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Testimony: 

Before the Committee on Oversight and Government Reform, U.S. House of 
Representatives: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery: 
Expected at 10:00 a.m. EST:
Thursday, December 3, 2009: 

Hurricane Katrina: 

Federal Grants Have Helped Health Care Organizations Provide Primary 
Care, but Sustaining Services Will Be a Challenge: 

Statement of Cynthia A. Bascetta:
Director, Health Care: 

GAO-10-273T: 

GAO Highlights: 

Highlights of GAO-10-273T, a testimony before the Committee on 
Oversight and Government Reform, House of Representatives. 

Why GAO Did This Study: 

The greater New Orleans area—Jefferson, Orleans, Plaquemines, and St. 
Bernard parishes—continues to face challenges in restoring health care 
services disrupted by Hurricane Katrina which made landfall in August 
2005. In 2007, the Department of Health and Human Services (HHS) 
awarded the $100 million Primary Care Access and Stabilization Grant 
(PCASG) to Louisiana to help restore primary care services to the low-
income population. Louisiana gave PCASG funds to 25 outpatient provider 
organizations in the greater New Orleans area. GAO was asked to testify 
on (1) how PCASG fund recipients used the PCASG funds, (2) how 
recipients used and benefited from other federal hurricane relief 
funds, and (3) challenges recipients faced and recipients’ plans for 
sustaining services after PCASG funds are no longer available. 

This statement is based on a recent GAO report, Hurricane Katrina: 
Federal Grants Have Helped Health Care Organizations Provide Primary 
Care, but Challenges Remain (GAO-09-588), other GAO work, and updated 
information on services, funding, and sustainability plans, which we 
shared with HHS officials. For the report, GAO analyzed responses to an 
October 2008 survey sent to all 25 PCASG fund recipients, to which 23 
responded, and analyzed information related to other federal funds 
received by PCASG fund recipients. GAO also interviewed HHS and 
Louisiana Department of Health and Hospitals officials and other 
experts. 

What GAO Found: 

PCASG fund recipients reported in 2008 that they used PCASG funds to 
hire or retain health care providers and other staff, add primary care 
services, and open new sites. For example, 20 of the 23 recipients that 
responded to the GAO survey reported using PCASG funds to hire health 
care providers, and 17 reported using PCASG funds to retain health care 
providers. In addition, most of the recipients reported that they used 
PCASG funds to add primary care services and to add or renovate sites. 
Recipients also reported that the grant requirements and funding helped 
them improve service delivery and expand access to care in underserved 
neighborhoods. As of September 2009, recipients used PCASG funds to 
support services for almost 252,000 patients, who had over 1 million 
interactions with a health care provider. 

Other federal hurricane relief funds helped PCASG fund recipients pay 
staff, purchase equipment, and expand mental health services to help 
restore primary care. According to data from the Louisiana Department 
of Health and Hospitals, 11 recipients received HHS Social Services 
Block Grant (SSBG) supplemental funds designated by Louisiana for 
primary care, and 2 received SSBG supplemental funds designated by 
Louisiana specifically for mental health care. The funds designated for 
primary care were used to pay staff and purchase equipment, and the 
funds designated for mental health care were used to provide a range of 
services including crisis intervention and substance abuse prevention 
and treatment. Most of the PCASG fund recipients benefited from the 
Professional Workforce Supply Grant incentives. These recipients hired 
or retained 69 health care providers who received incentives totaling 
over $4 million to work in the greater New Orleans area. 

PCASG fund recipients face multiple challenges and have various plans 
for sustainability. Recipients face significant challenges in hiring 
and retaining staff, as well as in referring patients outside of their 
organizations, and these challenges have grown since Hurricane Katrina. 
For example, 20 of 23 recipients that responded to the 2008 GAO survey 
reported hiring health care providers was a great or moderate 
challenge, and over three-quarters of these 20 recipients reported that 
this challenge had grown since Hurricane Katrina. PCASG fund recipients 
also reported challenges in referring patients outside their 
organization for mental health, dental, and specialty care services. 
Although all PCASG fund recipients have completed or planned actions to 
increase their ability to be sustainable, recipients are concerned 
about what will happen when PCASG funds are no longer available. 
Officials of the Louisiana Public Health Institute, which administers 
the PCASG locally, expect that some recipients might have to close and 
others could be forced to scale back capacity by as much as 30 or 40 
percent. They have suggested strategies to decrease what they estimate 
would be a $30 million gap in annual revenues when PCASG funds are no 
longer available. With the availability of PCASG funds scheduled to end 
in less than 10 months, preventing disruptions in the delivery of 
primary care services could depend on quickly identifying and 
implementing workable sustainability strategies. 

View [hyperlink, http://www.gao.gov/products/GAO-10-273T] or key 
components. For more information, contact Cynthia A. Bascetta at (202) 
512-7114 or bascettac@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss primary health care services 
in the greater New Orleans area. My testimony is based primarily on our 
July 2009 report entitled Hurricane Katrina: Federal Grants Have Helped 
Health Care Organizations Provide Primary Care, but Challenges Remain. 
[Footnote 1] More than 4 years after Hurricane Katrina made landfall on 
August 29, 2005, the greater New Orleans area continues to face 
challenges in restoring health care services disrupted by the storm. 
Before the hurricane, most health care for the low-income and uninsured 
population in the area was provided in emergency rooms and outpatient 
clinics at Charity and University hospitals, which were part of the 
statewide Louisiana State University (LSU) public hospital system. 
About half of the hospitals' patients were uninsured, and about one-
third were covered by Medicaid. Following the hurricane and the 
subsequent flooding, the hospitals and clinics closed because of the 
significant damage they had sustained. In November 2006, LSU reopened 
University Hospital under its new, temporary name, Interim LSU Public 
Hospital, which is operating at a lower capacity than Charity's and 
University's pre-Katrina capacity; Charity Hospital remains closed. 
While health care provider organizations in the area were able to 
reopen some health care clinics, gaps in the availability of primary 
care services[Footnote 2] in the greater New Orleans area remained. 

To help address the continuing health care needs of low-income area 
residents, the Department of Health and Human Services (HHS) awarded 
the $100 million Primary Care Access and Stabilization Grant (PCASG) to 
the Louisiana Department of Health and Hospitals (LDHH) in July 2007. 
[Footnote 3] The grant is administered at the federal level by HHS's 
Centers for Medicare & Medicaid Services (CMS) and at the local level 
by the Louisiana Public Health Institute (LPHI), the local partner of 
LDHH. The PCASG is intended to restore and expand access to primary 
care services, including mental health care services[Footnote 4] and 
dental care services, without regard to a patient's ability to pay, and 
to decrease costly reliance on emergency room use for primary care 
services for patients who are uninsured, underinsured, or covered by 
Medicaid.[Footnote 5] In addition to primary care services, PCASG fund 
recipients can use grant funds to provide specialty care, such as 
cardiology and podiatry services, and ancillary services, including 
supporting services such as translation, transportation, and outreach. 
LDHH provided funds to 25 outpatient provider organizations, which we 
refer to as PCASG fund recipients. As of March 20, 2008, the recipients 
were operating 75 sites that were eligible to use PCASG funds.[Footnote 
6] For an organization to be eligible for PCASG funding, it must have 
been a public or private nonprofit organization serving patients in the 
greater New Orleans area at the time that Louisiana's grant proposal 
was submitted. It must also have had the intent to be sustainable, that 
is, able to continue providing primary care after PCASG funds are no 
longer available.[Footnote 7] The PCASG was given only to the state of 
Louisiana. PCASG funds were made available to Louisiana for a 3-year 
period, from July 23, 2007, through September 30, 2010. As of June 22, 
2009, PCASG fund recipients had received more than $80 million in PCASG 
funds. 

Since the disruption to the health care system caused by the hurricane, 
several HHS agencies have awarded other grants that facilitate access 
to primary care. However, like the PCASG funding, much of the funding 
is temporary. HHS's Administration for Children and Families provided 
Social Services Block Grant (SSBG) supplemental funds to Louisiana, 
which subsequently dedicated a portion specifically for health care 
services, including mental health care.[Footnote 8] The Secretary of 
HHS awarded Professional Workforce Supply Grant funds to reduce 
shortages in the professional health care workforce. The funds were 
distributed as financial incentives to eligible health care providers; 
eligibility requirements included agreeing to serve Medicare, Medicaid, 
and uninsured patients.[Footnote 9] Grants from the Health Center 
Program of HHS's Health Resources and Services Administration (HRSA) 
were also available during this time to certain organizations providing 
primary care services. Under Section 330 of the Public Health Service 
Act, HRSA provides grants to health centers nationwide to increase 
access to primary care, using a competitive process to award grants. 
All health center grantees are Federally Qualified Health Centers 
(FQHC), which enjoy certain federal benefits such as enhanced Medicare 
and Medicaid payment rates. However, not all FQHCs receive Health 
Center Program grants, and those that do not are sometimes referred to 
as having an FQHC Look-Alike designation. Four health center grantees 
served the greater New Orleans area at the time HHS awarded the PCASG 
in July 2007. 

My statement today is based primarily on our July 2009 report on the 
PCASG, in which we examined (1) how PCASG fund recipients used the 
PCASG funds to support the provision of primary care services in the 
greater New Orleans area, (2) how PCASG fund recipients used and 
benefited from other federal hurricane relief funds that support the 
restoration of primary care services in the greater New Orleans area, 
and (3) challenges the PCASG fund recipients continued to face in 
providing primary care services, and recipients' plans for sustaining 
services after PCASG funds are no longer available. In addition, we 
updated selected information from our 2009 PCASG report and relied on 
other related GAO work. 

To do the work for our July 2009 report on how federal grants helped 
support primary care, we conducted site visits at 8 of the 25 PCASG 
fund recipients during April 2008, during which we collected documents 
and interviewed PCASG fund recipient, state, and local officials. Based 
in part on information we gathered during the site visits, we developed 
a Web-based survey that focused on how recipients used PCASG funds, the 
challenges they continued to face, and their plans for sustainability. 
We administered the survey in October 2008. We received responses from 
23 of the 25 recipients, a response rate of 92 percent. We also 
reviewed and analyzed data from LDHH on expenditures related to the 
supplemental SSBG and on awards made under CMS's Professional Workforce 
Supply Grant Program, reviewed the recipients' applications for PCASG 
funding and their plans for sustainability, and interviewed officials 
at LDHH and PCASG fund recipients about how the recipients used PCASG 
and other federal funds. We conducted the work for our July 2009 report 
from February 2008 through June 2009. To update the work on the PCASG, 
we interviewed state, LPHI, and PCASG fund recipient officials about 
sustainability plans and reviewed and analyzed more recent data from 
these officials about program funding and services. We conducted this 
new work in October and November 2009 and shared the information we 
obtained with HHS officials. In addition, we incorporated findings from 
another July 2009 report, which examined barriers to mental health 
services for children in the greater New Orleans area.[Footnote 10] We 
conducted the original and updated work in accordance with all sections 
of GAO's Quality Assurance Framework that are relevant to our 
objectives. The framework requires that we plan and perform the 
engagement to obtain sufficient and appropriate evidence to meet our 
stated objectives and to discuss any limitations in our work. We 
believe that the information and data obtained, and the analysis 
conducted, provide a reasonable basis for any findings and conclusions 
in this product. A detailed explanation of our methodology for each of 
the 2009 reports is included in the respective reports. 

PCASG Fund Recipients Used PCASG Funds to Support Primary Care Services 
by Hiring Health Care Providers and Other Staff and Adding Services and 
Sites: 

PCASG fund recipients that responded to our October 2008 survey 
reported that they used PCASG funds to hire or retain health care 
providers and other staff, add primary care services, and open new 
sites. (See table 1.) Recipients also said that the PCASG funds helped 
them improve service delivery and access to care for the patients they 
served. As of September 20, 2009, PCASG recipients reported to LPHI 
that they had used PCASG funds--in conjunction with other funds, such 
as other federal grants and Medicaid reimbursement--to support services 
provided to almost 252,000 patients. These patients had over 1 million 
encounters with a health care provider, two-thirds of which were for 
medical and dental care and one-third of which were for mental health 
care.[Footnote 11] A small number of encounters were for specialty 
care. The patients served by the PCASG fund recipients were typically 
uninsured or enrolled in Medicaid. We reported in July 2009 that for 
the first several months during which PCASG funds were available, at 
more than half of the PCASG fund recipients, at least half--and at 
times over 70 percent--of the patient population was uninsured. 

Table 1: Number of Primary Care Access and Stabilization Grant (PCASG) 
Fund Recipients That Used PCASG Funds to Hire or Retain Staff, Expand 
Services, or Open or Renovate Sites, as of October 28, 2008: 

Actions taken with PCASG funds: Hired health care providers; 
Number of PCASG fund recipients taking action: 20. 

Actions taken with PCASG funds: Hired other staff; 
Number of PCASG fund recipients taking action: 18. 

Actions taken with PCASG funds: Retained health care providers; 
Number of PCASG fund recipients taking action: 17. 

Actions taken with PCASG funds: Retained other staff; 
Number of PCASG fund recipients taking action: 15. 

Actions taken with PCASG funds: Added or expanded primary care 
services; 
Number of PCASG fund recipients taking action: 19. 

Actions taken with PCASG funds: Opened new or relocated sites; 
Number of PCASG fund recipients taking action: 15. 

Actions taken with PCASG funds: Renovated existing sites; 
Number of PCASG fund recipients taking action: 10. 

Source: GAO analysis of PCASG fund recipients' responses to GAO's Web- 
based survey. 

Note: The data in the table are based on the responses of the 23 
recipients that responded to GAO's Web-based survey. Recipients may 
have hired or retained more than one type of staff and added or 
expanded more than one type of service. 

[End of table] 

Of the 20 recipients that reported in our October 2008 survey that they 
used PCASG funds to hire health care providers, half hired both medical 
and mental health providers. (See figure 1.) One recipient reported 
that by hiring one psychiatrist, it could significantly increase 
clients' access to services by cutting down a clinic's waiting list and 
by providing clients with a "same-day" psychiatric consultation or 
evaluation. Another recipient reported that it hired 23 medical care 
providers, some of whom were staffed at its new sites. Some recipients 
reported that hiring additional providers enabled them to expand the 
hours some of their sites were open. 

Figure 1: Number of Primary Care Access and Stabilization Grant (PCASG) 
Fund Recipients That Used PCASG Funds to Hire Health Care Providers, as 
of October 28, 2008: 

[Refer to PDF for image: illustration] 

The illustration depicts two overlapping circles containing the 
following data: 

4 recipients reported hiring only medical health care providers; 

6 recipients reported hiring only mental health care providers; 

10 recipients reported hiring both medical and mental health care 
providers. 

Source: GAO analysis of PCASG fund recipients’ responses to GAO’s Web-
based survey. 

Note: The data in the figure are based on the responses of the 23 
recipients that responded to GAO's Web-based survey. 

[End of figure] 

Of the 23 recipients that responded to our survey, 17 reported they 
used PCASG funds to retain health care providers, and 15 of these 
reported that they also used grant funds to retain other staff. For 
example, one recipient reported that PCASG funds were used to stabilize 
positions that were previously supported by disaster relief funds and 
donated services. 

Nineteen of the 23 PCASG fund recipients that responded to our survey 
reported using PCASG funds to add or expand medical, mental health, or 
dental care services, and more than half of these added or expanded 
more than one type of service. Specifically, 11 added or expanded 
medical care, 15 added or expanded mental health care, and 4 added or 
expanded dental care services. In addition, PCASG fund recipients also 
reported using grant funds to add or expand specialty care or ancillary 
services. One recipient reported that it used PCASG funds to create a 
television commercial announcing that a clinic was open and that 
psychiatric services were available there, including free care for 
those who qualified financially. 

Almost all of the PCASG fund recipients that responded to our survey 
reported they used PCASG funds for their physical space. Ten recipients 
that responded to our survey reported using grant funds to renovate 
existing sites, such as expanding a waiting room, adding a registration 
window, and adding patient restrooms, to accommodate more patients. 
Officials from one PCASG fund recipient reported that relocating to a 
larger site allowed providers to have additional examination rooms. 

PCASG fund recipients that responded to our survey reported that 
certain program requirements--such as developing a network of local 
specialists and hospitals for patient referrals and establishing a 
quality assurance and improvement program that includes clinical 
guidelines or evidence-based standards of care--have had a positive 
effect on their delivery of primary care services. In addition, they 
reported that the PCASG funds helped them improve access to health care 
services for residents of the greater New Orleans area. For example, 
one PCASG fund recipient reported that the PCASG funds have helped it 
to expand services beyond residents in shelter and housing programs to 
include community residents who were not homeless but previously lacked 
access to health care services. Representatives of other PCASG fund 
recipients have reported that their organization improved access to 
care by expanding services in medically underserved neighborhoods or to 
people who were uninsured or underinsured. Representatives of local 
organizations also told us the PCASG provided an opportunity to rebuild 
the health care system and shift the provision of primary care from 
hospitals to community-based primary care clinics. 

Other Federal Hurricane Relief Funds Helped PCASG Fund Recipients to 
Pay Staff, Purchase Equipment, and Expand Mental Health Services to 
Help Restore Primary Care: 

PCASG fund recipients also used other federal hurricane relief funds to 
help support the restoration of primary care services. According to 
LDHH data, as of August 2008, 11 PCASG fund recipients expended $12.9 
million of the SSBG supplemental funds that were awarded to Louisiana 
and that the state designated for primary care.[Footnote 12] They used 
these funds to pay for staff salaries, purchase medical equipment, and 
support operations. For example, one recipient used SSBG supplemental 
funds to hire new medical and support staff and, as a result, expanded 
its services for mammography, cardiology, and mental health. The two 
PCASG fund recipients that received a total of almost $12 million in 
SSBG supplemental funds designated for mental health care used those 
funds to provide crisis intervention, substance abuse, and other mental 
health services, mostly through contracts to other organizations and 
providers.[Footnote 13] The majority of funds were expended on the 
categories LDHH identified as "substance abuse treatment and prevention 
services," "immediate intervention and crisis response services," and 
"behavioral health services for children and adolescents."[Footnote 14] 

As of August 2008, most of the 25 PCASG fund recipients had retained or 
hired a health care provider who had received a Professional Workforce 
Supply Grant incentive payment to continue or begin working in the 
greater New Orleans area.[Footnote 15] Among the health care providers 
working for PCASG fund recipients, 69 received incentives that totaled 
$4.5 million. The number of those health care providers who were 
employed by individual PCASG fund recipients ranged from 1 or 2 at 7 
recipient organizations to 10 at 2 recipient organizations. Three- 
quarters of recipients of incentive payments were existing employees 
who were retained, while one-quarter were newly hired. 

PCASG Fund Recipients Face Multiple Challenges and Have Various Plans 
for Sustainability: 

PCASG fund recipients face significant challenges in hiring and 
retaining staff, as well as in referring patients outside of their 
organizations, and these challenges have grown since Hurricane Katrina. 
Recipients are taking actions to address the challenge of 
sustainability, but are concerned about what will happen when PCASG 
funds are no longer available. 

PCASG Fund Recipients Face Significant Staffing and Referral 
Challenges, and These Challenges Have Grown Since Hurricane Katrina: 

Although most of the 23 PCASG fund recipients that responded to our 
October 2008 survey hired or retained staff with grant funds, most have 
continued to face significant challenges in hiring and retaining staff. 
Twenty of the 23 recipients reported the hiring of health care 
providers to be either a great or moderate challenge. Among those, over 
three-quarters responded that this challenge had grown since Hurricane 
Katrina. For example, in discussing challenges, officials from one 
recipient organization told us that after Hurricane Katrina they had 
greater difficulty hiring licensed nurses than before the hurricane and 
that most nurses were being recruited by hospitals, where the pay was 
higher. Moreover, officials we interviewed from several recipient 
organizations said that the problems with housing, schools, and overall 
community infrastructure that developed after Hurricane Katrina made it 
difficult to attract health care providers and other staff. In 
addition, 16 of the 23 recipients reported that retaining health care 
providers was a great or moderate challenge. Among those, about three- 
quarters also reported that this challenge had grown since Hurricane 
Katrina. 

An additional indication of the limited availability of primary care 
providers in the area is HRSA's designation of much of the greater New 
Orleans area as health professional shortage areas (HPSA) for primary 
care, mental health care, and dental care.[Footnote 16] Specifically, 
HRSA designated all of Orleans, Plaquemines, and St. Bernard parishes, 
and much of Jefferson Parish, as HPSAs for primary care. While some 
portions of the greater New Orleans area had this HPSA designation 
before Hurricane Katrina, additional portions of the area received that 
designation after the hurricane. Similarly, HRSA designated all four 
parishes of the greater New Orleans area as HPSAs for mental health in 
late 2005 and early 2006; before Hurricane Katrina, none of the four 
parishes had this designation for mental health. In addition, HRSA has 
designated all of Orleans, St. Bernard, and Plaquemines parishes and 
part of Jefferson Parish as HPSAs for dental care; before Katrina, only 
parts of Orleans and Jefferson parishes had this designation. 

The PCASG fund recipients that primarily provide mental health services 
in particular faced challenges both in hiring and in retaining 
providers. Six of the seven that responded to our October 2008 survey 
reported that both hiring and retaining providers were either a great 
or moderate challenge. Officials we interviewed from one recipient told 
us that while the Greater New Orleans Service Corps, which was funded 
through the Professional Workforce Supply Grant, had been helpful for 
recruiting and retaining physicians, it had not helped fill the need 
for social workers. Furthermore, officials we interviewed from two 
recipients told us that some staff had experienced depression and 
trauma themselves and found it difficult to work in mental health 
settings. Beyond challenges in hiring and retaining their own providers 
and other staff, PCASG fund recipients that responded to our survey 
reported significant challenges in referring their patients to other 
organizations for mental health, dental, and specialty care services. 

We also reported on a lack of mental health providers in our July 2009 
report that examined barriers to mental health services for children in 
the greater New Orleans area.[Footnote 17] Specifically, 15 of the 18 
organizations we interviewed for that work identified a lack of mental 
health providers--including challenges recruiting and retaining child 
psychiatrists, psychologists, and nurses--as a barrier to providing 
mental health services for children. In addition, we reported that 
HRSA's Area Resource File (ARF)--a county-based health resources 
database that contains data from many sources including the U.S. Census 
Bureau and the American Medical Association--indicated that the greater 
New Orleans area has experienced more of a decrease in mental health 
providers than some other parts of the country. For example, we found 
that ARF data documented a 21 percent decrease in the number of 
psychiatrists in the greater New Orleans area from 2004 to 2006, during 
which time there was a 1 percent decrease in Wayne County, Michigan 
(which includes Detroit and which had pre-Katrina poverty and 
demographic characteristics similar to those of the greater New Orleans 
area) and a 3 percent increase in counties nationwide. 

PCASG Fund Recipients Are Taking Actions to Address the Challenge of 
Sustainability, but Are Concerned About What Will Happen When PCASG 
Funds Are No Longer Available: 

In our July 2009 report on the PCASG, we found that an additional 
challenge that the PCASG fund recipients face is to be sustainable 
after PCASG funds are no longer available in September 2010.[Footnote 
18] All 23 recipients that responded to our October 2008 survey 
reported that they had taken or planned to take at least one type of 
action to increase their ability to be sustainable--that is, to be able 
to serve patients regardless of the patients' ability to pay after 
PCASG funds are no longer available. For example, all responding 
recipients reported that they had taken action--such as screening 
patients for eligibility--to facilitate their ability to receive 
reimbursement for services they provided to Medicaid or LaCHIP[Footnote 
19] beneficiaries.[Footnote 20] Furthermore, 16 recipients that 
responded to our October 2008 survey reported that they were billing 
private insurance, with an additional 5 recipients reporting they 
planned to do so. However, obtaining reimbursement for all patients who 
are insured may not be sufficient to ensure a recipient's 
sustainability, because at about half of the PCASG fund recipients, 
over 50 percent of the patients were uninsured. 

Many PCASG fund recipients reported that they intended to use Health 
Center Program funding or FQHC Look-Alike designation--which allows for 
enhanced Medicare and Medicaid payment rates--as one of their 
sustainability strategies. Four recipients were participating in the 
Health Center Program at the time they received the initial 
disbursement of PCASG funds. One of these recipients had received a 
Health Center New Access Point[Footnote 21] grant to open an additional 
site after Hurricane Katrina and had also received an Expanded Medical 
Capacity[Footnote 22] grant to increase service capacity, which it used 
in part to hire additional staff and buy equipment. Another of these 
recipients received a New Access Point grant to open an additional site 
after receiving PCASG funds. Beyond these four recipients, one 
additional recipient received an FQHC Look-Alike designation in July 
2008. 

HRSA made additional grants from appropriations made available by the 
American Recovery and Reinvestment Act of 2009, awarding five PCASG 
fund recipients with additional Health Center Program grants totaling 
$7.4 million as of October 19, 2009.[Footnote 23] Specifically, three 
PCASG fund recipients were awarded New Access Point grants totaling 
$3.9 million,[Footnote 24] five received Capital Improvement Program 
grants totaling more than $2.4 million,[Footnote 25] and five received 
Increased Demand for Services grants totaling nearly $1.1 million. 
[Footnote 26] 

Of the remaining 18 recipients that responded to our survey, 6 said 
they planned to apply for both a Health Center Program grant and an 
FQHC Look-Alike designation. In addition, one planned to apply for a 
grant only and another planned to apply for an FQHC Look-Alike 
designation only. Although many recipients indicated that they intended 
to use Health Center Program funding as a sustainability strategy, it 
is unlikely that they would all be successful in obtaining a grant. For 
example, in fiscal year 2008 only about 16 percent of all applications 
for New Access Point grants resulted in grant awards. 

About three-quarters of PCASG fund recipients reported that as one of 
their sustainability strategies they had applied or planned to apply 
for additional federal funding, such as Ryan White HIV/AIDS Program 
grants,[Footnote 27] or for state funding. In addition, a few reported 
that they had applied or planned to apply for private grants, such as 
grants from foundations. 

In our fall 2009 interviews, LPHI and PCASG recipient officials told us 
that there is uncertainty and concern among the PCASG fund recipients 
as the time approaches when PCASG funding will no longer be available. 
LPHI officials told us that they expect that some PCASG fund recipients 
might have to close, and others could be forced to scale back their 
current capacity by as much as 30 or 40 percent. For example, one PCASG 
fund recipient official we spoke with in November 2009 told us that the 
organization's mobile medical units may not be sustainable without 
PCASG funding; services provided by mobile units are not eligible for 
Medicaid funding without a referral and collecting cash from patients 
could make the units targets for crime. LPHI officials said they expect 
that the loss of PCASG funds would most affect PCASG fund recipients 
that serve the largest number of uninsured patients. 

To help PCASG fund recipients achieve sustainability, the LPHI 
developed a sustainability strategy guide in April 2009. This guide 
suggests actions that the recipients could take to become sustainable 
entities, such as maximizing revenues by improving their ability to 
screen patients for eligibility for Medicaid and other third party 
payers, enroll eligible patients, electronically bill the insurers, and 
collect payment from insurers. 

LPHI and a PCASG fund recipient have identified additional potential 
approaches for securing revenues to decrease what LPHI estimated would 
be a $30 million gap in the PCASG fund recipients' annual revenues when 
PCASG funds are no longer available. The LPHI sustainability strategy 
guide proposed that expanding Medicaid eligibility through a proposed 
Medicaid demonstration project that HHS is reviewing could result in a 
decrease in the number of uninsured people; these are the patients for 
whom PCASG fund recipients are most dependent on federal subsidies. 
[Footnote 28] The LPHI guide also suggested that it could be helpful if 
Louisiana received greater flexibility to use Medicaid disproportionate 
share dollars for outpatient primary care not provided by hospitals. 
[Footnote 29] In addition, a PCASG fund recipient official told us in 
November 2009 that a no-cost extension for PCASG funds might help some 
PCASG fund recipients if they are able to stretch their PCASG dollars 
beyond September 30, 2010. 

Although PCASG fund recipients have completed or planned actions to 
increase their ability to be sustainable and have received guidance 
from LPHI, it is unclear which recipients' sustainability strategies 
will be successful and how many patients recipients will be able to 
continue to serve. With the availability of PCASG funds scheduled to 
end in less than 10 months, preventing disruption in the delivery of 
primary care services could depend on quickly identifying and 
implementing workable sustainability strategies. 

Mr. Chairman, this completes my prepared remarks. I would be happy to 
respond to any questions you or other members of the committee may have 
at this time. 

Contacts and Acknowledgments: 

For further information about this statement, please contact Cynthia A. 
Bascetta at (202) 512-7114 or bascettac@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this statement. Key contributors to this statement 
were Helene F. Toiv, Assistant Director; Carolyn Feis Korman; Deitra 
Lee; Coy J. Nesbitt; Roseanne Price; and Jennifer Whitworth. 

[End of section] 

Footnotes: 

[1] See GAO, Hurricane Katrina: Federal Grants Have Helped Health Care 
Organizations Provide Primary Care, but Challenges Remain, [hyperlink, 
http://www.gao.gov/products/GAO-09-588] (Washington, D.C.: July 13, 
2009). In this statement we follow the Centers for Medicare & Medicaid 
Services' definition of the greater New Orleans area--Jefferson, 
Orleans, Plaquemines, and St. Bernard parishes--which is used by the 
program at the center of this statement, the Primary Care Access and 
Stabilization Grant. 

[2] In this statement, we define primary care as basic medical care 
that is generally provided in an outpatient setting such as a clinic or 
general practitioner's office, as opposed to in a hospital. 

[3] This grant was made under a provision of the Deficit Reduction Act 
of 2005 authorizing payments to restore access to health care in 
communities affected by Hurricane Katrina. Pub. L. No. 109-171, § 
6201(a)(4), 120 Stat. 4, 133 (2006). Notice of Single Source Grant 
Award, 72 Fed. Reg. 51,230 (Sept. 6, 2007). 

[4] In this statement, we define mental health care services to include 
substance abuse prevention and treatment services. 

[5] Medicaid is a federal-state health insurance program for certain 
low-income individuals. 

[6] March 20, 2008, was the end date of the first period for which 
recipients of PCASG funds reported data on their activities to LPHI. In 
this statement, we describe the data for this period at the recipient 
level. As of September 20, 2009, the 25 PCASG fund recipients were 
operating 93 sites that were eligible to use those funds. 

[7] For the PCASG, CMS defines sustainability as the ability to 
continue to provide primary care to all patients (regardless of their 
ability to pay) through some funding mechanism other than the PCASG 
funds, such as enrolling as a provider in Medicaid or another public or 
private insurer. 

[8] To help respond to the short-term crisis counseling needs, the 
greater New Orleans area also received federal Crisis Counseling 
Assistance and Training Program funds. See GAO, Catastrophic Disasters: 
Federal Efforts Help States Prepare for and Respond to Psychological 
Consequences, but FEMA’s Crisis Counseling Program Needs Improvements, 
[hyperlink, http://www.gao.gov/products/GAO-08-22] (Washington, D.C.: 
Feb. 29, 2008). 

[9] Financial incentive payments could be given to health care 
providers who remained in their qualifying job or to newly hired health 
care providers; individuals may receive only one financial incentive 
payment. 

[10] GAO, Hurricane Katrina: Barriers to Mental Health Services for 
Children Persist in Greater New Orleans, Although Federal Grants Are 
Helping to Address Them, [hyperlink, 
http://www.gao.gov/products/GAO-09-563] (Washington, D.C.: July 13, 
2009). 

[11] An encounter is an interaction between a patient and a provider 
for the purposes of meeting a health care need. It can occur by 
telephone or in person. 

[12] The SSBG supplemental funds were distributed before organizations 
received PCASG funds. Dollar amounts reflect funds expended by PCASG 
fund recipients at sites where they later used PCASG funds. 

[13] None of the contracts were awarded to other PCASG fund recipients. 

[14] Behavioral health is a term often used to refer to mental health 
and substance abuse services. 

[15] In discussing the incentive payments made from Professional 
Workforce Supply Grant funds, the information we provide about the 25 
PCASG fund recipients is based on the more than 80 sites that were also 
eligible to use PCASG funds as of August 2008. Additional health care 
providers who have received incentives may be employed by PCASG fund 
recipients, but not at sites eligible to use PCASG funds. 

[16] HPSAs are used to identify geographic areas, population groups, or 
facilities facing a shortage of primary care, dental, or mental health 
providers. 

[17] [hyperlink, http://www.gao.gov/products/GAO-09-563]. 

[18] [hyperlink, http://www.gao.gov/products/GAO-09-588]. 

[19] LaCHIP is the name of Louisiana's Children's Health Insurance 
Program. The Children's Health Insurance Program is a federal-state 
health insurance program that offers insurance to certain children 
under age 19 whose family income is too high for Medicaid eligibility 
and who are not enrolled under other health insurance. 

[20] From September 2007 to September 2009, there was a 20 percent 
increase in the number of PCASG recipients' clinics that billed 
Medicaid, according to data from LPHI. 

[21] New Access Point grants are for new grantees or for existing 
grantees to establish additional sites. 

[22] Expanded Medical Capacity grants support increased service 
capacity, such as by expanding operating hours. 

[23] The American Recovery and Reinvestment Act of 2009 provided HRSA 
with $2 billion for the Health Center Program (Pub. L. No. 111-5, div. 
A, title VIII, 123 Stat. 115, 175). 

[24] One of the three PCASG fund recipients that were awarded New 
Access Point grants was the one that received Look-Alike designation in 
2008; the other two were existing grantees. 

[25] Capital Improvement Program grants are limited-competition awards 
designed to address capital improvement needs in health centers, such 
as construction, repairs, renovation, and equipment purchase, including 
health information technology. 

[26] Increased Demand for Services grants are formula allocation awards 
designed to help health centers increase the number of total patients 
and uninsured patients served, such as by extending hours of operation, 
expanding existing services, adding staff, or retaining staff. 

[27] Through the Ryan White Comprehensive AIDS Resources Emergency Act 
of 1990 and subsequent legislation, HRSA provides federal funds to 
metropolitan areas, states, and others to assist with the cost of core 
medical and support services for individuals and families infected and 
affected by HIV/AIDS. See 42 U.S.C. §§ 300ff through 300ff-121. 

[28] States operate and administer their Medicaid programs 
independently within federal requirements established in statute and 
regulations, and the federal government shares in the cost of each 
state's program by paying an established share of states' reported 
expenditures. Under section 1115 of the Social Security Act, however, 
the Secretary of HHS may waive certain federal requirements for 
demonstrations the Secretary deems likely to promote Medicaid 
objectives, allowing states to apply to test and evaluate new 
approaches for delivering Medicaid services. 

[29] Medicaid disproportionate share hospital payments provide 
financial assistance to hospitals that serve a large number of low- 
income patients, such as people with Medicaid and the uninsured. 
Medicaid disproportionate share hospital payments are the largest 
source of federal funding for uncompensated hospital care. 

[End of section] 

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