U.S. Department of Health and Human Services 
Office of Inspector General 
 
 
HRSA Helped 
Health Centers 
With Elevated 
Risks and Can 
Continue To Take 
Additional Steps 
 
OEI-05-14-00470 
May 2018 
Daniel R. Levinson 
 
Inspector General 
oig.hhs.gov  Report in Brief  U.S. Department of Health and Human Services 
May 2018 
Office  of Inspector General 
OEI-05-14-00470 
 
 
HRSA Helped Health Centers With Elevated 
Why OIG Did This Review 
Risks and Can Continue To Take Additional 
Health centers are organizations that 
provide primary care to medically 
Steps 
underserved populations.  In FY 2018, 
Federal support for health centers 
What OIG Found 
totaled $5.4 billion.  HRSA administers 
Key Takeaway 
Twenty-five percent of the health centers to 
Federal grants that help health centers 
HRSA intervened in multiple 
which the Health Resources and Services 
serve 1 in 12 people in the United 
ways and was helpful in 
Administration (HRSA) awarded Service 
States.  These grants, called Service 
reducing health centers risk.  
Area Competition grants in FY 2014 had 
Area Competition grants, are typically 
However, HRSA missed 
elevated programmatic or financial risks.  
awarded to health centers serving 
opportunities to further 
Included among these health centers were 
communities with limited access to 
assist, particularly for centers 
two that did not meet HRSAs funding 
affordable health care services.   
with financial problems.  
criteria.   
  To maximize access to health care, 
HRSA took steps to help health centers 
HRSA sometimes funds health centers 
improve, and many were able to do so.  However, HRSA missed some 
that are out of compliance with 
opportunities to further minimize risk.  HRSA did not always limit project 
multiple program requirements or are 
periods, restrict funding, or conduct site visits when it should have, exposing 
not financially stablei.e., health 
Federal funds to potential negative effects.  In addition, HRSA was not always 
centers with elevated programmatic 
able to help health centers, particularly those with financial problems, to 
or financial risks.  When funding 
improve before awarding them additional years of funding. 
grantees with unknown risks, effective 
oversight is needed to ensure that 
What OIG Recommends and How the Agency Responded 
patients receive quality care and 
During this study, the Office of Inspector General (OIG) provided technical 
Federal grant funds are protected. 
assistance to HRSA as it improved its oversight and worked to update its risk 
Effective oversight is particularly 
management process to implement new guidance from the Department of 
important as Federal investment in 
Health and Human Services.  According to HRSA, it made changes in its risk 
the Health Center Program expands.  
management process based on this early information from OIG.  This report 
Federal support for health centers has 
provides two additional recommendations to help HRSA in its ongoing efforts 
more than doubled from $2.2 billion 
to strengthen oversight of the Health Center Program.  Specifically, we 
in FY 2010 to $5.4 billion in FY 2018. 
recommend that HRSA (1) use risk management interventions in accordance 
with its policies to help health centers reduce elevated risks and (2) explore 
How OIG Did This Review 
additional steps it could take to help health centers reduce elevated risks.  
We analyzed HRSA data from 
HRSA did not concur or nonconcur with our recommendations, but it noted 
2013 through 2015 related to the 
actions it has taken that are responsive to them.  
309 health centers that received 
Service Area Competition grants for 
FY 2014.  We used HRSAs risk 
assessments to identify health centers 
with elevated risk.  For these health 
centers, we reviewed nearly 2.5 years 
of HRSA actions to help the health 
centers improve. 
 
Full report can be found at http://oig.hhs.gov/oei/reports/oei-05-14-00470.asp   
TABLE OF CONTENTS 
BACKGROUND  1 
Methodology  7 
   
FINDINGS   
Twenty-five percent of the health centers to which HRSA awarded SAC grants in FY 2014 had  9 
elevated risks 
HRSA took steps to help health centers reduce their risks but could have done more  10 
   
CONCLUSION AND RECOMMENDATIONS   
HRSA should ensure that it uses its risk mitigation interventions as intended  14 
HRSA should explore additional steps it could take to help health centers reduce their elevated  15 
financial risks 
Agency Comments and Office of Inspector General Response  16 
   
APPENDICES   
A.  Health Center Program Requirements  17 
B.  Risk Management Interventions  22 
C.  Detailed Methodology    23 
D.  Frequency of Noncompliance Among Health Centers With Elevated Programmatic Risks  27 
E.   Descriptive Information for Health Centers With Elevated Programmatic or Financial Risks  28 
F.   Risk Management Interventions HRSA Did Not Use When It Could Have  29 
      G.  Agency Comments  31 
   
GLOSSARY  35 
 
ACKNOWLEDGMENTS  37 
 
 
   
BACKGROUND 
Objective 
Our review examined the Health Resources and Services Administrations 
(HRSAs) oversight of programmatic and financial risks in the Health 
Center Program.  We determined the extent to which HRSA (1) awarded 
FY 2014 Service Area Competition (SAC) grants to health centers with 
elevated risks and (2) intervened to help health centers improve. 
Rationale   Effective oversight is essential to HRSAs ability to support the crucial roles 
that health centers play in the U.S. health care system and safeguard health 
center patients and Federal grant funds.  Health centers typically serve 
communities that have limited access to affordable health care services.  
Health centers provide health care services to all patients regardless of their 
ability to pay.  Additionally, health centers are increasingly involved in 
addressing national health priorities like responding to the opioid crisis.  The 
Federal funding that supports health center operations has increased 
significantly, allowing the number of patients served and the number of 
health centers to increase nationally.  The annual budget for the Health 
Center Program has increased from $2.2 billion in FY 2010 to $5.4 billion in 
FY 2018.  Over this time, the Health Center Program served an additional 6.4 
million patients and funded over 2,200 new health center sites.  
 
Health Centers   Health centers are organizations that employ physicians and other 
healthcare providers to deliver primary care to medically underserved 
patients.  In 2016, nearly 1,400 health centers with more than 11,000 health 
center sites served nearly 26 million patients1 in 12 people living in the 
United States.1, 2 
Through the Health Center Program, HRSA administers Federal grants to 
support health centers operations.  To be eligible for these funds, health 
centers must meet statutory Health Center Program requirements 
(hereinafter referred to as program requirements.) 3  These requirements 
are designed to ensure that health centers deliver comprehensive, culturally 
competent, high-quality services to patients.  These requirements cover a 
variety of concerns, including the needs of the population served; the 
provision of services to patients; the management and finance of health 
centers; and the governance of health centers.  Key program requirements 
that directly affect patient care include those that require centers to provide 
certain health care services, to maintain a qualified staff, and to establish a 
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sliding fee-payment scale for low-income patients.4  See Appendix A for a 
description of all 19 program requirements in effect in FY 2014.
Each health center operates one or more sites in a service area.5  Service 
areas are typically communities with geographic, economic, or cultural 
barriers that limit access to affordable health care services.  Typically, 
a majority of a health centers patients reside in its service area. 
 
Service Area  Grants that HRSA administers to support health center operations are called 
Service Area Competition (SAC) grants.  HRSA opens SAC grants for 
Competition Grants 
competition when an existing health center completes the terms of its 
previous SAC grantgenerally every 3 yearsor is otherwise unable to 
continue operating in the service area.  Health centers compete for SAC 
grants on a rolling basis, with approximately one-third of health centers 
eligible for new SAC grants each year.  See Exhibit 1 for a representation of 
the SAC grant lifecycle. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Exhibit 1: HRSA can award SAC grants for 1 or 3 years.  
Source: OIG summary of HRSA policy documents, 2017. 
 
HRSA typically awards SAC grants for 3 years.  Health centers that are 
awarded 3-year grants receive first-year funds and then receive 
noncompetitive continuation grants in their second and third years.  
Typically, the amounts that a health center receives in the second and third 
years of its grant are similar to or slightly higher than the amount the center 
received in the first year.   
Alternatively, HRSA can limit the duration of a SAC grant to just 1 year, 
requiring health centers that receive such grants to compete for new grants 
after 1 year of funding.  A 1-year grant typically indicates that the health 
center has a history of noncompliance with program requirements and 
HRSA considers it to be of higher risk.    
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In FY 2014, HRSA awarded $522 million to support the first year of new SAC 
grants.  HRSA staff reported that the average first year of a FY 2014 SAC 
grant was slightly more than $1 million.  HRSA awarded additional funding 
to support health centers that had been given SAC grants in previous years 
and to fund the establishment of new health center sites.  
 
HRSAs Risk  Federal regulations require HRSA to assess the risks posed by each grant 
applicant before HRSA awards Federal funds.6  These regulations generally 
Management 
do not preclude HRSA from awarding funds to health centers with 
Process 
problems.  HRSA may choose to award SAC grants to such health centers to 
maximize patients access to health services and to ensure continuity of 
care.  This is particularly true if a given service area has no other 
organizations that are competing for the SAC grant. 
According to guidance from the Department of Health and Human Services 
(HHS), HRSA is required to help grantees reduce their risks.7  This guidance 
does not specify how HRSA should help its grantees.  To comply with these 
regulations and requirements, HRSA developed a risk management process 
to assess health center applicants and to intervene to help health centers 
improve.   
Assessing Risks 
Prior to awarding grants, HRSA conducts assessments to determine the 
degree to which health center applicants pose risks to the Health Center 
Programs missionto serve patientsor to Federal funds.  We refer to 
these two types of risks as programmatic risks and financial risks, 
respectively.  A health center with programmatic risks may not meet 
multiple Health Center Program requirements, and a health center with 
financial risks may show signs of financial instability, such as having financial 
problems that may warrant declaring bankruptcy. 
HRSA uses the results of its assessments as one of the factors to help 
determine whether health center applicants should receive SAC grants.  
When two or more health center applicants were competing for the same 
FY 2014 SAC grant, HRSA considered the results of these assessments when 
selecting which applicant would receive the grant.  Additionally, according 
to HRSAs FY 2014 funding criteria, health centers should not have received 
SAC grants if they (1) would be limited to a third consecutive 1-year grant or 
(2) had not met relevant deadlines for compliance with program 
requirements.  
HRSA also uses the results of its assessments to determine the length of the 
SAC grants it awards to health centers.  In FY 2014, HRSAs policy stated that 
it should limit SAC grants to 1 year for health centers that were out of 
compliance with five or more program requirements, had failed to come 
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into compliance with a program requirement after two attempts, or were in 
jeopardy of bankruptcy. 
Programmatic Risks.  To assess programmatic risks, HRSA evaluates each 
health centers compliance with program requirements.  According to HRSA, 
when it determines that a health center is not compliant with a program 
requirement, it places what it calls a program condition on the health 
centers grant award.  A program condition lists the specific requirement 
with which the health center is not compliant, allows HRSA to track the 
health centers progress toward compliance, and sets a deadline after which 
the health center may lose its grant if the condition remains unresolved.  A 
health center may have several program conditions on its grant 
simultaneously.  HRSA assesses health center compliance with program 
requirements at least annually, including during SAC application reviews and 
prior to awarding additional years of funding.  
Financial Risks.  To assess financial risks, HRSA conducts an initial financial 
assessment to evaluate the financial stability of each health center and 
documents the results.  According to HRSA, it reviews each health centers 
financial statements, tax records, independent audit findings, and other 
records.  On the basis of the assessments results, HRSA assigns each health 
center to a category describing the amount of risk posed to Federal funds: 
minimal, moderate, high, or extreme. 
Intervening to Reduce Risks 
HRSA can intervene in a variety of ways to help health centers reduce their 
risks.  HRSA can track the status of existing risks, identify new risks that may 
develop after receiving SAC grants, and help health centers limit the 
potential effects of their risks.  (We refer to these ways in which HRSA can 
intervene as interventions.)   
For some interventions, HRSAs policies describe when it should use those 
interventions to help health centers reduce their risks.  See Exhibit 2 for a 
description of the interventions with criteria governing their use.  (See 
Appendix B for an expanded version of this table that includes additional 
interventions.) 
 
   
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Exhibit 2: HRSA policy prescribes numerous interventions, with different 
purposes and criteria for use.  
 
Source: OIG summary of HRSA policy documents, 2017. 
 
Previous Reviews of  Both the Government Accountability Office (GAO) and OIG have evaluated 
aspects of HRSAs grants management process, and HRSA has changed this 
HRSAs Grants 
process in response to the GAO and OIG recommendations.8, 9, 10, 11  For 
Management 
example, prior to reviewing FY 2014 SAC grants, HRSA established formal 
Process  training requirements for its staff and developed guidance documents to 
ensure that its staff accurately and consistently assessed grantees 
compliance with Health Center Program requirements.  To communicate 
compliance expectations to grantees, HRSA also created a publicly available 
Health Center Program compliance manual and guide for conducting site 
visits. 
 
Updates to Risk  In December 2015, HHS issued the Grants Policy Administration Manual 
Management  (GPAM), which updated its Department-wide policies for grants 
management to more strongly emphasize risk management.  The GPAM 
Policies 
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requires HRSA and other HHS grantmaking agencies to exchange 
information with each other about higher risk grantees in ways that have 
not previously been required.   
HRSA uses the results of its financial assessments to comply with these new 
requirements.  According to HRSA, it shares information with other HHS 
agencies about health centers that it assesses as having a high level of 
financial risk.  HRSA also reported that its policy on how frequently it 
updates financial assessments for high-risk health centers was changed 
from annually to every 6 months. 
 
Methodology  In this evaluation we included the 309 health centers to which HRSA 
awarded FY 2014 SAC grants.  These health centers represent approximately 
one-quarter of all health centers that received Federal funds in FY 2014.  The 
remaining health centers were in the midst of multiyear grants and received 
noncompetitive continuation grants in FY 2014.  See Appendix C for a full 
discussion of our methodology. 
We analyzed a variety of data related to HRSAs identification of and 
response to health center risks.  Data included the program conditions that 
HRSA placed on health centers grants to indicate program noncompliance, 
the financial assessments that HRSA conducted for the health centers, and 
the ways in which HRSA intervened to help health centers.  These data 
spanned nearly 2.5 years, from the SAC grant applications in late 
2013 through the end of 2015.  HRSA stored these data in its Electronic 
Handbook, which is an electronic repository for data related to HRSAs 
funding and management of health centers.   
Using HRSAs data, we assigned each health center to one of four risk 
categories that we developed:  
1.  nominal risks,  
2.  elevated programmatic risks only,  
3.  elevated financial risks only, or  
4.  both elevated programmatic and financial risks.   
Our categorization of risk was informed by HRSAs guidance.  We classified 
a health center as having elevated programmatic risk if it met HRSAs 
programmatic criteria for a restricted grant period.  We classified a health 
center as having elevated financial risk if HRSAs financial assessment 
categorized the health centers level of financial risk as moderate, high, or 
extreme.  
To determine the extent to which HRSA took steps to help health centers 
reduce their risks, we identified the ways in which HRSA intervened 
following the award of FY 2014 SAC grants.  We also reviewed situations in 
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which HRSA did not intervene in accordance with its regulations and 
policies. 
To determine whether a health center was able to reduce its risks before it 
was awarded an additional year of funding, we compared its risk levels at 
the start of its FY 2014 funding to its risk levels at the start of its 
FY 2015 funding.  We considered a health center to have reduced its risks if 
it went from elevated to nominal risks in that time. 
Limitations  
We were not able to determine whether HRSAs interventions had a direct 
impact on health centers ability to improve because it was not possible to 
isolate HRSAs interventions from other explanatory variables.  For example, 
we could not separate the impact of HRSAs interventions from the impact 
of actions that health centers took. 
We did not review all documents that may have included HRSAs 
justifications for awarding SAC grants to health centers, as some of these 
documents were outside the scope of this review. 
In assessing whether HRSA used risk management interventions when it 
should have, we were not able to assess its use of five of its nine 
interventions because HRSA either did not have data available or did not 
have criteria governing the interventions use.  As a result, we may have 
underreported the number of times that HRSA did not intervene when it 
should have.     
 
Standards  This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General on 
Integrity and Efficiency. 
 
   
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FINDINGS 
Twenty-five percent  HRSA awarded FY 2014 SAC grants to 309 health centers that served 
4.8 million patients in 2014.  HRSA identified 232 of these health centers as 
of the health centers 
having only nominal risks.  HRSA identified the remaining 77 health centers 
to which HRSA 
as having elevated programmatic or financial risks.  These health centers 
awarded SAC grants  represented 25 percent of 
Exhibit 3: While most health centers 
in FY 2014 had  health centers that were 
with elevated risks had only a 
awarded FY 2014 SAC grants.  
elevated risks   financial or programmatic risk, 
They received $102 million in 
some had both. 
SAC grant funding and served 
almost 819,000 patients in 2014.   18 elevated financialrisk only
See Exhibit 3 for the extent to 
which the 77 health centers had 
one or both types of problems.   
4both types of elevated risks
Health centers with elevated 
programmatic risks had a range 
of problems that potentially 
55 elevated programmatic risk
could have harmed health center 
only
patients.  These health centers 
were most frequently out of 
compliance with program 
requirements directly related to 
patient care, including providing 
certain types of services and 
ensuring appropriately 
Source: OIG analysis of health centers to which HRSA 
credentialed staff.  Patients who 
awarded FY 2014 SAC grants, 2017. 
sought care at these health   
centers may have been treated by uncredentialed staff or may not have 
been able to receive all of the care they needed.  These health centers were 
less frequently out of compliance with program requirements related to 
their management, such as maintaining a fully staffed management team.  
See Appendices D and E for further details on health centers with 
programmatic problems. 
Health centers with elevated financial risks also had a range of issues that 
may have negatively affected their abilities to appropriately use Federal 
funds.  Some of these health centers experienced more concerning 
problems such as overbilling for services provided, using funds for 
unallowable expenditures, and staff theft.  Other health centers had less 
concerning problems, like being unable to provide HRSA with results from 
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independent audits or having 
minor problems identified  HRSA renewed a grant to one health 
through their independent  center with elevated financial risks.  This 
audits.  See Appendix E for  center had more than $500,000 in 
further details on health  unallowable expenditures at the time of 
centers with financial  the grant renewal.   
problems.  
Two of the health centers 
with problems should not have received SAC grants according to HRSAs 
funding criteria.  HRSA awarded each of these health centers a 1-year grant 
in FY 2014, as it had done for each of the health centers in each of the 
previous 2 years.  HRSAs policy states that it should not fund health centers 
that meet the criteria for being limited to 1-year grants 3 years in a row, as 
this indicates unsatisfactory performance and demonstrates that the health 
center cannot meet all of the Health Center Program requirements.  
According to HRSA, it sometimes funds health centers with problems to 
ensure access to health care for patients in the areas served by these health 
centers.   
  
HRSA took steps to  HRSA intervened in multiple ways to help health centers reduce 
their risks, and most health centers were able to do so 
help health centers 
HRSA helped 77 health centers, and ultimately 59 of these health centers 
reduce their risks 
improved before receiving additional years of funds.  For many health 
but could have done 
centers with programmatic problems, HRSA provided technical assistance to 
more   improve their compliance and regularly monitored their progress toward 
compliance.  For some health centers with financial problems, HRSA 
awarded 1-year grants and assigned drawdown restrictions to protect 
Federal funding while providing technical assistance to help health centers 
resolve their financial issues.  See Exhibit 4 for the number of health centers 
for which HRSA used each intervention.   
   
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Exhibit 4: HRSA most frequently used annual financial status reviews, 
the program condition resolution process, and technical assistance to 
help health centers with elevated risks.*  
 
Source: OIG analysis, 2017. 
* This exhibit is based on our analysis of 77 health centers with problems.  The total number of health 
centers for which HRSA used these interventions sums to more than 77 because HRSA intervened in 
multiple ways for each health center. 
HRSA most frequently used annual financial status reviews, the program 
condition resolution process, and technical assistance to help health centers 
with problems.  HRSA conducted annual financial status reviews for all of 
these health centers to monitor known issues and to identify new ones.  
Similarly, for any of the health centers that were out of compliance with one 
or more program conditions, HRSA tracked their progress toward 
compliance through the program condition resolution process.  Finally, 
HRSA provided technical assistance to many of these health centers on an 
as-needed basis to help them improve. 
HRSA used its remaining interventions less frequently.  Some of these 
interventions are intended to help health centers deal with less common 
issues.  For example, HRSA requires health centers to develop corrective 
action plans only if their independent audits have findings.  Other 
interventions, such as special grant reviews, are resource-intensive and are 
reserved for health centers with serious problems. 
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HRSA missed opportunities to further help health centers reduce 
risks   
For some health centers with problems, HRSA did not use all of its 
interventions as intended.  While most health centers were able to improve, 
HRSA missed opportunities to provide additional help.  
HRSA did not always use 
three of its interventions
HRSA did not conduct the operational 
1-year grants, drawdown 
site visits that it should have for the two 
restrictions, and operational 
health centers that did not meet its 
site visitsfor 47 of the 
funding criteria. 
77 health centers with 
problems that met the criteria 
for one or more of these 
interventions.  Most frequently, HRSA did not assign 1-year grants when it 
should have, failing to assign these grants to half of the health centers that 
met the criteria.  Two of these health centers were out of compliance with 
more than 10 program requirements.  For more information on the rates at 
which HRSA did not use its interventions as required, see Appendix F. 
By not using these interventions as required, HRSA did not do all that it 
could to safeguard patients and Federal funds.  By not limiting grant periods 
to 1 year or assigning drawdown restrictions to every health center that met 
the respective criteria, HRSA did not limit health centers access to funds 
and thus may have increased the amount of Federal funds exposed to 
unnecessary risk.  Additionally, by not conducting operational site visits for 
every health center that met the criteria, HRSA may have missed 
opportunities to collect comprehensive information about health centers 
performance and compliance, monitor existing risks, and identify new risks 
to patients and Federal funds at health centers.   
Some health centers, particularly those with elevated financial risks, 
were not able to reduce their risks despite HRSAs help 
Despite HRSAs help, half of all health centers with financial problems did 
not improve before HRSA awarded them additional years of funding.  In 
comparison, just 14 percent of health centers with programmatic problems 
were not able to improve before HRSA awarded them additional years of 
funding.12    
Health centers may not have addressed their financial problems even with 
HRSAs help because the contributing issues are not always fully within 
health centers control.  For example, one health center that had been 
flagged for multiple years as potentially considering bankruptcy did indeed 
file for bankruptcy in 2015, citing issues related to untimely reimbursements 
from payers.  This health center closed 2 of its service sites and served 
1,480 fewer patients in 2015 than in 2014.  The patients who regularly visited 
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these now-closed service sites may have had difficulty finding other health 
care providers. 
In some cases, health centers with financial problems developed more 
serious problems after receiving a first year of funding.  For example, to 
remain operational, one health center required not only the typical second 
year of funding, but also emergency supplemental funding.  This health 
center was not able to repay the emergency funding as expected.  Another 
health center had significant negative assets, zero working capital, a steady 
decline in revenue and patients served, and more than $500,000 in 
unallowable expenditures.  HRSA chose to continue funding this health 
center while simultaneously requiring it to repay the unallowable expenses.   
In contrast, health centers may have reduced their programmatic problems 
more frequently because the contributing issues are typically within their 
control.  Most programmatic problems are directly related to health centers 
operation and management. 
 
   
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CONCLUSION AND RECOMMENDATIONS 
Approximately one-quarter of the health centers to which HRSA awarded 
SAC grants in FY 2014 had elevated risks, including two that did not meet 
HRSAs funding criteria.  HRSA took steps to help health centers improve, 
and most health centers did so.  However, HRSA could have done more at 
the time to help health centers and to limit the potential negative effects on 
health center patients and Federal funds.  Additionally, some health centers, 
particularly those with financial problems, were not able to improve despite 
HRSAs help.   
HRSAs ability to provide comprehensive oversight is a key element in its 
mission to ensure that medically underserved patients are able to access 
health care.  To ensure access for these patients, HRSA may choose to fund 
health centers with problems.  However, after awarding grants to these 
health centers, HRSA must ensure that it uses interventions to limit potential 
negative effects on health center patients and Federal funds.   
During this study, OIG provided technical assistance to HRSA as it 
undertook improvements to its oversight and worked to update its risk 
management process to implement new HHS guidance.  According to 
HRSA, it has already made changes to this process based on this early 
information.  As HRSA continues these efforts, we recommend that it:  
Ensure that it uses its risk management interventions as 
intended 
HRSA should ensure that it uses its interventions for all health centers that 
meet the respective criteria.  Specifically, HRSA should ensure that it: 
  awards grants of only 1 year and assigns drawdown restrictions to all 
health centers that meet the criteria for these interventions, and 
  conducts operational site visits within a year for all health centers 
awarded 1-year grants. 
Each of these interventions is an important component of HRSAs risk 
management process.  One-year grants and drawdown restrictions allow 
HRSA to limit health centers access to Federal funds, thereby limiting the 
potential for health centers to misuse those funds.  Operational site visits are 
an important way for HRSA to collect comprehensive information about 
health centers performance and compliance.   
There are several steps that HRSA could take to help ensure that it is 
following its policies.  For example, it could develop automated mechanisms 
in its Electronic Handbook (an electronic repository for data related to its 
funding and management of health centers) that (1) alert staff when health 
centers meet the criteria for 1-year grants and drawdown restrictions and 
(2) send reminders to relevant staff when health centers should have 
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operational site visits conducted, if such mechanisms are not already in 
place.  Alternatively, HRSA could audit how consistently it limits SAC grants 
to 1 year and assigns drawdown restrictions for health centers that meet the 
respective criteria for those interventions, and HRSA could audit the 
timeliness with which it conducts operational site visits.  HRSA could then 
evaluate the results of these audits for process improvements.   
Explore additional steps it could take to help health centers 
reduce their elevated financial risks 
HRSA should take additional steps to help health centers with financial 
problems.  Compared to health centers with programmatic problems, health 
centers with significant financial problems were less frequently able to 
improve before being awarded additional Federal funds.  Although some 
financial issues may be beyond the control of HRSA and/or health centers, 
HRSA could expand its use of existing interventions or develop new 
interventions to help health centers.  For example, HRSA could facilitate 
sharing of best practices among health centers that are able to reduce 
financial problems.  Additionally, HRSA could focus more of its efforts on 
health centers with the most serious risk.  HRSA may need to revise existing 
or draft new internal policies to take these additional steps. 
   
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AGENCY COMMENTS AND OFFICE OF 
INSPECTOR GENERAL RESPONSE 
HRSA did not express whether it concurred or did not concur with our 
recommendations.  However, HRSA outlined actions it took that are 
consistent with OIGs recommendations.  Specifically, HRSA described 
adding new interventions to assess and mitigate risk, as well as developing 
new processes across the grants management lifecycle that HRSA believes 
are fully responsive to the recommendations in OIGs report.  OIG 
commends HRSA for its efforts and believes that these actions represent 
improvements to the program.  During a more detailed review of further 
evidence, we may find that HRSAs actions justify closing these 
recommendations. 
HRSA also expressed concern about some findings from OIGs report.  First, 
HRSA stated that OIGs findings do not account for justifications for HRSAs 
funding decisions.  OIG focused on reporting the number of health centers 
with elevated risks that received Federal funds and the steps that HRSA took 
to safeguard those funds.  We do note in the report that HRSA may choose 
to fund health centers with problems to ensure access to health care for 
patients. 
Second, HRSA expressed concern that OIGs report overstates the risk to 
patients associated with a HRSA finding of noncompliance with 
credentialing and privileging requirements.  HRSA states that its findings of 
noncompliance may represent a weakness in recordkeeping rather than a 
determination that providers were unlicensed or not credentialed.  However, 
because the documentation was found to be problematic, we cannot know 
for certain whether all providers are appropriately licensed and credentialed.  
OIG maintains HRSAs findings could in fact represent providers that were 
unlicensed or not credentialed, and OIG continues to believe that treatment 
of patients by unlicensed or uncredentialed providers does pose a risk to 
patients.    
OIG reviewed all materials provided by HRSA and updated the findings and 
recommendations as appropriate based on the scope and objective of the 
report.  OIG has maintained the recommendations that remain relevant, 
especially for grantees that pose the greatest risk to Federal funds.   
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APPENDIX A: Health Center Program 
Requirements 
Need 
1. Needs Assessment: Health center demonstrates and documents the needs of its target population, 
updating its service area, when appropriate.  (Section 330(k)(2) and Section 330(k)(3)(J) of the PHS Act) 
Services 
2. Required and Additional Services: Health center provides all required primary, preventive, enabling 
health services and additional health services as appropriate and necessary, either directly or through 
established written arrangements and referrals.  (Section 330(a) of the PHS Act) 
Note: Health centers requesting funding to serve homeless individuals and their families must provide 
substance abuse services among their required services.  (Section 330(h)(2) of the PHS Act) 
3. Staffing Requirement: Health center maintains a core staff as necessary to carry out all required 
primary, preventive, enabling health services and additional health services as appropriate and 
necessary, either directly or through established arrangements and referrals.  Staff must be 
appropriately licensed, credentialed, and privileged.  (Section 330(a)(1), (b)(1)-(2), (k)(3)(C), and (k)(3)(I) 
of the PHS Act and 42 CFR Part 51c.102 and 51c.303(n)) 
4. Accessible Hours of Operation/Locations: Health center provides services at times and locations that 
assure accessibility and meet the needs of the population to be served.  (Section 330(k)(3)(A) of the 
PHS Act) 
5. After Hours Coverage: Health center provides professional coverage for medical emergencies 
during hours when the center is closed.  (Section 330(k)(3)(A) of the PHS Act and 42 CFR 
Part 51c.102(h)(4)) 
6. Hospital Admitting Privileges and Continuum of Care: Health center physicians have admitting 
privileges at one or more referral hospitals, or other such arrangement to ensure continuity of care.  In 
cases where hospital arrangements (including admitting privileges and membership) are not possible, 
health center must firmly establish arrangements for hospitalization, discharge planning, and patient 
tracking.  (Section 330(k)(3)(L) of the PHS Act) 
continued on next page 
   
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Appendix A: Health Center Program Requirements (Continued) 
7. Sliding Fee Discounts: Health center has a system in place to determine eligibility for patient 
discounts adjusted on the basis of the patients ability to pay. 
  This system must provide a full discount to individuals and families with annual incomes at or 
below 100% of the Federal poverty guidelines (only nominal fees may be charged) and for 
those with incomes between 100% and 200% of poverty, fees must be charged in accordance 
with a sliding discount policy based on family size and income.* 
  No discounts may be provided to patients with incomes over 200% of the Federal poverty 
guidelines.* 
  No patient will be denied health care services due to an individuals inability to pay for such 
services by the health center, assuring that any fees or payments required by the center for 
such services will be reduced or waived. 
(Section 330(k)(3)(G) of the PHS Act, 42 CFR Part 51c.303(f)), and 42 CFR Part 51c.303(u)) 
8. Quality Improvement/Assurance Plan: Health center has an ongoing Quality Improvement/Quality 
Assurance (QI/QA) program that includes clinical services and management, and that maintains the 
confidentiality of patient records.  The QI/QA program must include: 
  a clinical director whose focus of responsibility is to support the quality 
improvement/assurance program and the provision of high quality patient care;* 
  periodic assessment of the appropriateness of the utilization of services and the quality of 
services provided or proposed to be provided to individuals served by the health center; and 
such assessments shall:* 
o  be conducted by physicians or by other licensed health professionals under the 
supervision of physicians;* 
o  be based on the systematic collection and evaluation of patient records;* and 
o  identify and document the necessity for change in the provision of services by the 
health center and result in the institution of such change, where indicated.* 
(Section 330(k)(3)(C) of the PHS Act and 42 CFR Part 51c.303(c)(1-2)) 
Management and Finance 
9. Key Management Staff: Health center maintains a fully staffed health center management team as 
appropriate for the size and needs of the center.  Prior approval by HRSA of a change in the Project 
Director/Executive Director/CEO position is required.  (Section 330(k)(3)(I) of the PHS Act, 42 CFR 
Part 51c.303(p), and 45 CFR Part 74.25(c)(2),(3)) 
10. Contractual/Affiliation Agreements: Health center exercises appropriate oversight and authority 
over all contracted services, including assuring that any subrecipient(s) meets Health Center program 
requirements.  (Section 330(k)(3)(I)(ii), 42 CFR Part 51c.303(n), (t)), Section 1861(aa)(4) and Section 
1905(l)(2)(B) of the Social Security Act, and 45 CFR Part 74.1(a)(2)) 
continued on next page 
   
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Appendix A: Health Center Program Requirements (Continued)   
11. Collaborative Relationships: Health center makes effort to establish and maintain collaborative 
relationships with other health care providers, including other health centers, in the service area of the 
center.  The health center secures letter(s) of support from existing health centers (section 330 
grantees and FQHC Look-Alikes) in the service area or provides an explanation for why such letter(s) 
of support cannot be obtained.  (Section 330(k)(3)(B) of the PHS Act, 42 CFR Part 51c.303(n), and 
HRSA, Health Center Program Compliance Manual, accessed at 
https://bphc.hrsa.gov/programrequirements/pdf/healthcentercompliancemanual.pdf) 
12. Financial Management and Control Policies: Health center maintains accounting and internal 
control systems appropriate to the size and complexity of the organization reflecting Generally 
Accepted Accounting Principles (GAAP) and separates functions appropriate to organizational size to 
safeguard assets and maintain financial stability.  Health center assures an annual independent 
financial audit is performed in accordance with Federal audit requirements, including submission of a 
corrective action plan addressing all findings, questioned costs, reportable conditions, and material 
weaknesses cited in the Audit Report.  (Section 330(k)(3)(D), Section 330(q) of the PHS Act and 45 CFR 
Parts 74.14, 74.21 and 74.26) 
13. Billing and Collections: Health center has systems in place to maximize collections and 
reimbursement for its costs in providing health services, including written billing, credit and collection 
policies and procedures.  (Section 330(k)(3)(F) and (G) of the PHS Act) 
14. Budget: Health center has developed a budget that reflects the costs of operations, expenses, and 
revenues (including the Federal grant) necessary to accomplish the service delivery plan, including the 
number of patients to be served.  (Section 330(k)(3)(D), Section 330(k)(3)(I)(i), and 45 CFR Part 74.25) 
15. Program Data Reporting Systems: Health center has systems which accurately collect and organize 
data for program reporting and which support management decision making.  (Section 330(k)(3)(I)(ii) 
of the PHS Act and 42 CFR Part 51c.303(j)) 
16. Scope of Project: Health center maintains its funded scope of project (sites, services, service area, 
target population and providers), including any increases based on recent grant awards.  (42 CFR 
Part 51c.107(c)) and 45 CFR Part 74.25) 
continued on next page 
 
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Appendix A: Health Center Program Requirements (Continued) 
Governance 
17. Board Authority: Health center governing board maintains appropriate authority to oversee the 
operations of the center, including: 
  holding monthly meetings; 
  approval of the health center grant application and budget; 
  selection/dismissal and performance evaluation of the health center CEO; 
  selection of services to be provided and the health center hours of operations; 
  measuring and evaluating the organizations progress in meeting its annual and long-term 
programmatic and financial goals and developing plans for the long-range viability of the 
organization by engaging in strategic planning, ongoing review of the organizations mission 
and bylaws, evaluating patient satisfaction, and monitoring organizational assets and 
performance;* and 
  establishment of general policies for the health center. 
(Section 330(k)(3)(H) of the PHS Act and 42 CFR Part 51c.304) 
Note: In the case of public centers (also referred to as public entities) with co-applicant governing 
boards, the public center is permitted to retain authority for establishing general policies (fiscal and 
personnel policies) for the health center (Section 330(k)(3)(H) of the PHS Act and 42 CFR 
51c.304(d)(3)(iii) and (iv)). 
18. Board Composition: The health center governing board is composed of individuals, a majority of 
whom are being served by the center and, this majority as a group, represent the individuals being 
served by the center in terms of demographic factors such as race, ethnicity, and sex.  Specifically: 
  Governing board has at least 9 but no more than 25 members, as appropriate for the 
complexity of the organization.* 
  The remaining non-consumer members of the board shall be representative of the 
community in which the center's service area is located and shall be selected for their 
expertise in community affairs, local government, finance and banking, legal affairs, trade 
unions, and other commercial and industrial concerns, or social service agencies within the 
community.* 
  No more than one half (50%) of the non-consumer board members may derive more than 
10% of their annual income from the health care industry.* 
Note: Upon a showing of good cause the Secretary may waive, for the length of the project period, 
the patient majority requirement in the case of a health center that receives a grant pursuant to 
subsection (g), (h), (i), or (p) of the PHS Act.  (Section 330(k)(3)(H) of the PHS Act and 42 CFR 
Part 51c.304) 
continued on next page 
 
   
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Appendix A: Health Center Program Requirements (Continued) 
   
19. Conflict of Interest Policy: Health center bylaws or written corporate board approved policy include 
provisions that prohibit conflict 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.  The Chief Executive may serve only as a non-voting ex-officio 
member of the board.* 
(45 CFR Part 74.42 and 42 CFR Part 51c.304(b)) 
Source: Health Resources & Services Administration, Health Center Program Requirements, 2014. 
Note: Portions of program requirements notated by an asterisk (*) indicate regulatory requirements that are recommended but 
not required for health centers that receive funds solely for Health Care for the Homeless (section 330(h)) and/or the Public 
Housing Primary Care (section 330(i)) Programs. 
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APPENDIX B: Risk Management Interventions 
Exhibit 5: There are a variety of ways in which HRSA can intervene to 
help health centers reduce their risks.* 
 
Source: OIG summary of HRSA documents, 2017. 
* HRSA is not required to use all available interventions on health centers with elevated risk.  Most 
interventions have specific criteria that describe when HRSA should use them.   
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APPENDIX C: Detailed Methodology 
Data Sources and Analysis 
This study is based on our analysis of Health Center Program data for 
FY 2014 SAC grants that we requested from HRSAs Electronic Handbook, an 
electronic repository for data related to HRSAs funding and management 
of health centers.  This data spanned nearly 2.5 years, from the SAC grant 
applications in late 2013 through the end of 2015.   
FY 2014 SAC grant applicants.  To identify health centers that competed for 
FY 2014 SAC grants, we requested data on SAC grant applicants.  The data 
included health centers demographic information, the service area(s) for 
which health centers applied, and HRSAs funding decisions.   
In total, we gathered data on 331 health centers that competed for 
FY 2014 SAC grants, including 309 health centers that were awarded SAC 
grants and 22 that were not.   
Risk assessment.  To identify how and when HRSA assessed risks at health 
centers, we used the financial assessments that HRSA completed for each of 
the 309 health centers to which it awarded a FY 2014 SAC grant.  We 
entered the data from each financial assessment into a database for 
analysis. 
To determine when HRSA should have assessed risks at health centers, we 
reviewed relevant policy documents, including the Departments Awarding 
Agency Grants Administration Manual and related HRSA policies. 
Health centers that should not have received grants.  To identify the 
number of health centers that should not have received FY 2014 SAC grants, 
we counted the number of health centers that were awarded 1-year grants 
for 3 years in a rowFYs 2012, 2013, and 2014. 
Health center risks.  To identify the number of health centers with elevated 
risks, we assigned each health center to one of our designated risk 
categories.  See Exhibit 6 on the next page for a description of the criteria 
we used for each category.  
 
 
 
 
 
 
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Exhibit 6: OIG used HRSAs criteria to categorize health centers as having nominal 
risks, elevated programmatic risks, elevated financial risks, or both types of 
elevated risks. 
Elevated Programmatic 
Nominal Risks Elevated Financial Risks
Risks
Health centers that HRSA: Health centers that HRSA  Health centers that HRSA 
 determined to be out  determined to: assigned a financial risk 
of compliance with   be out of compliance  category of:
fewer than five  with five or more   moderate risk,
program requirements,  program requirements,   high risk, or
 determined not to  or  extreme risk
have any program   have at least one 
conditions that  program condition that 
reached the final stage  reached the final stage 
of the program  of the program 
condition resolution  condition resolution 
process, and process
 assigned a financial risk 
category of minimal 
risk
 
Source: OIG summary of HRSA policy documents, 2017. 
 
To determine the number of health centers with elevated programmatic 
risks that received FY 2014 SAC grants, we used the data we requested from 
HRSA related to program conditions.  We used this data to identify health 
centers thatat the time HRSA reviewed their respective SAC grant 
applicationswere either (1) out of compliance with five or more program 
requirements or (2) had at least one program condition that reached the 
final stage of the program condition resolution process.  We used program 
conditions as a marker for program noncompliance because HRSA uses 
them in a similar way in the Electronic Handbook. 
We included program conditions in our determination of health centers with 
elevated programmatic risks if any of the following were applicable: 
1.  The condition had been placed before the SAC grant application 
was due to HRSA and had not been removed from the grant before 
HRSA finished its review of the application. 
2.  The condition had been placed while HRSA was reviewing the SAC 
grant application and had not been removed from the grant before 
HRSA finished its review. 
3.  The condition had been placed as a result of HRSAs review of the 
SAC grant application, typically after HRSA had finished its review of 
the application.  
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To determine the number of health centers with elevated financial risks that 
received FY 2014 SAC grants, we used the information recorded on the 
financial assessment that HRSA conducted prior to or during the review 
period for applications for FY 2014 SAC grants.  We used this data to 
identify health centers that HSRA had designated as having a financial risk 
level above minimal.  We considered a health center to have elevated 
financial risks if HRSA had assigned it a financial risk level of moderate, high, 
or extreme. 
We considered a health center to have nominal risks if HRSA had placed 
fewer than five program conditions on the health centers grant or assigned 
it a financial risk level of minimal. 
Risk management interventions.  To identify the ways in which HRSA 
intervened to help health centers reduce their elevated risks, we identified 
each type of intervention that HRSA used from the time of the FY 2014 SAC 
grant application through the end of 2015.  We then counted the number of 
risk management interventions that HRSA used for these health centers. 
To determine when HRSA should have used certain risk management 
interventions, we reviewed relevant policy documents. 
To identify the number of health centers with elevated risks for which HRSA 
did not use an intervention when it should have, we first identified the 
health centers that met the criteria for each intervention.  For our analysis of 
whether HRSA limited grants to 1 year when it should have, we identified 
the number of health centers that had five or more program conditions, had 
at least one condition in the final stage of the condition resolution process, 
or were at risk for bankruptcy.  We then counted the number of health 
centers that awarded 3-year grants despite meeting the criteria for being 
limited to 1-year grants.  For our analysis of whether HRSA assigned 
drawdown restrictions and conducted operational site visits when it should 
have, we identified health centers to which HRSA had awarded 1-year 
grants.  We then counted the number of these health centers for which 
HRSA did not use each intervention.   
Health centers that reduced their risks.  To determine the number of health 
centers that reduced their elevated programmatic risks before receiving an 
additional year of funding, we used the number of program conditions 
placed on each health centers grant at the start of the health centers 
FY 2015 funding.  If a health center had fewer than five conditions on its 
grant at the start of its next year of funding, we classified it as having 
reduced its programmatic risks. 
To determine the number of health centers that reduced their elevated 
financial risks before receiving an additional year of funding, we used the 
information recorded on each health centers most recent financial 
assessment available at the start of the health centers FY 2015 funding.  We 
identified the level of financial risk that HRSA had assigned to each health 
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OEI-05-14-00470   
center on the basis of its annual financial status review.  If a health center 
was assigned to the minimal-risk level, we classified it as having reduced its 
financial risks. 
Amounts awarded to health centers.  To calculate the amounts awarded to 
health centers, we summed the FY 2014 SAC grant award amounts recorded 
in HRSAs Electronic Handbook. 
Patients served by health centers.  To calculate the number of patients 
served by health centers, we summed the number of patients recorded for 
each health center in HRSAs Uniform Data System (UDS).  The UDS is a data 
repository for health center performance data, including number of patients 
served. 
 
   
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APPENDIX D: Frequency of Noncompliance 
Among Health Centers With Elevated 
Programmatic Risks 
Exhibit 7: Health centers with elevated programmatic risks were frequently out of 
compliance with program requirements related to patient care. 
We based this exhibit on our analysis of the 59 health centers with elevated programmatic 
risk.  Each of these health centers was out of compliance with at least five program 
requirements. 
Number of health centers with 
one or more program conditions 
Program Requirement related to the requirement
Required and Additional Services* 41 41
Staffing Requirement* 37 37
Quality Improvement/Assurance Plan* 35 35
Board Authority 34 34
Sliding Fee Discounts* 32 32
Financial Management and Control Policies 28 28
Board Composition 2255
Budget 2244
Hospital Admit Privileges & Continuum of Care* 2233
Contractual/Affiliation Agreements 2222
Billing and Collections 21 21
Scope of Project 21 21
Program Data Reporting Systems 17 17
Key Management Staff 14 14
Conflict of Interest Policy 11 11
Accessible Hours of Operation/Locations* 8 8
After Hours Coverage* 8 8
Needs Assessment 7 7
Collaborative Relationships 1 1
 
 Source: OIG analysis of FY 2014 program conditions data, 2017. 
* Program requirement related to patient care.   
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APPENDIX E: Descriptive Information for 
Health Centers With Elevated Programmatic 
or Financial Risks 
Exhibit 8: Most of the 59 health centers with elevated programmatic 
risk had 5 program conditions, with the number of health centers 
declining as the number of program conditions increased. 
14
13
12
6
4 4
2 2
0 0 1 1
5 6 7 8 9 10 11 12 13 14 15 16
Number of program condtions
Source: OIG analysis of health centers with elevated programmatic risks, 2017. 
 
Exhibit 9: One-half of the 22 health centers with elevated financial 
risk were assessed as either high risk or extreme risk on their 
financial assessments. 
11
10
1
Moderate  High  Extreme 
risk risk risk
 
Source: OIG analysis of health centers with elevated financial risks, 2017. 
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APPENDIX F: Risk Management Interventions 
HRSA Did Not Use When It Could Have 
Exhibit 10: HRSA did not always limit grants to 1 year, use drawdown 
restrictions, or conduct operational site visits when health centers 
with elevated risks met the criteria for these interventions. 
 
Source: OIG analysis of health centers with elevated risks, 2017. 
 
HRSA awarded 3-year grants when it should have awarded only 1-year 
grants for 50 percent of health centers that met the criteria for having their 
grants limited to 1 year.  In FY 2014, 64 health centers met the criteria for 
having their grants limited to 1 year because they had five or more program 
conditions, had one or more program conditions in the final phase of the 
condition resolution process, or were at risk for bankruptcy.  However, HRSA 
limited grants to 1 year for only 32 of these 64 health centers.  By not 
limiting grants to 1-year periods when it should have, HRSA may have 
increased the amount of Federal funds subject to risk by not limiting the 
number of years when health centers would have access to funds. 
Additionally, after awarding 1-year grants to these 32 health centers, HRSA 
did not always use 2 other interventions when it should have.  HRSAs 
FY 2014 criteria stated that a health center that is limited to a 1-year grant 
should receive an operational site visit within that year and be assigned 
a drawdown restriction.  However, HRSA did not conduct operational site 
visits when it should have for 14 of these 32 health centers or assign 
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OEI-05-14-00470   
drawdown restrictions to 3 of the 32 health centers.  Two of the 32 health 
centers received neither an operational site visit nor a drawdown restriction. 
   
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APPENDIX G: Agency Comments 
 
 
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GLOSSARY 
1-year grant: a grant with a shortened term; results in more frequent 
operational site visits and grant application reviews. 
Administrative condition resolution process: a process by which health 
centers address administrative issues of concern by specified deadlines.  
Corrective action plan: requires health centers to address audit findings. 
Drawdown restriction: requires health centers to obtain HRSA approval 
before accessing grant funds. 
Financial assessment: a document in which HRSA summarizes the financial 
stability of each health center after reviewing financial statements, tax 
records, independent audit findings, and other records annually. 
Financial risk level: describes the level of risk posed to Federal funds by a 
health center (i.e., minimal, moderate, high, or extreme), as determined by 
HRSAs financial assessment of the health center. 
Health centers with elevated risks: health centers that had elevated 
programmatic risks, elevated financial risks, or both types of elevated risks. 
Elevated financial risk: describes the situation when a health center poses 
more than a minimal risk to Federal funds. 
Elevated programmatic risk: describes the situation when a health center 
has five or more program conditions or at least one condition approaching 
the final deadline of the program condition resolution process.  
Noncompetitive continuation grant: a grant for the second or third year of 
a 3-year grant; a health center with a 3-year grant typically receives 
a noncompetitive continuation grant, presuming a satisfactory 
noncompetitive review by HRSA. 
Noncompliance: when a health center is unable to meet the conditions of 
a program requirement. 
Operational site visit: gathers comprehensive on the ground information 
on a health centers performance and compliance. 
Program condition: serves as an official notification to a health center that it 
is not compliant with a program requirement and states the terms the 
health center must meet to remain eligible for its SAC grant; most health 
centers have at least one program condition. 
Program condition resolution process (i.e., HRSAs Progressive Action 
Process): assigns a series of deadlines by which a health center must report 
its progress in correcting program conditions; failure to correct conditions 
by final deadline results in forfeiture of grants.  
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OEI-05-14-00470   
Service area: an area in which a health center provides health services; 
typically a geographic area, but can also be demographic groups such as 
individuals experiencing homelessness, migratory and seasonal agricultural 
workers, or residents of public housing. 
Service Area Competition (SAC) grants: grants that support the operation 
of health centers; open for competition in a service area when the existing 
health center completes the terms of its previous SAC grant or is otherwise 
unable to continue operating in the service area. 
Special grant review: examines systemic issues at a health center. 
Technical assistance: communication between HRSA and health centers 
staff through phone or email; can include both general and targeted 
information. 
 
   
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ACKNOWLEDGMENTS 
Lisa Minich served as the team leader for this study, and Hilary Slover served 
as the lead analyst.  Others in the Office of Evaluation and Inspections who 
conducted the study include Keisha Keith, Kayla Phelps, Megan Shade, and 
Liz Weiner.  Office of Evaluation and Inspections staff who provided support 
include Althea Hosein, Seta Hovagimian, Christine Moritz, Jodi Nudelman, 
and Melicia Seay. 
This report was prepared under the direction of Thomas Komaniecki, 
Regional Inspector General for Evaluation and Inspections in the Chicago 
regional office, and Kelly Waldhoff and Laura Kordish, Deputy Regional 
Inspectors General.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For additional information concerning this report or to obtain copies, 
contact the Office of Public Affairs at Public.Affairs@oig.hhs.gov.  
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OEI-05-14-00470   
ABOUT THE OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public 
Law 95-452, as amended, is to protect the integrity of the Department of 
Health and Human Services (HHS) programs, as well as the health and 
welfare of beneficiaries served by those programs.  This statutory mission is 
carried out through a nationwide network of audits, investigations, and 
inspections conducted by the following operating components: 
Office of Audit  The Office of Audit Services (OAS) provides auditing services for HHS, either 
by conducting audits with its own audit resources or by overseeing audit 
Services 
work done by others.  Audits examine the performance of HHS programs 
and/or its grantees and contractors in carrying out their respective 
responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, 
abuse, and mismanagement and promote economy and efficiency 
throughout HHS. 
Office of Evaluation  The Office of Evaluation and Inspections (OEI) conducts national evaluations 
to provide HHS, Congress, and the public with timely, useful, and reliable 
and Inspections 
information on significant issues.  These evaluations focus on preventing 
fraud, waste, or abuse and promoting economy, efficiency, and 
effectiveness of departmental programs.  To promote impact, OEI reports 
also present practical recommendations for improving program operations.   
Office of  The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of fraud and misconduct related to HHS programs, 
Investigations 
operations, and beneficiaries.  With investigators working in all 50 States 
and the District of Columbia, OI utilizes its resources by actively 
coordinating with the Department of Justice and other Federal, State, and 
local law enforcement authorities.  The investigative efforts of OI often lead 
to criminal convictions, administrative sanctions, and/or civil monetary 
penalties. 
Office of Counsel to  The Office of Counsel to the Inspector General (OCIG) provides general 
legal services to OIG, rendering advice and opinions on HHS programs and 
the Inspector 
operations and providing all legal support for OIGs internal operations.  
General 
OCIG represents OIG in all civil and administrative fraud and abuse cases 
involving HHS programs, including False Claims Act, program exclusion, and 
civil monetary penalty cases.  In connection with these cases, OCIG also 
negotiates and monitors corporate integrity agreements.  OCIG renders 
advisory opinions, issues compliance program guidance, publishes fraud 
alerts, and provides other guidance to the health care industry concerning 
the anti-kickback statute and other OIG enforcement authorities. 
   
 
ENDNOTES 
1 HRSA, 2016 Health Center Program Grantee Data, Uniform Data System.  Accessed at 
https://bphc.hrsa.gov/uds/datacenter.aspx on August 15, 2017.  
2 HRSA, Health Center Program Fact Sheet.  Accessed at https://www.bphc.hrsa.gov/about/healthcenterfactsheet.pdf 
on August 15, 2017. 
3 42 U.S.C.  254b, 42 CFR  51c, 45 CFR Part 75. 
4 42 U.S.C.  254b, 42 CFR  51c, 42 CFR  56.20156.604, and 45 CFR Part 75. 
5 42 U.S.C.  254b, 42 CFR  51c; HRSA, Program Information Notice 2008-01: Defining Scope of Project and Policy for 
Requesting Changes, December 2007. 
6 45 CFR  74.14; see also 45 CFR  75.205 (effective December 26, 2014). 
7 Awarding Agency Grants Administration Manual (AAGAM), ch. 2.01.101-3. 
8 GAO, Improved Oversight Needed to Ensure Grantee Compliance with Requirements (GAO-12-546), May 2012. 
9 GAO, Action Taken to Train and Oversee Grantee Monitoring Staff, but Certain Guidance Could Be Improved 
(GAO-14-800), September 2014. 
10 OIG, Use of the Departmental Alert List by HRSA (OEI-02-03-00011), May 2006. 
11 OIG, HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110), 
September 2015. 
12 Eleven of the 22 health centers with financial problems and 8 of the 59 health centers with programmatic problems 
were not able to reduce their problems before HRSA awarded them additional years of funding.  One of these health 
centers had both types of problems and was not able to reduce either type.