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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

May 2012: 

Health Center Program: 

Improved Oversight Needed to Ensure Grantee Compliance with 
Requirements: 

GAO-12-546: 

GAO Highlights: 

Highlights of GAO-12-546, a report to congressional requesters. 

Why GAO Did This Study: 

Under the Health Center Program, HRSA provides grants to eligible 
health centers. HRSA is responsible for overseeing over 1,100 health 
center grantees to ensure their compliance with Health Center Program 
requirements. GAO was asked to examine HRSA’s oversight. This report 
(1) describes HRSA’s oversight process and (2) assesses the extent to 
which the process identifies and addresses noncompliance with what 
HRSA refers to as the 19 key program requirements. GAO reviewed and 
analyzed HRSA’s policies and procedures and available programwide data 
related to HRSA's oversight of health centers, interviewed HRSA 
officials, and reviewed documentation of HRSA’s oversight from 8 
selected grantees that varied in their compliance experience, as well 
as other factors. 

What GAO Found: 

The Department of Health and Human Services’ (HHS) Health Resources 
and Services Administration (HRSA) relies on three main methods to 
oversee grantees’ compliance with the 19 key program requirements. 

* Annual compliance reviews. HRSA project officers review available 
information, including that submitted by grantees, to determine 
whether the grantee is in compliance with each of the 19 program 
requirements. 

* Site visits. HRSA and its consultants visit grantees to review 
documentation, meet with officials, and tour the health center. Some 
of these visits are intended to assess compliance with some or all 
program requirements. 

* Routine communications. Project officers communicate with grantees 
via phone and e-mail to learn about issues that may affect their 
compliance. 

When HRSA identifies noncompliance with program requirements, it uses 
a process, implemented in April 2010, to address this with a grantee. 
This process provides a grantee with defined time frames for 
addressing any identified noncompliance. If a grantee is unable to 
correct the compliance issue by the end of the process, HRSA’s policy 
is to terminate the health center’s grant. 

HRSA’s ability to identify grantees’ noncompliance with Health Center 
Program requirements is insufficient. 

* HRSA does not require project officers to document their basis for 
determining that a grantee is in compliance with a requirement. When 
project officers are uncertain about compliance, HRSA instructs them 
to consider a grantee in compliance and to note the lack of certainty 
in a text field of their evaluation tool. However, HRSA has no 
centralized mechanism to ensure this occurs. Thus, it is unclear 
whether project officers' decisions that a grantee is in compliance 
with a requirement are because there was sufficient evidence 
demonstrating compliance or the project officer failed to document 
that compliance was uncertain. 

* The number of compliance-related visits conducted may be limited. 
HRSA’s available data indicates that only 11 percent of grantees had a 
compliance-related site visit from January through October 2011; less 
than half of which had a visit that assessed compliance with all 19 
program requirements. 

* HRSA’s project officers do not consistently identify and document 
grantee noncompliance. Project officers GAO interviewed had different 
interpretations of what constitutes compliance with some program 
requirements and therefore when they should cite a grantee for 
noncompliance. 

HRSA’s process for addressing grantee noncompliance with program 
requirements seems to provide both the agency and grantees with a 
uniform structure for addressing noncompliance. However, the extent to 
which this process is adequately resolving grantee noncompliance or 
terminating grantee funding is unclear because HRSA’s experience with 
this process is too recent for GAO to make an overall assessment. 

What GAO Recommends: 

GAO recommends that, among other things, HRSA improve its 
documentation of compliance decisions, strengthen its ability to 
consistently identify and cite grantee noncompliance, and periodically 
assess whether its new process for addressing grantee noncompliance is 
working as intended. HHS concurred with all of GAO’s recommendations, 
and stated that HRSA has already begun implementing many of them. HHS, 
however, did not concur with what it characterized as certain 
conclusions drawn from the findings. HHS based its comments on only 
some of the evidence. GAO’s analysis of all the evidence and HRSA’s 
planned implementation of the recommendations confirm the validity of 
the findings and conclusions. 

View [hyperlink, http://www.gao.gov/products/GAO-12-546]. For more 
information, contact Debra A. Draper at (202) 512-7114 or 
draperd@gao.gov. 

Contents: 

Letter: 

Background: 

HRSA Uses Three Main Methods to Oversee Grantee Compliance and Has a 
Process to Address Noncompliance: 

HRSA's Process for Identifying Noncompliance Is Insufficient, and It 
Is Too Soon to Assess the Revised Process for Addressing Noncompliance: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Characteristics of Selected Health Center Grantees: 

Appendix II: Summary of Noncompliance Data for the Health Center 
Program: 

Appendix III: Comments from the Department of Health and Human 
Services: 

Appendix IV: Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Summary of HRSA's 19 Key Health Center Program Requirements: 

Table 2: Examples of HRSA Guidance to Project Officers for Assessing 
Compliance with Six Selected Program Requirements: 

Table 3: Types of HRSA Site Visits Conducted for the Health Center 
Program: 

Table 4: Characteristics of the Eight Selected Health Center Grantees: 

Figures: 

Figure 1: HRSA's Process for Addressing Health Center Grantee 
Noncompliance: 

Figure 2: Number of Conditions of Noncompliance HRSA Issued per 
Grantee, from April 9, 2010, through October 7, 2011: 

Figure 3: Number of Conditions and Number of Grantees That Had a 
Condition, by Requirement from April 9, 2010, through October 7, 2011: 

Abbreviations: 

BPHC: Bureau of Primary Health Care: 

HHS: Department of Health and Human Services: 

HRSA: Health Resources and Services Administration: 

PPACA: Patient Protection and Affordable Care Act: 

UDS: uniform data system: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

May 29, 2012: 

The Honorable Michael B. Enzi: 
Ranking Member: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable Richard Burr: 
Ranking Member: 
Subcommittee on Children and Families: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable Tom Coburn: 
Ranking Member: 
Permanent Subcommittee on Investigations: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The nationwide network of health centers in the federal Health Center 
Program is an important component of the health care safety net for 
vulnerable populations, including Medicaid beneficiaries, people who 
are uninsured, and others who may have difficulty obtaining access to 
health care. To fulfill the Health Center Program's mission of 
providing comprehensive, quality primary health care services for the 
medically underserved, the Department of Health and Human Services' 
(HHS) Health Resources and Services Administration (HRSA) provides 
grants to eligible health centers under Section 330 of the Public 
Health Service Act.[Footnote 1] These grants are an important part of 
successful health center operations and viability. In 2010, Health 
Center Program grants helped fund more than 1,100 health center 
grantees that provided services at more than 8,100 health care 
delivery sites and served nearly 19.5 million people--72 percent of 
whom had income at or below the federal poverty level. These grants 
made up over 20 percent of all health center grantees' revenues in 
2010. 

To continue receiving program funds, health center grantees must 
comply with a number of requirements. For example, HRSA identified 
what it refers to as the 19 key program requirements, which the agency 
indicated are based on requirements outlined in the Public Health 
Service Act and regulations.[Footnote 2] HRSA groups these 19 program 
requirements into four broad categories: patient need, the provision 
of services, management and finance, and governance. For example, the 
provision of services category includes requirements for health center 
grantees to provide comprehensive primary health care services, 
including preventive, diagnostic, treatment, and emergency services; 
provide professional coverage after normal business hours; and have a 
system for adjusting fees based on a patient's ability to pay. Project 
officers in HRSA's Bureau of Primary Health Care (BPHC) are primarily 
responsible for overseeing health center grantees to ensure their 
compliance with the Health Center Program requirements. 

Funding for the Health Center Program has increased substantially 
during the past decade. The Health Center Program's annual funding 
more than doubled from approximately $1.3 billion to about $2.8 
billion, from fiscal year 2002 through fiscal year 2012. This funding 
includes the amount of program funds HRSA allocated from its annual 
appropriations during the period, as well as amounts the agency 
received through other legislation.[Footnote 3] Specifically, the 
program's fiscal year 2009 funding included $2 billion that HRSA 
received through the American Recovery and Reinvestment Act of 2009, 
[Footnote 4] and its fiscal years 2011 and 2012 funding included a 
total of $2.2 billion HRSA received through the Patient Protection and 
Affordable Care Act (PPACA).[Footnote 5] Furthermore, for fiscal years 
2013 through 2015, PPACA appropriated an additional $7.3 billion to 
HRSA to provide grants for the operation and expansion of health 
centers.[Footnote 6] As a result, health center capacity is expected 
to expand over the next several years. 

Given the past and expected increases in program funding, you asked us 
to examine HRSA's oversight of health center grantees. In this report, 
we (1) describe the process HRSA uses to oversee grantee compliance 
with Health Center Program requirements, and (2) assess the extent to 
which HRSA's process identifies and addresses noncompliance with these 
program requirements. 

To describe the process HRSA uses to oversee compliance with the 
Health Center Program requirements, we reviewed key documents related 
to HRSA's oversight process. These documents included regulations 
governing the Health Center Program, HRSA's standard operating 
procedures for monitoring and assessing grantees' compliance, and 
guidance that HRSA provides to its project officers and grantees 
regarding compliance with the 19 program requirements. We also 
interviewed knowledgeable HRSA officials about the agency's oversight 
process, as well as any significant changes to this process over the 
past several years. 

To assess the extent to which HRSA's process identifies and addresses 
noncompliance with Health Center Program requirements, we reviewed and 
analyzed HRSA's standard operating procedures, and the tools and 
guidance HRSA provides to project officers related to its oversight 
process. We also discussed the oversight process with cognizant HRSA 
officials. To gain a more in-depth understanding of the extent to 
which HRSA's process identifies and addresses noncompliance, we also 
reviewed and analyzed HRSA's oversight of eight selected health center 
grantees. The grantees were selected to provide variation in: size, as 
determined by the number of delivery sites; length of time as a Health 
Center Program grantee; and the number of findings of noncompliance--
referred to as conditions--that HRSA had cited for each grantee that 
were unresolved as of July 11, 2011.[Footnote 7] (See app. I for 
additional information about the grantees we selected.) We also 
selected the eight grantees to ensure that each of the eight had a 
different HRSA project officer and was located in a different state. 
For each of the selected grantees, we reviewed documentation of HRSA's 
oversight activities; including documentation of the most recently 
completed assessment of the grantees' compliance with the 19 program 
requirements. During our review, we identified whether HRSA staff were 
following the agency's procedures for identifying and addressing 
noncompliance, and whether the process was consistent with internal 
control standards for the federal government.[Footnote 8] For part of 
our review, we focused on HRSA's oversight of the eight selected 
grantees' compliance with 6 of the 19 program requirements; we 
judgmentally selected 2 requirements from each of the provision of 
services, management and finance, and governance categories.[Footnote 
9] Some of the selected requirements pertain to how health center 
grantees operate, such as the requirement that grantees provide 
sliding discounts to patients based on their ability to pay (known as 
the "sliding fee discounts" requirement), and the requirement that a 
health center grantee has a governing board, the majority of whose 
members are patients of the health center (board composition). 
[Footnote 10] Other requirements we selected are important because 
compliance with them helps to ensure the financial viability of health 
center grantees, such as the requirement that grantees implement 
systems to maximize revenue collections to cover the costs of 
providing services (billing and collections). The remaining 3 
requirements we selected for review were those requiring grantees to: 
provide professional coverage, such as access to a physician, for 
patients after normal health center hours (after hours coverage); 
possess sufficient management expertise to run the health center (key 
management staff); and have a policy to prevent conflicts of interest 
(conflict of interest). Additionally, we interviewed the relevant HRSA 
project officers and their supervisors, known as branch chiefs, about 
the criteria they used to assess whether grantees were in compliance 
with the 6 selected program requirements. Collectively, these project 
officers and branch chiefs were responsible for overseeing or 
supervising the oversight of almost 500 grantees. 

We also assessed the extent to which HRSA's process identifies and 
addresses noncompliance with the 19 program requirements by reviewing 
and analyzing programwide data HRSA had available on its use of site 
visits to health center grantees and the conditions issued to grantees 
for noncompliance with these requirements. We obtained and analyzed 
HRSA's data on site visits--on-site assessments of grantees' 
performance in providing services to patients or compliance with 
Health Center Program requirements--conducted between January 1, 2011, 
and October 27, 2011, and determined the frequency with which visits 
were conducted over this period.[Footnote 11] In addition, we analyzed 
programwide data on noncompliance issues HRSA cited from April 9, 
2010, through October 7, 2011, and determined, among other things, the 
number and types of issues, and proportion of grantees cited for 
noncompliance.[Footnote 12] We discussed both the site visit and 
noncompliance data with knowledgeable HRSA officials and reviewed the 
data for accuracy and consistency. We found a number of anomalies with 
the site visit data, including that certain data fields could not be 
updated for changes, and concluded that the data were of an 
undetermined reliability. We determined that the noncompliance data 
were sufficiently reliable for the purposes of our review. 

We conducted this performance audit from July 2011 to May 2012 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Health Center Program grantees are private, nonprofit community-based 
organizations or, less commonly, public organizations such as public 
health department clinics. Health centers funded through HRSA's Health 
Center Program are typically managed by an executive director, a 
financial officer, and a clinical director, and provide comprehensive 
primary care services including enabling services, such as translation 
and transportation, that help facilitate access to health care. 

HRSA's Health Center Program: 

HRSA identified 19 program requirements, which it indicated were based 
on Section 330 of the Public Health Service Act and regulations, which 
health center grantees must meet to continue receiving grant funding. 
HRSA groups these 19 program requirements into four broad categories: 
patient need, the provision of services, management and finance, and 
governance. Table 1 provides a summary of the 19 requirements. 

Table 1: Summary of HRSA's 19 Key Health Center Program Requirements: 

Category: Patient need: 

Requirement: Needs assessment; 
Description of requirement: Health center demonstrates and documents 
the needs of its target population. 

Category: Provision of services: 

Requirement: Required and additional services; 
Description of requirement: Health center provides (either directly or 
through established referral arrangements) all required primary, 
preventive, and enabling health services, and additional health 
services as appropriate and necessary. 

Requirement: Staffing requirement; 
Description of requirement: Health center maintains a core staff 
necessary to carry out all required, and additional services, either 
directly or through referral arrangements; 
the staff must be appropriately credentialed and licensed. 

Requirement: Accessible hours of operation/locations; 
Description of requirement: Health center provides services at times 
and locations that ensure accessibility, and meets the needs of 
population served. 

Requirement: After hours coverage; 
Description of requirement: Health center provides professional 
coverage during hours when the center is closed. 

Requirement: Hospital admitting privileges and continuum of care; 
Description of requirement: Health center physicians have admitting 
privileges at one or more referral hospitals, or other arrangements to 
ensure continuity of care. 

Requirement: Sliding fee discounts; 
Description of requirement: Health center has a system to determine 
eligibility for patient discounts adjusted on the basis of a patient's 
ability to pay. The system must provide a full discount to individuals 
with incomes at or below the federal poverty level, and a sliding 
level of discount to those with incomes up to twice the federal 
poverty level. No discounts may be provided to individuals with 
incomes over 200 percent of the federal poverty level. 

Requirement: Quality improvement/assurance plan; 
Description of requirement: Health center has an ongoing quality 
improvement/assurance program that includes clinical services and 
management, and that maintains the confidentiality of patient records. 

Category: Management and finance: 

Requirement: Key management staff; 
Description of requirement: Health center maintains a fully staffed 
management team. 

Requirement: Contractual/affiliation agreements; 
Description of requirement: Health center exercises appropriate 
oversight and authority over all contracted services, including 
ensuring that the entities it contracts with meet Health Center 
Program requirements. 

Requirement: Collaborative relationships; 
Description of requirement: Health center makes effort to establish 
and maintain collaborative relationships with other providers in its 
service area. 

Requirement: Financial management and control policies; 
Description of requirement: Health center maintains accounting and 
internal controls systems. Health center ensures that an annual 
independent financial audit is performed in accordance with federal 
audit requirements. 

Requirement: Billing and collections; 
Description of requirement: Health center has systems to maximize 
collections and reimbursements for its costs of providing health 
services. 

Requirement: Budget; 
Description of requirement: Health center has developed a budget that 
reflects the costs of operations, expenses, and revenues. 

Requirement: Program data reporting systems; 
Description of requirement: Health center has systems that accurately 
collect and organize data for program reporting. 

Requirement: Scope of project; 
Description of requirement: Health center is providing the scope of 
services covered by its grant, including any increases in the scope 
based on recent grant awards. 

Category: Governance: 

Requirement: Board authority; 
Description of requirement: Health center governing board maintains 
appropriate authority to oversee the operations of the center. 

Requirement: Board composition; 
Description of requirement: The health center has a governing board of 
between 9 and 25 members. A majority of the governing board members 
are patients of the center and they represent the individuals served 
by the center in terms of demographic factors such as race, ethnicity, 
and sex. The non-consumer members of the board must be representative 
of the community, and no more than half of them may derive more than 
10 percent of their annual income from the health care industry. 

Requirement: Conflict-of-interest policy; 
Description of requirement: Health center bylaws or written governing 
board approved policy includes provisions prohibiting conflicts of 
interest by board members, employees, consultants and those who 
furnish goods or services to the health center. No board member shall 
be an employee of the health center or an immediate family member of 
an employee. 

Source: GAO analysis of information from HRSA. 

[End of table] 

HRSA uses a competitive process to award Health Center Program grants. 
This process applies both to health centers receiving a grant for the 
first time--known as new starts--and to existing health center 
grantees that must compete periodically for grants. In either case, 
prospective or existing grantees are required to submit the applicable 
grant application to HRSA, and if approved, receive grants to provide 
services to individuals located in a specified area, known as their 
service area. 

HRSA approves funding for health centers for a specified time period, 
known as a project period. Currently, HRSA approves new start grantees 
funding for a 2-year project period, and existing grantees funding for 
project periods of 1, 3, or 5 years. The length of the project period 
for existing grantees is determined, in part, based on how well 
grantees are complying with the 19 program requirements. Each year of 
a project period is referred to as a budget period. After the 
competitive award of a grant for the first year, or budget period, 
HRSA awards noncompetitive continuation grants for each remaining 
budget period if funds are available, and the grantee demonstrates 
satisfactory progress in providing its services. A grantee 
demonstrates satisfactory progress by submitting a budget period 
progress report for HRSA's review. In both the competitive grant 
application and the budget period progress report, a grantee is, among 
other things, required to describe the services offered, provide a 
listing of its key management staff, and include a detailed narrative 
description of the current status and any changes in its operations 
related to the 19 program requirements. 

In addition to maintaining compliance with the 19 program requirements 
and submitting annual budget period progress reports, health center 
grantees are required to periodically submit other information to 
HRSA. For example, grantees are required to submit to HRSA an annual 
independent financial audit in accordance with federal audit 
requirements. In addition, in the first quarter of every year, 
grantees must submit a variety of information to HRSA's Uniform Data 
System (UDS); UDS tracks a variety of information on Health Center 
Program grantees, including information on their patient demographics 
(e.g., race/ethnicity, insurance status, income level); revenues; 
expenses; quality of care measures; and health center staffing and 
patient utilization patterns. 

HRSA's Bureau of Primary Health Care: 

HRSA's BPHC has primary responsibility for overseeing health center 
grantees' compliance with program requirements.[Footnote 13] This 
includes monitoring grantees to determine if they are in compliance 
with the 19 program requirements and addressing cases of grantee 
noncompliance. BPHC has four operating divisions, each containing five 
branches; the branches correspond to specified geographic locations. 
Within each branch there are project officers who are responsible for 
the ongoing oversight of an assigned portfolio of grantees. As of 
March 2012, HRSA had 111 project officers, whose portfolios ranged 
from 4 to 17 health center grantees; the average portfolio size was 10 
grantees per project officer. Each project officer reports to a 
supervisor, known as a branch chief. HRSA project officers use an on-
line electronic system, called the Electronic Handbook, to document 
their oversight activities, as well as correspond with and exchange 
documents with health center grantees. The system contains several 
different modules within which project officers record such 
information. 

To help them conduct their oversight, project officers have a variety 
of internal and external resources. For example, officials from the 
BPHC's Office of Policy and Program Development can assist project 
officers in interpreting program guidance and Health Center Program 
requirements. In addition, project officers have access to consultants 
through an over $30-million, 4-year contract with Management Solutions 
Consulting Group, a nationwide management consulting firm that 
provides HRSA access to approximately 300 to 350 consultants. The 
consultants are to provide a range of services, including conducting 
site visits and helping assess the results of health center grantees' 
annual financial audits. 

HRSA Uses Three Main Methods to Oversee Grantee Compliance and Has a 
Process to Address Noncompliance: 

HRSA primarily relies on three main methods to oversee grantees' 
compliance with Health Center Program requirements: annual compliance 
reviews, site visits, and routine communications. Additionally, when 
HRSA identifies noncompliance with these requirements, the agency has 
a recently revised process to address this with its grantees. 

HRSA Primarily Relies on Annual Compliance Reviews, Site Visits, and 
Routine Communications to Oversee Grantees: 

HRSA relies on three main methods to oversee grantees' compliance with 
Health Center program requirements. 

Annual Compliance Reviews: 

To oversee health center grantees' compliance with the 19 program 
requirements, HRSA requires project officers to conduct an annual 
compliance review for each of the grantees in their assigned 
portfolios. During this review, project officers are responsible for 
determining whether a health center grantee is in compliance with each 
of the 19 program requirements. The annual compliance review process 
begins when a health center grantee submits an application for a 
competitive grant or submits a budget period progress report to HRSA. 
When conducting a compliance review, HRSA project officers are 
responsible for reviewing information contained in the grantee's 
submission, such as information on the grantee's policies and a 
narrative explaining how the grantee believes it meets, or plans to 
meet, the 19 program requirements. HRSA also expects project officers 
to review other available information about the grantee, such as 
results from the grantee's annual financial audit and UDS information. 
Project officers generally have the option to contact the grantee 
during their annual review if they need clarification about the 
information in a grantee's application or budget period progress 
report.[Footnote 14] 

HRSA provides guidance to project officers for determining whether 
grantees are meeting each of the 19 program requirements. In 
particular, HRSA provides project officers with a list of key factors 
and questions related to the 19 program requirements to consider when 
making their assessment of compliance. Table 2 includes examples of 
the factors and questions provided to project officers for the 6 
program requirements we selected for more in-depth review. 

Table 2: Examples of HRSA Guidance to Project Officers for Assessing 
Compliance with Six Selected Program Requirements: 

Requirement: After hours coverage; 
Examples of key factors and questions project officers should consider 
when assessing compliance: 
Key Factors: 
* At a minimum, the grantee should ensure telephone access to a 
clinician who can exercise professional judgment in assessing a 
patient's need for emergency medical care and who can refer patients 
to an appropriate location for such care, including emergency rooms, 
when warranted; 
* Grantee should have an established mechanism for patients needing 
care to be seen after hours in an appropriate location and ensure that 
health center clinicians conduct timely follow up with patients seen 
after hours. 

Requirement: Sliding fee discounts; 
Examples of key factors and questions project officers should consider 
when assessing compliance: 
Key Factors: 
* Grantee should have a fee schedule that provides varying levels of 
discounts on charges to patients with incomes between 101 and 200 
percent of the federal poverty level; 
* No fee or only a nominal fee that would not be a major barrier to 
care should be charged to patients with incomes at or below the 
federal poverty level; 
* No discount should be provided to patients with incomes above 200 
percent of the federal poverty level; 
* Fee schedule must be based on the most recent federal poverty level 
guidelines. 

Requirement: Key management staff; 
Examples of key factors and questions project officers should consider 
when assessing compliance: 
Key Factors: 
* Grantee should maintain a fully staffed management team that is 
appropriate for the size and needs of the health center; 
Key Questions: 
* Does the grantee have a Chief Executive Officer, Executive Director, 
or Project Director? 
* Does the management team include other key management staff as 
appropriate, such as a Chief Financial Officer, Chief Operating 
Officer, Clinical Director, or Chief Information Officer? 
* Is the management team fully staffed, with each of the listed 
positions filled as appropriate?. 

Requirement: Billing and collections; 
Examples of key factors and questions project officers should consider 
when assessing compliance: 
Key Factors: 
* Grantee should maintain documented billing and collections policies 
and procedures; 
* Grantee must have the ability to bill Medicaid and Medicare. 

Requirement: Board composition; 
Examples of key factors and questions project officers should consider 
when assessing compliance: 
Key Questions: 
* Do a majority of board members (at least 51 percent) receive 
services (i.e. are patients) of the health center? 
* Do the patient board members reasonably represent--in terms of race, 
ethnicity and sex--the individuals who are served by the health center? 
* Does the board have between 9 and 25 members? 
* Is the size of the board appropriate for the complexity of the 
health center and diversity of the community served? 
* Does the board include at least one member with expertise in a 
variety of fields, such as finance and banking or legal affairs? 
* Do less than half of the non-consumer board members receive over 10 
percent of their annual income from the health care industry?. 

Requirement: Conflict-of-interest policy; 
Examples of key factors and questions project officers should consider 
when assessing compliance: 
Key Questions: 
* Do the grantee's bylaws or other policy documents include a conflict-
of-interest provision(s)? 
* Does the grantee's conflict-of-interest policy address issues such 
as: 
- Disclosure of relationships that create actual or potential conflict 
of interests; 
- Extent to which board members can participate in decisions where the 
member has a personal or financial interest; 
- Using board members to provide services to the health center; 
- Board member expense reimbursement policies; 
- Acceptance of gifts and gratuity; 
- Personal political activities of members; and; 
- Statement of consequences for violating the conflict-of-interest 
policy? 

Source: GAO analysis of Information from HRSA. 

[End of table] 

To conduct and document their compliance review, project officers use 
an electronic evaluation tool that is contained in the Electronic 
Handbook. The evaluation tool lists each of the 19 program 
requirements, and, among other things, asks project officers to 
indicate whether the grantee is in or out of compliance.[Footnote 15] 
If after reviewing available information, the project officer remains 
uncertain whether or not the grantee has demonstrated compliance with 
a requirement, then, according to HRSA's guidance, the project officer 
should indicate that the grantee is in compliance until noncompliance 
is clearly determined. In such cases, HRSA's guidance instructs 
project officers to document their concerns about compliance by 
writing a comment in a text field of the evaluation tool. In addition, 
as part of the review, a project officer may decide to designate a 
performance improvement area.[Footnote 16] According to HRSA, 
performance improvement areas are actions or other measures that 
project officers recommend to help grantees improve their delivery of 
services and, ultimately, patient outcomes. Performance improvement 
areas are intended to promote continuous improvement for grantees 
above and beyond compliance with the 19 program requirements; they are 
not intended to address findings of noncompliance with these 
requirements. Once project officers complete their review, branch 
chiefs are responsible for reviewing and approving project officers' 
assessments, including their determinations regarding compliance and 
the identification of performance improvement areas. According to HRSA 
officials, branch chiefs are responsible for providing leadership and 
guidance in areas such as program evaluation and monitoring, which 
establishes an important quality control for the annual compliance 
reviews. 

While HRSA has conducted annual reviews of grantees' compliance for 
several years, the process for conducting these reviews has changed. 
To improve their oversight process, in 2008 HRSA officials revised the 
annual compliance evaluation tool to link the annual compliance 
reviews to each of the Health Center Program requirements. As a result 
of this change, project officers now make an assessment of whether 
grantees are in compliance with each requirement, rather than just an 
overall assessment of compliance. In addition, HRSA officials 
indicated that they continually assess the annual review process, and 
have recently made changes such as requiring grantees to submit more 
detailed narrative descriptions and an updated sliding fee discount 
schedule for the fiscal year 2012 reviews. 

Site Visits: 

HRSA also relies on site visits, which it refers to as onsite 
technical assistance, as a method to oversee health center grantees' 
compliance with the Health Center Program requirements. According to 
HRSA, there are seven types of site visits, some of which are designed 
specifically to assess compliance and others which are focused on 
providing a grantee with technical assistance or training to improve 
its performance. Two of the seven types of site visits--new start 
initial and operational assessment visits--are intended to review 
compliance with all 19 program requirements. In addition, three other 
types of visits--new start follow-up, operational follow-up, and 
diagnostic assessment visits--may involve an assessment of compliance 
with some, but not all, of the 19 program requirements. The remaining 
two types of visits--targeted technical assistance and routine project 
officer visits--are not intended to assess compliance.[Footnote 17] 
(See table 3 for information on the seven types of site visits.) 

Table 3: Types of HRSA Site Visits Conducted for the Health Center 
Program: 

Site visit types intended to assess compliance with all 19 program 
requirements: 

Type of visit: New start initial; 
Purpose: Site visit types intended to assess compliance with all 19 
program requirements: To assess new start grantees' compliance with 
the 19 program requirements and provide technical assistance; 
Frequency of visit: Site visit types intended to assess compliance 
with all 19 program requirements: Generally occurs 90 to 120 days 
after initial funding is awarded; 
Duration of visit: 3 days. 

Type of visit: Operational assessment; 
Purpose: Site visit types intended to assess compliance with all 19 
program requirements: To assess existing health center grantees' 
compliance with the 19 program requirements; 
Frequency of visit: Site visit types intended to assess compliance 
with all 19 program requirements: Occurs as needed; 
Duration of visit: 3 days. 

Site visit types that may include an assessment of compliance with 
some of the 19 program requirements: 

Type of visit: New start follow-up; 
Purpose: Site visit types intended to assess compliance with all 19 
program requirements: To monitor new start grantees' progress in 
addressing prior site visit findings and provide additional technical 
assistance; 
Frequency of visit: Site visit types intended to assess compliance 
with all 19 program requirements: Generally occurs 120 to 180 days 
after the new start initial visit; 
Duration of visit: Varies based on grantee needs. 

Type of visit: Operational follow-up; 
Purpose: Site visit types intended to assess compliance with all 19 
program requirements: To monitor existing health center grantees' 
progress in addressing prior site visit findings and provide 
additional technical assistance; 
Frequency of visit: Site visit types intended to assess compliance 
with all 19 program requirements: Occurs as needed; 
Duration of visit: Varies based on grantee needs. 

Type of visit: Diagnostic assessment; 
Purpose: Site visit types intended to assess compliance with all 19 
program requirements: To perform an in-depth assessment of an aspect 
of health center grantees' operation or compliance; 
Frequency of visit: Site visit types intended to assess compliance 
with all 19 program requirements: Occurs as needed; 
Duration of visit: 2 to 3 days. 

Site visit types not intended to assess compliance with the 19 program 
requirements: 

Type of visit: Targeted technical assistance; 
Purpose: Site visit types intended to assess compliance with all 19 
program requirements: To provide technical assistance in specified 
area(s) to help health center grantees improve performance; 
Frequency of visit: Site visit types intended to assess compliance 
with all 19 program requirements: Occurs as needed; 
Duration of visit: Varies based on grantee needs. 

Type of visit: Routine project officer; 
Purpose: Site visit types intended to assess compliance with all 19 
program requirements: To provide a general overview of health center 
grantees' operations and performance; 
Frequency of visit: Site visit types intended to assess compliance 
with all 19 program requirements: Occurs as needed, with a goal of 
once per project period; 
Duration of visit: 1 day. 

Source: GAO analysis of HRSA's standard operating procedures. 

[End of table] 

According to HRSA's procedures, project officers attend new start 
initial and routine project officer site visits; however, they are not 
required to participate in the other types of visits. Rather, HRSA 
primarily relies on its consultants--who have financial, management, 
and clinical expertise--to conduct many of the site visits, including 
those that involve assessing whether a grantee is in compliance with 
Health Center Program requirements. As part of compliance-related site 
visits, consultants are responsible for reviewing documentation, 
meeting with health center officials, and touring some or all of the 
grantee's health care delivery sites. For example, HRSA officials 
indicated that consultants may review key operating policies and 
procedures, and review a sample of billing records to test the 
grantee's system for providing sliding fee discounts to patients. 
Additionally, according to HRSA officials, the consultants may check 
to see whether the grantee has posted signage in the patient waiting 
areas regarding its provision of after hours coverage, and may call 
the health center when it is closed to test its provisions for 
providing this coverage. HRSA officials indicated that compliance-
related site visits, such as an operational assessment, are critical 
tools for assessing a health center grantee's compliance with Health 
Center Program requirements and verifying that the policies and 
documentation submitted by health center grantees are appropriately 
implemented. 

After a site visit is completed, the consultant and project officer--
if one attends--are responsible for preparing separate reports 
documenting their findings. The consultant's report--which is first 
provided to HRSA for review and then transmitted to the grantee for 
comment--is used to document, among other things, any areas of 
noncompliance that the consultant identified during the site visit 
and, if necessary, information on steps the grantee can take to come 
into compliance with requirements or improve its performance. When 
project officers participate in any type of site visit, HRSA requires 
them to prepare a separate, brief internal report to document their 
observations from the visit and inform the branch chiefs and other 
HRSA officials about any major findings, recommendations, or concerns. 

HRSA's current approach for conducting site visits has been in place 
since 2010. Prior to that time, many of the site visits were performed 
by a different HRSA office, the Office of Performance Review, which 
focused on assessing the overall performance of HRSA grantees. 
According to HRSA officials, the transition of site visit 
responsibility to BPHC has resulted in placing a greater emphasis on 
assessing compliance with Health Center Program requirements during 
site visits. 

Routine Communications: 

HRSA project officers also use routine communications to oversee 
health center grantees' compliance with the 19 program requirements. 
Routine communications consist of regular e-mail correspondence and, 
according to HRSA policy, at a minimum, quarterly phone calls between 
project officers and health center grantees. During these 
communications, project officers may learn about significant changes 
that might affect a grantee's compliance with the 19 program 
requirements. For example, HRSA officials indicated that during a 
quarterly phone call a grantee may inform the project officer that its 
CEO position is vacant, which would place the grantee out of 
compliance with the key management staff requirement that it maintain 
a fully staffed management team appropriate for the size and needs of 
the health center. Project officers are required to document their 
communications with grantees in HRSA's Electronic Handbook. 

HRSA's Process to Address Grantee Noncompliance Recently Changed: 

In April 2010, HRSA implemented a uniform process intended to 
standardize how the agency works with grantees to address 
noncompliance with Health Center Program requirements. This process, 
referred to as the progressive action process, begins when HRSA 
documents an area of noncompliance by placing what it refers to as a 
"condition" on the health center's grant.[Footnote 18] Through this 
process a grantee is provided with a "progressive" series of time 
frames within which it must address the noncompliance.[Footnote 19] 

When HRSA places a condition(s) of noncompliance on a grant, it alerts 
the health center grantee by sending a notice specifying for which of 
the 19 program requirement(s) the grantee is noncompliant, the nature 
of corrective action required, time frames for achieving compliance, 
and the consequences if the grantee fails to achieve and document 
compliance. HRSA then provides grantees a series of sequential phases 
to resolve the condition(s) by demonstrating compliance, with each 
phase providing the grantee with less time than the prior phase. 
Specifically, the progressive action process consists of the following 
three phases. Phase 1 provides the grantee with 90 days to submit 
documentation demonstrating that it has complied with, or developed an 
action plan to comply with, the specified program requirement(s). 
Phase 2 provides an additional 60 days, and phase 3 another 30 days, 
for grantees to submit the appropriate documentation. If the nature of 
the condition of noncompliance requires the grantee to develop and 
implement a plan for achieving compliance, then the grantee is 
provided additional implementation phases--the first of which is 120 
days in length--to implement its plan and document compliance with the 
specified program requirement(s).[Footnote 20] In between each phase, 
HRSA provides itself with 30 days to review the grantee's response and 
determine whether or not the response is acceptable. (See figure 1 for 
an illustration of the progressive action process.) 

Figure 1: HRSA's Process for Addressing Health Center Grantee 
Noncompliance: 

[Refer to PDF for image: process map] 

HRSA determines grantee is out of compliance and places a condition on 
the grant. 

1. 90 days for grantee to respond (i.e., document compliance or submit 
an action plan); 
30 days for HRSA review; 
Is the response adequate? 
Yes: go to #5. 
No: go to #2. 

2. 60 days for grantee to respond; 
30 days for HRSA review. 
Is the response adequate? 
Yes: go to #5. 
No: go to #3. 

3. 60 days for grantee to respond; 
30 days for HRSA review. 
Is the response adequate? 
Yes: go to #5. 
No: go to #4. 

4. Grantee is out of compliance. HRSA begins process to terminate 
funding. 

5. Does the issue of noncompliance require an implementation phase? 
Yes: go to #6; 
No: go to #10.   
        
6. 120 days for grantee to implement; 
30 days for HRSA review. 
Is the response adequate? 
Yes: go to #10. 
No: go to #7. 

7. 60 days for grantee to implement; 
30 days for HRSA review. 
Is the response adequate? 
Yes: go to #10. 
No: go to #8. 

8. 30 days for grantee to implement; 
30 days for HRSA review. 
Is the response adequate? 
Yes: go to #10. 
No: go to #9. 

9. Grantee is out of compliance. HRSA begins process to terminate 
funding. 
   
10. Grantee is in compliance. HRSA removes conditions. 

Source: GAO analysis of information from HRSA. 

Note: Once HRSA places a condition of noncompliance on a grant, it 
provides health center grantees a series of sequential phases to 
resolve the condition by demonstrating compliance. Depending on the 
issue of noncompliance, the initial phases of the process will either 
require the grantee to submit documentation demonstrating compliance 
with the program requirement or submit an action plan demonstrating 
how the grantee plans to come into compliance. For the latter, the 
grantee is provided additional time to implement its action plan, 
i.e., implementation phases. Between each phase, HRSA provides itself 
with 30 days to review the grantee's response to determine if the 
response is adequate--that is, whether the grantee demonstrated 
compliance or, if applicable, provided an adequate plan for achieving 
compliance. 

[End of figure] 

During the different phases of the progressive action process, HRSA 
recommends that project officers contact grantees to advise them on 
specific actions needed to address deficiencies, and provide technical 
assistance as needed to help the grantee achieve compliance. Overall, 
the number of phases a particular grantee goes through depends on the 
nature of the corrective action required and how quickly the grantee 
addresses the noncompliance issue. If a grantee is unable to correct 
the compliance issue by the end of the progressive action process, 
HRSA's policies require it terminate the health center's grant. 

HRSA's Process for Identifying Noncompliance Is Insufficient, and It 
Is Too Soon to Assess the Revised Process for Addressing Noncompliance: 

HRSA's process for identifying noncompliance is insufficient as annual 
compliance reviews do not identify all instances of noncompliance and 
the extent to which HRSA uses site visits to assess compliance is 
unclear, but appears to be limited. Moreover, HRSA's project officers 
do not consistently identify and document grantee noncompliance. 
Finally, HRSA's ability to address noncompliance is unclear as the 
agency's process for doing so has recently changed. 

Annual Compliance Reviews Do Not Identify All Instances of 
Noncompliance: 

HRSA's annual compliance reviews do not identify all instances of 
health center grantee noncompliance that other methods, such as site 
visits, have identified. Among the eight grantees included in our 
review, we identified 10 instances where the project officer 
determined that a grantee was in compliance with a program requirement 
during the annual compliance review, but a site visit a short time 
later found the grantee to be noncompliant with the same requirement. 
For example, in April 2010, a project officer completed an annual 
compliance review and found that a grantee was in compliance with 16 
of the 19 program requirements. However, in July 2010, just 3 months 
later, a HRSA consultant completed an operational assessment site 
visit and found that the grantee was not in compliance with 10 of the 
19 requirements; this included 7 requirements for which the project 
officer had previously concluded the grantee was in compliance. During 
the annual compliance review, for instance, the project officer 
determined that the grantee was in compliance with both the board 
composition and board authority program requirements. However, the 
site visit found, among other things, that the board had less than the 
minimum number of required members, did not meet monthly as required, 
and was not fulfilling its required duties and responsibilities to 
oversee the operations of the center--key aspects of these 2 program 
requirements.[Footnote 21] HRSA officials could not definitively 
explain why the site visit identified these issues of noncompliance, 
when the annual compliance review had failed to do so. HRSA officials 
speculated that because this grantee was having management problems, 
its performance may have rapidly deteriorated since the annual review 
was completed. Although the grantee may have been experiencing 
management problems, the consultant's site visit report indicates that 
the grantee did not fall out of compliance with all 7 of these 
requirements in the intervening 3 months. Rather, the report indicated 
that several of these noncompliance issues were ongoing, including one 
that had existed for several years. Additionally, none of the 10 
annual compliance review decisions included an indication that the 
project officer was uncertain about whether or not the grantee 
demonstrated compliance. Thus, it does not appear that the affirmative 
compliance decisions were due to project officers indicating that a 
grantee is in compliance until noncompliance is clearly determined. 

In addition to finding instances where the annual compliance review 
failed to identify grantee noncompliance, our review of HRSA's 
oversight documentation of selected grantees revealed that project 
officers frequently determined a grantee was in compliance with 
selected program requirements without having sufficient information to 
make such decisions. Our analysis of 48 compliance decisions that 
project officers made during their fiscal year 2011 annual compliance 
reviews for our eight selected grantees found that in 43 cases (90 
percent) project officers determined grantees were in compliance with 
requirements.[Footnote 22] However, in 23 of these 43 cases (53 
percent), we were unable to find sufficient information to support the 
project officer's compliance decision and the project officers did not 
indicate that they were unable to clearly determine compliance, which 
is what HRSA guidance instructs them to do if they are uncertain about 
whether or not the grantee demonstrated compliance, for example: 

* Project officers determined that all eight selected health center 
grantees were in compliance with the after hours coverage requirement. 
However, it appears that six of the eight project officers had 
insufficient information when making their assessments. Our review of 
HRSA's oversight documentation found that information grantees 
provided ranged from a sentence or two in their budget period progress 
report narrative stating they had a 24-hour answering service that 
will arrange for contact with an on-call clinician, to no mention of 
how they were meeting the after hours coverage requirement. In 
contrast, we found the other two project officers had information from 
recent site visits to assess compliance with this requirement. 

* Project officers determined that six of the eight selected health 
center grantees were in compliance with the sliding fee discounts 
requirement. However, we found that four of six project officers who 
made this determination did not, at the time, have a current, updated 
version of their grantees' sliding fee discount schedule to review. 
These project officers made their compliance decisions based on 
limited information, including grantee assertions that they had a 
current and up-to-date schedule. According to HRSA officials, 
beginning with the fiscal year 2012 annual compliance reviews, 
grantees will be required to submit an updated sliding fee discount 
schedule. 

While HRSA requires project officers to document their basis for 
finding a grantee out of compliance with a requirement, it does not 
require project officers to document their basis for finding a grantee 
in compliance. Therefore, there were often no records documenting how 
or why a project officer determined a health center grantee was in 
compliance with the requirements. In 26 of the 43 compliance decisions 
(60 percent) we reviewed in which project officers determined grantees 
were in compliance with selected program requirements, the project 
officers had not documented the basis for their decisions. The lack of 
documentation is not consistent with internal control standards for 
the federal government, which indicate "that all transactions and 
other significant events need to be clearly documented" and stress the 
importance of "the creation and maintenance of related records which 
provide evidence of execution of these activities as well as 
appropriate documentation."[Footnote 23] 

The absence of such documentation may limit HRSA's ability to ensure 
that project officers have identified all cases of grantee 
noncompliance during the annual compliance review and make it more 
difficult for HRSA to keep track of issues affecting grantee 
compliance especially when oversight responsibilities transfer among 
staff. For example, without such documentation, it is difficult for 
supervisors to appropriately assess the basis for project officers' 
decisions. Further, according to HRSA, about 40 percent of grantees 
have had a change in their assigned project officer and branch chief 
over the past few years due in part to HRSA's hiring of a significant 
number of new project officers to meet the expected increase in the 
number of health center grantees. While HRSA officials indicated they 
have a process to ensure a smooth transition between oversight staff, 
we found the absence of documentation can present challenges. For 
example, each of the eight project officers we interviewed had been 
assigned to their grantee for 2 years or less, and some of the project 
officers were unable to answer questions about why previous project 
officers determined their grantees were in compliance with specific 
requirements. 

Additionally, when project officers are uncertain about compliance, 
HRSA instructs project officers to consider grantees in compliance. As 
noted earlier, HRSA's guidance indicates that project officers are to 
document these instances when compliance is unclear by writing a 
comment in a text field of the evaluation tool, but HRSA has no 
centralized or automated mechanism to ensure this occurs. The lack of 
such a mechanism, coupled with the lack of documentation of project 
officers' basis for finding a grantee in compliance, limits HRSA's 
ability to determine whether a project officer decided a grantee was 
in compliance with a requirement because the file contained evidence 
demonstrating compliance, or because the project officer was unsure 
about compliance and simply defaulted to an affirmative compliance 
decision without including documentation of his or her concerns. 

HRSA's Use of Site Visits to Assess Compliance Is Unclear, but Appears 
to Be Limited: 

Data limitations make it difficult to determine the extent to which 
HRSA uses site visits to assess compliance; however, our analysis of 
these data suggest that the number of compliance-related site visits 
is limited. HRSA does not have aggregate, readily available data on 
site visits conducted prior to January 2011. Consequently, to 
determine which health center grantees had compliance-related site 
visits prior to January 2011, HRSA officials would have to manually 
compile a list by accessing each site visit report located in each 
individual grantee's file. 

To help the agency in planning site visits, HRSA began requiring that 
all site visits be recorded in its on-line Electronic Handbook in 
January 2011. However, the reliability of at least some of the data 
elements, including the type of site visit, is uncertain. After a site 
visit record is created in the Electronic Handbook, which is the first 
step for documenting a planned a site visit, the system prevents 
project officers from editing certain fields, including the field for 
the type of site visit conducted.[Footnote 24] As a result, if the 
site visit type changes after project officers create the site visit 
record, the record will be inaccurate. Further, project officers are 
not required to update certain other fields, such as the site visit 
start and end dates, which increases the potential for data 
inaccuracies. While HRSA officials indicated that the type of site 
visit does not frequently change, when we compared the site visit data 
to information contained in site visit reports, we found that the type 
of site visit had changed for one of the five visits that took place 
at our selected grantees since January 2011. After discussing this 
with HRSA officials, the officials indicated that they would alter 
their electronic system to allow project officers to revise the site 
visit type; however, they have yet to do so. In addition, HRSA 
officials indicated the electronic system does not have a mechanism to 
ensure that a canceled site visit is properly recorded. Therefore, 
when a planned site visit is canceled, the record is removed only if a 
project officer proactively takes action to remove it. If the project 
officer fails to remove the record, the database will contain 
inaccurate information. From the programwide site visit data we 
received, we determined that the data included at least one site visit 
that had been canceled, but not removed from the database. However, 
there may be other instances that we were unable to identify based on 
the available data. 

As noted earlier, HRSA considers site visits an important tool for 
assessing and assuring grantee compliance with Health Center Program 
requirements. According to our analysis, site visits were conducted at 
417 (37 percent) of the 1,128 health center grantees between January 
1, 2011 and October 27, 2011.[Footnote 25] A total of 472 site visits 
were conducted during this period because some grantees had multiple 
visits. Although HRSA's data on the type of site visit conducted has 
inaccuracies, these data suggest that only a small portion of grantees 
had compliance-related visits. HRSA's data indicate that 58 grantees, 
or 5 percent of all health center grantees, had site visits to review 
compliance with all 19 program requirements during this time 
period.[Footnote 26] An additional 70 grantees (6 percent) had a site 
visit that may have assessed compliance with some of the 19 program 
requirements. The remaining grantees either did not have a site visit 
during the period or had a site visit which was not intended to assess 
compliance with the 19 program requirements. 

Although HRSA's standard operating procedures do not currently specify 
how frequently compliance-related site visits should be conducted, 
HRSA officials indicated that, beginning in 2012, the agency is 
requiring that project officers schedule an operational assessment--a 
site visit intended to assess compliance with all 19 program 
requirements--for each grantee at least every 5 years. At their 
current rate and assuming the number of grantees remains the same, it 
would take HRSA over 15 years to conduct an operational assessment 
visit at each of the over 1,100 health center grantees. HRSA officials 
recognized that in order to meet this goal, they will have to increase 
the number of operational assessment site visits which are conducted 
annually. Along those lines, officials indicated that HRSA increased 
the amount of funding and planned number of operational assessment 
site visits to be provided through their current nationwide contract 
for conducting site visits. 

HRSA's Project Officers Do Not Consistently Identify and Document 
Grantee Noncompliance: 

HRSA's project officers do not consistently identify noncompliance and 
document it through the placement of conditions. For three of the six 
program requirements we reviewed, the HRSA project officers we 
interviewed did not have consistent interpretations of what 
constitutes compliance and what should therefore result in the 
placement of a condition on a health center's grant, raising concerns 
about the adequacy of HRSA's guidance and training for project 
officers. The project officers we spoke with had different 
interpretations regarding the board composition, after hours coverage, 
and key management requirements. 

* Health center grantees are required, by statute and regulations, to 
have a governing board, the majority of whose members are patients of 
the center and who demographically represent the population served by 
the grantee. However, some project officers we spoke with indicated 
that the lack of an appropriately representative board would not 
result in a condition; these project officers did not consider the 
lack of an appropriately representative board an issue of 
noncompliance. 

* While HRSA's guidance for project officers indicates that, at a 
minimum, a grantee's after hours coverage system should ensure that 
patients have telephone access to a clinician who can assess whether 
they need emergency medical care, some of the project officers we 
spoke with indicated that they would consider using a performance 
improvement area, not a condition, if a health center had only an 
answering machine directing patients to the emergency room. Other 
project officers stated that if a grantee had only an answering 
machine directing patients to the emergency room they would not be in 
compliance with this requirement. 

* HRSA guidance instructs project officers to assess whether a health 
center grantee maintains a fully staffed management team as 
appropriate for the size and need of their health center. When asked 
about the criteria they use for determining whether grantees are in or 
out of compliance with the key management staff requirement, two 
project officers told us that they base their compliance decision on 
whether the grantee's management staff includes a Chief Executive, 
Financial, and Medical Officer. In contrast, the other six project 
officers said that a grantee did not necessarily need to have all of 
these positions staffed. 

We also found one instance where HRSA's guidance on what constitutes 
compliance is inconsistent with Health Center Program requirements, 
and thus project officers may not be making correct decisions 
regarding grantee compliance and appropriately addressing 
noncompliance. In this particular instance, HRSA guidance instructs 
project officers to use a performance improvement area, not a 
condition, if a grantee has not used the most recent federal poverty 
guidelines for developing their sliding fee discounts; the guidance 
therefore indicates that grantees are to be considered in compliance 
with the requirement even if their sliding fee discount schedule is 
outdated. Health Center Program regulations, however, require a 
grantee's sliding fee discounts to be based on the most recent 
guidelines. As a result, a grantee that has not used the correct 
federal poverty guidelines should be deemed noncompliant with this 
program requirement and a condition should be placed on its grant. 
When we raised this issue with HRSA officials, they acknowledged that 
the guidance was not consistent with requirements, and that it would 
be revised. They also confirmed that if a grantee has not used the 
correct federal poverty guidelines in its sliding fee discount 
schedule, a project officer should deem the grantee noncompliant and 
that a condition should be issued. HRSA officials further indicated 
they are developing a policy notice on the sliding fee discounts 
program requirement, and the guidance will specify that a grantee's 
sliding fee discounts must be revised annually to reflect updates to 
the most recent federal poverty guidelines. 

Finally, we found instances where grantee noncompliance was identified 
through site visits, but HRSA failed to place conditions on the grant. 
According to HRSA's standard operating procedures, when a site visit 
determines that a grantee is noncompliant with at least one of the 19 
program requirements, a project officer must place a condition on the 
health center's grant. However, as part of our review of the eight 
selected grantees, we identified five site visits from 2009 through 
August 2011 that clearly identified findings of noncompliance with 
some of the 19 program requirements, but HRSA did not issue conditions 
to grantees for the majority of these findings. For example, one site 
visit found that a grantee was not in compliance with 16 of the 19 
requirements, but HRSA did not issue any conditions to the grantee. At 
the time of the site visit, this grantee had been receiving HRSA 
funding for about 15 months, and had been experiencing compliance 
issues for at least 12 months. Despite this, HRSA officials told us 
that because it was a new grantee that was receptive to technical 
assistance, HRSA wanted to give the grantee more time to address their 
compliance issues before placing numerous conditions on it. Another 
site visit found that a grantee was not in compliance with the board 
authority and conflict-of-interest policy requirements, but HRSA did 
not issue any conditions to the grantee as a result of this site 
visit. Instead, HRSA arranged for a consultant to provide the grantee 
with technical assistance to revise and update its bylaws to address 
these issues. 

HRSA's Ability to Address Noncompliance Is Unclear As the Agency's 
Process Has Recently Changed: 

The extent to which HRSA's revised process--the progressive action 
process--is adequately resolving conditions or terminating grantee 
funding is unclear because HRSA's experience with this revised process 
is too recent to make any overall assessment. The progressive action 
process, which was implemented in April 2010, can potentially take 
over a year to move through all of the phases. Completing the first 
three phases of the progressive action process can take up to 9 
months, while grantees with conditions that allow for a 120-day 
implementation phase can take up to 19 months to fully complete the 
process.[Footnote 27] Thus, HRSA has limited experience with the 
process to date, and does not have sufficient data to assess the 
extent to which the process is effective in bringing grantees into 
compliance or in addressing those grantees that have failed to achieve 
compliance by the end of the final phase. 

During the first 18 months that the progressive action process has 
been in place--from April 9, 2010, through October 7, 2011--HRSA 
issued 1,017 conditions for grantee noncompliance to a total of 417 
different grantees (approximately 37 percent of all grantees), with 
some grantees having multiple conditions. Over half of the conditions 
were for grantee noncompliance with requirements related to the 
management and finance category. (See app. II for additional 
information about the conditions placed during this time period.) As 
of November 10, 2011, 775 conditions (76 percent) were resolved and 
240 conditions (24 percent) were still in process. The remaining 2 
conditions, which belonged to the same grantee, were not resolved in 
the allotted time; thus, HRSA officials indicated that the agency was 
is in the process of terminating the grantee's funding.[Footnote 28] 

Conclusions: 

HRSA's Health Center Program provides access to health care for people 
who are uninsured or who face other barriers to receiving needed care. 
Over the past decade the program has expanded and, given the 
additional funding appropriated by PPACA, will likely continue to do 
so over the next few years. As such, it will play an increasingly 
greater role as a health care safety net for vulnerable populations. 
Particularly in light of the growing federal investment in health 
centers, it is important for HRSA to ensure that health centers are 
operating effectively and in compliance with Health Center Program 
requirements. HRSA has taken steps to improve its oversight of health 
center grantees over the past few years, such as by standardizing its 
process for addressing grantee noncompliance. Despite these efforts, 
however, HRSA's oversight is insufficient to ensure that it 
consistently identifies all instances of grantee noncompliance with 
Health Center Program requirements. 

Although HRSA has devoted substantial resources to overseeing 
grantees--including having over 100 project officers to perform annual 
compliance reviews and having a more than $30-million contract for 
consultants who conduct site visits and provide other assistance-- 
limitations in HRSA's oversight methods have affected the agency's 
performance in identifying issues of noncompliance. The annual 
compliance reviews place too little emphasis on documenting project 
officers' basis for making their compliance decisions, while HRSA's 
guidance instructs project officers to indicate that a grantee is in 
compliance with Health Center Program requirements, even if the 
project officer is uncertain about the grantee's compliance. Further, 
HRSA does not have a systematic process for tracking and following-up 
on instances when project officers are uncertain about a grantee's 
compliance to ensure that compliance is ultimately demonstrated. The 
lack of such a process, coupled with the lack of documentation of 
project officers' basis for finding a grantee in compliance, limits 
HRSA's ability to assess whether project officers accurately 
determined that grantees were actually in compliance with a 
requirement, or whether they were simply unsure about compliance. This 
is especially problematic because project officers we interviewed had 
different interpretations of what constitutes compliance with certain 
requirements and therefore, when they should place a condition on a 
health center's grant. 

Additionally, while HRSA officials indicated, and we found, that site 
visits are an important tool for overseeing grantees and verifying 
compliance with Health Center Program requirements, the agency's use 
of compliance-related site visits appears to be limited. HRSA has a 
goal of having an operational assessment visit to each grantee at 
least once every 5 years. The agency's ability to effectively meet 
this goal, however, is challenged by a lack of comprehensive and 
reliable data on which grantees have had various types of site visits. 
To the extent HRSA is able to develop and analyze accurate data on 
site visits, it will be in a better position to target its resources 
to those grantees that may be in greater need of such visits. 
Furthermore, HRSA needs to ensure that when site visits are conducted, 
the information obtained is appropriately used, for example, by 
ensuring that instances of noncompliance identified during a site 
visit result in the placement of a condition on a health center's 
grant. 

Finally, HRSA's recently revised process for addressing grantee 
noncompliance with the 19 program requirements seems to provide both 
the agency and grantees with a uniform structure for addressing 
compliance deficiencies. However, given the length of time the 
progressive action process provides grantees to address noncompliance, 
HRSA has had limited experience with the process, and thus it is too 
early to tell whether this revised process is effective. As HRSA gains 
more experience with the process, it will be important for the agency 
to assess whether the process is functioning as intended and whether 
any changes are needed to make the process more effective. 

Recommendations for Executive Action: 

To improve HRSA's ability to identify and address noncompliance with 
Health Center Program requirements, the Administrator of HRSA should 
take the following six actions: 

* Develop and implement a mechanism for recording, tracking, and 
following-up on instances when project officers are unable to 
determine compliance during the annual compliance review process. 

* Require that when completing annual compliance reviews, project 
officers clearly document their basis for determining that grantees 
are in compliance with program requirements. 

* Clarify agency guidance and provide training, as needed, to better 
ensure that project officers are accurately and consistently assessing 
grantees' compliance with program requirements. 

* Ensure that site visit data contained in HRSA's electronic system 
are complete, reliable, and accurate to better target the use of 
available resources and to help ensure that all grantees have 
compliance-related site visits at regular and timely intervals. 

* Develop and implement procedures to ensure that instances of 
noncompliance with program requirements consistently result in the 
placement of a condition on a health center's grant. 

* Periodically assess whether its new progressive action process for 
addressing grantee noncompliance, including the time frames allotted 
for grantees to respond, is working as intended and make any needed 
improvements to the process. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to HHS for its review, and HHS 
provided written comments (see app. III). HHS concurred with all six 
of our recommendations and indicated that while resource availability 
may impact the extent of certain actions, HRSA is already in the 
process of planning and implementing many of the recommendations. For 
example, HHS indicated that HRSA is in the process of enhancing the 
electronic evaluation tool, known as the Program Analysis and 
Recommendations tool, which project officers use to conduct and 
document annual compliance reviews. HRSA is also working on issuing 
additional policies, procedures, and guidance documents to better 
ensure that project officers are consistently assessing grantee 
compliance and documenting noncompliance. 

While HHS concurred with our recommendations and indicated that the 
report's findings were helpful in informing ongoing efforts to improve 
oversight of the Health Center Program, it did not concur with what it 
characterized as some of the central conclusions drawn from the 
report's findings. First, HHS indicated that it did not concur with 
what it characterized as our conclusion that HRSA's process for 
identifying noncompliance is insufficient because annual compliance 
reviews do not identify all instances of noncompliance. HHS indicated 
that HRSA's active monitoring of grantees is not limited to the 
project officer's annual compliance review, but is accomplished 
through a variety of available resources including, but not limited 
to, the review of grantee data reports, independent annual audit 
reports, quarterly conference calls, site visits, and correspondence 
from the grant recipient. We agree with HHS's statement, and our 
report reflects that HRSA uses multiple methods to oversee grantees. 
However, we believe that HHS mischaracterized the nature of our 
conclusion. Our conclusion that HRSA's oversight of health center 
grantees is insufficient was not based solely on our assessment of 
HRSA's annual compliance reviews, but rather was based on our 
assessment of several key oversight methods described throughout our 
report including HRSA's use of site visits, the consistency of project 
officers' oversight, and the use of programwide data to aid oversight 
across grantees. 

HHS also did not concur with what it characterized as our conclusion 
that HRSA's process for identifying noncompliance is insufficient 
because HRSA's project officers do not consistently identify and 
document grantee noncompliance. In explaining its concerns, HHS 
focused on instances where project officers cannot definitively 
determine whether or not grantees are complying with program 
requirements. For example, HHS noted that when project officers are 
uncertain about compliance, HRSA's standard operating procedures 
require project officers to record these areas of uncertainty for 
follow-up action. However, our findings about the lack of consistency 
in the identification and documentation of grantee noncompliance are 
not limited to instances when project officers are uncertain about 
compliance. Rather, as the report indicates, we found that project 
officers we interviewed did not have consistent interpretations of the 
criteria for assessing compliance and what should therefore result in 
the placement of a condition on a health center's grant. Furthermore, 
we found one instance where HRSA's guidance on what constitutes 
compliance is inconsistent with Health Center Program requirements and 
found several instances where identified noncompliance did not result 
in the placement of a condition on a health center's grant. As the 
report notes, in cases when project officers may be uncertain about 
compliance, we found that HRSA did not have a centralized mechanism to 
ensure that project officers are recording such instances. 
Additionally, despite HHS's comment stating that HRSA's procedures 
provide for such follow-up, it agreed with our recommendation that 
HRSA should develop a mechanism for ensuring that recording, tracking, 
and following up on such instances occurs. 

Finally, HHS did not concur with our finding that the lack of 
documentation in the annual compliance review is not consistent with 
internal control standards for the federal government. HHS indicated 
that HRSA established its annual compliance review tool to record 
documented findings of noncompliance and utilizes a standard 
progressive action process to resolve these areas consistent with its 
overall internal control procedures. While we agree that HRSA's 
process provides for both documenting areas of identified 
noncompliance and a standard process for resolving these issues, our 
findings were not limited to an assessment of what HRSA has included 
in its oversight process, but also takes into account what HRSA did 
not include in this process. Thus, our findings take into account the 
fact that HRSA does not require project officers to document their 
basis for finding a grantee in compliance. Therefore, as stated in the 
report, we found there were often no records documenting how or why a 
project officer determined a health center grantee was in compliance 
with the requirements. The lack of such documentation makes it 
difficult for managers to assess the accuracy of project officers' 
decisions and assure that grantees are in compliance with applicable 
laws and regulations, which is a key purpose to having effective 
internal controls. Thus, we continue to believe that this lack of 
documentation is not consistent with internal control standards for 
the federal government, which indicate "that all transactions and 
other significant events need to be clearly documented" and stress the 
importance of the creation and maintenance of related records which 
provide evidence of execution of these activities as well as 
appropriate documentation. 

As noted above, our conclusion that HRSA's oversight of health center 
grantees is insufficient was based on our overall assessment of HRSA's 
key oversight methods. In addition to finding limitations with HRSA's 
annual compliance reviews and a lack of consistency among HRSA project 
officers, we also found that HRSA's use of site visits to assess 
compliance has been limited. Thus, we stand by our conclusion that 
HRSA's process for identifying noncompliance is insufficient. We are 
pleased that HRSA is already taking steps to implement our 
recommendations and encourage the agency to continue to take actions 
to help to improve its oversight of health center grantees. 

HHS also provided technical comments, which we incorporated as 
appropriate. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the Administrator of HRSA. In addition, the report is available at 
no charge on the GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-7114 or draperd@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix IV. 

Signed by: 

Debra A. Draper: 
Director, Health Care: 

[End of section] 

Appendix I: Characteristics of Selected Health Center Grantees: 

As part of our assessment of the extent to which the Health Resources 
and Services Administration's (HRSA) process identifies and addresses 
noncompliance with Health Center Program requirements, we reviewed 
HRSA's oversight of eight selected health center grantees. The 
grantees were selected to provide variation in: size, as determined by 
the number of delivery sites; length of time as a Health Center 
Program grantee; and compliance experience, as determined by the 
number of the number of findings of noncompliance--referred to as 
conditions--that HRSA had cited for each grantee that were unresolved 
as of July 11, 2011. (See table 4.) 

Table 4: Characteristics of the Eight Selected Health Center Grantees: 

Health center grantee: A; 
State: Alabama; 
Number of delivery sites: 8; 
Year became a health center grantee: 1983; 
Documented compliance issues[A]: No. 

Health center grantee: B; 
State: California; 
Number of delivery sites: 7; 
Year became a health center grantee: 1968; 
Documented compliance issues[A]: Yes. 

Health center grantee: C; 
State: Illinois; 
Number of delivery sites: 10; 
Year became a health center grantee: 1983; 
Documented compliance issues[A]: No. 

Health center grantee: D; 
State: North Carolina; 
Number of delivery sites: 1; 
Year became a health center grantee: 1980; 
Documented compliance issues[A]: Yes. 

Health center grantee: E; 
State: New York; 
Number of delivery sites: 1; 
Year became a health center grantee: 1984; 
Documented compliance issues[A]: No. 

Health center grantee: F; 
State: Oklahoma; 
Number of delivery sites: 4; 
Year became a health center grantee: 2004; 
Documented compliance issues[A]: No. 

Health center grantee: G; 
State: Pennsylvania; 
Number of delivery sites: 2; 
Year became a health center grantee: 2009; 
Documented compliance issues[A]: Yes. 

Health center grantee: H; 
State: Wyoming; 
Number of delivery sites: 2; 
Year became a health center grantee: 2004; 
Documented compliance issues[A]: No. 

Source: GAO analysis of information from HRSA. 

[A] Indicates whether the grantee had at least one documented 
compliance issue as of July 11, 2011, which was still unresolved more 
than 90 days after HRSA notified the grantee about the area of 
noncompliance. 

[End of table] 

[End of section] 

Appendix II: Summary of Noncompliance Data for the Health Center 
Program: 

During the first 18 months of HRSA's progressive action process, from 
April 9, 2010, through October 7, 2011, HRSA issued 1,017 conditions 
to 417 health center grantees, with some grantees having multiple 
conditions during this time period. Specifically, the number of 
conditions HRSA issued to the 417 grantees ranged between 1 and 17 
conditions per grantee, with HRSA issuing between 1 and 3 conditions 
to most of these grantees. (See figure 2.) HRSA issued conditions for 
each of the 19 program requirements, with the greatest numbers issued 
for the financial management and control policies, program and data 
system reporting, and board composition requirements. (See figure 3.) 
Grantees can have multiple and simultaneous conditions associated with 
the same program requirements, with each condition being related to a 
different component of the requirement. For example, in fiscal year 
2011, there were 3 possible conditions related to the financial 
management and control policy requirement. 

Figure 2: Number of Conditions of Noncompliance HRSA Issued per 
Grantee, from April 9, 2010, through October 7, 2011: 

[Refer to PDF for image: vertical bar graph] 

Number of conditions: 1; 
Number of grantees: 206. 

Number of conditions: 2; 
Number of grantees: 87. 

Number of conditions: 3; 
Number of grantees: 53. 

Number of conditions: 4; 
Number of grantees: 17. 

Number of conditions: 5; 
Number of grantees: 17. 

Number of conditions: 6; 
Number of grantees: 11. 

Number of conditions: 7; 
Number of grantees: 6. 

Number of conditions: 8; 
Number of grantees: 6. 

Number of conditions: 9; 
Number of grantees: 2. 

Number of conditions: 10; 
Number of grantees: 2. 

Number of conditions: 11; 
Number of grantees: 3. 

Number of conditions: 12; 
Number of grantees: 2. 

Number of conditions: 13; 
Number of grantees: 1. 

Number of conditions: 14; 
Number of grantees: 1. 

Number of conditions: 15; 
Number of grantees: 2. 

Number of conditions: 16; 
Number of grantees: 0. 

Number of conditions: 17; 
Number of grantees: 1. 

Source: GAO analysis of HRSA data. 

[End of figure] 

Figure 3: Number of Conditions and Number of Grantees That Had a 
Condition, by Requirement from April 9, 2010, through October 7, 2011: 

[Refer to PDF for image: horizontal bar graph] 

Number of grantees: 

Category: Patient need: 

Requirement: Needs assessment; 
Number of conditions for this requirement: 24; 
Number of grantees that had a condition for this requirement: 23. 

Category: Provision of services: 

Requirement: Required and additional services; 
Number of conditions for this requirement: 52; 
Number of grantees that had a condition for this requirement: 52. 

Requirement: Staffing requirement; 
Number of conditions for this requirement: 20; 
Number of grantees that had a condition for this requirement: 20. 

Requirement: Accessible hours of operation/locations; 
Number of conditions for this requirement: 10; 
Number of grantees that had a condition for this requirement: 10. 

Requirement: After hours coverage; 
Number of conditions for this requirement: 15; 
Number of grantees that had a condition for this requirement: 15. 

Requirement: Hospital admitting privileges and continuum of care; 
Number of conditions for this requirement: 31; 
Number of grantees that had a condition for this requirement: 31. 

Requirement: Sliding fee discount schedule; 
Number of conditions for this requirement: 47; 
Number of grantees that had a condition for this requirement: 47. 

Requirement: Quality improvement/assurance plan; 
Number of conditions for this requirement: 50; 
Number of grantees that had a condition for this requirement: 48. 

Category: Management and finance: 

Requirement: Key management staff; 
Number of conditions for this requirement: 59; 
Number of grantees that had a condition for this requirement: 51. 

Requirement: Contractual/affiliation agreements; 
Number of conditions for this requirement: 19; 
Number of grantees that had a condition for this requirement: 19. 

Requirement: Collaborative relationships; 
Number of conditions for this requirement: 5; 
Number of grantees that had a condition for this requirement: 5. 

Requirement: Financial management|and control policies; 
Number of conditions for this requirement: 230; 
Number of grantees that had a condition for this requirement: 181. 

Requirement: Billing and collections; 
Number of conditions for this requirement: 50; 
Number of grantees that had a condition for this requirement: 49. 

Requirement: Budget; 
Number of conditions for this requirement: 69; 
Number of grantees that had a condition for this requirement: 67. 

Requirement: Program data reporting systems; 
Number of conditions for this requirement: 121; 
Number of grantees that had a condition for this requirement: 82. 

Requirement: Scope of project; 
Number of conditions for this requirement: 37; 
Number of grantees that had a condition for this requirement: 37. 

Category: Governance: 

Requirement: Board authority; 
Number of conditions for this requirement: 43; 
Number of grantees that had a condition for this requirement: 43. 

Requirement: Board composition; 
Number of conditions for this requirement: 111; 
Number of grantees that had a condition for this requirement: 99. 

Requirement: Conflict of interest policy; 
Number of conditions for this requirement: 24; 
Number of grantees that had a condition for this requirement: 24. 

Source: GAO analysis of HRSA data. 

Note: Grantees can have multiple and simultaneous conditions 
associated with the same program requirements, with each condition 
being related to a different component of the requirement. 

[End of figure] 

[End of section] 

Appendix III: Comments from the Department of Health and Human 
Services: 

Department of Health & Human Services: 
Office of The Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

May 10 2012: 

Debra Draper: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Ms. Draper: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) correspondence entitled: "Health Center Program: Improved 
Oversight Needed to Ensure Grantee Compliance with Requirements" (GA0-
12-546). 

The Department appreciates the opportunity to review this draft 
section of the report prior to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

[End of letter] 

General Comments Of The Department Of Health And Human Services'(HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"Health Center Program: Improved Oversight Needed To Ensure Grantee 
Compliance With Requirements" (GAO-12-546): 

The Department appreciates the opportunity to review and comment on 
this draft report. 

For more than 45 years, Health Center Program grantees have delivered 
comprehensive, high-quality preventive and primary health care to 
patients regardless of their ability to pay. During that time, health 
centers have become the essential primary care medical home for 
millions of Americans including some of the nation's most vulnerable 
populations. Today, more than 1,100 health centers operate over 8,500 
service delivery sites that provide care to approximately 20 million 
patients in every State, the District of Columbia, Puerto Rico, the 
U.S. Virgin Islands, and the Pacific Basin. 

This network of health centers has created one of the largest safety 
net systems of primary and preventive care in the country with a true 
national impact. Health centers emphasize coordinated primary and 
preventive services or a "medical home" that promotes reductions in 
health disparities for low-income individuals, racial and ethnic 
minorities, rural communities, and other underserved populations. 
Health centers place emphasis on the coordination and 
comprehensiveness of care, the ability to manage patients with 
multiple health care needs, and the use of key quality improvement 
practices, including health information technology. The health center 
model also overcomes geographic, cultural, linguistic and other 
barriers through a team-based approach to care that includes 
physicians, nurse practitioners, physician assistants, nurses, dental 
providers, midwives, behavioral health care providers, social workers, 
health educators, and many others. 

A programmatic emphasis on quality improvement, as well as community-
responsive and culturally appropriate care, has also translated into 
impressive reductions in health disparities for health center 
patients. Calendar Year 2010 Health Center Program data demonstrate 
that centers continue to provide high quality care and improve patient 
outcomes, while reducing disparities, despite serving a population 
that is often sicker and more at risk than seen nationally: 

* Between 2008 and 2010 health centers saw improved birth outcomes 
with the percent of low birthweight babies born to health center 
patients decreasing from 7.6 percent in 2008 to 7.4 percent in 2010, 
which is lower than the 2010 national low birthweight rate of nearly 
8.2 percent. In addition, the rate of entry into prenatal care in the 
first trimester for health center patients increased from 65 percent 
to 69 percent between 2008 and 2010. 

* 74 percent of health center children received all appropriate 
immunizations by their second birthday - up from 69 percent in 2009. 

* 71 percent of health center patients demonstrated control over their 
diabetes with a hemoglobin A1c (HbA1c) level less than or equal to 9. 

* 63.2 percent of hypertensive health center patients have their blood 
pressure under control. 

Health centers also reduce costs for health systems and contribute to 
economic growth in their communities. The health center model of care 
has also been shown to reduce the use of emergency departments and 
hospitals and serve as a critical source of economic development and 
growth. 

* Health centers continue to deliver high quality care efficiently and 
effectively at a total annual cost of $630 per (total) patient. 

* In addition, in 2010, health centers injected operating expenditures 
directly into their local economies generating over 131,660 full-time 
jobs. 

HRSA's program oversight has contributed directly to these program 
accomplishments and HRSA remains committed to ensuring the appropriate 
and effective use of Federal funds while achieving the Health Center 
Program's mission of providing comprehensive, culturally competent, 
quality primary health care services to medically underserved 
communities and vulnerable populations. Within the past several years, 
HRSA has significantly strengthened its program oversight policies, 
systems, and processes. These enhancements include but are not limited 
to the following: 

Clarification of Program Requirements: 

Beginning in 2007, HRSA consolidated and clarified the list of Health 
Center Program Requirements based on the program's statutory and 
regulatory language as well as applicable grants regulations. These 19 
Key Health Center Program Requirements (see [hyperlink, 
http://www.bphc.hrsa.gov/about/requirements/index.html]) serve as the 
criteria for determining compliance with program requirements and the 
foundation for all Health Center Program monitoring and related 
oversight activities, including documents and tools such as competing 
continuation funding guidances, annual progress report instructions, 
the annual internal review tool used to assess and document grantee 
progress, performance, and compliance and the health center site visit 
protocol. 

Improved Oversight of Program Requirements: 

* Program Analysis and Recommendations Tool: Building on the 
clarification of program requirements, HRSA created the Program 
Analysis and Recommendations (PAR) Review Tool. The PAR was designed 
to draw on a variety of information and data sources but provide a 
consistent format for HRSA's Project Officers to annually assess and 
monitor program compliance and performance improvement for all health 
center grantees. The PAR was developed in 2007 and has been used by 
HRSA's Project Officers since 2008 to electronically document and 
track grantee compliance with statutory and regulatory program 
requirements in alignment with the 19 Key Health Center Program 
Requirements. 

* Site Visit Protocol: In 2008, HRSA developed and implemented a new, 
in-depth site visit protocol, the HRSA Health Center Site Visit Guide, 
to support on-site assessments of grantee compliance with program 
requirements and identification of clinical and financial performance 
improvement. The HRSA Health Center Site Visit Guide also serves as a 
review instrument that grantees can use for self-assessment. The HRSA 
Health Center Site Visit Guide and corresponding standard report 
templates (used to document findings from site visits) are aligned 
with and structured to correspond to the 19 Key Health Center Program 
Requirements. The Health Center Site Visit Guide is available at 
[hyperlink, http://bphc.hrsa.gov/policiesregulations/centerguide.html]. 

Standardization of Performance Improvement Measures: 

In 2008, HRSA adopted a set of core clinical and financial performance 
measures, specifically relevant to the Health Center Program and 
aligned with nationally recognized and standardized quality metrics. 
These measures reflect HRSA's emphasis on health outcomes and quality 
of care delivered by health centers. Clinical and financial 
performance measures are integrated into the annual Health Center 
Program progress reports and competing continuation applications and 
provide an additional dimension of monitoring that allows Project 
Officers to track grantee performance on these measures. 

Time-Phased Approach to Address Compliance Issues: 

In 2010, HRSA introduced the Progressive Action policy and process, 
which provided a uniform structure and a time-phased approach for 
notifying grantees of compliance issues through standard conditions of 
award based on the 19 Program Requirements. The Progressive Action 
policy and process was implemented through an integrated electronic 
system that greatly enhanced the ability for both HRSA staff and 
health center grantees to track, respond to conditions with documented 
corrective actions, and assess responses to these conditions. 

Frequency of Operational Site Visits: 

In 2012, HRSA expanded its Technical Assistance (TA) efforts to 
include regularly scheduled Operational Site Visits to all health 
center grantees. I IRSA recently increased the number of site visits 
provided through their current nationwide contract and plans to 
conduct approximately 240 Operational Site Visits annually. Beginning 
in 2012, all Health Center Program grantees will receive an 
Operational Site Visit at least once every five years. These visits 
are designed to provide a full operational assessment of all 19 
Program Requirements as well as focus on areas for clinical and 
financial performance improvement. 

Building on these significant achievements, HRSA will continue to 
focus on advancing accountability in all aspects of the program's 
development to ensure the appropriate and effective use of Federal 
funds and to achieve the Health Center Program's mission of providing 
comprehensive, culturally competent, quality primary health care 
services to medically underserved communities, and vulnerable 
populations. 

Response to the Report's Findings: 

While HHS considers the report's findings to be helpful in informing 
ongoing efforts to improve oversight of the Health Center Program, HHS 
does not concur with the following central conclusions drawn for the 
report's findings: 

Page 17 [now page 20]: HRSA's Process for Identifying Noncompliance is 
insufficient because annual compliance reviews do not identify all 
instances of non-compliance. HRSA project officers monitor grantees 
throughout the year to identify potential issues, including non-
compliance with program requirements and areas where technical 
assistance might be necessary. Contrary to GAO's conclusion, this 
active monitoring is not limited to the project officer's annual 
Program Analysis and Recommendations (PAR) review, but is accomplished 
through a variety of available resources including, but not limited 
to, the review of grantee data reports, independent annual audit 
reports, quarterly conference calls, site visits, correspondence from 
the grant recipient, and other information available as shared with 
GAO during the study and as described within the report itself. 
Project officers utilize all of these resources to determine if 
conditions are warranted at any point during the year. In fact, the 
site visits examined during the GAO review period were conducted 
because HRSA determined that these organizations presented a higher 
level of risk for non-compliance and/or performance concerns. 
Therefore, HHS does not concur with GAO's conclusion that because site 
visits identified additional areas of noncompliance beyond what was 
identified in the annual PAR review, HRSA's process for identifying 
non-compliance was insufficient. 

Page 19 [now page 23]: The lack of documentation [in the annual PAR 
review] is not consistent with internal control standards for the 
federal government [found in Standards for Internal Control in the 
Federal Government (GAO/AIMD-00-21.3.1)]. The stated purpose of the 
Standards for Internal Control in the Federal Government is to 
"provide the overall framework for establishing and maintaining 
internal control and for identifying and addressing major performance 
and management challenges and areas at greatest risk of fraud, waste, 
abuse, and mismanagement" (GAO/AIMD-00-21.3.1, Page 1). The PAR review 
utilizes a risk-based approach for identifying major performance and 
management challenges and areas at greatest risk of fraud, waste, 
abuse, and mismanagement. Specifically, HRSA established its PAR 
review to record documented findings of non-compliance and utilizes a 
standard progressive action process to resolve these areas consistent 
with its overall internal control procedures. Therefore. HI-IS does 
not concur with GAO's conclusion that HRSA's annual PAR review does 
not meet the internal control standards for identifying and addressing 
major performance and management challenges and areas of greatest risk. 

Pages 22-23 [now page 26]: HRSA's Process for Identifying 
Noncompliance Is Insufficient because HRSA's Project Officers do not 
consistently identify and document grantee noncompliance. When 
documented non-compliance issues are identified, Project Officers are 
expected to follow the Progressive Action policy and process and 
notify grantees of the area of non-compliance via a condition of 
award, provide guidance on the corrective actions necessary to meet 
compliance, and provide technical assistance as needed. GAO concluded 
that HRSA's process for identifying non-compliance is insufficient 
because HRSA's project officers do not consistently identify and 
document grantee non-compliance in cases where non-compliance cannot 
be definitively determined. In these cases, HRSA's standard operating 
procedures require project officers to record these areas of 
uncertainty in the PAR review for follow-up action, including 
conference calls, grantee site visits and/or additional documentation 
to verify compliance. Based on the results of these follow-up actions, 
HRSA places conditions on the grant award, as appropriate. Therefore, 
HHS does not concur with GAO's conclusion that HRSA's process for 
identifying non-compliance is insufficient in cases where non-
compliance cannot be definitively determined. 

Given the significant improvements made by HRSA in creating a core 
foundation to support and strengthen overall program monitoring and 
oversight capacity of the Health Center Program, coupled with a 
commitment to continually assess and improve on this foundation, HHS 
concurs with all six Recommendations for Executive Action. While 
resource availability may impact the extent of certain actions, HRSA 
is already in the process of planning and implementing many of these 
recommendations: 

1. Develop and implement a mechanism for recording, tracking and 
following-up on instances where project officers are unable to 
determine compliance during the annual compliance review process.
Added electronic functionality to the PAR is under development as part 
of the HRSA Electronic Handbook Project Management Module (PMM) to 
support Project Officers in their overall, ongoing monitoring of 
grantees throughout the year, including instances where program 
compliance is uncertain. 

2. Require that, when completing annual compliance reviews, project 
officers clearly document their basis for determining that grantees 
are in compliance with program requirements. 

HRSA plans to update the structure of the FY 2013 PAR to require a 
justification that cites the source document when a Project Officer 
marks "Yes, organization demonstrates compliance." 

3. Clarify agency guidance and provide training, as needed, to better 
ensure that project officers are accurately and consistently assessing 
grantees' compliance with program requirements. 

HRSA is working to publicly issue several policies that clarify 
program requirements, including sliding fee discount programs, quality 
improvement/assurance programs and governance, for both grantees as 
well as HRSA staff. HRSA will continue to provide staff
training on the Health Center Program requirements as well as specific 
trainings on any forthcoming policies once released. HRSA will also 
continue to offer extensive internal support to assist Project 
Officers and Branch Chiefs in making compliance review decisions. 

4. Ensure that site visit data contained in HRSA's electronic system 
are complete, reliable and accurate to better target the use of 
available resources and help ensure that all grantees have compliance-
related site visits at regular and timely intervals. 

HRSA is updating its Onsite Technical Assistance Module to improve the 
quality, accuracy, and completeness of data captured in the module, 
including improvements identified by GAO in this study. As noted 
above, HRSA has communicated to stakeholders that beginning in 2012, 
all Health Center Program grantees will receive an Operational Site 
Visit at least once every five years. HRSA has also created operating 
guidance for the development of an annual site visit plan and has 
obligated additional resources accordingly. 

5. Develop and implement procedures to ensure that instances of 
noncompliance with program requirements consistently result in the 
placement of a condition on a health center's grant. 

HRSA has developed a Standard Operating Procedure (SOP) for 
determining appropriate and consistent placement of conditions at 
times and for reasons outside of the annual application PAR review 
process (referred to as "Off-Cycle" conditions). 

6. Periodically assess whether its new progressive action process for 
addressing grantee noncompliance, including the timeframes allotted 
for grantees to respond, is working as intended and make any needed 
improvements to the process. 

HRSA has and will continue to monitor its Progressive Action process 
and make identified improvements, as necessary. HRSA established a 
Progressive Action Enhancements Workgroup to: 

* Identify issues and key areas of improvement for the Progressive 
Action process; 

* Identify and prioritize proposed solutions that align with the 
Progressive Action policy and related grants regulations and policies; 

* Define critical tasks and task leads needed to implement proposed 
solutions; and; 

* Provide related training on the Progressive Action policy and 
process for HRSA staff. 

[End of section] 

Appendix IV: Contacts and Staff Acknowledgments: 

GAO Contact: 

Debra A. Draper, (202) 512-7114 or draperd@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, key contributors to this 
report were Michelle B. Rosenberg, Assistant Director; Krister P. 
Friday; David Lichtenfeld; Lillian Shields; and Jennifer M. Whitworth. 

[End of section] 

Footnotes: 

[1] 42 U.S.C. § 254b. 

[2] The 19 key program requirements are among those that HRSA reviews 
as part of its oversight of health center grantees. In this report, we 
refer to the 19 key program requirements as either the 19 program 
requirements or Health Center Program requirements. There are other 
requirements for health center grantees, including periodic reporting 
requirements to HRSA, which are outside the scope of our work. 

[3] HRSA allocates funds to the Health Center Program out of the 
annual appropriations made to the agency for its programs. Annual 
appropriations allocated to the Health Center Program increased 
between fiscal year 2002 and 2010. However, in fiscal year 2011, 
Health Center Program funding was reduced by 27 percent (or $604 
million) as a result of a reduction to HRSA appropriations and a 
rescission of appropriations made for that year for non-defense 
programs. HRSA allocated $1.6 billion of its fiscal year 2012 
appropriation to the Health Center Program. 

[4] Pub. L. No. 111-5, 123 Stat. 115. 

[5] Pub. L. No. 111-148, § 10503, 124 Stat. 119, 1004 (2010); Pub. L. 
No. 111-152, § 2303, 124 Stat. 1029, 1083. In this report, references 
to "PPACA" are to the Patient Protection and Affordable Care Act, as 
amended by the Health Care Education and Reconciliation Act of 2010. 

[6] PPACA also appropriated $1.5 billion for the construction and 
renovation of health centers for fiscal years 2011 through 2015. 

[7] We looked at the number of documented compliance issues that 
grantees had as of July 11, 2011, which were still unresolved more 
than 90 days after HRSA notified the grantee about the area of 
noncompliance. 

[8] See GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: Nov. 1999). 

[9] We did not review requirements from the fourth category--patient 
need. For information on actions HRSA has recently taken to target 
grants to health centers in communities with demonstrated need see 
GAO, Health Center Program: 2011 Grant Award Process Highlighted Need 
and Special Populations and Merits Evaluation, [hyperlink, 
http://www.gao.gov/products/GAO-12-504] (Washington, D.C.: May 29, 
2012). 

[10] HRSA may waive the board composition requirement for certain 
centers upon a showing of good cause. 42 U.S.C. § 254b(k)(3)(H). 

[11] HRSA did not have readily accessible, comprehensive data on site 
visits conducted prior to 2011. 

[12] At the time of our data request, this represented the most recent 
data available. In addition, the time period of the data reviewed 
corresponded with the time that HRSA's current process for addressing 
noncompliance had been implemented. 

[13] HRSA's Office of Federal Assistance Management is responsible for 
awarding and administering the grant. 

[14] According to HRSA's policy, project officers are not allowed to 
contact grantees for additional information when reviewing a 
competitive grant application in which more than one organization has 
submitted an application for the same service area. 

[15] HRSA refers to this evaluation tool as the Program Analysis and 
Recommendations. 

[16] During annual reviews, project officers must identify at least 
one clinical measure and one financial performance measure as a 
performance improvement area for each grantee. Performance improvement 
areas are optional for all other aspects of the program. 

[17] HRSA officials indicated that although not intended to assess 
compliance, it is possible that information obtained during a targeted 
technical assistance or routine project officer visit could raise 
questions about grantees' compliance. 

[18] HRSA uses conditions to address specific findings of 
noncompliance; these are different than performance improvement areas, 
which are intended to help promote continuous improvement for grantees 
above and beyond compliance with the 19 program requirements. 

[19] Prior to April 2010, HRSA did not have a uniform series of time 
frames in which grantees were required to address noncompliance. 

[20] HRSA has a list of conditions that it utilizes for issues of 
noncompliance with the 19 program requirements; some of the program 
requirements have multiple associated conditions each of which is 
related to a different component of the requirement. Over half of 
these conditions--approximately 60 percent--provide the grantee with 
additional implementation phases. 

[21] The other five program requirements for which the site visit 
found the grantee noncompliant were the needs assessment, required and 
additional services, hospital admitting privileges and continuum of 
care, contractual/affiliation agreements, and budget requirements. 

[22] For each of the eight selected grantees, we reviewed the 
compliance decisions that the project officers made for the following 
six program requirements--after hours coverage, sliding fee discounts, 
key management staff, billing and collections, board composition, and 
conflict-of-interest policy; a total of 48 compliance decisions. 

[23] See [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[24] According to HRSA officials, the on-line Electronic Handbook 
contains certain business rules to help safeguard site visit data. One 
of these rules was that the type of site visit could not be modified 
after a site visit record was created. 

[25] According to HRSA, the number of grantees in the Health Center 
Program was 1,127 in July 2010 and 1,129 as of November 1, 2011--we 
used the average of the two figures, which is 1,128. 

[26] All of these visits were operational assessment visits, as HRSA 
did not conduct any new start site visits during the time period for 
which data were available. 

[27] The maximum allotted time available to a grantee depends on the 
nature of the issue of noncompliance and the corrective action the 
grantee needs to take to establish compliance. Specifically, when an 
issue of noncompliance can be directly addressed by providing specific 
documentation (e.g., updated service map), the progressive action 
process consists of three phases and, when including time for HRSA to 
review grantees' submission, can take up to 9 months. However, when a 
grantee has a condition that requires it to both develop and implement 
a plan for achieving compliance (e.g., develop and implement a 
financial recovery plan), the process may include up to three 
additional implementation phases, and can take up to 19 months to 
complete when including time for HRSA to review grantees' submissions 
between each phase. 

[28] For the 5 years prior to implementation of the progressive action 
process, HRSA indicated that it discontinued funding for 37 grantees. 
Of these, HRSA categorized 12 as involuntary terminations. 

[End of section] 

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