elicia J. Herz.
6 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 and Health Resources and Services Administration, Bureau of Primary Care, Uniform
Data System, 2012 National Summary Report, Rockville, MD, http://bphc.hrsa.gov/uds/datacenter.aspx?year=2012&
state=AL&compare=Nat. Hereinafter, 2012 UDS Report.
7 P.L. 111-148, as amended.
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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 centers8 and program
requirements. This section of the report 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 Requirements9
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; the Government Accountability Office (GAO) raised some
concerns that the agency may not be providing sufficient oversight of the program and that some
health centers may not be meeting these requirements.10 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).11
8 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?”
9 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.
10 U.S. Government Accountability Office, Health Center Program: Improved Oversight Needed to Ensure Grantee
Compliance with Requirements, 12-546, May 2012.
11 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 the committee’s 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 CRS report’s publication, released a final rule.
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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.12
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, GAO found that Medicare payments did not
cover the full cost of health center services in nearly two-thirds of the visits they examined.13
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.14 They found that Medicaid reimbursements
covered 81% of the cost of providing services, while Medicare and private insurance
reimbursements cover approximately two-thirds.15 The NACHC also found that the PHSA
12 42 C.F.R. 51c.303(f) and Section 330(k)(3)(G)(i) of the Public Health Service Act (PHSA).
13 U.S. Government Accountability Office, Medicare Payments to Federally Qualified Health Centers, GAO-10-576R,
July 30, 2010. 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. Appendix B describes ACA changes to Medicare
FQHC payments that may more closely align Medicare payments to the costs of providing services. CMS released the
proposed rule to implement these changes; see Department of Health and Human Services, Centers for Medicare &
Medicaid Services, “Medicare Program; Prospective Payment System for Federally Qualified Health Centers,” 78
Federal Register 58385-58414, September 23, 2013.
14 See National Association of Community Health Centers, A Sketch of Community Health Centers, Chartbook,
Washington, DC, 2013, http://www.nachc.com/client//Chartbook2013.pdf; hereinafter, 2013 Health Center Chartbook.
15 Ibid.
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Section 330 grant amount received per uninsured patient—$312—was less than half the average
health center cost per patient of $654.16
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.17
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 report section discusses the required services, as well as certain
optional services, and then presents some data on services provided at health centers in 2012 (see
Table 1).
Health centers are required to provide primary health services and preventive and emergency
health services.18 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.19 Primary health services are those provided by physicians20 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 intended to ensure care continuity for hospitalized health
center patients. In instances where a health center physician does not have admitting privileges at
a nearby hospital, the health center is required to establish other arrangements to ensure care
continuity.
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
16 Ibid. these amounts were for 2011.
17 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.
18 42 C.F.R. 51c.102(h).
19 This requirement was added by P.L. 109-171, effective January 1, 2006.
20 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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additional dental care, mental health services, or substance abuse treatment.21 Table 1 identifies
some specific services tracked in the Uniform Data System (UDS) 2012, the HRSA- required
health center grantee reporting system.
Table 1. Examples of Services Provided and the Number of Patients Served by
Health Centers (2012)
Service Provided
Number of Patients Served
Medical Services
18,034,338
Dental Services
4,332,314
Enabling Services
1,970,511
Mental Health Services
1,035,537
Substance Abuse Services
114,037
Source: HRSA, Uniform Data System (UDS) Report, UDS, National Rollup Report, 2012 at http://bphc.hrsa.gov/
uds/datacenter.aspx?year=2012; hereinafter, 2012 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.22 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, the percentage of women who were screened for cervical cancer, and the percentage
of patients whose body mass index was assessed and who were referred to appropriate services if
found to be obese.23 Finally, health centers are required to have quality improvement systems in
place that include clinical services, management, and patient confidentiality assurances. To meet
this 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.24
21 For specific types of health centers (see “What Types of Health Centers Exist?”) some supplemental services may be
required.
22 The performance measures and clinical outcomes that health centers are required to report are those 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.
23 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; hereinafter, Health
Center Quality Improvement Report.
24 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.
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HHS has also awarded grants to health centers to implement quality initiatives such as care
coordination through mechanisms like medical homes.25
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 pays some of the costs of seeking and
maintaining accreditation from one of these two accrediting entities.26
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.27 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
Five types of grants support health centers. New Access Point (NAP) grants permit existing
grantees to establish new sites or new grantees to establish new health centers. ACA funds were
used to support these grants in FY2013.28 Increased Demand for Services (IDS) or Expanded
Service (ES) grants are for health centers to expand the number of patients they serve or to
provide additional types of services. The Capital Improvement Program (CIP) 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 FY2012.29 The fourth type
25 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.
26 For more information, see http://bphc.hrsa.gov/policiesregulations/accreditation.html/.
27 PHSA Section 330 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.
28 U.S. Department of Health and Human Services, “HHS Awards Affordable Care Act Funds for New Health Care
Delivery Sites,” press release, September 13, 2013, http://www.hhs.gov/news/press/2013pres/09/20130913a.html.
29 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 ACA: Summary and Timeline, coordinated by C. Stephen Redhead and Elayne J. Heisler, 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,
(continued...)
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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 FY2011.30 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.31
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 some operate
more than one type of health center.32 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.33 Under statute, HRSA must allocate certain percentages of the health
center program’s 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:
• at least 8.6% for grants to centers serving migrant or farmworkers,
• at least 8.7% for grants to centers serving homeless individuals, and
• at least 1.2% for grants to centers serving residents of public housing.34
(...continued)
“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.
30 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.
31 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.
32 Health Center Quality Improvement Report.
33 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;
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; and U.S.
Department of Health and Human Services, Health Resources and Services Administration, Justification of Estimations
for Appropriations Committees, FY2014, Rockville, MD; hereinafter, HRSA FY2014 Budget Justification.
34 42 U.S.C. §254(b)(r)(2)(B).
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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 for centers that would serve sparsely populated areas, defined as areas
with seven or fewer residents per square mile.35 GAO found that in order to ensure that these
percentages are met, HRSA may adjust funding criteria, thereby funding some applications that
may not have scored as high in the competitive process.36
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.37 At the end of the application period, health centers are
required to compete for continued funding.38
Table 2. Health Center Grants Awarded (FY2012)
Grants
FY2012
Total Number of Grants
1,205
Average Awarded Amount
$2 million
Range of Awarded Amounts
$250 thousand-$13.3 million
Source: U.S. Department of Health and Human Services, Health Resources and Services
Administration, Justification of Estimations for Appropriations Committees, FY2014, Rockville, MD.
What Is the Health Center Program’s Appropriation?
The health center program’s appropriation has increased over the past decade, resulting in the
establishment of more centers and the ability to serve more patients. From FY2000 through
FY2013 (the last year of final appropriation information available), the health center
appropriation increased by 96%. Over this same time period, the number of health center sites
also increased. Beginning in 2002, the George W. Bush Administration began a multi-year effort
to expand the health center program by providing funding for new or expanded health centers for
1,200 communities.39 The program’s expansion has continued during the Obama Administration.
In FY2009, under the Obama Administration, the health center program received $2 billion under
the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). Specifically, ARRA
provided $500 million for new sites and expanded services at existing sites. It also provided $1.5
35 Ibid. and 42 U.S.C. §254b(p).
36 U.S. Government Accountability Office, Health Center Program: 2011 Grant Award Process Highlighted Need and
Special Populations Merit Evaluation, 12-504, May 2012.
37 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.
38 HRSA FY2013 Budget Justification.
39 Department of Health and Human Services, Budget in Brief, FY2007, pp. 5-6 and 21.
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billion for construction, renovation, equipment, and health information technology. The
program’s expansion may continue under the Patient Protection and Affordable Care Act of 2010
(ACA).40ACA, 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), which included a total of $9.5 billion for health center operations to be
appropriated in FY2011 through FY2015.41 However, it is not likely that these funds will be used
to expand the health center program because in FY2011, FY2012, FY2013, and the FY2014
continuing resolution, these funds were or would be used to augment reductions to discretionary
appropriations to the health center program.42 The ACA also appropriated funding for health
centers to train medical residents and provided funding for care coordination initiatives.43
Although the program’s appropriations increased by 96% since FY2003, the additional
appropriated funds have generally been used to expand the number of centers—which increased
by 61%44—while funding awarded to individual centers increased less rapidly over the time
period.45
Table 3 presents the health center program’s appropriations from FY2002 through the FY2014
President’s budget request.46 The table also includes amounts appropriated under ARRA and the
ACA and the number of grantees in each fiscal year.
40 P.L. 111-148, as amended.
41 The total amount that will be appropriated was reduced under the FY2013 sequester and will be reduced in the event
of a sequester in FY2014 and/or FY2015.
42 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, FY2013, and FY2014 under the continuing resolution. P.L. 113-46
43 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 ACA:
Summary and Timeline, coordinated by C. Stephen Redhead and Elayne J. Heisler. 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.
44 See Table 3.
45 CRS analysis of HRSA Budget documents.
46HRSA FY2014 Budget Justification. The continuing resolution for FY2014, P.L. 113-46, provided discretionary
funding for the health center at the post-sequester FY2013 level ($1,479 million for the health center program) until
January 15, 2014. See CRS Report R43338, Congressional Action on FY2014 Appropriations Measures, by Jessica
Tollestrup.
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Table 3. Health Center Appropriations and Sites, FY2003-FY2014 (President’s Budget Request)
(Dollars in Millions)
2014
2013
President’s
Operating
Budget
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Plana
Request
Appropriation
$1,505
$1,617
$1,735
$1,785
$1,988 $2,065 $2,190 $2,190 $1,190 $1,567 $1,479
$1,567
ARRA Fundsb
$2,000
ACA CHCFc
$1,000
$1,200
$1,465 $2,200
Change in
appropriation
from previous
year +$162
+$112
+$118
+$50
+$203
+$77
+$2,126d -$2,000 +$1,391e +$577e +$177e +$823e
Approx. number
of sites
3,578
3,651
3,745
3,831
__f 6,208 7,892 8,156 8,501g 8,746g __f __f
Source: Compiled by CRS from Health Resources and Services Administration budget documents and HRSA FY2013 Sequestration Operating Plan, see
http://www.hrsa.gov/about/budget/operatingplan2013.pdf.
Notes: Appropriated amounts include federal tort claims funds.
a. Amounts taken from the HRSA FY2013 Sequestration Operating Plan, see http://www.hrsa.gov/about/budget/operatingplan2013.pdf. The amount reduced from the
FY2013 CHCF is calculated based on the percentages applied in OMB Report to the Congress on the Joint Committee Sequestration for Fiscal Year 2013, March 1, 2013:
http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/fy13ombjcsequestrationreport.pdf. Hereinafter referred to as OMB Report to the Congress
on the Joint Committee Sequestration for Fiscal Year 2013, March 1, 2013.
b. American Recovery and Reinvestment Act (ARRA, P.L. 111-5).
c. 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).
d. Includes ARRA funding.
e. Includes CHCF transfer.
f.
Number not included in HRSA budget documents.
g. 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, HRSA compiles this information for
the health center program. Table 4 presents data for FY2012, the most recent year of final data
available. Medicaid is the largest source of health center revenue (39%) and Section 330 grants
provide approximately 19% of the program’s revenue. Amounts received from grants and
contracts from state, local, and private foundations provided nearly 17.4% of the program’s total
revenue in FY2012. (See Table 4.)
Table 4. Health Center Program Revenue Sources (FY2012)
(Dollars in Millions)
Percent of
Funding Sources
Dollars
Program Revenue
Section 330 Authorized Grants
Section 330 Grants
2,642.0
19.1
Subtotal (Section 330 authorized grants)
2,642.0
19.1
Reimbursements
Medicaid
5,370.0
38.8
CHIP
290.0
2.1
Medicare
820.0
5.9
Other third party payers (e.g., private insurance)
1,185.0
8.6
Patient Feesa
830.0
6.0
Subtotal (Reimbursements)
8,495.0
61.4
Other Federal Grants
Other Federal Grants
310.0
2.2
Subtotal (Other Federal Grants)
310.0
2.2
State, Local, and Private Grants and Contracts
State, Local, Other
2,405.0
17.4
Subotal (State, Local, and Private Grants and
2,405.0 17.4
Contracts)
Total (all sources)
13,852.0
100
Source: U.S. Department of Health and Human Services, Health Resources and Services Administration,
Justification of Estimations for Appropriations Committees, FY2014, Rockville, MD.
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 populations served by each center type. The section also describes where
health centers are located and outcomes associated with health center use.47
What Types of Health Centers Exist?
Four types of health centers exist: (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.
Below describes each type of health center, the population targeted by these centers, and the
specific services that each type of center must provide.48
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.49
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.50 Section 330 defines
homeless individuals as those who lack permanent housing or live in temporary facilities or
transitional housing.51 In addition to the services required of all health centers, HCHs are required
47 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.
48 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.
49 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.
50 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.
51 P.L. 104-299 Section 330(h)(4)(A).
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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 at least 8.7% of its budget to support these
centers.52
Health Centers for Residents of Public Housing
Health centers for residents of public housing53 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.54 By statute, HRSA must allocate at least 1.2% of its budget to support these
centers.55
Migrant Health Centers
Migrant health centers provide care to migrant 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, but do not migrate for this work).56 HRSA estimates that they provide care to more
than one-quarter of all migrant and seasonal farmworkers.57 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.58 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 at least 8.6% of
its budget to support these centers.59
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”).
52 42 U.S.C. §254(b)(r)(2)(B).
53 As defined by 42 U.S.C. §1437 et. seq.
54 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.
55 42 U.S.C. §254(b)(r)(2)(B).
56 42 U.S.C. §254b.
57 Health Center Quality Improvement Report.
58 42 C.F.R. §56.102(g).
59 42 U.S.C. §254(b)(r)(2)(B).
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Table 5. Comparison of Health Center Types
(2012)
Number
Number of
Health Center
Target
of
Patients
Type
Population
Grantees Additional
Requirements
Seena
Community
All individuals
8,330 Not
Applicable.b 19,241,809c
Health Centers
who live in
service area
Health Centers
Homeless
2,682 Prevention and treatment services for
839,980
For the Homeless
individuals
substance abuse.
Health Centers for Individuals who
802 Must consult with public housing
219,220
Residents of Public
reside in or
residents prior to applying for a grant.
Housing
near public
housing
Migrant Health
Migrant,
1,785 Environmental health services including
801,382
Centers
agricultural
sanitation services; and services related
workers
to the prevention and treatment of
pesticide exposure.
Source: HRSA’s Data Warehouse at http://datawarehouse.hrsa.gov/sitesdetail.aspx and HRSA, UDS, National
Rollup Report 2012.
a. Refers to the 2012 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
(21,102,391).
Who Uses Health Centers?
According to HRSA, health centers served 21.1 million patients in 2012. These patients were
generally socioeconomically disadvantaged and uninsured or underinsured.60 The majority of
health center patients have incomes at or below the federal poverty level.61 Nearly a quarter of
patients are treated in a language other than English and the majority of health center patients are
racial or ethnic minorities. In 2012, 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 2012 including age, race, ethnicity, and
insurance status.
60 2012 UDS Report.
61 The 2012 federal poverty level was $11,720 for an individual living alone; $14,937 for a two-person family; and
$23,492 for a family of four. For more information, see CRS Report RL33069, Poverty in the United States: 2012, by
Thomas Gabe.
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Table 6. Health Centers’ Patients’ Profile, 2012
Demographic Characteristics of Patients Percentage of Patients Served
Income at or below the federal poverty level
71.9%
Enrol ed in Medicaid
40.8%
Uninsured
36.0%
Hispanic/Latino 34.5%
Below Age 18
31.6%
African-American 24.2%
Enrol ed in Medicare
8.0%
Age 65 and older
7.2%
Source: Department of Health and Human Services, Health Resources Services and Administration’s website:
http://bphc.hrsa.gov/uds/datacenter.aspx?year=2012, 2012 Data Snapshot; and HRSA website: “What is a Health
Center” at http://bphc.hrsa.gov/about/.
Figure 1 and Figure 2 show 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. Figure 1 shows that community health
centers are distributed throughout the country, Figure 1 compared to Figure 2 also shows that
community health centers are the most numerous type of sites and 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. Community Health Center Grantee Sites
(Data as of December 2013)
Source: CRS analysis of HRSA grantee data.
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Figure 2. Selected Other Health Center Sites
(Data as of December 2013)
Source: CRS analysis of HRSA grantee data.
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.62 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.
62 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.63 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.64 Health center patients are also more likely to have their
chronic conditions—like diabetes—managed.65 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 made progress 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.66
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.67 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.68 In addition, GAO found that health centers attempt to lower emergency department use in
63 U.S. Government Accountability Office, Hospital Emergency Departments: Health Center Strategies that May Help
Reduce Their Use, GAO-11-414R, April 11, 2011.
64 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; 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.
65 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.
66 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.
67 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.
68 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.69
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.70 Health center patients enrolled in Medicaid were also less likely to be
hospitalized and less likely to have an emergency room visit, relative to Medicaid beneficiaries
who did not use health centers.71
Researchers have also found that patients who receive the majority of their care at health centers
have lower medical costs (41% lower on average) than those who receive the majority of their
care through another source.72 Another study found the difference to be 24%,73 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.74 Regardless of the magnitude of the difference, there appears to be
consensus that health centers provide less costly health care than other outpatient settings.75
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 overall costly care
because their providers work on a salaried basis, and so do not have financial incentives to order
additional tests or procedures. 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.76 Other studies note that differences in the cost of
services (i.e., the cost for a particular procedure or visit) 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 of how health centers
69 U.S. Government Accountability Office, Hospital Emergency Departments: Health Center Strategies the May Help
Reduce Their Use, GAO-11-414R, April 11, 2011.
70 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).
71 Health Center Quality Improvement Report.
72 Ibid.
73 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.
74 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.
75 See, for example, discussion in HRSA FY2012 Budget Justification and HRSA FY2013 Budget Justification.
76 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.
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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.77
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 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; results from one study indicate health center
patients were more likely to be Hispanic or African American.78 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.79
Some research has suggested that health centers may reduce health disparities because they
provide care to a population that might otherwise have difficultly accessing health care.80
Relative to other providers (such as office-based physicians) 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, 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.81 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.82 Other
77 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.
78 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.
79 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.
80 Health Center Quality Improvement Report.
81 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.
82 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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studies have examined how health centers manage chronic conditions; for example, one study
found that health centers that implemented quality improvement teams to manage asthma
succeeded in reducing hospitalizations and emergency department visits due to asthma.83
Another study compared the quality of health center care to that of Medicaid managed care
organizations (MCOs) on selected quality measures, including diabetes and blood pressure
control.84 The study found that there were two groups of health centers: those that exceeded
Medicaid MCOs in the selected quality measures (called “high performing health centers”) and
those that were below the Medicaid MCOs (called “low performing health centers”). The
researchers found that more health centers were considered “high performing” (12%) and that
relatively few health centers (4%) were considered “low performing.” The authors observed that
there were differences in the population served by high- and low-performing health centers and
that it is possible that these population differences resulted in the quality differences observed.
Specifically, “low performing health centers” were more likely to serve individuals who were
uninsured or homeless and had less revenue from Medicaid. There were also geographic
differences in the quality of health center with “high performing” health centers mostly located in
California, New York, and Massachusetts and with “low performing health centers” more often
located in southern states.85
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;86 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.87 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.88
Medicaid is the largest source of reimbursements, providing nearly 39% of all revenue for the
health center program (see Table 4). The amount received by an individual health center varies by
the percentage of the patient population that is enrolled in Medicaid; however, the NACHC
estimates that the average health center receives 38.1% of its revenue from Medicaid
reimbursements.89 Health centers are also eligible for discounted prescription drugs and vaccines,
83 Sibylle H. Lob 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.
84 The Kaiser Commission on Medicaid and the Uninsured, Quality of Care in Community Health Centers and Factors
Associated with Performance, Issue Brief, Washington, DC, June 2013.
85 Note that there were small numbers of health centers ranked as low performers.
86 See Table 4.
87 They may also fulfill their National Health Service Corps (NHSC) commitment at other types of facilities that
provide care to populations in health professions shortage areas.
88 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.
89 2013 Health Center Chartbook.
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and 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)90 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,91 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.92
J-1 Visa Waivers
Health centers may also be able to obtain providers temporarily through special waivers for J-1
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.93 Because health
centers are designated as HPSAs, a number of centers may rely on this program to recruit
physicians.94
Federally Qualified Health Center Designation95
Health centers are eligible to be designated as Federally-Qualified Health Centers (FQHCs),96 but
must enroll as a provider in the Medicare and/or Medicaid programs to receive the higher97
90 Health professions shortage areas (HPSAs) are defined in 42 U.S.C. §254e. See U.S. Department of Health and
Human Services, Health Resources and Services Administration, “Health Professional Shortage Areas (HPSA) and
Medically Underserved Areas/Populations (MUA/P),” http://datawarehouse.hrsa.gov/hpsadetail.aspx. For a larger
discussion of Health Professional Shortage Areas (HPSAs, see CRS Report R42029, Physician Supply and the
Affordable Care Act, by Elayne J. Heisler.
91 For more detailed information on the NHSC, see HRSA FY2014 Budget Justification.
92 National Association of Community Health Centers, The Struggle to Build a Strong Workforce at Health Centers,
Fact Sheet #0609, Washington, DC, 2009.
93 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.
94 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.
95 Because all health centers are eligible to be designated as Federally Qualified Health Center (FQHCs) some refer to
FQHCs and health centers interchangeably.
96 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.
97 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
(continued...)
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reimbursement rates for services provided to patients enrolled in these programs.98 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.99 Specific FQHC Medicare and
Medicaid reimbursement methodology, including recent payment changes, are described in
Appendix B.
340B Drug Pricing Program100
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
17% below average manufacturer price depending on the type of drug. HRSA reports that 340B
eligible facilities, between FY2013 and FY2014, will receive an estimated $3 billion in drug
discounts through the program.101
Vaccines for Children Program102
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,103
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).104 Under the FTCA, health
center employees and contractors cannot be sued for medical malpractice for care they provided
(...continued)
Clinics and Free Clinics: A Report to Congress, Washington, DC, January 23, 2012.
98 Health Resources and Services Administration, Program Assistance Letter: Process of Becoming Eligible for
Medicare Reimbursements under the FQHC Benefit, Rockville, MD, March 8, 2011.
99 Health Center Quality Improvement Report.
100 HRSA FY2014 Budget Justification.
101 Ibid.
102 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.
103 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.
104 CRS Report 95-717, Federal Tort Claims Act (FTCA), by Vivian S. Chu.
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that was within the scope of their health center employment. According to HRSA, in FY2012,
107 claims were paid through the FTCA program totaling $68.1 million.105 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.106
Ryan White HIV/AIDS Treatment Grants107
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.
Other Federal Grant Programs108
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,109 increase mental health and
substance abuse services availability,110 provide services to high-risk pregnant women and their
infants,111 increase health professional training at health centers,112 and increase access to family
planning services for low income families.113 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.114 Health centers may also use General
105 HRSA FY2014 Budget Justification.
106 This responsibility could include both the cost of the claims and the legal costs resulting from defending providers
against these claims. In the 113th Congress, bills have been introduced in the House (e.g., H.R. 2703) and the Senate
(e.g., S. 955) that would extend liability protection to health professionals who volunteer at health centers.
107 For more information about this program, see CRS Report RL33279, The Ryan White HIV/AIDS Program, by Judith
A. Johnson.
108 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 2012 UDS Report.
109 HRSA FY2014 Budget Justification; for programs through the U.S. Department of Agriculture, see
http://www.rurdev.usda.gov/RD_Grants.html.
110 For more information about the Substance Abuse and Mental Health Services Administration, see
http://www.samhsa.gov/.
111 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 Carmen Solomon-Fears and Amalia K. Corby-Edwards.
112 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.
113 CRS Report RL33644, Title X (Public Health Service Act) Family Planning Program, by Angela Napili.
114 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.
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Services Administration resources to acquire real estate and dispose of property115 and may use
the Department of Housing and Urban Development’s insurance program to finance facility repair
and improvement.116
Issues for Congress
Health centers face a number of issues 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),117 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.
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.118 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.119 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.
115 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.
116 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.
117 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.
118 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.
119 §5101 of P.L. 111-148. The populations included in the purpose of this title are those that are traditionally served by
health centers.
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Health Centers and Health Insurance Expansion in the ACA
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.120 These health insurance expansions may increase the
number of health center patients and may increase reimbursements received for providing this
care. Although health centers are available to the uninsured and to 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.121 There is also
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.122 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.123 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
As noted, Medicaid beneficiaries may seek care at health centers because they are required to
accept Medicaid patients. In contrast, some private providers may not accept Medicaid because of
120 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. 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; 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; however,
twenty-five states have indicated that they do not intend to expand their Medicaid programs. This may impact health
centers, as discussed in “Health Centers and Medicaid Expansion.”
121 Kaiser Commission on Medicaid and the Uninsured, Community Health Centers: Opportunities and Challenges of
Health Reform, Issue paper, Washington, DC, August 2010.
122 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.
123 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.
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low reimbursement rates or administrative requirements.124 The ACA aims to increase health
insurance coverage, in part, by expanding Medicaid enrollment.125 However, 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 to do so.126 This state variation in Medicaid eligibility will affect
health center patients and the finances of the health centers where they seek care. Health centers
may benefit if their currently uninsured patients enroll in Medicaid eligible because they would
be able to bill Medicaid for the services they provide to these patients. In general, health centers
use sliding scale fees to serve uninsured patients and may supplement these patient payments with
grant or other funds. An increased patient share enrolled in Medicaid would mean higher
collections from Medicaid, which is currently the largest source of health center reimbursements.
One study attempted to quantify the effect of Medicaid expansion on health centers. It estimated
that under a full Medicaid expansion, an estimated 5 million health center patients would have
been eligible for Medicaid; however, given that some states have opted out of the Medicaid
expansion, they expect that only 4 million of the estimated 5 million health center patients will
become Medicaid eligible. This would leave 1 million health center patients not eligible for
Medicaid.127 The authors estimate that health centers in states where the state intends to expand
its Medicaid program will see more than $2 billion in additional reimbursements. These increased
reimbursements are expected to allow these centers to expand or improve services. It is also
possible that the increased revenue base may improve the quality of care that health centers
provide.128 Conversely, health centers in states where Medicaid is not expanded will not realize
this additional revenue and will continue to use grant funds or other sources to provide care to the
uninsured.129 Given that current grant funding does not equal the cost of providing services to
uninsured patients,130 health centers located in states that do not expand their Medicaid program
may be strained to provide services to the population that remains uninsured. The extent to which
124 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.
125CRS Report R41664, ACA: A Brief Overview of the Law, Implementation, and Legal Challenges, coordinated by C.
Stephen Redhead.
126 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, June 14, 2013, http://www.advisory.com/Daily-Briefing/Resources/Primers/
MedicaidMap for states not implementing Medicaid expansion.
127 Peter Shin, Jessica Sharac, and Sara Rosenbaum, Assessing the Potential Impact of the Affordable Care Act on
Uninsured Community Health Center Patients: A Nationwide and State-by-State Analysis, Geiger Gibson/RCHN
Community Health Foundation Research Collaborative, Policy Research Brief #33, Washington, DC, October 16,
2013.
128 See The Kaiser Commission on Medicaid and the Uninsured, Quality of Care in Community Health Centers and
Factors Associated with Performance, Issue Brief, Washington, DC, June 2013 and report section on “Quality.”
129 Peter Shin, Jessica Sharac, and Sara Rosenbaum, Assessing the Potential Impact of the Affordable Care Act on
Uninsured Community Health Center Patients: A Nationwide and State-by-State Analysis, Geiger Gibson/RCHN
Community Health Foundation Research Collaborative, Policy Research Brief #33, Washington, DC, October 16,
2013.
130 2013 Health Center Chartbook.
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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. Some suggest that once health center patients who were
previously uninsured gain insurance coverage, they may seek private providers, which may in
turn reduce the health center service population. However, evidence from Massachusetts, which
has already expanded insurance coverage, does not suggest that this may occur. Researchers
found that Massachusetts health centers retained their patients after Massachusetts’s insurance
expansion was implemented.131 Should this occur after the ACA insurance expansions, it would
likely benefit health centers because more health center patients would likely have services
reimbursed by private insurance,132 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.133
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.134
This means that health insurance plans offered through the exchanges must have providers in
their plan’s networks that serve the population that health centers typically serve. It does not
require that these insurance plans offer health center contracts. This distinction concerns some
health centers; they fear that their current patients will enroll in exchange plans where health
centers are not part of the provider network. If this were to occur, health centers would not be
able to receive reimbursements for these patients, which might create financial strain for the
health centers or require health center patients to choose different providers. In addition to
concerns about being included in exchange plans, health centers are also concerned that they may
not receive reimbursement rates high enough to cover the cost of care for patients enrolled in
these plans because they believe that they may have little leverage to negotiate rates.135
The impact of the ACA on the health center patient base and revenue is not yet known.
Furthermore, as will be discussed below, health centers face other challenges that 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
131 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.
132 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.
133 Ibid.
134 42 U.S.C. §13031.
135 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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challenges that health centers face as reimbursements may not cover the cost of providing care136
and some patients will remain uninsured.137
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 estimates that staffing needs will 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 2015.138 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,139 and because private practice options are generally
more lucrative for providers.140 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. The ACA includes mandatory funding for the NHSC from FY2011
through FY2015. This money was used to expand the program in FY2011 but has since been used
in lieu of the program’s discretionary appropriation.141 That mandatory funding has made up the
entirety of the NHSC’s appropriation since FY2012 has some program advocates concerned about
the program’s funding after these mandatory appropriations end in FY2015. If, for example,
FY2016 funding were to be a continuing resolution of FY2015 discretionary funding levels, the
NHSC would not be funded. As more than half of all NHSC providers fulfill their service
commitment in health centers, this program is viewed as many as a central component of the
136 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.
137 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.
138 National Association of Community Health Centers, The Struggle to Build a Strong Workforce at Health Centers,
Fact Sheet #0609, Washington, DC, 2009.
139 CRS Report R42029, Physician Supply and the Affordable Care Act, by Elayne J. Heisler
140 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.
141 See discussion in HRSA section and Appendix B of CRS Report R43304, Public Health Service Agencies:
Overview and Funding, coordinated by Amalia K. Corby-Edwards and C. Stephen Redhead. Under the FY2014
continuing resolution (in P.L. 113-46), no discretionary funds were appropriated to support the National Health Service
Corps. The program will receive $350 million in FY2014 from the Community Health Center Fund created in the
ACA.
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health center workforce, and the future funding of the program may be a concern for health
centers. In addition to future funding uncertainty, there may be concerns that 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 likely stay beyond their service commitment; however, not all will,
which could 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.142 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.143 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 the
researchers 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 available health center services.
The ACA appropriates 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.144 However, these payments are time-limited
(through FY2015). In addition, although the ACA authorizes funding for grants to develop
teaching health centers, no funds have been appropriated. Given that funding for teaching health
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.
142 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. Unless otherwise noted, information in this paragraph is drawn
from Krystal Knight et al., Health Centers’ Contributions to Training Tomorrow’s Physicians, National Association of
Community Health Centers, Washington, DC, August 2010.
143 Krystal Knight et al., Health Centers’ Contributions to Training Tomorrow’s Physicians, National Association of
Community Health Centers, Washington, DC, August 2010.
144 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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Financial Considerations
Individual health centers may have a number of financial considerations including current and
future program appropriations which, in turn, affect 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 2013, 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.145 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 for health services
provided 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 established the CHCF, but it is unclear whether this will increase health center
appropriation levels. As shown in Table 3, the health center program has grown in the past
decade. This growth included funding increases for individual centers and funding for more
centers.146 ARRA continued these expansions, as did the CHCF. As discussed, 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 has occurred
since FY2011 when, as part of deficit reduction efforts, funds from the CHCF monies 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.147 This may indicate that the federal government’s focus has shifted to
145 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.
146 Funding increases discussed do not take into account inflation nor do they take into account medical inflation, which
is generally higher than general inflation.
147 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
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.
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maintaining the program—rather than continuing program expansions—as congressional concern
has increasingly focused on deficit reduction. Another concern that some advocates have raised is
that the time-limited CHCF makes up a large fraction of the overall health center program budget
(50% in FY2013); consequently, some are concerned that after the CHCF ends in FY2016 overall
funding for the program could decrease significantly unless the CHCF is extended or its funds are
replaced from another source.148
Health Center Appropriations and the Budget Control Act
Health center appropriations were also affected by budget reduction provisions in the Budget
Control Act (BCA, P.L. 112-25), which required mandatory budget reductions beginning in
FY2013.149 Although the reduction of the CHCF allocated to community health centers and
migrant health centers was limited to 2%, the discretionary health center appropriation was
subject to the full percentage—5%—of the sequester. As a result more than $60 million was
reduced from the program.150 In addition, the sequester reduced 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.
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.151 Reduced
emergency department use may yield savings to third party payers or hospitals but would not
yield savings to health centers. It is also possible that health centers may 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,152 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.153 Specifically, health
148 See, for example, National Association of Community Health Centers, Campaign for America’s Health Centers,
“Community Health Center Advocates Pull Together to Fix the Health Center Funding Cliff,” November 5, 2013,
http://blog.saveourchcs.org/2013/11/05/community-health-center-advocates-pull-together-to-fix-the-health-center-
funding-cliff/.
149 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, the
American Tax Payers Relief Act (P.L. 112-240) postponed the sequester until March 1, 2013.
150 See discussion of the health centers program in CRS Report R42050, Budget “Sequestration” and Selected
Program Exemptions and Special Rules, coordinated by Karen Spar.
151 U.S. Government Accountability Office, Hospital Emergency Departments: Health Center Strategies that May Help
Reduce Their Use, GAO-11-414R, April 11, 2011.
152 Ibid.
153 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 “ACA Provisions Targeting Physician Productivity” in CRS
Report R42029, Physician Supply and the Affordable Care Act, by Elayne J. Heisler. 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
(continued...)
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centers are eligible for increased reimbursements under Medicare to increase primary care and
care coordination154 and may participate in accountable care organizations that aim to increase
care coordination across health providers.155
Health Center Funding and State Funding Availability156
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. 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.157 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.
As Medicaid is a joint federal and state program, states are providing support to health centers
through reimbursements that health centers receive for providing services to Medicaid patients.
Health center program advocates argue that much of the reduced health care costs attributed to
health center usage are realized as Medicaid (such as through reduced emergency department
use), which would justify states providing separate—non-Medicaid—funding to health centers
because states will realize these investments as Medicaid cost savings.158 Despite this, states may
(...continued)
release, September 27, 2012, http://www.hhs.gov/news/press/2012pres/09/20120927b.html.
154 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.
155 CRS Report R41474, Accountable Care Organizations and the Medicare Shared Savings Program, by Amanda K.
Sarata.
156 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.
157 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 National Association of Community Health Centers, A Sketch of Community Health Centers,
Chartbook, Washington, DC, 2012, http://www.nachc.com/client//Chartbook2012.pdf.
158 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.
(continued...)
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choose to limit their separate funding for health centers or may choose to augment their support
of health centers using Medicaid funds, which will be partially matched by the federal
government.
Concluding Observations
Health centers serve a predominantly low-income medically underserved population with 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 Federally Qualified
Health Center (FQHC) designation. Health center appropriations have increased over the past
decade, but it is unclear whether these increases will continue. A number of issues facing both the
health center program and individual health centers 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.
(...continued)
Department of Health and Human Services, December 3, 2010, http://www.nachc.com/client/
Leter%20to%20Secretary%20Sebelius%20-%20120310.pdf.
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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, 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.159 SBHCs may be located at public, private, charter, or parochial schools and must open, at
a minimum, during school hours.160 Prior to the ACA, HRSA funded SBHCs through its Section
330 appropriation.161 The 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.162 Although the ACA authorized grants for SBHC
operation, funding has not yet been appropriated for these grants.163 Despite the lack of an explicit
159 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.
160 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.
161 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
162 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; 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; and U.S. Department of
Health and Human Services, Health Resources and Services Administration, “School-Based Health Centers,”
http://bphc.hrsa.gov/about/schoolbased/index.html.
163 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.
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SBHC operating grant program, some Section 330 grantees may operate SBHCs. HRSA estimates
that there are 1,152 SBHCs.164
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.165 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.166 Grantees were required to submit a sustainability plan for operation after the federal
grant period is complete in 2013.167 No funding has been awarded since FY2010.
Community Mental Health Centers
Community mental health centers (CMHC)168 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.169
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.170 They are also eligible for
HHS grants awarded through the Social Service Block Grant.171 CMHCs also receive
164 This report see http://datawarehouse.hrsa.gov/sitesdetail.aspx; hereinafter HRSA Data Warehouse. Email from the
Health Resources and Services Administration, Office of Legislation, November 25, 2013.
165 Tina Hansen-Turton, NNCC 2010 Annual Report, National Nursing Centers Consortium, Philadelphia, PA,
http://www.nncc.us/site/pdf/publications/2010AnnualReport.pdf.
166 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.
167 Ibid.
168 As defined in 42 U.S.C. §1395x.
169 P.L. 111-152 added this requirement effective April 1, 2011. The Center for Medicare & Medicaid Services (CMS)
has also established conditions of participation—requirements for Medicare providers—for CMHCs. See 78 C.F.R.
§64,603.
170 For more information about the Substance Abuse and Mental Health Services Administration block grants, see
http://www.samhsa.gov/.
171 CRS Report 94-953, Social Services Block Grant: Background and Funding, by Karen E. Lynch.
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reimbursements from Medicare and Medicaid for covered services provided to beneficiaries
enrolled in these programs.
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.172 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.173 In FY2011, NHHCS provided medical and
enabling services, such as transportation and translation services, to more than 8,400 people.174
Tribal Health Centers
Indian Tribes (ITs), Tribal Organization (TOs), and Urban Indian Organizations (UIOs)175 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)176 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.
172 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.
173 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.
174 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.
175 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 R43330,
The Indian Health Service (IHS): An Overview, by Elayne J. Heisler.
176 These facilities received the ability to be designated as FQHCs in P.L. 103-66.
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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
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.177
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.178 In general, free clinic funding comes from donations (both monetary and
in-kind), religious groups, foundations and corporations.179 There are more than 1,200 free
clinics180 that provide services to a population that is similar to that served by health centers.181
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.182
Federally Qualified Health Center (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.183 The FQHC look-alike program
was authorized in 1990 to support the demand for new health centers.184 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)185 available to health
177 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.
178 42 U.S.C. §233.
179 Ibid.
180 See http://www.freeclinics.us/.
181 Julie S. Darnell, “Free Clinics in the United States: A Nationwide Survey.” Archives of Internal Medicine, vol. 170
(June 2010), pp. 946-953.
182 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.”
183 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.
184 Section 1905 of the Social Security Act for Medicaid; and Section 1861(aa)(4) of the Social Security Act for
Medicare.
185 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.”
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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 November 2013, HRSA
reported that there were 316 FQHC look-alikes.186
186 HRSA Data Warehouse.
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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)187 upon
enrolling as a provider in the Medicare and Medicaid programs.188 The FQHC designation makes
Section 330 grantees (among others,
see text box) eligible for Medicare
Social Security Act FQHC Definition
and Medicaid reimbursements rates
FQHC means (1) an entity that is receiving a PHSA Section 330 grant
that are generally higher than the
or is receiving funding through a contract with a PHSA Section 330
reimbursement rates for comparable
grant recipient; (2) an entity that meets the requirements to receive
a PHSA Section 330 grant as determined by HRSA; (3) an entity that
services provided in a physician’s
was treated by the Secretary of HHS as a comprehensive federally
office.189 The FQHC designation
funded health center for the purposes of Medicare Part B as of
was created to ensure that Medicare
January 1, 1990; or (4) an outpatient program or facility operated by
and Medicaid reimbursements cover
an Indian Tribe, Tribal Organization, or Urban Indian Organization
the costs of providing services so
receiving funds authorized in the Indian Health Care Improvement
Act.
that Section 330 grant funds are not
used to subsidize these costs.190 This
Source: §18611(aa)(4 of the Social Security Act, 42 U.S.C. §1395x
and §1905(l)(2)(B), 42 U.S.C. §1396d.
appendix describes Medicare and
Medicaid payments to FQHCs and
ACA-required changes to Medicare FQHC payments.
187 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.
188 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.
189 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.
190 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
provided (see
visit.”
text box).191 The
all-inclusive
Medicare defines a “visit” as a face-to-face encounter between a patient and a provider
(physician, physician assistant, nurse practitioner, nurse midwives, visiting nurse, clinical
payment rate is
psychologist, or clinic social worker) where an FQHC service is provided (e.g., a
calculated by
medical, mental health service, diabetes self-management training, or medical nutrition
dividing the
therapy). A “visit” may include services received from more than one health
total estimated
professional in a single day at the same location; however, a patient may have more
allowable costs
than one visit type. For example, a patient can have a medical visit and a mental health
visit in the same day or may have a medical visit and a diabetes self-management
(with certain
training visit in the same day. The facility may receive a separate all-inclusive payment
limits that take
rate for each of these visit types.
into account the
Source: U.S. Department of Health and Human Services, Center for Medicare and
reasonable costs
Medicaid Services, Medicare Claims Process Manual, Chapter 9- Rural Health
for providing a
Clinics/Federal y Qualified Health Centers, Baltimore, MD, November 12, 2010, p. 16,
service,
https://www.cms.gov/manuals/downloads/clm104c09.pdf.
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.192 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.193 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.194
191 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.
192 U.S. Government Accountability Office, Medicare Payments to Federally Qualified Health Centers, GAO-10-
576R, July 30, 2010.
193 Ibid.
194 For example, the 2013 urban per visit payment rate is $128.00 while the rural per visit payment limit is $110.78. See
Department of Health and Human Services, Centers for Medicare & Medicaid Services, Medicare learning Network,
MLN Matters Number: MM8119, http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/
MLNMattersArticles/downloads/MM8119.pdf. 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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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
FQHC services.195 Beneficiaries—with some exceptions196—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;197 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 would eliminate the all-inclusive
payment rate and may better align Medicare payments with the cost of providing services. To
implement the new PPS system, CMS issued a proposed rule that proposes to establish a national
encounter-based rate for all FQHCs. This encounter rate would be calculated using Medicare cost
report and claims data to assure that the rate reflects the cost of providing services.198 The rate
would also be adjusted for several factors including geographic differences costs, more intensive
services that may be provided during the annual wellness visit, and more time or services that
may be provided during a Medicare beneficiary’s first visit to an FQHC. The new rule would also
eliminate payments for multiple visits on one day, which CMS determined are rare among
Medicare beneficiaries who receive services at FQHCs.199
The ACA also required that Medicare preventive services and the initial exam for new Medicare
beneficiaries be provided without copayments.200 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
195 For discussion of FQHC services, see discussion in report section “Health Service Requirements”.
196 FQHCs can waive collection of all or part of the coinsurance, depending upon the beneficiary’s ability to pay.
197 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.
198 In order to develop the new Prospective Payment System (PPS), 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. HCPCS is used to standardize the identification of medical
services, supplies and equipment. It is used when billing the Medicare and Medicaid programs. For more information,
see https://www.cms.gov/MedHCPCSGenInfo/20_HCPCS_Coding_Questions.asp.
199 Department of Health and Human Services, Centers for Medicare & Medicaid Services, “Medicare Program;
Prospective Payment System for Federally Qualified Health Centers,” 78 Federal Register 58385-58414, September
23, 2013.
200 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.
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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, 2014.201
Medicaid Payments
Medicaid uses a PPS to reimburse FQHCs for services provided to Medicaid beneficiaries.202 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.203 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.204 In 2011,
approximately 20 states and Puerto Rico used the PPS, 12 states used an alternative payment
methodology (APM) to reimburse FQHCs under Medicaid, and the remaining states used a
combination of both methods.205 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.206 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
201 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.
202 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.
203 U.S. Government Accountability Office, Medicare Payments to Federally Qualified Health Centers, GAO-10-
576R, July 30, 2010.
204 Ibid.
205 National Association of Community Health Centers, Update on the Status of the Medicaid Prospective Payment
System in the States, Washington, DC, November 2011.
206 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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