Community Health Centers:

Adapting to Changing Health Care Environment Key to Continued Success

HEHS-00-39: Published: Mar 10, 2000. Publicly Released: Mar 23, 2000.

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Pursuant to a congressional request, GAO reviewed federal community and migrant health centers (C/MHC), focusing on: (1) the current status of C/MHCs, the populations they serve, the types of services they provide, and their primary sources of revenue; (2) changes in Medicaid that have had an effect on C/MHCs; (3) how C/MHCs have responded to these and other changes in the health care environment; and (4) assessing the Department of Health and Human Services' actions to monitor C/MHC performance and help them improve operations.

GAO noted that: (1) the Health Resources and Services Administration (HRSA) estimates that about half of the C/MHCs have some operational or financial problems and about 10 percent are struggling to maintain operations; (2) while approximately 2 percent lost federal grant funding each of the last 3 years, about the same number of grantees entered the program; (3) C/MHCs primarily serve children, low-income individuals, and minority populations; (4) a high- and increasing-proportion of the centers' patient population is uninsured and a significant proportion is enrolled in Medicaid; (5) in addition to primary care, C/MHCs provide ancillary services, but at times have had to curtail these services because of declining revenues; (6) while federal grant funding for the C/MHC program increased significantly in recent years, to about $1.02 billion for fiscal year 2000, the program's major source of funding since the 1980s has been Medicaid payments; (7) in implementing mandatory Medicaid managed care programs, some states discontinued cost-based reimbursements for C/MHCs and some health centers in these states experienced declines in Medicaid reimbursements; (8) the Balanced Budget Act of 1997 (BBA) allowed all states to gradually reduce reimbursement levels; (9) BBA also required states to make supplemental payments to centers participating in Medicaid managed care to cover differences between the managed care organizations' payments and the minimum reimbursement level established by BBA; (10) however, some states have been slow in giving centers these required payments, resulting in reduced Medicaid reimbursements at some centers; (11) most C/MHCs have adapted to recent changes in Medicaid and the overall health care environment; (12) GAO found that C/MHCs that have formed partnerships and networks and are participating in managed care are more likely to be successful; (13) attracting patients with diverse payment sources and pursuing other revenue sources have also contributed to better C/MHC financial performance; (14) C/MHCs that have not adjusted to the changes in Medicaid and the health care market and whose management and board have not paid sufficient attention to their financial operations are more likely to have problems; (15) to monitor the performance of C/MHCs, HRSA conducts onsite reviews and collects and analyzes program data; (16) for centers with performance problems, HRSA may provide certain assistance, such as developing a financial recovery plan; and (17) while such action has helped some struggling centers, HRSA's monitoring tools--as well as the timeliness of its intervention--could be improved.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To ensure that C/MHCs continue to provide access to care for vulnerable populations, the Administrator, HRSA, should further improve the quality of the Uniform Data System (UDS) data, enforce the requirement that every grantee report complete and accurate UDS data, and use more accurate and timely financial data for monitoring performance.

    Agency Affected: Department of Health and Human Services: Public Health Service: Health Resources and Services Administration

    Status: Closed - Implemented

    Comments: The Department's Bureau of Primary Health Care reports that it has taken several steps to improve the UDS and the collection of performance information. Grantees are now required to submit their UDS reports electronically, and the Bureau says this has improved the timeliness and accuracy of data by eliminating the need for a second level of data entry. The Bureau has implemented formal training of centers in the completion and use of the UDS and has developed a Data Workgroup to review the content of the UDS and comment on its relevance. The Bureau believes the workgroup is improving the quality of data collected. Furthermore, UDS data collection is being verified through on-site PCER reviews of centers. Regarding the need for more accurate and timely financial data for monitoring performance, a standardized summary of key data elements extracted from each center's annual financial audit is now available online. Bureau officials can use this information in conjunction with field office reviews of centers. In addition, the Bureau is getting more timely information on grantees that have taken heavy drawdowns of their grants and is intervening in those situations more quickly.

    Recommendation: To ensure that C/MHCs continue to provide access to care for vulnerable populations, the Administrator, HRSA, should determine, before encouraging all C/MHCs to seek Joint Commission on Accreditation of Healthcare Organizations accreditation, whether it is a cost-effective tool for oversight of the C/MHC program and whether it is beneficial for improving the quality and competitiveness of C/MHCs.

    Agency Affected: Department of Health and Human Services: Public Health Service: Health Resources and Services Administration

    Status: Closed - Implemented

    Comments: In June 2001, the Bureau of Primary Health Care (BPHC) awarded a contract to assess the effects of Joint Commission on Accreditation of Healthcare Organization's (JCAHO) accreditation on quality, competitiveness, and cost. The final report was presented in March 2002. Two in-depth survey instruments were given to six accredited centers (three that were accredited recently and three for a longer period) and three that just receive the Bureau's PCER review. Because the number of centers surveyed was so small, the results were not generalizable. The report also analyzed patient satisfaction data gathered by the National Association of Community Health Centers from a much larger sample of centers. The report concluded that JCAHO is an important quality review option for C/MHCs, but that for some centers, the burdens may outweigh the benefits. In a July 24, 2002 Policy Information Notice, BPHC gave centers the option of using an integrated JCAHO/PCER accreditation review or just the PCER. BPHC recognized that each organization operates in a unique marketplace and only the organization can determine the extent to which its interests are best served by undergoing PCER or JCAHO review. In its latest contract with JCAHO, BPHC has asked JCAHO to develop a methodology and collect data on the cost to centers of using JCAHO accreditation; the report did not address that issue because centers had not been able to supply such information.

    Recommendation: To ensure that C/MHCs continue to provide access to care for vulnerable populations, the Administrator, HRSA, should establish a best practices program to facilitate C/MHCs' sharing of information about the successful innovations and best practices they have used to adapt to changes in the health care market.

    Agency Affected: Department of Health and Human Services: Public Health Service: Health Resources and Services Administration

    Status: Closed - Implemented

    Comments: The Bureau of Primary Health Care is in the process of developing an Assistance Resource Network (ARN) for health centers and communities. The ARN will be a place for centers and communities to obtain information and referrals on different subject areas such as Joint Commission on Accreditation of Healthcare Organizations accreditation and successful models of primary care.

    Recommendation: To ensure that states comply with federal requirements regarding C/MHCs, the Administrator, HCFA, should monitor whether state Medicaid programs, in their implementation of Medicaid managed care, are complying with the BBA payment provisions or the special terms and conditions of their section 1115 waivers and intervene promptly when states do not meet their financial obligations to centers.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

    Status: Closed - Implemented

    Comments: CMS reports that, as a result of BIPA, states no longer have waivers of cost-based reimbursement for C/MHCs. All states, including those operating comprehensive section 1115 demonstrations, must comply with the new prospective payment system. The BBA requirement that states supplement MCO payments, when necessary, continues under the new PPS. CMS states that, as part of routine monitoring of section 1915(b) waiver programs and section 1115 demonstrations, it monitors states to ensure compliance with the BBA supplemental payment requirements.

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