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A REVIEW OF COMMUNITY HEALTH CENTERS:

ISSUES AND OPPORTUNITIES

HEARING

BEFORE THE

SUBCOMMITTEE ON

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

MAY 25, 2005

Serial No. 109–31

Printed for the use of the Committee on Energy and Commerce

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

COMMITTEE ON ENERGY AND COMMERCE

JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas

MICHAEL BILIRAKIS, Florida

Vice Chairman

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

CHARLIE NORWOOD, Georgia

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi, Vice Chairman

VITO FOSSELLA, New York

ROY BLUNT, Missouri

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

C.L. ‘‘BUTCH’’ OTTER, Idaho

SUE MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

JOHN D. DINGELL, Michigan

Ranking Member

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

TOM ALLEN, Maine

JIM DAVIS, Florida

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

BUD ALBRIGHT, Staff Director

DAVID CAVICKE, Deputy Staff Director and General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

ED WHITFIELD, Kentucky, Chairman

CLIFF STEARNS, Florida

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

CHARLES F. BASS, New Hampshire

GREG WALDEN, Oregon

MIKE FERGUSON, New Jersey

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

JOE BARTON, Texas,

(Ex Officio)

BART STUPAK, Michigan

Ranking Member

DIANA DEGETTE, Colorado

JAN SCHAKOWSKY, Illinois

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

HENRY A. WAXMAN, California

JOHN D. DINGELL, Michigan,

(Ex Officio)

(II)

C O N T E N T S

Page

Testimony of:

Duke, Elizabeth M., Administrator, Health Resources and Services Administration, U.S. Department of Health and Human Services ............... 13

Goetcheus, A. Janelle, Medical Director, Unity Health Care ....................... 54

Hawkins, Daniel R., Jr., Vice-President, National Association of Community Health Centers ...................................................................................... 44

Manifold, Roderick V., Executive Director, Central Virginia Health Services, Inc .......................................................................................................... 61

Shi, Leiyu .......................................................................................................... 58

Sibilsky, Kim, Executive Director, Michigan Primary Care Association ..... 40

Smith, Dennis, Director, Center for Medicaid and State Operations, Centers for Medicare and Medicaid Services, U.S. Department of Health

and Human Services ..................................................................................... 18

Additional material submitted for the record:

Duke, Elizabeth M., Administrator, Health Resources and Services Administration, U.S. Department of Health and Human Services:

Letter dated August 17, 2005, to Hon. Tammy Baldwin, enclosing

response for the record .......................................................................... 124

Letter dated August 17, 2005, to Hon. John D. Dingell, enclosing

response for the record .......................................................................... 121

Smith, Dennis, Director, Center for Medicaid and State Operations, Centers for Medicare and Medicaid Services, U.S. Department of Health

and Human Services, letter dated September 16, 2005, enclosing response for the record ..................................................................................... 127

(III)

(1)

A REVIEW OF COMMUNITY HEALTH CENTERS:

ISSUES AND OPPORTUNITIES

WEDNESDAY, MAY 25, 2005

HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, Washington, DC.

The subcommittee met, pursuant to notice, at 2:03 p.m., in room

2322 of the Rayburn House Office Building, Hon. Ed Whitfield

(chairman) presiding.

Members present: Representatives Whitfield, Stearns, Bass, Walden, Ferguson, Burgess, Blackburn, Barton (ex officio), Stupak, Inslee, Baldwin, and Waxman.

Also present: Representative Green.

Staff present: Anthony Cooke, majority counsel; Mark Paoletta,

chief counsel; Chad Grant, legislative clerk; Jeanne Haggerty, majority counsel; Edith Hollman, minority counsel; and Voncille

Hines, staff assistant.

Mr. WHITFIELD. At this time, I would like to call this hearing to

order.

As you know, this is the Energy and Commerce Committee’s

Subcommittee on Oversight and Investigations, and today’s hearing

is entitled: ‘‘A Review of Community Health Centers.’’ And I certainly want to thank all of those who will be participating today

as witnesses.

And at this point, I will recognize myself for an opening statement.

We convene this afternoon to review community health centers.

I look forward to today’s hearing with particular interest, because

I hope to bring, and I think this Subcommittee hopes to bring, national attention to the opportunities of this program for improving

the lives and health of many Americans while at the same time

bringing focus to the important role primary preventive health care

can play in controlling health care costs.

To meet the promises we have made through the Medicaid and

Medicare programs to provide health care we must always seek

ways to use the taxpayers’ money wisely and promoting preventing

medicine for our most needy citizens is just one such opportunity.

I might also say that the President has recognized the promise

of community health centers by placing them at the center of an

initiative to expand the access and services of these important safety net institutions. Since 2002, this new funding to the community

health center program has added the capacity to serve an additional 3 million Americans.

2

As the committee with principal authority over community

health centers, we should look forward to learning directly from the

health centers with us here today and to find out how this new

money is going to work.

I might also say that when we decided to have this hearing, a

lot of people were quite concerned, because they said, ‘‘Oh, my

gosh. Why do they want to have a hearing about community health

centers? Is it because their Congressional District does not have

enough? Is it because they have got to find money to save in Medicaid? What is the reason?’’ And since I was one of those that

thought up the idea of having it, and I know that Ranking Minority

Member Stupak has had a real interest in this, and I know we

have a witness from Michigan here today who is running a successful community health center, but my only interest was that, one,

I don’t think that enough attention of the Congress has been focused on these health centers. And two, I think that they are providing an invaluable service in providing access to, particularly a

lot of people who are uninsured, and I might add, uninsured people

who do have jobs but whose employer is not paying their health

care for them, and yet these people are paying the taxes so that

people on Medicaid get their health coverage, people on Medicare

get their health coverage, and they are paying their taxes, but yet

they can’t afford to buy their own health coverage for their own

families.

And so we wanted to focus on these community health centers.

What are the opportunities out there for expansion? Are there

some new initiatives that we may think of, new models that we

could look at? You know, there are some unique things about these

health centers. They do have some limited liability prospects under

the Tort Claims Act. They get a discount on prescription drugs. So

there are a lot of great attributes to these community health centers. And the real reason that we are having this hearing is simply

to get a better understanding of how it works. Is there a well

thought through policy on the relationship between the community

health centers and Medicaid, between the community health centers and Medicare? Are there other avenues that we may need to

go?

So I just wanted to mention that as a clarification. I certainly do

not view this as a hearing of a way to save $10 billion next year

for Medicaid. So I just want to set that in the record, set that

straight. And I do look forward to the testimony, and what we

might learn, and, hopefully, can come up with some conclusions

that will help improve health care for everyone in America.

[The prepared statement of Hon. Ed Whitfield follows:]

PREPARED STATEMENT OF HON. ED WHITFIELD, CHAIRMAN, SUBCOMMITTEE ON

OVERSIGHT AND INVESTIGATIONS

We convene this afternoon to review community health centers. I look forward to

today’s hearing with particular interest because I hope to bring national attention

to the opportunities of this program for improving the lives and health of many

Americans while, at the same time, bringing focus to the important role primary,

preventative health care can play in controlling health care costs. To meet the promises we have made through the Medicaid and Medicare programs to provide health

care, we must always seek ways to use the taxpayers’ money wisely—and promoting

preventative medicine for our most needy citizens is just one such opportunity.

3

Today there are over 900 community health centers providing a spectrum of primary health care services through 3600 urban and rural sites located in every state

and territory. According to the Bureau of Primary Healthcare, community health

centers in 2003 treated over 12 million people in medically underserved areas, including 4.8 million uninsured. Indeed, 90% of CHC patients live under 200% of the

federal poverty line. In 2003, these community health centers delivered mammograms to over 200,000 women, gave check-ups and other health services to 1.6 million children and administered over 2.2 million immunizations. The primary

healthcare services given by these community centers also included pre-natal care,

mental health services, blood pressure and cholesterol checks and care of chronic

diseases such as diabetes. I have a community health center in my District and

know the vital role it plays in providing care to my constituents.

Community health centers play a critical role in our nation’s healthcare safety

net. The purpose of our oversight hearing today is to evaluate the effectiveness of

the program in reaching the medically underserved and to listen to ideas that could

build upon the program’s areas of success. One such potential area of success, which

is of particular interest in this time of tightening budgets, is the role of community

health centers in giving the regular, preventative care that both enhances their patients’ daily health but also keeps them out of hospitals and emergency rooms where

the cost of providing care is more expensive. Healthy people naturally utilize fewer

health care services thereby decreasing the burdens on our health care system and

the Medicaid and Medicare programs. As one example, a study in 1980 found that

a set of Medicaid patients, who used community health centers, had a 30% to 65%

lower hospitalization rate and used 12% to 48% less total Medicaid funds than a

similar group of Medicaid patients who did not use such health centers.

The President has also recognized the promise of community health centers by

placing them at the center of an initiative to expand the access and services of these

important safety net institutions. Since 2002, this new funding to the community

health center program has added the capacity to serve an additional 3 million Americans. As the Committee with principal authority over community health centers,

we should look forward to learning directly from the health centers with us here

today how this new money is going to work.

Finally, I would note here that there is surprisingly little recent research on the

issue of whether community health centers create savings to our public health programs such as Medicaid, through their provision of preventative care. As such, I recently asked the Government Accountability Office to study this important connection and I look forward to its report.

I welcome today’s witnesses and appreciate their appearance here. I hope this

hearing will leave us all with a more complete understanding of the community

health center program and ways in which it might better serve the medically underserved of this nation while, at the same time, helping to control overall healthcare

costs.

Mr. WHITFIELD. And with that, I yield back the balance of my

time and recognize the gentleman from Michigan, Mr. Stupak.

Mr. STUPAK. Thank you, Mr. Chairman, and thank you for holding this hearing.

First, I want to welcome Kim Sibilsky, the Executive Director of

the Michigan Primary Health Care Association, who has dedicated

many, many years to making sure that Michigan has one of the

best community health care systems in the country. I look forward

to hearing her testimony today.

Community health centers are one of the few success stories in

the health care field. They provide quality primary care at a fraction of the cost to the uninsured, but also provide care to the insured. Not only are community health centers the epitome of doing

more with less by being incredibly resourceful in using the funding

they receive, but also community health centers lower the costs of

health care overall by keeping people out of the hospital emergency

rooms where the cost of care is much greater. As a result, the community health care program continues to enjoy strong, bipartisan

support.

4

Under both the Clinton and Bush Administrations, Congress has

expanded the budget and the geographic coverage of these centers.

In the most recent dismal health care disparities report of 2004,

which I have placed in the exhibit book, the Department of Health

and Human Services reports ever decreasing quality of care and

less access for most disadvantaged and poor groups except those

who receive care in community health centers.

But community health centers face serious challenges. The

linchpin that keeps these centers financially afloat is the Medicaid

reimbursement. About one-third of their income comes from Medicaid. Along with the base Federal grant and SCHIP, Medicaid is

what allows these centers to care for the uninsured, those who

have limited health care insurance, and those with no place else to

go. Yet Medicaid is under attack. The Energy and Commerce Committee has been ordered to cut Medicaid by $15 billion to $20 billion over 5 years. This cut is equivalent to completely eliminating

Federal funding for Medicaid coverage between 1.8 and 2.5 low-income parents for each of the next 5 years. States simply can not

afford these cuts. Michigan’s high unemployment rate makes Ms.

Sibilsky’s job and that of rural health centers and federally qualified health centers more difficult. This is especially true with Medicaid cuts expected to be between $15 billion to $20 billion.

The fact is that States are already struggling, making cuts, and

impacting the community health centers. When States decide to reduce their Medicaid roles or cut coverage services, the community’s

health centers can’t throw out these people or stop providing care.

The patients still need health care, and the centers are legally obligated to provide it. When States cut Medicaid, the community

health centers are hit with a double whammy: community health

centers lose Medicaid payments for their current patients and community health centers get new patients who are being turned away

from or can’t afford their private providers.

Attached to my statement is an overview of how Michigan community health centers are being hit. Michigan, for example,

stopped paying for dental care for adult Medicaid patients. But

that service is more utilized than any other by patients in the

State’s community health care centers. They have to keep providing it. The poor oral health has serious long-term effects on people’s health, morbidity, and employability. But who will pay for it?

Who also will pay for the health care of those whose employers

can no longer afford it? Many employers are struggling to compete

in the global economy and can no longer offer affordable health insurance to their employees. When employers cut insurance coverage, the burden falls to Medicaid and community health centers.

Twenty-seven percent of the adults on Medicaid in Michigan have

a job. Ms. Sibilsky says it better than I could: ‘‘When you restrict

enrollment in public programs, the cost to providing care does not

disappear and the savings are not absolute. People will eventually

receive the care they need. It may not be in the best and most costeffective location at a time when progression of illness can be headed off and the most expensive care prevented, but in the end, anyone can walk into a community hospital and receive some level of

care.’’ Michigan centers are already confronting higher co-payments, longer waiting periods for new patients, reduction in servVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 20751.TXT HCOM1 PsN: HCOM1
5

ices, and losses in the hundreds of thousands of dollars for ineligible oral health care. Community health centers face still more

challenges. Who is going to provide the money for capital expenditures, something the Federal Government doesn’t pay for? A number of these centers are becoming very adept at private fundraising, but more and more often they are competing with other

worthy causes, which are losing their funding because of shortsighted political decisions made here in Washington. The centers

need computers, equipment, expanded facilities, and staff.

The President has a commendable goal of creating many new

health centers, but we can’t improve health care if the tradeoff is

letting the existing centers stay barely alive. In addition, the President’s budget slashes funding from $300 million this year to $11

million next year for the Health Professions Program, which specifically provides Federal funding to bring physicians and other

health care providers to under-served populations, the exact same

populations served by community health centers.

It is distressing, Mr. Chairman, to see a program that is so successful, so efficient, so economical, and so praised face problems of

this size and complexity. I hope this hearing today will provide

more than a feel-good experience for the members and we begin to

discuss how arbitrary budget cuts in Washington directly affect our

ability to provide quality health care and coverage to those most

in need.

Mr. Chairman, I yield back the balance of my time.

Mr. WHITFIELD. Thank you, Mr. Stupak.

At this time, I will recognize the gentleman from Oregon, Mr.

Walden, for his opening statement.

Mr. WALDEN. Well, thank you very much, Mr. Chairman. I appreciate your holding this hearing. I have been a big advocate of

the centers. I spent 5 years on a community hospital board, chaired

and worked on committees in the Oregon legislature and enacted

the Oregon Health Plan in an effort to better serve and better utilize Medicaid funding to try and do preventive work as well.

I hadn’t planned to get into the argument over Medicaid funding,

but just for the record, I believe the target that we have to achieve

on all areas within our jurisdiction in this committee is something

to the order of $10 billion and not $15 billion. And we do have

other ways we can generate revenues, too, from things like spectrum auction.

I would also point out that we did support, as I recall on the floor

and in the budget resolution that has been passed, the Medicaid

Commission is due to report on how we can achieve greater efficiencies in Medicaid. And as an employer, I certainly sympathize

with the cost of health care. My own insurance policies in my company, premiums went up close to 20 percent this year. So there are

a lot of conflicting pressures on health care delivery, and it is our

opportunity and challenge to figure out how best to take care of

people who need health care in the most efficient and affordable

way possible. And it is not through the emergency room door. It is

through clinics like this.

And I want to brag a bit in terms of what has happened in my

home State of Oregon, where we have 23 community health centers

which support over 125 sites in urban, rural, and frontier areas.

6

Now I want to talk about a frontier area. My District is the second biggest in the Nation other than the five single-member States.

And let us cut to the chase and go right on out to Wheeler County

where there are 1,713 square miles. That is about the same as the

population in the county. Okay. That is the size an area as big as

the State of Rhode Island. And located there is the Asher Clinic,

the sole life-saving source for health care. The two surrounding

counties of Wheeler County, Sherman and Gilliam, none of these

three counties has a hospital. They have clinics. They have physician assistants. One, I guess, now has a doctor but for many years

didn’t. This clinic out in Wheeler County faced some difficulty and

initial rejection to be able to get qualified as a Federal health center and was facing a shortfall of $80,000 a year. That is a huge

sum in a community like that, a county of 1,700 people or thereabouts. So they contacted me and my staff in May 2003, and we

helped them work through some of the paperwork and all, and I

really want to commend Elizabeth Duke and her folks for their

work on this effort as well, because they were, in 2004, able to receive a health center grant for $229,500, and you would have

thought they won the $100 million lottery. And I went out to

Wheeler County not long after that to help them celebrate a bit.

And you know, we really are talking about life saving, a source of

health care. Because you can drive, in parts of my District, 100

miles in any direction before you hit the first stop light. And if you

have a crisis in health care, if clinics like this don’t exist, you are

out of luck unless you wait for a helicopter to come pick you up and

transport you somewhere, which is the alternative, or you race in

a car somewhere to try and find health care.

And so I am a firm believer in these federally qualified clinics.

I believe they can be, and are, a very productive way to help people

who don’t have health insurance get care before it is an emergency

and improve their own qualities of life.

So Mr. Chairman, I appreciate your oversight on this. We are

spending a lot of money in this area. It is our obligation to look at

what is working and what is not, as we do in this subcommittee

and as you do very aggressively as our chairman. And I think it

is good to point out once in a while where things are working and

use, as an example, these clinics, and if there are problems, let us

figure out where things work better and apply those standards

elsewhere. But we have got big challenges in this Congress when

it comes to the delivery of health care services. And if you add up

the promises that have been made from Social Security, Medicare,

and Medicaid, we bankrupt the next generation if we don’t get it

right now.

And so hopefully, as we look at issues involving, for example, the

work this subcommittee has done on AWP versus ASP on how we

pay for drugs versus what it costs to actually get them. There are

some false economies there and actually some perverse incentives

to drive up costs of pharmaceuticals to Medicaid and robs money,

I believe, from actually being able to expand and deliver service.

It could be as much as $15 billion over 10 years. These are issues

that we have looked at in this committee and need to look at closely as we try to reform Medicaid to be able to deliver the most service most efficiently to the most number of people.

7

And so I welcome this hearing, and I appreciate your and our

staff’s work in this area.

And I yield back the remaining 31⁄2 seconds.

Mr. WHITFIELD. Thank you, Mr. Walden, for being so generous

with your time.

And Mr. Waxman, you are recognized for your opening statement.

Mr. WAXMAN. Thank you very much, Mr. Chairman.

Well, it is clear from what I have heard so far that there is

strong, bipartisan support for the community health centers. It is

one of the real successes of our Federal health policy.

But I want to make one point that Mr. Stupak indicated. We will

be doing a real disservice to the community health centers if we

make some of the cuts in Medicaid that are being proposed. It may

not be the $15 billion or $20 billion, although we still don’t know

if somebody might just come up with something more than $10 billion, but $10 billion is not a small amount of money. It is the Medicaid program that is the lifeblood of these centers. If we had not

established the federally Qualified Health Centers Program in

Medicaid in 1989 guaranteeing community health centers that they

would be covered providers in the Medicaid program and reimbursed at a fair level that recognized their costs, many centers just

would not be viable. And it is hard to praise those centers when

they are not around anymore. It is a crucial source of payment, and

they are not going to be around anymore if we make some of these

cuts in Medicaid.

If we cut the Medicaid program and we take away the guarantee

of coverage for eligible people, we will be damaging the community

health center program just as directly as if we slashed its funding.

If we accede to State calls for flexibility and take away the payment and coverage guarantees we have given to FQHCs, then it is

the viability of the community health centers that will be directly

threatened.

It is easy to voice support for these centers but miss the crucial

link to a robust Medicaid program. Certainly the administration, in

my view, has been hypocritical in touting their support for community health centers while they work for constant changes in Medicaid, which would damage these institutions beyond repair.

In addition to Medicaid, community health centers see the uninsured. Well, we will have many more uninsured if there is not a

Medicaid eligibility for them to get that coverage. We will have

more uninsured, less payment, and the community health centers,

and other providers, will not be able to absorb those costs.

I thank you, Mr. Chairman, for holding this hearing. Let us keep

all of these things in mind, because there are a lot of times we

don’t want the unforeseen consequences to occur when we adopt

legislation, but let us take the time in this Oversight Committee

to foresee what would happen if we make short-term cuts in Medicaid to deal with the budget and then have very foreseen consequences that could be so harmful to a program that has been

working well.

Mr. WHITFIELD. Mr. Ferguson, do you have an opening statement? And while you are preparing, I would like to recognize and

welcome Mr. Green of Texas, who is a member of the Energy and

8

Commerce Committee. He does not happen to be a member of this

subcommittee, but we know of his intense interest in community

health centers and welcome him here today. It is the policy of the

subcommittee that if you are not a member of the subcommittee,

you can not make an opening statement, but you can certainly ask

questions and make comments during that period. And I know you

are excited about the number of health centers in Texas, and I was

going to be really astute and give you the number, but now I can’t

seem to find it, but I think there are something like 35 grantees,

or so, in Texas.

But at this time, I recognize Mr. Ferguson for his 5-minute opening statement.

Mr. FERGUSON. Thank you, Mr. Chairman.

I am sorry I was walking in a couple of minutes late.

I want to thank you for holding this hearing about an initiative

that has received great support from the President and the administration and is currently providing care to millions of poor and

under-served Americans in our country today. In a short time, community health centers have emerged as viable sources of health

care for the poor of our Nation. In fact, 90 percent of people that

have used community health centers are people under 200 percent

of the Federal poverty level. Community health centers in 2003

treated over 12 million people in medically under-served areas, including 4.8 million uninsured patients. That same year, 1.6 million

children received check-ups or other health services from CHCs

and they administered over 2.2 million immunizations. Pre-natal

care, mental health services, blood pressure, mammograms, and

cholesterol checks and care of chronic diseases, such as diabetes, all

take place at community health centers every day.

All of these statistics are impressive, but we can do more. I am

thankful that we are going to have this opportunity today to delve

into what we can do to help make community health centers serve

the community better. For instance, is it possible to open up the

grant process to faith-based groups to help provide these health

services to the poor and under-served? Today, for instance, there

are over 500 Catholic-sponsored health clinics for the poor, serving

the exact same patient population as community health centers,

but they are not eligible for Federal funding.

I thank the chairman for holding this important hearing. I look

forward to hearing from our expert panel. And I welcome their suggestions.

Thank you, Mr. Chairman. I yield back.

Mr. WHITFIELD. Thank you, Mr. Ferguson.

At this time, I recognize Ms. Baldwin for her opening statement.

Ms. BALDWIN. Thank you, Mr. Chairman.

I want to commend you for holding today’s hearing on community health centers.

Like my colleagues, I, too, am a strong supporter of community

health centers and their mission. I represent a District with two

federally qualified health centers, and I like to visit them frequently. I am constantly impressed with the excellent job that they

do with extremely limited resources. I think each of us knows the

large role that community health centers play in responding to the

health needs of our uninsured, our under-insured, and low-income

9

constituents and other targeted communities within our constituency.

But the community health centers are also the first to talk with

me when I visit about the unmet needs that exist in our community that they are simply not able to meet, the people that they

must turn away on a daily, weekly, and monthly basis. As just one

example, because of the fact that no dentist in the largest county

in the District that I represent has accepted new Medicaid patients

in over 2 years, the Madison Community Health Center has tried

very hard to fill some of that role. They have just expanded and

moved into a new building with dental suites. They can currently

serve over 12,000 individuals per year who need dental care, but

it is estimated that 63,000 more people in that one county need

dental care but don’t receive it.

There are two closing points that I want to make. Even acknowledging what a huge fan I am of community health centers and the

incredible job that they do in our community, I just want to say

that they are clearly a response to the crisis of uninsurance in our

country, but in my view, not the solution. And I remain committed

to the belief that this Congress ought to declare health care to be

a right and not a privilege, that we ought to ultimately tackle the

challenge of universal health care.

Also, I want to underscore what several other colleagues have

said in their opening statements about my strong concerns on how

community health centers will be impacted by the impending cuts

anticipated in the Medicaid program. Obviously, we all agree that

community health centers’ role and mission are vital, and at a time

when the situation is so dire, we need them to have the capacity

to respond to as many in need as possible.

With that, Mr. Chairman, I yield back my remaining time.

Mr. WHITFIELD. Thank you, Ms. Baldwin.

At this time, I will recognize the gentleman from Texas, Dr. Burgess, for his opening statement.

Mr. BURGESS. Thank you, Mr. Chairman.

The District that I represent actually has just crossed the finish

line with its first community health center. My District is truly a

cross-section of the country. Within its boundaries, you will find a

mix of rich, poor, middle income, rural, suburban, urban, black,

Anglo, and Hispanic citizens. You will also see sharp differences in

the health needs of different communities and how they are impacted by the very health disparities.

For instance, in one part of my District, you will see some of the

highest infant mortality rates anywhere in the country, and indeed,

higher than some areas in parts of the world that we feel are less

developed. In other parts of my District, the population is healthier

but without ready access to health insurance. A new community

health center in Denton, Texas is beginning to make a difference

by giving community residents access to a physician at free or reduced cost. This will not only improve their short-term health, but

will help with the creation of a medical home.

I am also actively seeking out stakeholders in the city of Fort

Worth to look at standing up a clinic in Southeast Fort Worth to

meet the needs of this community. This area of Fort Worth, having

yet to really catch the wave of economic development that has benVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 20751.TXT HCOM1 PsN: HCOM1
10

efited other areas of the city, is crying out for the type of assistance

that a community health center can provide.

As we proceed from this hearing, I hope to be able to tap some

of the expertise here in the room and assist my constituents that

look to establish a community health center back home.

Thank you, Mr. Chairman, for calling this hearing, and I will

yield back.

Mr. WHITFIELD. I thank you, Dr. Burgess.

At this time, I recognize the gentleman from New Hampshire for

his opening statement.

Mr. BASS. Thank you, Mr. Chairman.

This is an interesting hearing. Community health care centers

are a very important part of almost every Congressional District

and every State in the country. I have the benefit of having at least

three or four in my District. I believe there are seven altogether in

the State of New Hampshire. And what they do, as may have been

mentioned before, is provide a bridge for adequate health care between those who qualify for Medicaid and those that buy a health

insurance policy. I note that the budget for community health care

centers has gone up almost double in the last 4 or 5 years because

we recognize, as does the administration, this is an important part

of the whole health care picture in this country.

It is a good hearing, a good time for a hearing. I will be interested to know whether there are any issues involved with whether

the competitive bidding process or application process for grants

ends up resulting in having lots of community health care centers

in some parts of the country or in some States and not in others

where they may be needed.

So Mr. Chairman, I appreciate your calling this hearing, and I

look forward to hearing from the witnesses.

Mr. WHITFIELD. Thank you, Mr. Bass.

And I am going to ask unanimous consent that we also enter into

the record about nine documents that specifically relate to the

health centers. The staffs on both sides of the aisle have reviewed

this, and I think it will be helpful to complete the record with that.

So without objection, these documents, a total of nine of them,

will be entered into the record.

[The information referred to appears at the end of the hearing.]

Mr. WHITFIELD. We are going to pause for just 1 minute. I have

been told that the Chairman of the Full Committee is on his way,

and I know that he did want to make an opening statement. So I

am going to ask for your patience for a minute. We will see if he

is going to be here.

Mr. GREEN. Mr. Chairman, while we are waiting for the opening

statement, could I just ask unanimous consent to place a statement

into the record?

Mr. WHITFIELD. Yes. That will be fine.

Thank you, Mr. Green.

While we are waiting on the Chairman, I would like, at this

time, to call the first panel to the witness stand.

The first panel consists of Dr. Elizabeth Duke, who is the Administrator of Health Resources and Services Administration with the

U.S. Department of Health and Human Services. Dr. Duke, we are

delighted that you are here with us today, and we look forward to

11

your testimony. In addition, Mr. Dennis Smith, who is the Director

of the Center for Medicaid and State Operation, the Centers for

Medicare and Medicaid Services at the U.S. Department of Health

and Human Services.

So we do welcome you all here today.

And at this time, the Chairman of the Full Energy and Commerce Committee, Mr. Joe Barton of Texas, has just arrived. And

I know he has a specific interest in community health centers. And

at this time, we would recognize him for his opening statement.

Chairman BARTON. Well, first, Mr. Chairman, happy birthday to

you.

If I had known a little bit sooner, we would have had a cake, but

you are now old enough to vote, and we appreciate that.

Mr. WHITFIELD. I am 52 today.

Chairman BARTON. Today is your birthday, so happy birthday.

I need to give Congressman Ferguson, Mr. Embryo himself, credit for that. You know, we were all embryos once, and that is going

to be on your tombstone.

But to get to the subject of today’s hearing, Mr. Chairman, community health centers get little national attention. As the chairman of the committee with direct jurisdiction over the program, I

personally want to learn more about how these centers work, what

role they actually play in delivering health care, and what cost savings they might achieve. And I believe, Mr. Chairman, this hearing

is one of the first hearings any committee of the Congress has held

on community health centers in a long, long time, and I want to

commend you for that.

The program itself is decades old. It was intended then and now

to serve the poor. It was a small program, but now it is a large one.

We operate over 3,600 urban and rural size in every State and Territory, and community health centers serve more than 12 million

people.

I am interested in knowing more about the care offered by these

centers and the impact that they have on both patients and the

general health care system in America.

It has been reported that community health centers lower the

cost of Medicaid. We are told that even as far back as 1980 there

was a study that found a set of Medicaid patients who use community health centers use between 12 to 48 percent less total Medicaid funds than a similar group of Medicaid patients who did not

use community health centers. That is back in 1980. Well, now we

are in 2005. Is the same thing true today?

I am also interested in learning whether community health centers have been successful or can be successful in moving routine

patient care out of emergency rooms to clinics where the quality is

better and the care costs are dramatically lower.

The President has also included community health centers in his

domestic health care agenda, and the President’s initiative since

2001 has increased the number of community health centers by

334. As the primary authorizing committee, we must remain informed about how these additional centers have been allocated

around the country.

I really want to thank you, Mr. Chairman, on your birthday, for

holding this hearing. I look forward to the committee’s review, and

12

we look forward to moving forward, possibly in legislative areas, if

this hearing shows that we need to.

With that, I yield back.

[The prepared statement of Hon. Joe Barton follows:]

PREPARED STATEMENT OF HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY

AND COMMERCE

The subject of today’s hearing, community health centers, seems to get little national attention. But, over a number of years, these centers have been slowly building a track record that suggests promising developments in the difficult area of

health care. Community health centers have seemed to be both helping patients live

healthier lives while, at the same time, controlling overall costs. Like any member

of Congress hearing something like this—I want to learn more. And as Chairman

of the Committee with direct jurisdiction over this program—I want to find how to

support the good work of these centers.

The community health center program is not new. Indeed it has its roots in efforts

during the 1960’s to promote health services within underserved communities. Bypassing the bureaucracies of state governments, federal money went directly to community based organizations delivering basic health services to some of the most

needy among us.

Today, this effort continues in over 900 community health centers which operate

3600 urban and rural sites in every state and territory and serve over 12 million

people. In 2003, these community health centers delivered mammograms to over

200,000 women, gave check-ups and other health services to 1.6 million children and

administered over 2.2 million immunizations. Pre-natal care, mental health services,

blood pressure and cholesterol checks—all to a patient population 90% of whom

lived under 200% of poverty. I am interested in learning more about the care offered

by these centers and looking at ways, such as through extended hours, to enhance

access to these services.

While these centers have made important differences in the lives and health of

their patients, there may also be good news about the role these centers play in the

health of our vital Medicaid and Medicare programs. As one example, a study in

1980 found that a set of Medicaid patients, who used community health centers, had

a 30% to 65% lower hospitalization rate and used 12% to 48% less total Medicaid

funds than a similar group of Medicaid patients who did not use such health centers. In other words: an ounce of prevention may, indeed, be worth a pound of cure.

Community health centers treat people preventatively in a doctor’s office instead of

finding them in the more expensive setting of an emergency room. This lowers costs

to programs such as Medicaid without sacrificing the quality of the health care delivered to beneficiaries.

The President has made support and expansion of Community Health Centers a

priority in his domestic health care agenda. For example, since 2001, the President’s

Initiative has increased the number of community health center sites by 334 locations. As the primary authorizing Committee, we must remain well informed of developments in this program and be ready to seize opportunities to leverage and

apply more broadly the good ideas they have developed.

I thank the Chairman of the Subcommittee, Ed Whitfield, for holding this hearing

today. I look forward to the Committee’s review of community health centers and

the chance to look at the issues and opportunities involved in this program.

Mr. WHITFIELD. And thank you, Mr. Chairman.

At this time, I recognize the gentlelady from Tennessee, Ms.

Blackburn, for her opening statement.

Ms. BLACKBURN. Thank you, Mr. Chairman.

And I want to thank you, also, for holding this hearing.

And I want to thank the witnesses for taking the opportunity to

come and talk with us about the community health center program.

I know Mr. Smith is a little familiar with my District. He has been

on the road with me in that District. And you know we have some

fine community health centers there. And we thank you for your

time today.

And as we look at this issue, I want us to carefully examine the

effectiveness of the centers, because these centers provide direct

13

health care services for some of America’s population that is most

in need of quality, low-cost health care. And having that access is

important.

As the cost of health care has been dramatically rising over the

past decade, this committee must ensure that these health centers

are performing adequately and in the most cost-efficient manner

before we dedicate new funding for the program. I look forward to

the responses from these agencies on how the health centers are

conducting risk management training and implementation of efforts for quality performance reviews that minimize the risk of

malpractice claims and medical liability.

And again, I thank you very much for your time.

And Mr. Chairman, I thank you for the hearing.

Mr. WHITFIELD. And I have already introduced our witnesses on

the first panel.

As you are aware, this is an investigative hearing, and it is the

practice of this subcommittee that when we hold hearings, that the

witnesses testify under oath. And I would ask the two of you, do

you have any difficulty testifying under oath this afternoon?

Ms. DUKE. No.

Mr. SMITH. No.

Mr. WHITFIELD. I would also advise you that you do have the

right to counsel if you want counsel, and I am assuming that neither one of you have legal counsel with you today. So in that case,

if you would please rise and raise your right hand, I will swear you

in.

[Witnesses sworn.]

Mr. WHITFIELD. Thank you.

I will proudly tell you, now you are officially sworn in. And Dr.

Duke, we will begin with you, and you may give your 5-minute

opening statement.

TESTIMONY OF ELIZABETH M. DUKE, ADMINISTRATOR,

HEALTH RESOURCES AND SERVICES ADMINISTRATION, U.S.

DEPARTMENT OF HEALTH AND HUMAN SERVICES; AND DENNIS SMITH, DIRECTOR, CENTER FOR MEDICAID AND STATE

OPERATIONS, CENTERS FOR MEDICARE & MEDICAID SERVICES, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Ms. DUKE. Thank you very much, sir.

I would like to submit the longer statement for the record and

just give an abbreviated statement, if I may.

I want to thank you very much for having this hearing and for

allowing us to be with you this afternoon.

You know that the health centers, in 2004, served an estimated

13.2 million people. That was about 3 million more than they

served in 2001. And they did that service at 3,650 service delivery

sites, which represents an increase of 600 new and expanded sites

since 2001. In 2005, we plan to fund 153 new or expanded health

center sites and to serve almost 14 million people. The President’s 2006 budget request includes an additional $277

million to complete the President’s 5-year health center initiative

by increasing the number of health center sites by 275 and significantly expanding 303 existing sites to increase the number of peoVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6602 20751.TXT HCOM1 PsN: HCOM1
14

ple served by 2.4 million above the 2005 level for a total of 16.3

million patients.

The President has also set a new goal to open a health center

or a rural health clinic in every poor county that can support one.

The budget includes a $26 million request to open new health center sites in 40 of the Nation’s poorest counties and will support 25

planning grants as well. The goal of this initiative is to leverage

the success of the current program to poor counties that can support a health center and provide access to primary and preventive

health care services, particularly in poor counties that are medically under-served.

The distinguishing mission of the health center program is to

empower communities to solve their own local access problems and

to improve the health status of their under-served and vulnerable

populations by building community-based primary care capacity

and by offering case management, home visiting, outreach, and

other enabling services.

The program also addresses significant challenges facing communities by targeting public housing, homeless, and migrant health

center development as well. Health centers can provide access to

high-quality, family oriented, comprehensive primary and preventive care regardless of ability to pay.

Health center grantees, as a result of their receiving a HRSA

grant, under Section 330 of the Public Health Service Act, are eligible for enhanced benefits, including Medicaid and Medicare reimbursement, access to the Federal Tort Claims Act program for malpractice coverage and access to the program for discount drugs for

patients under Section 340B of the PHS Act.

Under Section 330, a health center is required to provide primary health services, including those related to family medicine,

internal medicine, pediatrics, obstetrics, or gynecology, that are

furnished by physicians and, where appropriate, physicians assistants, nurse practitioners, and nurse midwives. Additionally, they

are required to have basic health services, including diagnostic laboratory and radiological services and services in preventive health.

To receive Section 330 grant funds, a clinic must meet a number

of statutory requirements. The health center must be located in a

federally designated medically under-served area or serve a federally designated medically under-served population. It must also be

a public or a private non-private health center, provide comprehensive primary health services, referrals, and other services needed

to facilitate access to care, such as case management, translation,

and transportation. It must have a governing board, the majority

of whose members are patients of the health center, provide services to all in the area regardless of their ability to pay, and offer

a sliding fee schedule that adjusts according to individual family

income.

Health centers are in all 50 States of the Union.

In conclusion, in administering grants for the health center program, we take great pride in the high evaluation given the program and by the bipartisan support of the Congress, and we fully

realize that the program works only as a partnership with those

extraordinary local primary care providers providing indispensable,

quality clinical service to under-served Americans, their neighbors.

15

[The prepared statement of Elizabeth M. Duke follows:]

PREPARED STATEMENT OF ELIZABETH M. DUKE, ADMINISTRATOR, HEALTH RESOURCES

AND SERVICES ADMINISTRATION

Mr. Chairman, Members of the Subcommittee, thank you for the opportunity to

meet with you today on behalf of the Health Resources and Services Administration

(HRSA) to discuss the Health Centers Program.

I am so pleased to have the opportunity to address you regarding the Health Centers program. I was here before the Health Subcommittee of the Energy and Commerce Committee on August 1, 2001, to discuss the reauthorization of this program.

At that time, the funding for the program was approximately $1.2 billion. We thank

you for both your efforts in reauthorizing the program and ensuring funding to expand this worthwhile program to accomplish the President’s Initiatives, with a requested FY2006 funding level of approximately $2 billion, a $304 million increase.

Today, I am proud to update you on the success and growth of the program to

date. By any measure, we have been enormously successful implementing the President’s Health Center Expansion initiative—an effort designed to establish or expand

1,200 health center sites and serve an additional 6.1 million patients annually by

the end of 2006. This continues to be a priority because we know that 100 percent

of these funds go to provide direct health care services for our neighbors who are

most in need.

In 2004, the health center system served an estimated 13.2 million people—about

3 million more than in 2001—at more than 3,650 service delivery sites which represents an increase of more than 600 new and expanded sites since 2001. In 2005,

we plan to fund 153 new or expanded health center sites and serve almost 14 million patients.

The President’s FY 2006 budget request includes an additional $277 million to

complete the President’s five-year Health Centers Initiative by increasing the number of health center sites by 275 and significantly expanding 303 existing sites to

increase the number of people served by 2.4 million, above 2005 levels, for a total

of more than 16.3 million patients.

The President has set a new goal to open a health center or rural health clinic

in every poor county that can support one. The Budget includes $26 million to open

new health center sites in 40 of the Nation’s poorest counties and will support 25

planning grants as well. The goal of the initiative is to leverage the success of the

current program to poor counties that can support a Health Center and provide access to primary and preventive health care services particularly in poor communities

that are medically underserved.

Health Centers Program

The distinguishing mission of the Health Centers Program is to empower communities to solve their own local access problems and to improve the health status of

their underserved and vulnerable populations by building community-based primary

care capacity and by offering case management, home visiting, outreach, and other

enabling services. The program also addresses significant challenges facing communities by targeting public housing, homeless, and migrant health center development as well. Health Centers provide access to high quality, family oriented, comprehensive primary and preventive health care, regardless of ability to pay.

Health Center grantees, as a result of their receiving from HRSA a grant under

section 330 of the Public Health Service (PHS) Act, are eligible for enhanced benefits including Medicaid/Medicare reimbursement, access to the Federal Tort Claims

Act (FTCA) program for malpractice coverage and access to the program for discount

drugs for patients under section 340B of the PHS Act.

Under the section 330, a Health Center is required to provide primary health

services, including those related to family medicine, internal medicine, pediatrics,

obstetrics, or gynecology, that are furnished by physicians and where appropriate,

physician assistants, nurse practitioners, and nurse midwives. Additional required

basic health services include diagnostic laboratory and radiologic services and a series of preventive health services, including prenatal and perinatal services; appropriate cancer screening; well-child services; immunizations against vaccine-preventable diseases; screenings for elevated blood lead levels; communicable diseases and

cholesterol; pediatric eye, ear, and dental screenings; voluntary family planning

services; and preventive dental services.

Health Centers Requirements

To receive section 330 grant funds, a clinic must meet a number of statutory requirements. The Health Center must: be located in a Federally designated medically

16

underserved area (MUA) or serve a Federally designated medically underserved

population (MUP); be a public or private nonprofit health center; provide comprehensive primary health services, referrals, and other services needed to facilitate

access to care, such as case management, translation, and transportation; have a

governing board, the majority of whose members are patients of the Health Center;

provide services to all in the service area regardless of ability to pay; and offer a

sliding fee schedule that adjusts according to individual family income.

The requirement that a majority of board members be Health Center patients

makes these clinics unique among safety net providers and is designed to ensure

that the centers remain responsive to community needs. Under section 330, a

Health Center applicant needs to demonstrate the establishment of a governing

board that has a 51 percent consumer majority, meets monthly, selects the Health

Center’s services and hours, approves the Health Center’s annual budget, selects the

Health Center’s director, and establishes the Health Center’s general policies.

Health Centers are located in all 50 States, the District of Columbia, and the territories. Currently the Health Center urban-to-rural ratio is even.

Health Centers Awards Process

HRSA accepts, on a competitive basis, applications from eligible organizations

seeking a grant for operational support for new and continuing Health Centers. Eligible organizations are public or nonprofit entities including tribal, faith-based and

community-based organizations.

The largest category of grant awards includes new access points encompassing

both new clinic starts and satellites of existing clinics. Other categories include the

expansion of medical capacity at existing locations and new service expansion activities such as enhanced oral health and mental health/substance abuse services.

All eligible and responsive grant applications are referred to an Objective Review

Committee (ORC), comprised of experts in the delivery of community health care

services, for their independent review and recommendations. When funding decisions are made, each applicant receives a notification letter listing strengths and

weaknesses of each section of their application as noted by the ORC. This review

approach provides valuable technical assistance for improving future applications

for both awardees and those we were not able to approve during a particular cycle

due to funding limitations. The process is very competitive and during many cycles,

we are able to fund only 20% of the applications submitted. This result reflects a

very dynamic program which is encouraging the development of community-based

primary health care clinics at a rate greater than we can provide monetary support.

Technical Assistance

HRSA works directly with communities to develop needed resources through the

primary care associations in each State. These primary care associations, funded by

HRSA, provide ongoing technical assistance involving guidance and options for organizations interested in applying for Health Center grants and to existing Health

Center grantees interested in expanding their comprehensive primary care services.

In addition, HRSA assists applicants through grant-writing workshops and other

technical assistance activities, which are provided through a contract with the National Association of Community Health Centers. Such activities assist applicants

to: demonstrate a high level of need in the community; present a sound proposal

to meet this need; show that the organization is ready to rapidly implement the proposal; display responsiveness to the health care environment in the service area;

and demonstrate collaborative and coordinated delivery systems for the provision of

health care to the underserved in their communities.

Federally-funded health centers are similar to other health care businesses. Like

most businesses, at any point in time, approximately 4% of health centers are experiencing significant challenges to their viability. HRSA, with assistance from interdisciplinary teams that may include contractors, grantees and staff, provides intensive technical assistance to grantees to address problems. At all times, continuity

of service for the affected population is the first priority under consideration in addressing such challenges.

Health Centers Services

Health Centers offer ambulatory services that reflect the diverse needs of the populations they serve. Because of the combination of low incomes, linguistic barriers,

and often poor health status, Health Center patients require access to enabling services as well as comprehensive primary care services.

Health Centers are unique among primary care providers for the array of enabling services they offer, including case management, translation, transportation,

outreach, eligibility assistance, and health education. Health Centers commit signifiVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 20751.TXT HCOM1 PsN: HCOM1
17

cant resources to managing chronic conditions including diabetes, asthma, and cardiovascular disease.

In 2003, Health Centers provided more than 49 million encounters, 220,000 mammograms, over 1.4 million pap tests, and 2.27 million encounters for immunizations,

as well as nearly 400,000 HIV tests and counseling, perinatal and delivery care for

332,000 women, and translation services to more than 3.5 million patients.

Health Centers are staffed by a combination of clinical, enabling, and administrative personnel. They are typically managed by a chief executive officer and a clinical

director. Depending on the size of the patient population, the clinical staff consists

of a mixture of primary care physicians, nurse practitioners, physician assistants,

substance abuse and mental health specialists, dentists, hygienists, and other

health professionals.

Health Centers Financing

Health Centers receive funding from a variety of sources. A majority of Health

Centers revenue comes from Federal resources including Medicaid, Medicare, the

330 grant, SCHIP and other Federal programs. On average nationwide, HRSA

grants comprise 22 percent of Health Center revenue, but as little as 15 percent depending on the individual community and grant application. At 36 percent, Medicaid

is the largest source of revenue for Health Centers, followed by Federal grants.

Health Centers serve about 10 percent of all Medicaid enrollees nationally, but in

actual Medicaid dollars, this amounts to less than 1 percent of all Medicaid payments to all providers.

For Health Centers( revenues, in addition to Medicaid and the section 330 Federal

grant funding, Medicare accounts for 6 percent, self-pay for 6 percent, other thirdparty payers 9 percent, other State/local government or foundations account for 13

percent and the remaining 6 percent from other sources.

Health Centers Background

The Consolidated Health Centers program has developed over 40 years ago, beginning with the creation of the migrant health center program and followed by the

neighborhood health center demonstration projects initiated in 1965 and first funded by Congress as part of the War on Poverty. By the early 1970s, about 100 neighborhood health centers had been established under the Economic Opportunity Act.

These centers were designed to provide accessible, dignified personal health services

to low-income families. Community and consumer participation in the organization

and a patient-majority governing board were features of the Health Center model.

With the phase-out of the Office of Economic Opportunity in the early 1970s, the

centers supported under this authority were transferred to the Public Health Service. The mandate of the centers was broadened so that comprehensive primary and

preventive services were provided to all who came through the doors. The Community Health Center program, as authorized under section 330 of the Public Health

Service Act, was established in 1975. A reauthorization that consolidated the separate authorities of the Community, Migrant, Homeless and Public Housing Health

Centers under section 330 took place in 1996. Most recently, the Health Care Safety

Net Amendments of 2002 reauthorized the Consolidated Health Centers Program

through 2006. The 2002 Health Center reauthorization requires that grants be

awarded for FY 2002 and beyond in such a way that maintains the proportion of

the total appropriation awarded to migrant, homeless and public housing applicants

in FY 2001. In general, about 81 percent of funding is awarded to community health

centers, with the remaining 19 percent divided across migrant, public housing, and

homeless health centers.

Conclusion

Health Centers offer high quality, prevention-oriented, case-managed, family-focused primary care services that result in appropriate and cost-effective use of ambulatory, specialty and in-patient services. Primary care is delivered for all life cycles, and includes a full range of health services. In administering grants for the

Health Centers program, we take great pride in the high evaluation given the program, and the bipartisan support of Congress, and fully realize that the program

works only as a partnership with those extraordinary local primary care providers

providing indispensable quality clinical services to underserved Americans with few

health care alternatives.

Mr. WHITFIELD. Thank you, Dr. Duke.

And Mr. Smith, you are recognized for your opening statement.

18

TESTIMONY OF DENNIS SMITH

Mr. SMITH. Thank you, Mr. Chairman. And thank you, members

of the subcommittee, for inviting me today to talk with you all on

the role of community health centers as an important part of America’s health care system, and in particular, the relationship of the

Medicaid and Medicare programs to the CHCs.

I do have a full written statement for the record, and I will try

my best not to plow the same ground as the administrator on our

points.

But the majority of Medicare and Medicaid dollars that go into

the community health centers are through the federally qualified

health centers, or FQHCs. Over the years, Medicaid spending has

increased substantially. In 1991, Medicaid spending through

FQHCs totaled $45 million. Ten years later, Medicaid expenditures

in FQHCs had increased to $737 million. Over the last 4 years,

spending on FQHCs has nearly doubled to an estimated $1.3 billion. This increased spending is due, in large part, to the President’s initiatives to expand community health centers. Medicaid,

indeed, is the largest single source of revenues for FQHCs, accounting for 64 percent of patient-related revenues.

Medicare, Medicaid, and SCHIP Benefits Improvement Protection Act of 2000, or BIPA, established a prospective payment system for FQHCs. This system, which has been in place since January 2001, replaced the previous cost-based reimbursement system

for health centers under Medicaid. The prospective payment system establishes a per-visit payment rate for each FQHC in advance. And since fiscal year 2002, payments made under this system have been adjusted annually for inflation using the Medicare

Economic Index.

States have the option of using an alternative payment mechanism, provided that the payment rate is not lower than what would

have been paid under the new PPS. States have made a variety of

choices in how they want to set their reimbursement rates—which

system to use, the PPS or alternative methodologies. I think it is

very important to emphasize that the FQHCs themselves must

agree to the alternative methodologies.

In addition, States are required to make supplemental payments

to FQHCs that provide care to Medicaid beneficiaries when they

are enrolled in a managed care plan to cover the difference between

the rates paid by managed care plans and the FQHC’s prospective

payment rate. So again, Congress has been very clear that FQHC’s

are an important part of the delivery system. We want to make certain that those payments make the FQHCs whole for the cost that

they provide to beneficiaries.

Very briefly, in addition to Medicaid expenditures, Medicare spends $265 million on services provided through FQHCs. The

Medicare reimbursement rate is based on an all-inclusive per-visit

payment amount based on reasonable costs as determined through

filing of a Medicare cost report. These are subject to one of two

upper payment limits, not the other upper payment limits that we

often discuss, but its own upper payment limit, depending on

whether the FQHC is located in an urban or a rural area. For calendar year 2005, the upper payment limit is $109.88 for urban centers, $94.48 for rural centers.

19

In conclusion, community health centers are an important part

of the Medicare and Medicaid network of providers. Substantial

growth in expenditures reflects the increase in access to care at

CHCs through President Bush’s initiatives as well as through the

partnerships that have been formed over the years between HRSA,

CMS, the centers, the States, and the managed care organizations.

I look forward to addressing the questions that you might have,

and thank you, again, for the opportunity to appear before you

today.

[The prepared statement of Dennis Smith follows:]

PREPARED STATEMENT OF DENNIS SMITH, DIRECTOR, CENTER FOR MEDICAID AND

STATE OPERATIONS, CENTERS FOR MEDICARE AND MEDICAID SERVICES

Chairman Whitfield, Congressman Stupak, thank you for inviting me to testify on

the role of the Medicaid program in serving millions of Americans who seek care

through community health centers (CHCs). CHCs are an important part of America’s health care safety net, providing comprehensive primary and preventive health

care services to all who seek care. They serve in rural areas or in inner-city neighborhoods, places where too many people do not have the access to the quality health

care they require. CHCs exist in areas where economic, geographic, or cultural barriers limit access to primary health care for a substantial portion of the population;

and, they tailor services to the needs of the community. Services include primary

and preventive health care, prenatal services, dental care, and essential ancillary

services such as laboratory tests, X-ray, environmental health, and pharmacy services. In addition, they provide services such as outreach and health education, transportation, and translation services.

CHCS, STATE MEDICAID PROGRAMS, AND MEDICARE SERVE AMERICANS WITH LIMITED

INCOMES

The majority of Medicare and Medicaid dollars that go into CHCs are through the

Federally Qualified Health Centers (FQHCs). Congress established the FQHC program in 1989 to respond to concerns that health centers were using grant funds intended to support care for the uninsured to supplement Medicare and Medicaid payments. FQHCs under Medicare and Medicaid include three types of centers:

• Community health centers that receive grants under section 330 of the Public

Health Service Act;

• FQHC ‘‘look-alikes’’—centers that meet all of requirements for a community

health center under section 330 of the Public Health Service Act, but do not receive such a grant, and that are not owned, controlled or operated by another

entity; and

• Outpatient health programs or tribal facilities operated by a tribe or tribal facility

under the Indian Self-Determination Act or by an urban Indian organization receiving funds under Title V of the Indian Health Care Improvement Act for the

provision of primary health services.

Over the years, Medicaid spending through FQHCs has increased substantially.

As recently as 1991, Federal Medicaid spending on services provided to Medicaid

beneficiaries by FQHCs totaled $45 million. Federal Medicaid expenditures in

FQHCs have increased since then to $778 million in FY 2004. This increased spending is due in large part to an increase of about 500 new health center sites under

the President’s health center initiative. (These figures do not include expenditures

through managed care contracts or the state share of Medicaid funding). Total Federal and State Medicaid spending total $1.3 billion in FY 2004.

According to HRSA, Medicaid is the largest single source of revenue for the

FQHCs. Medicaid accounts for 36 percent of total revenue of the FQHCs.

CMS designates FQHC look-alikes based on the recommendation of HRSA. When

CMS receives a recommendation from HRSA, CMS notifies the State Medicaid agency of a pending application for FQHC designation and provides the state with an

opportunity to comment on the application. Once all issues are addressed, CMS notifies HRSA and the State Medicaid agency that the application has been approved

and HRSA notifies the center of the approval. In CY 2004, CMS approved 26 applications. Currently, six applications are under review.

20

MEDICAID COVERS FQHCS AS A MANDATORY BENEFIT

As mentioned earlier, FQHCs provide a package of primary and preventive care

services to Medicaid beneficiaries. These services include physician, nurse practitioner, physician assistant, clinical psychologist and clinical social worker, plus any

other ambulatory service that is covered in the state plan. FQHCs are paid under

the Medicaid program for services on a per visit basis, rather than billing separately

for each service provided when a patient visits a health center.

The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of

2000 (BIPA) established a prospective payment system for FQHCs. This system,

which has been in place since January 2001, replaced the previous cost-based reimbursement system for health centers under Medicaid. The prospective payment system establishes a per visit payment rate for each FQHC in advance. The 2001 payment rate was based on the average of each FQHC’s reasonable costs per visit in

FY 1999 and FY 2000. Since FY 2002, payments made under this system have been

adjusted annually for inflation using the Medicare Economic Index. Payments also

are adjusted based on increases or decreases in change in scope of services provided.

States have the option of using an alternative payment mechanism, provided the

payment rate is not lower than what would be paid under the new PPS. For example, states may opt to establish an alternative PPS or retain the original cost-based

reimbursement system. CMS must review and approve the payment system; and,

the FQHC must agree to the alternative methodology. Most states are using the

PPS option established under BIPA, while 15 states opted to use cost-based reimbursement and eight states elected to implement an alternative PPS to pay at least

a portion of their FQHC costs.

In addition, states are required to make supplemental payments to FQHCs that

provide care to Medicaid beneficiaries enrolled in a managed care plan to cover the

difference between the rates paid by managed care plans and the FQHC’s prospective payment rate. FQHCs receive the same payment rate from managed care plans

that the plans pay to other providers for similar services. This supplemental payment provision was added as an incentive to FQHCs to participate in managed care

plans. FQHCs are guaranteed a PPS rate as a minimum to participate in a managed care plan.

MEDICARE PAYMENTS BASED ON REASONABLE COSTS

FQHC services also are available to Medicare beneficiaries under Part B. The

Medicare FQHC benefit provides coverage for a full range of primary care services

(and services incident thereto) including physician, physician assistant, nurse practitioner, and certain other non-physician practitioner services such as clinical social

worker and clinical psychologist services. The benefit also covers a range of preventive services as well as pneumococal and influenza vaccines. In CY 2003, almost

900,000 Medicare beneficiaries received care at a section 330-funded FQHC.

Medicare pays FQHCs an all-inclusive per visit payment amount, based on reasonable costs as determined through the filing of its Medicare cost report. The

FQHC’s all-inclusive per visit payment amount is subject to one of two upper payment limits (UPL), depending upon whether the FQHC is located in an urban or

rural area. In CY 2005, the UPL is $109.88 for urban centers and $94.48 for rural

centers. In FY 2004, Medicare spent about $265 million on services provided by

FQHCs. To ensure payment rates are appropriate, CMS and HRSA are jointly evaluating the current UPLs for Medicare FQHC services.

In addition, the Medicare Prescription Drug, Improvement, and Modernization Act

of 2003 (MMA) establishes a wrap-around payment in Medicare, similar to the supplemental payment in Medicaid. CMS will pay FQHCs the difference between what

a Medicare Advantage health care plan pays the FQHC, and the reasonable cost

payments the FQHC otherwise would receive under Medicare fee-for-service. Medicare Advantage plans must pay FQHCs the same levels and amounts they pay other

providers for similar services. This provision becomes effective for services provided

on or after January 1, 2006 and contract years beginning on or after January 1,

2006.

ENSURING FQHCS PARTICIPATE IN THE MEDICARE PRESCRIPTION DRUG PROGRAM

HRSA and CMS have been working closely together on efforts to implement the

new prescription drug benefit under Medicare Part D, and will be working to make

sure health centers are a key part of that effort, particularly with respect to outreach and education of low-income Medicare beneficiaries who are eligible for the

low-income subsidy program and will be eligible for a comprehensive drug benefit

with minimal copayments. Also, health centers with pharmacies will be able to parVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 20751.TXT HCOM1 PsN: HCOM1
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ticipate in prescription drug coverage plans and Medicare Health Plans with prescription drug coverage. In addition, the final rule implementing the MMA provides

that prescription drug coverage plans and Medicare Health Plans may count FQHC

pharmacies in meeting the MMA pharmacy access standards, and this will give

these plans incentives to include FQHC pharmacies in their plan networks.

CONCLUSION

CHCs are an important part of the Medicare and Medicaid networks of providers.

The substantial growth in expenditures reflects the increase in access to care at

CHCs through the President’s initiative as well as partnerships that have been

formed over the years between HRSA, CMS, the Centers, the states, and managed

care organizations.

Thank you again for this opportunity and I look forward to answering any questions you might have.

Mr. WHITFIELD. Well, thank you all very much for your testimony. We appreciate your taking the time to be with us, as I indicated.

And Dr. Duke, I will begin the question period here.

And you mentioned in your testimony that one of your goals is

to be sure that 40 of the Nation’s poorest counties each has a community health center located within their boundaries. How many

of those 40 counties have a community health center today?

Ms. DUKE. The initiative, as the President described it, is to target high-poverty counties that have no health center or rural

health clinic in them today.

Mr. WHITFIELD. This 40 figure that you mentioned, so you are

talking about areas that do not have a center already?

Ms. DUKE. Yes, sir; that is correct.

Mr. WHITFIELD. I thought that you were talking about that it

was an overall goal to be sure that the 40 poorest counties had a

center and that some of them already did have a center, but that

is not what you are talking about.

Ms. DUKE. No, sir. The idea is that there are many, many counties that do not have a rural health clinic or an FQHC.

Mr. WHITFIELD. Right.

Ms. DUKE. And the goal would be to allow competition to increase the number of poor counties that have a center.

Mr. WHITFIELD. Well, what role do States play in winning these

330 grants? And I ask that question, because is there any concern

that some States just may be more adept at this than others? I noticed, for example, that Alaska has, like, 21 grantees, and they

have a population of about 670,000. A State like Kentucky, and I

just happen to be from Kentucky, has 4.5 million and we have 12.

So do States play an important role in being successful in the

awarding of these grants?

Ms. DUKE. The process by which these get awarded, perhaps if

I could talk about the process and then talk about the State role

in that, would that be helpful?

Mr. WHITFIELD. Yes. Right.

Ms. DUKE. The process under which grants are awarded is a

competitive process. And the requirements are that to be awarded

a health center, it must be in a medically under-served area——

Mr. WHITFIELD. Right.

Ms. DUKE. [continuing] and that it must be a non-for-profit or a

public entity. And it is competitive. And it has been a very competitive process. We receive far more applications than we have capacVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 20751.TXT HCOM1 PsN: HCOM1
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ity to fund. And the States do get engaged in this activity, because

we have initiated a strategic planning process. And the primary

care associations in each State work to identify needs for health

centers and provide technical assistance to communities in building

the foundation to be actually able to compete. And some have been

very, very engaged in that process and others have been, perhaps,

less engaged.

But interesting, you can actually see the results of the way that

activity has gone in the sense that intensive strategic planning has

produced increased numbers of awards to States over the last 4 to

5 years.

Mr. WHITFIELD. And what are some of the States that are most

adept at that?

Ms. DUKE. Well, I think the one that I took particular attention

to in the recent competition was Texas, which had a high uninsured rate where the Primary Care Association and the legislature

put together a strategic plan, and in the last competition, they

achieved 10 health center awards in that last competition.

Mr. WHITFIELD. And how many were granted nationwide?

Ms. DUKE. In that round, I think it was 88.

Mr. WHITFIELD. So Texas received 10 of those?

Ms. DUKE. Eighty-eight plus seventeen. I am sorry. It is 88 plus

17.

Mr. WHITFIELD. Okay. Now the Objective Review Committee,

who is a member of the Objective Review Committee, and how is

it decided who is a member of that committee?

Ms. DUKE. Objective Review Committees are selected from people

who have expertise in community health delivery. And it is our

goal to have the members of the Objective Review Committees

cycle on and off so we don’t have the same people on all of the time.

We have made a very aggressive campaign to have more and more

people involved in that process. We think it is educational for

them, and it certainly provides fairness for the community. And we

receive about 100 applications a month for people to enter the

ranks of serving on these objective review panels.

So it is a widely diverse group.

Mr. WHITFIELD. And is there a set number of members on that

Objective Review Committee?

Ms. DUKE. It is not a set number, but the goal is to have a sufficient number that there can be dialog that they can carry on the

weight of the number of applications, because we get hundreds of

applications, and we break them down into a certain number per

panel. So they work very hard, and they do a great deal of work,

because each of these applications is about 80 pages long.

Mr. WHITFIELD. So do you appoint them, or who appoints them?

Ms. DUKE. I do not touch them. They are basically taken care of

in the routine process of our centralized grants management process. We have a centralized grants management process that sets up

the Objective Review Committees. That is to say it is separate from

the program office that runs the health center program. And it is

separate from my office. It is set up by people who do professionally

grant administration. And they are set up objectively, and then

they have a scoring process that is designed to get around the problem, which is inherent in human nature, and, as we used to say

23

in the school world, some people are easy graders and some people

are hard graders, and so they set up a process to distinguish out

the outliners so that a fair score——

Mr. WHITFIELD. But they don’t make the final decision?

Ms. DUKE. No, sir; they don’t make the final decision, but their

weighting is very significant.

Mr. WHITFIELD. Okay.

Ms. DUKE. The final decision has to rest on addressing other

issues, like their financial viability.

Mr. WHITFIELD. I read an article for this hearing, and it may

have been somebody’s testimony, I can’t remember right now, but

it said that last year, 106 million visits were made to hospital

emergency rooms and that 58 percent of those really were not necessary, it was not proper to be at a hospital, and maybe going to

a community health center would have been better. Are you familiar with that statistic? And has your agency conducted any studies

on the relationship of savings by these community health centers

for hospital emergency rooms, for example? Any sort of study like

that that you conducted?

Ms. DUKE. Sir, I could give you two. I am not familiar with that

particular statistic, but we could provide copies for you, I am familiar with the results of one study that indicated that by having patients have a medical home at a health center, that that drives

down the inappropriate hospitalizations by about 11 percent and

drives down inappropriate use of emergency rooms by 19 percent.

And we could provide that for you. The other thing is that we have

seen some communities that have come together to compete for

health center programs who have then networked themselves together with the community health centers and hospitals and private physicians and so forth to address this question of the inappropriate use of very expensive emergency room care. And we have

seen in one instance where we provided a grant for 3 years to support that kind of networking, and at the end of the 3 years, the

community sustained that approach with the view that they were

saving enough in the hospitals’ emergency rooms to support the

networking costs associated with it.

So it is a good investment.

Mr. WHITFIELD. Have you had any experience with a small hospital, say a small rural hospital, that is a critical access hospital,

as an example, that was having such financial difficulty that they

decided they wanted to convert to become a community health center with emphasis on primary care and preventative care? Are you

aware of an example of that happening anywhere in the country?

Ms. DUKE. I don’t have a specific instance in mind, but that is

one of the things that we have seen is where hospitals previously

had run outpatient clinics and ultimately decided to give up that

line and a community board took over the outpatient work and ultimately competed for and won a grant as a federally supported

FQHC.

Mr. WHITFIELD. Well, my time is expired, and I recognize the

gentleman from Michigan.

Ms. DUKE. Thank you, sir.

Mr. STUPAK. Thank you, Mr. Chairman, and welcome to our witnesses.

24

Ms. DUKE. Thank you.

Mr. STUPAK. Mr. Smith, if I may ask you a question on Medicaid

here. The large Medicaid cuts are particularly hurting our rural

areas, as folks in rural areas are more likely to receive Medicaid

and to be uninsured, and 30 percent of the children in rural areas

have Medicaid or SCHIP coverage compared to 19 percent in urban

areas. Nearly 25 percent of residents in rural counties are uninsured.

In my statement, I mentioned Michigan and how our unemployment is at 7.5 percent and our demand on Medicaid is unprecedented. We are covering a lot of people who are employed. We have

a job and can’t afford insurance. So our question is, we are having

all of these people on here. We have cuts coming to Medicaid.

Where does Michigan go? Actually one out of every four people now

in Michigan are on Medicaid. So who do we dump in Michigan if

we don’t have the funds to take care of it? If you take a look at

our Medicaid in Michigan, it has gone up 30 percent but yet we

have held our costs to less than 5 percent. So I think Michigan has

really done a good job, but we are just at the point now where we

have to start making tough choices. So who do we dump? The senior in the nursing homes? The children with disabilities? Or cut

providers?

Mr. SMITH. We are very pleased with the partnership we have

had with Michigan over the past several years. We have helped

Michigan expand health insurance coverage through the HIFA

waiver. We helped Michigan come up with one of the most innovative cost containment proposals in the country by starting the drug

purchasing arrangements. Michigan was the originator, but it has

expanded to other States as well.

Mr. STUPAK. Sure, but under that program, we are getting penalized for being efficient.

Mr. SMITH. I think that what we are finding in Michigan, and

other States as well, States are reconsidering new ways to deliver

services in more cost effective and innovative ways, including in

long-term care settings. A third of Medicaid’s spending is on longterm care. We are seeing States move more into home and community-based services, expanding services for people to stay in their

own homes rather than go into institutional care. We think this is

part of the solution.

Mr. STUPAK. Well, let me ask the question this way. Medicaid

was set up so that when unemployment goes up, Medicaid would

be there to take care of those people who lost their insurance or

can’t afford it anymore. But yet what we are seeing in Michigan,

more and more people are going on Medicaid, and our reimbursement, or help from the Federal Government, has decreased, the

exact opposite of the way it was supposed to be when the program

was passed by Congress. So how can we justify increased caseloads

in Michigan but yet less money? Something has got to give. Who

don’t we cover any more?

Mr. SMITH. In large part, when people become uninsured, they

are not eligible for Medicaid in the first place. For example, if you

are an unemployed single male, you are not going to become eligible for Medicaid.

Mr. STUPAK. But a lot of these are not unemployed single males.

25

Let me ask you this question. The Energy and Commerce Committee has been directed to find $15 to $20 billion in cuts over the

next 5 years. If you take a look at it, the President’s proposed Medicaid cuts, it is probably $8 billion, but yet in the budget resolution,

we are directed to come up with $15 to $16 to $20 billion in cuts,

and we have this commission. Can you provide some specific ways

Congress could cut funding to Medicaid that were not included in

the President’s budget proposal that CBO scored at $8 billion? And

this commission that is set up, wouldn’t it be better if we had them

look outside the budget process on ways we can save money as opposed to looking within the Federal budget process?

Mr. SMITH. I think that the President’s budget provides a lot of

guidance for how we think you can lower the rate of growth in the

Medicaid program. Medicaid over the next 10 years is going to

spend $5 trillion. And you mentioned Michigan’s rate of growth of

being around 5 percent. In fact, Michigan has been holding their

rate of growth to below the national average for each of the 5

years. So we know that States can adopt ways to lower their rate

of growth of spending and still deliver quality services and, in the

case of Michigan, expand coverage as well. What we have——

Mr. STUPAK. But rate of growth, to make sure we are on the

same page here, are you talking about spending, sir?

Mr. SMITH. Yes, Mr. Stupak.

Mr. STUPAK. Well, I am talking about rate of growth to increase

the people we have on here. I agree, the spending is down, but the

number of people on it are going up.

Mr. SMITH. And as I said, and you stated as well, Michigan’s rate

of growth is around 5 percent.

Mr. STUPAK. Correct.

Mr. SMITH. That is lower than the national rate of growth.

Mr. STUPAK. And they have cut every possible way to keep that

less than 5 percent. They even came up with a new drug program,

and yet we are being penalized by the Federal Government for

doing that. We are going to lose money underneath the program reimbursement. So how do we do it? I mean, I am not wrong in my

theory on why we have Medicaid, so when unemployment goes up,

Medicaid is supposed to go up and be there to take care of the unemployed. When unemployment goes down, Medicaid should go

down, right? That is the theory behind the program.

Mr. SMITH. And that is the essential partnership that still exists

in the Medicaid program as well.

Mr. STUPAK. The partnership exists, but the reimbursement isn’t

there.

Mr. SMITH. The Federal dollars follow State dollars, and the

States make the decisions beyond the Federal requirements of eligibility and services. The States are the ones making the decisions

on who to cover, what services——

Mr. STUPAK. But unlike the Federal Government, the States

have to balance their budget. The Federal Government does not.

And Michigan, as it balances its budget, is balancing a budget, especially when we come to Medicaid when $1 out of every $4 is on

Medicaid, is either on seniors, on nursing homes, disabled people,

or the unemployed.

26

Let me just leave you with this thought. Hopefully this commission will look at ways to modernize Medicaid outside the budget

process. I would hope you would encourage them to do that. I

would just look within this Federal budget, because I think there

are other ways of doing it, and Michigan would be one good example, if you would take a look at it.

Let me ask Dr. Duke this question.

You said in your opening, and I found it pretty fascinating, that

about 2001 we had 10 million people on the system, and your goal

is to get, by the end of fiscal year 2005, 16.3 million. You know,

we are putting more people on, but the reimbursement isn’t there,

and you are bringing on new centers and the centers now, as we

will hear in the next panel, don’t have enough money to compete.

So for putting on 60 percent more people than we did 5 years ago,

we have more health centers than we had 5 years ago, but we are

not keeping up with the reimbursement rates from the Federal

Government the same, so again, something has got to give. Either

we have got to cut back on providers, we have got to cut back on

the existing ones. We are going to have to find money elsewhere,

correct?

Ms. DUKE. The health centers are supported by a variety of funding sources. The grants under the Public Health Service Act constitute about 22 percent of their funding. Medicaid is about a third

of their funding. But they also have funding that comes in from the

State and from private philanthropy, and in fact, about 75 percent

of their funding does not come through the program that we conduct. They are locally funded as well. So I don’t want to just tie

the public health centers to one source of funding.

Mr. STUPAK. Sure. Well, let me ask it this way. From just the

Federal Government, if you had 10 million people being served,

and I don’t know how many centers there were back in 2001, but

you had it in your testimony——

Ms. DUKE. 3,200.

Mr. STUPAK. 3,200. And in 2006, you are going to have how

many?

Ms. DUKE. 4,400.

Mr. STUPAK. Okay. Are the 3,200 going to get the same amount

of money in real dollars, not taking into account inflation, what

they got in 2001? Will they get that same amount in 2006?

Ms. DUKE. Well, there will be a different body of health centers.

Mr. STUPAK. Sure. We are expanding them.

Ms. DUKE. There will be a different body of health centers, and

they will have different sources of funding. They will have Medicaid. They will have our grant. They will have Medicare. They will

have private philanthropy——

Mr. STUPAK. Well, that is the same thing they had in 2001. The

point being, how can we continue to expand a program if we are

not taking care of existing health centers now?

Ms. DUKE. The health centers now have received, over the last

several years, grant money, and they have received base adjustments, $31 million in 2005. In addition, they receive sources of

funding outside of the Federal Government.

Mr. STUPAK. I agree with all of that. The Rural Flexibility Grant

Program, it is a great program. Let us zero it out this year. How

27

do we justify that? How about the Rural Health Reach Grant Program? That is $28 million. It took a 70 percent cut this year. So

I mean, how do we make that stuff up?

Ms. DUKE. The Rural Health Program is funded under a different category, and the——

Mr. STUPAK. Or not funded. But go ahead.

Ms. DUKE. The reasoning behind that has been that the rural areas are significantly benefited, about $25 billion, under the Medicare Modernization Act, and the categorical programs that were

under our program were considered to be now not needed since the

funding would come through MMA.

Mr. STUPAK. Do you really think any of the health care centers

are going to say we no longer need the Rural Flexibility Grant Program or the rural outreach grants, that they are no longer needed

underneath your program? They still need those programs, don’t

they?

Ms. DUKE. The rural health centers and the variety of recipients

of those grants are in the process of just getting used to the new

act that is just coming into implementation.

Mr. STUPAK. Getting used to no money? I mean, if you zeroed out

the program, they are just getting used to it.

Ms. DUKE. The new act will come in in 2006, and that is the

2006 budget you are quoting.

Mr. STUPAK. Right. Okay.

Mr. WALDEN [presiding]. The Chair now recognizes the chairman

of the full committee, Mr. Barton, for questions.

Chairman BARTON. Thank you.

And I don’t think I will take 10 minutes.

First, Dr. Duke, I want to thank you for your assistance in helping make the decision to fund the health clinic in Tarrant County

at John Peter Smith. We appreciate that.

I guess my basic question is just kind of a general one. How

many counties and cities do we have that could use a rural health

clinic or a public health clinic that don’t have them right now?

What percent of the truly eligible needy population is not being

served that could be served? Are we serving half of the population,

two-thirds of the population, a fourth of the population?

Ms. DUKE. Sir, I don’t have an exact number to give you there.

We have a number of counties that have significant populations at

below 200 percent of poverty. The question is some of them have

a rural health clinic. Some of them have an FQHC, so I don’t exactly have the exact number to give you at this moment.

Chairman BARTON. Well, but give me some number. I mean, how

close are we to saying that we are generally meeting the need that

the program was designed to meet? I am not holding you to any

specificity, just generically. Are we——

Ms. DUKE. I will just use the data I have myself. If I go by the

number of applications we receive versus the number of applications are we are actually able to fund, that might be a piece of

data. We can fund about 20 percent of the grant applications we

receive, which means that four-fifths of those that we receive, we

can’t fund.

Chairman BARTON. And so all of those are qualified? They are legitimate applications that meet the minimum requirements?

28

Ms. DUKE. Yes, all of the grants that I am referring to there

were deemed to be eligible to compete and had applications that

could be reviewed by an objective review committee.

Chairman BARTON. Okay. So just kind of generally, we are only

meeting 20 percent, or one out of five, and it could be 1 out of 4

or 1 out of 3, but we can’t say that we are meeting 7 out of 10.

We are not at 70 percent or 80 percent. We are under 50 percent,

not over 50 percent.

Ms. DUKE. We have a base of 3,200 that we started with in 2001,

and so given that as a base, which lays a foundation, then on top

of that, the competition is that we are funding about one-fifth of

our applications.

Chairman BARTON. Okay. This application process, I mean, I am

familiar with it now, because I went through it in my home county

in my home District, do you consider that to be a fair application

process?

Ms. DUKE. Yes, it is a fair application process. It has many,

many challenges. One of the challenges is ascertaining need. Need

exists in a variety of ways as you go across this really very diverse,

vast country. And need looks different in Alaska than it looks in

Florida. It looks different in Montana than in Texas. And one of

the things we did fairly early on was to change the process to allow

communities to tell us what need looked like in their community

and then tell us how they were going to meet that need. And that

need boils down to what are the barriers to care in the area and

what are the disparities and health results that come from those

barriers? So we have just put on a Federal Register notice, and we

have received some answers back that we are in the process of having the experts review. To get feedback from the communities as

to the adequacy of those criteria and also the percentage of weight

that should be put on need in both the first round of scoring, which

is just strictly on need, and then in the second round, the percentage of need as related to how that need is going to be met.

So we are constantly trying to assess that process, make sure

that it is fair, and make sure that it is getting a return of good

health care for the investment the taxpayers are making.

Chairman BARTON. My last question, Mr. Chairman, and I will

refer to this to Mr. Smith.

We are looking at Medicaid reconciliation and Medicaid reform.

We are going to do that in our Health Subcommittee later this

summer. Are these federally qualified health centers an avenue

that could be utilized more to get better quality care for low income

at a competitive price if we were to make a few changes in the current Medicaid laws?

Mr. SMITH. Mr. Chairman, I think that FQHCs in particular are

vitally important because of access in under-served areas, and they

are very important for that. In terms of reform or generating a

lower rate of growth——

Chairman BARTON. No, I am talking about expanding them, not

contracting them, by taking the pressure off emergency rooms in

our central hospitals, could we get better quality at less cost if we

expanded the use of these federally qualified health centers? That

is probably a better way to phrase the question.

29

Mr. SMITH. I think they are key players in under-served areas.

In terms of great impact on the overall program, as I said, Medicaid reimbursement for FQHCs is about $1.3 billion out of total

Medicaid spending of well over $300 billion. They are very important for local areas in giving access, but nationally, FQHCs are a

relatively small part of the program.

Chairman BARTON. I am going to yield back. I yield to Mr. Walden.

Mr. WALDEN. Thank you, Mr. Chairman.

I was just going to point out that as we have this discussion

about the size of the budget for the federally qualified centers

versus overall Medicaid, it is important to go back to a comment

made earlier and the work that is being done to look at the savings

that are achieved for Medicaid because we have these centers in

place. And it was pointed out to me that a 1980 study looked at

a set of Medicaid patients who used community health centers back

then and had a 30 to 65 percent lower hospitalization rate and

used 12 percent to 48 percent less total Medicaid funds than a

similar group of Medicaid patients who did not use such centers.

So if these data hold true today, 25 years later or 20 years later,

whatever it is, they are enormous savings. I mean, it is just sort

of logical that if you are not feeling well and you can go to a health

center in your community and get checked out and sort of do the

preventive end of things, you would probably be more likely to do

that, at least in this period of time, than waiting if there is no clinic. That means I have got to go to the hospital, and you wait and

suddenly you just go to the ER. And the most expensive portal of

health care is open to you. And so it just seems to me, logically,

that if we could encourage families and encourage these health

care clinics——

Chairman BARTON. Especially if only 20 percent of the eligible

population has one of these.

Mr. WALDEN. Yes. And that is why I think the President is on

track.

Chairman BARTON. Expand this program and——

Mr. WHITFIELD. I might add, Mr. Chairman, that I have heard

some people make a comment, half seriously and half not seriously,

that we might be better of as a Nation, from a health care perspective, if say half of the money spent on Medicaid now was used to

create additional community health care centers, that that would

be a greater savings, provide better health care, in other words

think outside the box a new model.

Chairman BARTON. Isn’t it great to have these hearings so we

can talk to each other while you all watch?

Mr. WALDEN. Well, can I just finish up on——

Chairman BARTON. Sure. I am going to yield the balance of my

time to Congressman Walden, the vice-chairman of the subcommittee.

Mr. WALDEN. Thank you. I appreciate that, Mr. Chairman.

There is one question. I noticed today, in the Congress Daily, Mr.

Smith, you are quoted talking about——

Chairman BARTON. This just means after he asks his questions

he can leave. He doesn’t have to wait for another hour. That is how

sneaky he is.

30

Mr. WALDEN. Well, because I had to yield, when I was in the

chair, to you, because you are like senior and all and have the big

gavel.

So in the 43 seconds I have left on your time, I guess the question is as we look for savings, one of the things that has been identified recently is some pharmaceuticals that are given to certain

people, and specifically when it comes to things like Viagra, for potential sex offenders through Medicaid. You have spoken out on

that. I mean, are there other things like that that we need to be

looking at when we look at how to direct the money to the best

place?

Mr. SMITH. I think there are lots of areas in Medicaid to look at.

FQHCs show that when you have access, it is going to lower costs

for the total part of the system. We have talked, and Chairman

Barton held a hearing last December on how Medicaid is overpaying for prescription drugs, finding ways for Medicaid to be a

better payer, and the extent to which Medicaid can get to the

under-utilization and the over-utilization by improving service delivery. I think that is where the promise really lies. And we have

seniors who are on drugs that are contraindicated for them individually. You go to a PACE program and when I go in, I inevitably

ask, ‘‘What is the average number of drugs a senior is on when

they come into the clinic?’’ Once they have started, 6 months later,

they are on half of the number of drugs they were on when they

started. So I think there is a lot of over-utilization in the program

and by improving the way we deliver services we will also improve

health care and lower the rate of growth.

Mr. WALDEN. Well, the figure on these impotence drugs are like $2 billion for Medicare and Medicaid combined. So we are talking

about billions around here. It adds up.

Mr. SMITH. Yes, sir.

Mr. WHITFIELD. The gentleman’s time has expired.

I might also just add that I had, myself, asked the General Accounting Office to do a little more comprehensive study of some of

the savings to Medicaid and Medicare as a result of having these

community health centers, which touched on some issues that

Chairman Barton raised, and I am looking forward to their getting

back with us on that study.

At this time, I will recognize the gentlelady from Wisconsin, Ms.

Baldwin.

Ms. BALDWIN. Thank you, Mr. Chairman.

My question is for Dr. Duke. I would like to get your opinions

on the sparsely populated area preference, which has been in effect

since 1995. And it is a provision that I would say adversely affects

my State, and as I understand, most States in the Midwest, East,

and South of our country.

Now let me just go through my understanding of this preference

before I ask your opinion.

My understanding is that a sparsely populated area is a preference, which is unlike a priority designation, and that a priority

designation can add a few points to an applicant’s score, but a preference requires that an application that meets minimal qualifications must be funded ahead of other applicants, perhaps with significantly higher overall scores. Thus, many sparsely populated

31

area applicants that meet the needs test cutoff and score well

enough to be fundable are allowed to really jump to the front of the

funding line, regardless of their overall comparative merit and

score.

I represent part of the State of Wisconsin and much of Wisconsin

is quite rural. But none of the counties in Wisconsin meet the very

narrow criteria to be a sparsely populated area, which, to my understanding, is a county with a population of seven persons or

fewer per square mile.

I think you previously testified that a few years back, in 2002, over $13 million was provided to 24 sparsely populated applicants

in eight States, yet 125 non-sparsely populated applicants with

higher scores than the lowest scoring sparsely populated applicant

were passed over for funding.

So I guess I would ask whether you would be supportive of Congress making the sparsely populated applicants a priority rather

than a preference. And I would also be interested in knowing what

changes in the scoring process you would support in order to make

sure that rural applicants get their fair share of these grants.

Ms. DUKE. The legislation, as you describe it, sets up certain categories of applicants, among them sparsely populated, which, as

you describe, is a requirement that has a population number of

seven——

Ms. BALDWIN. Seven people or fewer per square mile.

Ms. DUKE. [continuing] people or fewer per square mile, and certain States fit that requirement.

One of the barriers to care that is part of the consideration is the

issue of geography and distance. And that was the comment I made

a bit back that America is an incredibly diverse country. And so

the barriers to care in one State may look significantly different

from the barriers to care in another State or in a section of a State.

So that was the thinking of the Congress in putting that sparsely

populated provision in. There are also provisions for special treatment of migrant health centers, public housing, and homeless

health centers as well. And the justification is, as I have indicated,

the administration does not have a position on changing those designations at this point, but I will raise the issue.

Ms. BALDWIN. Okay. And then for Mr. Smith, I am certainly very

supportive of the increases in funding for community health centers. And in my State, centers have been able to use additional

funding to expand. In conversations with some of the directors, it

is my impression that CMS and HRSA have put a large emphasis,

and perhaps even a requirement, on build-out. For example, if a

clinic is expanding, they must also build dental suites as part of

that expansion. But what happens, it seems that less emphasis is

given to funding the actual health care that would be provided in

these build-outs. So I guess my question is what kind of requirements are placed on centers that are expanding? And is it appropriate to place such emphasis on build-outs without a corresponding emphasis on the services delivered?

Mr. SMITH. I thank you for the question, but I think actually the

administrator would be better able to respond on build-out.

Ms. DUKE. I will have to get back to you for the record on that.

I need to check out what that issue is.

32

Ms. BALDWIN. Okay.

Ms. DUKE. I apologize. I need to follow up on that.

Ms. BALDWIN. We would be happy to work with you to get some

more information.

Ms. DUKE. Okay.

Ms. BALDWIN. I do not have any further questions, and I would

yield back the remainder of my time.

Mr. WHITFIELD. Thank you, Ms. Baldwin.

At this time, we would recognize Mr. Walden.

Mr. WALDEN. Yes. Mr. Chairman, I had a couple minutes of the

other chair’s time, and I know we have got votes coming up, so I

will yield to other members.

Mr. WHITFIELD. Okay. Mr. Burgess, you are recognized.

Mr. BURGESS. Thank you, Mr. Chairman.

I will, too, try to condense this because of votes.

Dr. Duke, thank you for your commitment, the administration’s

commitment to the community health centers program, and thanks

for your interest to work with Congress to continue the expansion

currently underway. The need for the comprehensive services that

these centers provide is on the rise, based on the number of applications that your office receives annually. And I see this need back

home, where I am very eager to have another health center established in Tarrant County. Chairman Barton correctly pointed out

that one was placed in North Fort Worth just recently, but we very

badly need one in the southeast part of town.

Can you tell me how many applications you received last year

that were acceptable for funding? If there were no limits on funding, how many would you have funded?

Ms. DUKE. I think I am just going to have to report on one

round. I believe we received 330 some in the round, and we were

able to fund 76, I think, in that round, and it came back to about

25 percent. But that is from memory. And what I would rather do,

frankly, is to share with you a table that would have the accurate

data rather than trying to do it from memory.

Mr. BURGESS. Very well. If additional funding is coming your

way, what plans do you have for ensuring that the maximum number of proposals are going to be accepted to receive funding?

Ms. DUKE. We have put together a strategic planning process in

each State that is led by the primary care association in each State

to identify where needs are and to give technical assistance to communities to build those areas. What we are doing right now is

those plans are developed and the applications that are coming in

are extraordinarily good. Basically, we follow the legislation, as I

just mentioned to Ms. Baldwin, and we follow the requirements for

the set-asides for the various categories. And then we take the

available money and we fund centers in order of their scores until

we have no more money. And so we have lots of applications that

are high-quality applications that we would continue to fund and

we believe that the strategic planning process will continue to

bring in good applications from deserving communities.

Mr. BURGESS. Very well. Thank you.

Mr. Smith, if I understand this correctly, Medicaid reimbursement at a federally qualified health center or a look-alike facility,

33

is at the usual and customary rate as opposed to the Medicare

maximum allowable, is that correct?

Mr. SMITH. There are a couple of different ways. The payment

methodologies can use a prospective payment system or a cost-reimbursement system that is then indexed, or an alternative that

the FQHCs and the States can agree upon. So there are really

about three different ways you could potentially pay. And then on

top of that, if you are serving an individual in Medicaid who is enrolled in managed care, the managed care plan may be the payer,

but the State would also pay a supplemental rate at an FQHC site

in order to make the FQHC whole.

Mr. BURGESS. Well, certainly I support the administration’s goal

of providing more federally qualified health centers. Given the

chairman’s discussion and Mr. Walden’s discussion, I just can’t

help but think there ought to be some way to pay providers just

a little bit better and have that network of providers for that population without standing up a clinic with walls. That is, there must

be a network available in the community already that would be

willing to see those patients and able to see those patients within

existing facilities without having to stand up the walls of a clinic

and pay a clinic administrator and all of the overhead associated

with a clinic. Is any work being done in that area to sort of establish a federally qualified health center without walls?

Mr. SMITH. I will ask the administrator to help me out. I think

part of——

Mr. BURGESS. Well, clearly, Chairman Barton, if I could just add

to that, said this is a more cost-effective way of delivering care. If

we are able to keep the patient in the doctor’s office, whether it be

a federally qualified health center or a private office, it is cheaper

than going to the emergency room where you have the highest

overhead on the planet. So you know, maybe I am just more making an observation rather than asking a question. It would seem

to me that if you can capture physician networks within a community that needs a federally qualified health center but doesn’t have

one, and if you just pay a little bit better, you are going to be able

to place those patients within private offices and, as Mr. Walden

pointed out, possibly save a ton of money in the process. I just

think back to my own days in private practice. No one ever expects

to make money on a Medicaid patient, and in fact, I think we have

been told that by the previous iteration of CMS that was HCFA,

we just expect you to go broke a little more slowly. And I think

that was sort of the business model where this was set up.

But please feel free to respond to that, and again, it may be more

of an observation on my part than a question. It just seems like

when we are looking for a better way to do things, this would be

a better way.

Mr. SMITH. A couple things. I think you are pointing out that the

solution is outside Medicaid in terms of getting more Americans insured. And certainly, the President has offered a number of proposals that expand insurance in the first place. Within the Medicaid program, treating people and giving them access to care in a

clinic or an FQHC or in the doctor’s office instead of in the emergency room is a goal certainly we all share. And I think that part

of that is it is going to come in a variety of different approaches.

34

And as we have expanded coverage, there have also been folks that

want to know if Medicaid is paying its share. I think Medicaid is

paying its share for the Medicaid recipients in the reimbursement

system that we presently have. As I stated, Medicaid accounts for

64 percent of total patient-related reimbursement to FQHCs.

So I think Medicaid is paying its share, and I think Congress has

made sure that Medicaid is paying its share in the PPS system, the

supplemental payments above the managed care rates, et cetera.

But the real goal everybody has is to expand insurance so people

are seeking care in the most appropriate setting instead of in emergency rooms.

Mr. BURGESS. Well, is there a subset of the population that really

just needs help buying insurance rather than the full faith and

credit of the Medicaid system behind them?

Mr. SMITH. Again, I think what the President is proposing is to

be able to expand coverage through a variety of different ways,

whether it is through the employers, giving tax credits to small

businesses, forming purchasing pools, or tax credits to help people

meet the cost of care. They could take a variety of approaches, and

the President, in his budget, has increased the Federal commitment to health care spending.

Mr. BURGESS. Mr. Chairman, I have taken more time—I am

sorry. Did you have something you wanted to add, Dr. Duke?

Ms. DUKE. I just could add that we do have some models where

centers have entered into partnerships with private providers. In

Salt Lake City, 600 private providers work with the county, the

hospitals, the doctors, and the health centers to do what you are

talking about in the sense that the services are expanded by private contributions from doctors who take uninsured patients and

provide those services as part of their commitment to the community.

Mr. BURGESS. Thank you, Mr. Chairman. I have used more time

than I intended. I will yield back.

Mr. WHITFIELD. The gentleman from Washington, Mr. Inslee.

Mr. INSLEE. Thank you.

I wonder if either or both of you could talk about the clinics’ experience with the Medicare prescription drug bill. What percentage

of folks are signed up for that? What are not? What experience

have you had with the bill that was adopted a while back?

Mr. SMITH. In terms of enrollment, there are a number of people

who will automatically be enrolled, people who are presently eligible for Medicaid will be automatically enrolled into a plan. I don’t

believe the MMA had a specific provision about the role of the

FQHCs, but certainly at CMS and HRSA, we are encouraging

PDPs and the plans to include FQHCs in their network. FQHCs in

particular play a very vital role in access for individuals, and we

are certainly encouraging that. For enrollment of the rest of the

Medicare population, we are on the threshold of the Social Security

Administration and CMS doing great outreach efforts to encourage

individuals to apply for the low-income subsidy so that Medicare

will pay the vast majority of the cost of enrolling in the part D prescription drugs. We are encouraging the plans to make the FQHCs

a part of their network. So we don’t have statistics yet on actual

35

enrollment, because we are at the beginning of that for the entire

population.

Mr. INSLEE. So can you give me any flavor at all? Are people

rushing to sign up on their first visits to the health center, or is

this a hard sell? Or can you give me any flavor of what is happening out there?

Ms. DUKE. I have just, within the last week, sent out a letter to

health centers to initiate this process, so we are really at the very

beginning, and I have no data on that at this point. But as we get

data, I will be glad to share it with you.

Mr. INSLEE. Have you had any feedback from the health centers

about the relative response to their constituents at all to this effort?

Ms. DUKE. No, I just sent the letter out within the last week.

Mr. SMITH. If I may add, I believe that with Social Security’s capabilities, we are going to have very sophisticated analysis at the

local level, by county, to be able to identify the take-up rates. As

we have said, we are at the very beginning of that, but over time,

those will be targeted. We have teams around the country who will

continue to look at that data to make certain that the take-up rates

are as positive as possible.

So if we see that enrollment is lagging behind, we have teams

that will then provide outreach to sign up the beneficiaries.

Mr. INSLEE. So you haven’t gotten calls from the health centers

that they are overwhelmed and you have got to put on new help

to get people clamoring to get on that? It doesn’t sound like it anyway.

Mr. SMITH. We have a whole variety of different agencies involved in the outreach including Social Security and SHIPs. We

have the area agencies on aging. The FQHCs are part of a very

large effort to do the outreach.

Mr. INSLEE. Well, I suspect you won’t be overwhelmed with the

needs of people to process this, so that probably won’t be a problem.

Thank you.

Mr. SMITH. Thank you.

Mr. WHITFIELD. Ms. Blackburn, you are recognized for 10 minutes.

Ms. BLACKBURN. Thank you, Mr. Chairman.

And I am going to try to consolidate this as much as I can, so

that we get through everyone before we go to vote.

And Mr. Smith, you said something earlier that I think hits the

nail on the head with the centers that I have seen, and that is that

when you have the type of access that these centers provide then

you do have a lower cost. I think the other thing that I have noticed in the centers is the environment. And you create an environment where there is an acceptance that it is okay to ask questions

and to get some education on how to deal with health care situations. And I think that is a positive as we look for ways to better

educate.

Mr. Smith, one more thing before I go to Dr. Duke.

The revenue stream, we have talked around that a couple of

times, and you mentioned 36 percent of the funding comes from

Medicaid payments, Medicare and Medicaid. If you will just in

36

writing for me later, break that stream down as to how most centers arrive at their full funding.

And then I want to move on to my risk management liability

questions that I have.

And Dr. Duke, the HHSIG’s report from February 2005 talks

about HSRA no longer performing onsite primary care effectiveness

reviews and that HSRA is developing a new performance assessment protocol for all its grantees, including the health centers. And

what I would like to know is if this has been developed and if it

has not, when it is to be developed and fully implemented.

Ms. DUKE. We are in the process now of doing the first full year

of performance reviews for our grantees. The approach we have

taken is to do one review per grantee and to cover all of the grants

that they might have from us so that perhaps they have a health

center grant, they might have an HIV/AIDS grant, so that we

would not go back twice to the same grantee. We would do them

all at once.

Ms. BLACKBURN. So your new model will be one onsite review.

Ms. DUKE. Yes.

Ms. BLACKBURN. Then the balance, are you planning to handle

that as a web-based review or information submission or what is

your template?

Ms. DUKE. The approach we have taken is that the reviews actually use both.

Ms. BLACKBURN. Okay.

Ms. DUKE. That is to say there is a preparatory stage, which is

document reviews, web-based, and so forth, and then there is an

onsite, and then there is a feedback process, and it has been received very well by grantees as positive.

Ms. BLACKBURN. Okay. Great. I will be interested in following

that. I think that is an important part of this concept as we look

at the care delivery, the cost-effectiveness, and increasing the scope

of the program.

In that vein, you have got 33 percent of the centers that have

received accreditation from the Joint Commission of Health Care

Organizations. Okay. And when do you think you are going to have

all current centers or your grant recipients receiving accreditation?

Ms. DUKE. We are working very closely in trying to move that

forward. We have a goal of having 100 percent coverage, but we

won’t reach it this year.

Ms. BLACKBURN. Are all of the centers actively pursuing accreditation or——

Ms. DUKE. I don’t believe I could say all of them are seeking accreditation at this point. There are issues of cost involved.

Ms. BLACKBURN. Okay.

Ms. DUKE. And so I think at this point, people are balancing

many competing demands, but that is our goal is that we will reach

that. But we won’t reach it this year.

Ms. BLACKBURN. Okay. Let us quickly talk about risk management controls, because the Inspector General’s report notes that

the risk management training is lacking. And I will ask you to respond to this in writing, because we are in the vote. I would like

to know how the centers are conducting their risk management

37

training workshops and if you all have a comprehensive agenda for

covering that risk management.

And then my final question to you will be, and you can respond

in writing to this, too, just for the interest of time, looking at the

health center tort claims fund from which the malpractice claims

are paid. And I would like to know the current status of that fund

and what is the average amount of a malpractice claim on one of

the centers?

And with that, Mr. Chairman, I will yield back.

Mr. WHITFIELD. Thank you.

Mr. STUPAK. Mr. Chairman, before we yield, you were asking

questions on the OIG report. Do you have that, and could you put

it in the record so we could have that?

Ms. BLACKBURN. Yes, I do have that, and I will be happy to put

it in the record.

Mr. STUPAK. Okay. Thank you.

Mr. WHITFIELD. Without objection, so ordered.

Mr. Green, you are recognized.

Mr. GREEN. Thank you, Mr. Chairman, and I will try and be

brief, because I know we have a vote in a little over 2 minutes.

One, I want to thank you and the ranking member for allowing

me to be on the subcommittee. I serve on the Health Subcommittee, and obviously community health centers are important,

and I want to thank HRSA for the ten for Texas and we received

five in the Houston area. We have identified, through Dr. Sanchez,

who used to be our Health Commissioner. I don’t know what we

call him now since the State legislature merged all of the agencies,

identified community-based clinics as a way that we can deal with

it with the resources that we don’t have. But it brings it down to

the local level oftentimes that, for example, the one that was just

awarded in Pasadena had fund-raisers and we had both business

and, in fact, one of our for-profit hospitals convinced that over half

their emergency room contacts could be eliminated by having a

community health clinic. And our numbers, we think 57 percent of

the emergency room visits in Houston and Harris Counties are people who could have been served by a community-based clinic. And

so I agree that we could look at lowering some of our other costs

if we do that.

One of the concerns I have is we have been looking at, in the success we had, two of those five were in the District I represent. And

what I was trying to see, is it easier for FQHCs to have amendments or look-alikes than it is to have another free-standing one,

because it seems like maybe they would have better response from

HRSA for expansion? So if we only have five, for example, in the

city of Houston and we are looking at the next round to see what

we can do, is it better to have just expansions of clinics, additional

sites that are in the needy areas, or it seems like it is much harder

to get a whole new free-standing clinic with a new board?

Ms. DUKE. The look-alikes often make very good candidates for

actual grant status in the sense that they already meet many of

the same requirements. And so I don’t think that the question is

mutually exclusive. I think moving to look-alike status has the advantage of providing care and getting some benefits from the FedVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6602 20751.TXT HCOM1 PsN: HCOM1
38

eral Government and then being able to compete very well. Lookalikes have competed very well for those grants.

Mr. GREEN. Okay. The other issue for the one of the clinics, I

know the funding doesn’t begin until later this year, and I know

in 2005, Congress provided $775 billion for community health centers, and I know that several programs, the Bureau of Primary

Health Care, have it delayed during the current fiscal year. And

can you explain how the fiscal year 2005 funding for community

health centers has been allocated or is being allocated? It looks like

the 330 grants are being moved into the next budget year.

Ms. DUKE. We have the costs of continuing the grantees we already have, which is a number of about almost 3,700. And so they

continue to get grants to continue their operations. And so the

issue is the availability of funds to start new centers. One of the

issues, for me, or at least my sense, is that there is a terrible cost

for people that have to keep coming in to compete over and over

again. And so one of the things we have tried to do was to identify

the groups who had already competed successfully and to identify

them for funding in the next round rather than go through another

very costly grant process so that we, in essence, have one leg up

on the next cycle.

Mr. GREEN. And Mr. Chairman, my last statement is if we use

the cap program to put together these collaboratives for the community, and I know the President is supporting community-based

clinics, but we also need the cap program to be able to put together

these collaboratives, particularly in areas that we have to bring the

community groups and the folks together on.

But Mr. Smith, my last question for CMS is two of the FQHCs

in my District have expressed frustration with the process of obtaining Medicaid provider numbers for Federal reimbursement.

There was a merger between two of our clinics, and it took 7

months to get a provider number. Is there some way that if you

have two clinics, for example, that may have separate numbers

that it could be fast-tracked on instead of the delay sometimes?

Mr. SMITH. Mr. Green, that is Medicare. Medicare is enrolling

the providers directly. I would be happy to get back to you on that.

Mr. GREEN. Okay.

Mr. SMITH. I just don’t know off hand.

Mr. GREEN. I know our own experiences with our one in Pasadena, we needed the number very quickly, and thank goodness

there is a Texan who I know is family who runs CMS, and we were

able to get that number quickly, but not everybody can call their

Member of Congress and get it done.

Mr. SMITH. If you could give me their names, I will make sure

we check them.

Mr. GREEN. Okay. We can get that information to you.

Mr. SMITH. Okay.

Mr. GREEN. In fact, when we run vote, my staff will be able to

share it.

Mr. SMITH. We will be happy to follow up.

Mr. GREEN. And again, thank you, Mr. Chairman, for letting me

in. It is a great——

Mr. WHITFIELD. Thank you, Mr. Green.

39

We do have a series of four votes on the floor. We had a lot of

other questions for you, Dr. Duke, and Mr. Smith, but we are not

going to ask you to stay, because we have another panel coming in.

But we are going to submit some additional questions in writing,

particularly for you, Mr. Smith, and one being, for example, should

States be allowed to spend Medicaid dollars to establish community

health centers themselves, meeting the guidelines? Just something

to think about. And we will have some additional questions for you.

And then Dr. Duke, one thing that I would like to ask you all

to provide us is 2003/2004 list of new grantees by Congressional

District. If you would do that, we would appreciate it. And Mr. Stupak, do you have anything?

Mr. STUPAK. Not at this time.

Mr. WHITFIELD. Okay. Okay. And like I said, we will submit additional questions in writing.

And thank you all so much, and we look forward to continue

working with you as we strive to improve health care.

And with that, the first panel is dismissed.

For those of you on the second panel, as I said, we have four

votes. We are going to go cast those votes now. I imagine we could

be back here by about 4:35. And we will swear you in at that point,

and we will begin your panel.

So thank you very much.

With that, we are in recess.

[Brief recess.]

Mr. WHITFIELD. Okay. On our second panel, we have Mr. Roderick Manifold, who is the Executive Director at the Central Virginia Health Services, Incorporated; Mrs. Kim Sibilsky, who is the

Executive Director of the Michigan Primary Care Association; Mr.

Daniel Hawkins, who is the Vice-President of the National Association of Community Health Centers; Dr. Janelle Goetcheus, who is

the Medical Director of Unity Health Care; and Dr. Leiyu Shi, who

is an Associate Professor at Johns Hopkins School of Public Health.

We welcome all of you.

And where is Mr. Manifold? Okay. Well, Mr. Stupak has just

come back from voting as well, and so as soon as we get Mr. Manifold, we will go on and have you sworn in and you can begin your

testimony.

And we do genuinely thank you for being with us today, and we

look forward to hearing what you have to say.

I will tell you, if it is going to be 10 minutes, we will go on and

swear these in, and we will go on and start with your testimony.

So I will call the meeting back to order. And you all are aware

that this is an investigative hearing, and it is the practice of the

Oversight Investigations Subcommittee that we give testimony

under oath. Do any of you have any difficulty giving testimony

under oath? And you also know that when you give it under oath,

if you want legal counsel, you have that right. And assuming you

do not have legal counsel, so if you will stand, I will swear you in.

[Witnesses sworn.]

Mr. WHITFIELD. Thank you. Okay. You are now under oath, and

Mrs. Sibilsky, we will start with you. And be sure and turn your

microphone on and get it up close. And you may begin your 5-

minute opening statement.

40

TESTIMONY OF KIM SIBILSKY, EXECUTIVE DIRECTOR, MICHIGAN PRIMARY CARE ASSOCIATION; DANIEL R. HAWKINS, JR.,

VICE-PRESIDENT, NATIONAL ASSOCIATION OF COMMUNITY

HEALTH CENTERS; A. JANELLE GOETCHEUS, MEDICAL DIRECTOR, UNITY HEALTH CARE; LEIYU SHI; AND RODERICK

V. MANIFOLD, EXECUTIVE DIRECTOR, CENTRAL VIRGINIA

HEALTH SERVICES, INC.

Ms. SIBILSKY. Good afternoon. My name is Kim Sibilsky, and I

am the Executive Director of the Michigan Primary Care Association.

On behalf of Michigan’s federally qualified health centers, I

thank you for this opportunity to testify.

Representing community-based primary care centers, MPCA provides a myriad of services, including health professional recruitment, clinical support, technical assistance services, education and

training, as well as assisting organizations becoming community

migrant health centers or other primary care delivery models. In

short, we are a membership association of FQHCs dedicated to educating for the medically under-served.

Mr. Chairman and members of the subcommittee, I believe the

most important job of a health center is to serve as a medical home

for medically under-served communities. In Michigan, health centers serve as the medical home and are delivering comprehensive

primary care to more than 425,000 persons in more than 140 communities and neighborhoods. Our 29 FQHC organizations form an

essential component of the State’s safety net for health care services. To that end, we are committed to bringing high-quality, comprehensive health care to people and communities in Michigan that

desperately need them.

This job is getting tougher every day, however. Growing health

care costs coupled with increased uninsured and underinsured people in Michigan and nationwide directly contributes to the growing

number of Medicaid-eligible people. In Michigan, nearly 25 percent

of the State’s low-income residents lack basic health insurance.

And about 12 percent of the overall State population is uninsured.

Seen another way, unless these people are fortunate enough to

live in a community with an FQHC or a free or a charity clinic,

they have few options, other than their local hospital’s emergency

room, to receive care. And let me tell you, there are consequences

to this reality.

In 2001, Michigan looked at preventable hospitalizations, those

for which timely and effective ambulatory care can help reduce the

risks for common problems, such as asthma, diabetes, or dehydration. High rates of preventable hospitalizations in a community signal potential barriers to care, including lack of sufficient primary

care resources.

The review estimated that Michigan had over 240,000 preventable hospitalizations, which resulted in almost 1.3 million unnecessary inpatient days of care. But this does not have to be the reality

today. FQHCs strategically placed in under-served communities increase access to early intervention and improve the economic and

physical health of Michigan’s communities.

Through the President’s initiative, Michigan has expanded access

to care to over 56,000 residents in 28 communities. As Michigan’s

41

uninsured population continues to grow, the State also is experiencing record levels of enrollment in Medicaid as the result of our

slow economic recovery. Currently, Michigan’s Medicaid program

covers one out of seven citizens. With such high Medicaid enrollment numbers and low State revenues, the pressure is on to identify cost savings.

Mr. Chairman, FQHCs stand ready to be a part of the answer.

In Michigan alone, 29 FQHC organizations currently care for 10

percent of all Medicaid enrollees for less than 1 percent of the physician services budget. In other words, health centers are saving

the Medicaid program money.

This achievement is made possible largely because of Congress’

wise decision to support adequate Medicaid reimbursement to

health centers by creating the prospective payment system for

FQHCs. I am proud to say that the implementation of the prospective payment system is a huge success, and we applaud Congress

for their support.

However, as Congress considers to Medicaid, it is critical that it

recognize the unique relationship between health centers and Medicaid. In particular, lawmakers must appreciate the changes in

Medicaid that could be construed as minor could actually have devastating impacts on health centers. For example, the elimination of

dental services for Medicaid adults in Michigan in 2003 is still

causing tremendous stress to the system and to health centers.

And to be sure, Michigan’s Medicaid adult benefit waiver program

continues to threaten FQHCs’ abilities to protect Federal dollars

for the uninsured in the State. Lawmakers must be careful not to

inadvertently impact the mission of health centers during discussions on Medicaid reform.

And I, along with the Michigan health centers, look forward to

working with Congress in this effort.

Thank you for this opportunity to talk with you. If there are any

questions, I would be pleased to answer.

[The prepared statement of Kim E. Sibilsky follows:]

PREPARED STATEMENT OF KIM SIBILSKY, EXECUTIVE DIRECTOR, MICHIGAN PRIMARY

CARE ASSOCIATION ON BEHALF OF THE MICHIGAN PRIMARY CARE ASSOCIATION

Good Afternoon. My name is Kim Sibilsky and I am here representing Michigan’s

Federally Qualified Health Centers (FQHC), which include community, migrant,

homeless health centers. I am the Executive Director of the Michigan Primary Care

Association (MPCA). The MPCA is a nonprofit organization developed to promote,

support and develop comprehensive, accessible and affordable, quality primary

health care services to everyone living in Michigan. Representing organizational

providers and affiliates of community-based primary care centers in the state, we

provide a myriad of services, including health professional recruitment, clinical support and technical assistance services, education and training as well as helping organizations become a Community/Migrant Health Center or other primary care delivery model.

Thank you for this opportunity to speak with you today.

Federally Qualified Health Centers (FQHC) provide medical homes to residents

of medically underserved communities. Michigan’s health centers deliver comprehensive primary care in more than 140 Michigan communities and neighborhoods to more than 425,000 persons. Michigan’s 29 FQHC organizations form an essential component of the state’s safety net for health care services. We are committed to providing high quality, comprehensive health care services to federally

designated medically underserved areas and populations.

As FQHC organizations, we provide a comprehensive set of primary care services

and enabling services to all people, regardless of their ability to pay. Our clinics not

only provide care to families, they also provide care to high risk and special popuVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6621 20751.TXT HCOM1 PsN: HCOM1
42

lations including people with changing insurance coverage and those with chronic

conditions and disabilities. Research has repeatedly shown that these groups cost

the system a disproportionate share of available resources and we are committed

to providing them with the best service in a cost-effective manner.

To address the cost of health care, we must ensure that necessary services are

available, are delivered by the most appropriate provider, and are accessible in the

most cost-effective setting, at the right time. By regulation, only communities lacking such access qualify for a Federally Qualified Health Center. These regulations

focus on two different, but equally important issues: 1) a severe shortage of primary

care providers for the entire community; and/or 2) a severe shortage due to primary

care physicians refusing to provide essential care to populations in need.

Research shows that you can reduce the cost of health care by increasing access

to preventive and primary care services. It follows that a reduction in health care

costs will result in a reduction in the number of uninsured persons. Yet the cost

of health care continues to grow and the growing number of uninsured and underinsured people in Michigan and across the country is directly contributing to the

growing number of Medicaid eligible people. This results in a burgeoning Medicaid

budget. Figures calculated from the Current Population Survey and Claritas, a data

clearinghouse, indicate that more than 250,000 or 24.7% of Michigan’s low-income

residents lack basic health insurance. Looking at all income levels, 1.1 million or

12% of Michigan’s residents and 45 million or 15.6% nationally are uninsured.

Unless an uninsured person is fortunate enough to live in a community with an

FQHC or a free/charity clinic, they have few options other than their local hospital’s

emergency room. Reports indicate that 58% percent of the 106,000,000 annual visits

to hospital emergency rooms across the country are described as inappropriate. In

a new study published in Health Services Research; entitled, ‘‘ailability of Safety

Net Providers and Access to Care of Uninsured Persons’’ Hadley J. and

Cunningham P., October 2004) finds that FQHCs are more cost effective because

they improve access to primary care for the uninsured and underinsured and reduce

emergency room visits and hospital stays.

Michigan completed a study in 2001 which looked at preventable hospitalizations,

those for which timely and effective ambulatory care can help reduce the risks for

common problems such as asthma, diabetes or dehydration. High rates of preventable hospitalizations in a community signal potential barriers to care including lack

of sufficient primary care resources. The review estimated that we had over 240,000

preventable hospitalizations which resulted in almost 1.3 million unnecessary inpatient days of care.

Michigan’s Medicaid program covers 1 out of 7 citizens. We continue to experience

record levels of enrollment as a result of our slow economic recovery. With such high

Medicaid enrollment numbers and low state revenues, the pressure is on to identify

cost savings. FQHCs stand ready to be a part of the answer. Several studies have

demonstrated that health centers save the Medicaid program more than 30% in annual spending per beneficiary due to reduced specialty care referral and fewer hospital admissions and FQHCs save by helping to prevent unnecessary usage of the

emergency room. Studies have indicated that Medicaid beneficiaries who sought

care at health centers were 22% less likely to be hospitalized for potentially avoidable conditions than beneficiaries who obtained care elsewhere. Michigan’s 29

FQHC organizations currently care for 10% of all Medicaid enrollees for less than

1% of the physician services budget.

Federally Qualified Health Centers (FQHC) applaud the work of Congress to protect the federal funds provided to help care for the uninsured and underinsured.

From the beginning, Congress recognized that without mandating a payment system

that provided sufficient resources to the FQHCs to care for Medicaid clients, federal

dollars may be shifted away from the uninsured. Previously, this meant cost-based

reimbursement. On January 1, 2001, the Prospective Payment System outlined in

the Medicare and Medicaid Beneficiaries Improvement and Protection Act of 2000

was implemented across the country. This was a historic moment in our program’s

history. For Michigan FQHCs, not only did this allow them to plan for the future

with a predictable budget, it created incentives to innovate and implement cost-saving programs such as the 340(b) drug pricing program. FQHCs welcomed and continue to support efforts to maximize the use of limited tax dollars at both the state

and federal levels. The Prospective Payment System is key to these efforts.

Under the Prospective Payment System, each FQHC is assigned a prospective

payment amount calculated from their reported 1999-2000 costs. While states have

implemented the system in slightly different ways, they all are required to adjust

the rates annually by at least the Medicare Economic Index (MEI). These adjustments have averaged around 2.7% over the last four years, way below the medical

inflation rate. Even with these modest adjustments, Michigan FQHCs view the imVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6621 20751.TXT HCOM1 PsN: HCOM1
43

plementation of the Prospective Payment System as a huge success and support efforts by our State Medicaid Agency to act as a guardian on behalf of the public good.

We have to work within a budget and we understand that both the State and federal government have to do the same.

The Prospective Payment System reimburses the FQHCs and FQHC ‘‘look-alikes’’

on an encounter basis. FQHC encounters combine the cost of the face-to-face visit

with a provider and the cost of ancillary services such as immunizations, on-site lab

and x-rays, translation, and nutritional counseling provided during the visit into one

payment. People not directly involved in the FQHC program often mistakenly believe that we are paid higher rates for office visits than private physician offices.

In reality, private physician offices usually do not provide the scope of services we

do and when they do provide some of these ancillary services, they often do not incorporate these services into their practice without a means to receive payment.

Michigan would like to draw your attention to how crucial the Prospective Payment System is to FQHCs. We recognize that through the waiver process, states

regularly request the ability to waive their obligation to provide FQHCs with payment according to the Prospective Payment System. This waiver activity has the potential to jeopardize the entire system. For example, when the State Children’s

Health Insurance Program was created, recognition of our payment system was not

included. At the time of development, we anticipated that the enrollees would be

relatively inexpensive to care for given that they were children. To our surprise,

Michigan created a SCHIP waiver program for childless adults with incomes below

35% of the federal poverty level. This program is referred to as the Adult Benefits

Waiver. As you can imagine, this is a very different population than the one we,

and we believe Congress, envisioned. Adults enrolled in this program often have

multiple conditions including chronic illness, substance abuse, and mental health

issues. Many of them are very transient, moving from shelter to shelter or reside

on the street. Without recognition of our Prospective Payment System, programs

such as Michigan’s Adult Benefit Waiver threaten the FQHCs’ ability to protect the

federal dollars for the uninsured persons in our communities. Because of the demographics of the target population, most private providers do not wish to enroll in

these provider networks. As a result, more than half to two-thirds of the Adult Benefit Waiver program enrollees are patients of FQHCs. Recognition of our payment

system would protect the financial viability of our nation’s health centers and the

federal funds provided for the uninsured.

I would like to ask for your assistance as you and your colleagues begin to evaluate the Medicaid program to remember the Federally Qualified Health Centers.

Changes that could be construed as minor could have devastating impacts on our

system. For example, the State of Michigan elected to eliminate dental services for

Medicaid adults on October 1, 2003. This saved relatively little general fund dollars

($9.2 million) and would impact few providers given the relatively small number of

private dentists enrolled in the program. What they did not understand is that the

Federally Qualified Health Centers accounted for the majority of dental care currently being provided to the Medicaid adults. The elimination of Medicaid adult dental is still causing tremendous stress to our system since the need did not disappear,

just the payment.

Everyone is struggling with how to pay for our Medicaid system. We must remember the interplay between publicly-funded coverage and the uninsured. When you

restrict enrollment in public programs, the cost of providing care does not disappear

and the savings are not absolute. People will eventually receive the care they need.

It may not be in the best and most cost-effective location, at a time when the progression of illness can be headed off and the most expensive care prevented, but in

the end, anyone can walk into a community hospital and receive some level of care.

Our goal as providers is to squeeze any waste out of the system that we can. We

believe a sizeable amount of waste exists simply from the vast amount of paperwork

required of health care providers, the lack of connections between different components of the health care delivery system, and the mobility of our population. I would

like to talk to you today about two opportunities that Michigan’s FQHCs have embraced to help us address some of these challenges—the chronic disease

collaboratives and technology.

Federally Qualified Health Centers are uniquely positioned to embrace change.

Our administrators are particularly adept at stretching dollars, our clinicians are

mission-oriented and employed by the centers, our Boards of Directors are made of

a majority of users of the clinics and therefore personally committed to their continuation, and the federal government is an important partner with resources that

go beyond the financial. With the support of the Bureau of Primary Health Care,

the FQHCs have undertaken a major shift in how chronically ill patients are cared

for and given the responsibility for their own health. Many positive changes have

44

occurred as a result of the Chronic Disease Collaboratives. Some of these are listed

below:

• Michigan Health Centers in the Chronic Disease Collaboratives have experienced

drastic reductions in the severity of diabetes among their patients. The Hemoglobin A1c, a lab measurement used to gauge the severity of diabetes, has increased by 26% from the when the centers began to implement the model in

1999 to April 2005. • Presently there are over 5,463 Michigan patients being tracked related to cardiovascular disease. The Chronic Disease Collaborative aims to reduce blood pressure which leads to reduction in complications associated with cardiovascular

disease. To date, despite an influx in the number of new patients enrolled, the

program has demonstrated a 5% overall increase in the number of patients with

a blood pressure less than 140/90. • In addition to tracking diabetes and cardiovascular disease, the Michigan health

centers are spreading the care model to other chronic diseases including cancer,

depression, asthma and a perinatal pilot project.

As a State Primary Care Association, we are working to educate our state policymakers about this program and in fact have a proposal pending with the State of

Michigan that will draw many different provider types into providing care using the

chronic care model including Critical Access Hospitals, community hospitals, independent and provider-based Rural Health Clinics, private physician offices, Medicaid Health Maintenance Organizations, and community-based coverage programs.

This model has tremendous potential that is just beginning to be broadly appreciated such as improvements in patients’ depressive symptoms, percentage increases

of patients receiving appropriate treatment for chronic conditions and the ability to

track measurable improvement in meeting nationally accepted guidelines. We are

committed to providing assistance and sharing our lessons learned in order to see

the impressive results in improvement of health status and reduction of health disparities in Michigan that we have experienced in health centers nationally.

Finally, in light of the national interest in moving health care to the electronic

age, I’d like to speak with you concerning Michigan health centers’ innovation in

information technology supported by the Bureau of Primary Health Care of HRSA,

VirtualCHC. VirtualCHC is an Application Service Provider (ASP) designed by

MPCA which delivers application functionality and computer services to many users

via the Internet or a private network. VirtualCHC houses software appropriate to

health centers, including a number of choices of practice management, general ledger, Microsoft Office Suite and many others, making them available to health centers

via the Internet.

As I mentioned earlier, electronic health records represent an opportunity. They

are key to our efforts to improve the quality of care through better and more regular

monitoring of patient/provider adherence to clinical guidelines and to eliminate duplication of services/testing/treatment. Implementing electronic health records is a

large front-end expense for centers purchasing the software, equipment, training

and lost productivity. VirtualCHC provides a way to help minimize that initial investment by giving them a viable alternative to developing and implementing complex systems themselves. Finally, because VirtualCHC is Internet based, there are

no geographic limitations in health centers selecting or being supported by

VirtualCHC. As a result, VirtualCHC has serviced health center clients in Michigan,

Missouri, Massachusetts, Alaska and the Virgin Islands. With Community Health

Centers, the future really IS now.

Thank you for this opportunity to talk with you. If there are any questions, I

would be pleased to answer them at this time.

Mr. WHITFIELD. Thank you.

Mr. Hawkins, you are recognized for 5 minutes.

TESTIMONY OF DANIEL R. HAWKINS, JR.

Mr. HAWKINS. Thank you, Mr. Chairman.

Good afternoon to you and members of the subcommittee. My

name is Dan Hawkins, and on behalf of America’s health centers

and their 15 million patients, thank you for the opportunity to

speak with you this afternoon about the Federal health centers program and to share their success stories.

Mr. Chairman, I have personally seen the power of health centers to transform the health and well being of under-served people

45

and communities as a VISTA volunteer back in the 1960’s. I helped

a community in a small, rural south Texas town to startup a health

center and then served as its initial Director. That center is still

in operation today, no thanks to me. It serves more than 40,000

people a year.

Conceived in 1965 as a bold experiment to bring health care

services to our Nation’s neediest communities, the health center

program has a 40-year record of success, providing an enduring

model of primary care delivery for the country.

Health centers have used community empowerment, what we

like to call patient democracies, to produce improved health outcomes and quality of life. Dr. Duke has already pointed out the

stellar record of achievement of the health centers. NAC, and all

health centers, are deeply grateful to Congress for its support of

the health centers program and for expanding its reach. The $566

million increase in appropriations provided since fiscal year 2002

has enabled more than 700 communities to secure a new or expanded health center, adding 4 million new patients over the last

4 years.

Program funds are rewarded nationally on a competitive basis,

thus ensuring high-quality projects. Thankfully, Congress has also

provided additional funding for existing centers, all of which face

growing uninsured patient rolls and rising costs. We appreciate the

President’s historic request, a $304 million increase for next year.

It can’t come soon enough, as the numbers show. As you have

heard earlier today, last year, over 430 applications were submitted

for a new health center site, and only 91 of them received funding.

We are delighted the President has announced a second health

center initiative to place a new health center in every poor county

that currently lacks one. We recently released a study showing 929

such counties, including 69 in Kentucky and 11 in Michigan, several in your District, Mr. Chairman, and several in Mr. Stupak’s

District.

We look forward to working with the President and Congress to

help this program reach every community in need. As my colleague, Kim Sibilsky has already noted, NAC and State primary

care associations have long recognized that the success of the program and the current expansion initiatives will depend on the ability of health centers to meet all requirements and performance

standards and expectations. With this in mind, we have significantly enhanced our training and technical assistance activities for

health centers focused on financial management, clinical practice,

and board governance, among others. We continue to assist hundreds of communities to successfully apply for new health center

funding.

As you know, the health centers program is scheduled for reauthorization next year. Over the years, Congress has consistently reaffirmed and strengthened the core elements of the health centers

program, including community governance, location in underserved communities, open-door policy regardless of health status,

insurance coverage, or ability to pay, and focus on community-wide

health. We believe these core statutory requirements provide the

crucial framework for the success of the program. It simply would

not be where it is today without them, and we commend the comVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 20751.TXT HCOM1 PsN: HCOM1
46

mittee for consistently safeguarding these requirements over the

years.

I want to turn, for a moment, to the Medicaid program. Medicaid

health centers have long enjoyed a special relationship as twin pillars of a broad strategy to improve health care for the poor, minority, and under-served Americans. Today, that unique relationship

continues with health centers caring for nearly 6 million Medicaid

recipients, more than one of every ten Medicaid beneficiaries for

less than 1 percent of all Medicaid dollars, while Medicaid serves

as their single largest revenue source. Recognizing the importance

of this relationship, Congress, in 1989, made health center services

a guaranteed Medicaid benefit and required that its payments

cover the cost of care for Medicaid patients so that their Federal

grant funds could be dedicated to care of the uninsured. Since that

time, health centers have doubled the number of uninsured people

served to 6 million because Medicaid paid its fair share. And in

2000, this committee led Congress to reaffirm the importance of

adequate Medicaid payments to health centers by creating a prospective payment system for them.

Today, health centers continue to deliver significant savings to

all payers, and especially to Medicaid. They control health care

costs by providing primary care and preventive services, reducing

the need for more costly hospital care down the road. Dozens of

studies have found that health centers save the Medicaid program

30 percent or more in total spending compared to other providers.

As Congress considers Medicaid reforms, we stand ready to work

with the committee to ensure that any such reforms preserves

Medicaid’s crucial coverage for those who need it most and recognizes the key role of health centers in both caring for Medicaid recipients and the uninsured.

Thank you, once again, for this opportunity, and I would be

happy to answer any questions.

[The prepared statement of Daniel R. Hawkins, Jr. follows:]

PREPARED STATEMENT OF DANIEL R. HAWKINS, JR., VICE PRESIDENT, FEDERAL,

STATE, AND PUBLIC AFFAIRS, NATIONAL ASSOCIATION OF COMMUNITY HEALTH CENTERS

Mr. Chairman and Members of the Subcommittee, my name is Dan Hawkins and

I am Vice President for Federal, State, and Public Affairs for the National Association of Community Health Centers. On behalf of America’s Health Centers and the

15 million patients they serve, I want to express my gratitude for the opportunity

to speak to you today about the federal Health Centers program. NACHC and

health centers appreciate the unwavering support that this Subcommittee and the

entire Committee has given to carry out their mission and we look forward to continuing to work with you to further strengthen the program to serve medically underserved communities. As the Committee that oversees not just the authorization

of the Health Centers program, but also the entire Medicaid program, we appreciate

the opportunity to appear before you today.

Mr. Chairman, I have personally seen the power of health centers to lift the

health and the lives of individuals and families in our most underserved communities. As a VISTA volunteer assigned to south Texas in the 1960s, the residents

of our town asked me to work on improving access to health care and clean water

in our community. We decided to apply for funds through a relatively new, innovative program—the Migrant Health program. I stayed on and served as executive director of the health center from 1971 to 1977. The health center is still in operation

today, and has expanded to serve over 40,000 patients annually. The community

empowerment and patient-directed care model thrives today in every health center

in America and I am honored to be here to share with you their success story.

47

Background and History of the Health Centers Program

Conceived in 1965 as a bold, new experiment in the delivery of health care services to our nation’s most vulnerable populations, the Health Centers program has

a 40-year record of success that serves as an endearing model of primary care delivery for the country. The Health Centers program began in rural Mississippi, and

in inner-city Boston in the mid-1960s, to serve rural, migrant, and urban individuals who had little access to health care and no voice in the delivery of health services. In the 1980s and 1990s, the Health Care for the Homeless and Public Housing

health centers were created. In 1996, the Community, Migrant, Public Housing and

Health Care for the Homeless programs were consolidated into a single statutory

authority within the Public Health Service Act (PHSA).

Congress established the program as a unique public-private partnership, and has

continued to provide direct funding to community organizations for the development

and operation of health systems that address pressing local health needs and meet

national performance standards. This federal commitment has had a lasting and

profound affect on health centers and the communities and patients they serve in

every corner of the country. Now, as in 1965, health centers are designed to empower communities to create locally-tailored solutions that improve access to care

and the health of the patients they serve.

This blueprint has stood the test of time, and has allowed health centers to serve

hundreds of millions of people since the inception of the program. Health centers

proudly accept this responsibility in return for the investment made by the American taxpayers in the form of PHSA grants. However, this overwhelmingly poor, uninsured, and medically underserved patient mix creates unique challenges for health

centers that are not necessarily confronted by other health care providers.

Current Statistics

Indeed, America’s Health Centers serve an estimated 15 million people in every

state and territory. Health centers provide care to 10 million people of color, 6 million uninsured individuals, 700,000 seasonal and migrant farmworkers, and 600,000

homeless individuals. Over 1,000 health centers are located in 3,600 rural, frontier,

and urban communities across the country. The communities served by health centers are in dire need of improved access to care, and in many cases the centers serve

as the sole provider of health services in the area, including medical, dental, mental

health, and substance abuse services.

Patients can walk through the doors of their local health center and receive onestop health care delivery that offers a broad range of preventive and primary care

services, including prenatal and well-child care, immunizations, disease screenings,

treatment for chronic diseases such as diabetes, asthma, and hypertension, HIV

testing, counseling and treatment, and access to mental health and substance abuse

treatment. Health centers also offer critically important enabling services that ensure that health center patients can truly access care, such as family and community outreach, case management, translation and interpretation, and transportation

services.

Delivery of High-Quality, Cost-Effective Care

Because of the unique model of patient empowerment, what we like to call ‘‘patient democracies’’, health centers have produced improved health outcomes and

quality of life. Health centers provide preventive services to vulnerable populations

that may not otherwise have access to certain services such as immunizations,

health education, mammograms, and Pap smears, as well as colorectal, glaucoma,

and other screenings. Health centers have also made significant headway in preventing anemia and lead poisoning.

Additionally, health centers have distinguished themselves in the management of

chronic illness, meeting or exceeding nationally accepted practice standards for

treatment of these conditions. In fact, the Institute of Medicine and the General Accounting Office have recognized health centers as models for screening, diagnosing,

and managing chronic conditions such as cardiovascular disease, diabetes, asthma,

depression, cancer, and HIV/AIDS.

HHS’ Health Resources and Services Administration (HRSA) has also helped improve the provision of quality care at health centers through the Health Disparities

Collaboratives initiative. At the end of 2004, more than two-thirds of all health centers had initiated this effort, and an additional 150 health centers have started a

Collaborative this year. I like to think of the Collaboratives as clinical demonstrations for health centers, designed to improve the skills of clinical staff, and strengthen caregiving through the development of extensive patient registries that improve

clinicians’ ability to monitor the health of individual patients, and effectively educate patients on the self-management of their conditions. More than 75,000 people

48

with chronic diseases have been enrolled in elective registries for cancer, diabetes,

asthma, and cardiovascular disease. Health centers participating in the

Collaboratives almost unanimously report that health outcomes for their patients

have dramatically improved.

As a result of health centers’ focus on the provision of preventive and primary

care services and management of chronic diseases, low-income, uninsured health

center users are more likely to have a usual source of care than the uninsured nationally. 99% of surveyed health center patients report that they were satisfied with

the care they receive at health centers. Communities served by health centers have

infant mortality rates between 10 and 40% lower than communities not served by

health centers, and the latest studies have shown a continued decrease in infant

mortality at health centers while the nationwide rate has increased. Health centers

are also linked to improvements in accessing early prenatal care and reductions in

low birth weight.

This one-stop, patient-centered approach works. The Health Centers program has

been recognized by the Office of Management and Budget as one of the most effective and efficiently run programs in the Department of Health and Human Services

(HHS). Numerous studies have also pointed to the success of health centers in reducing health disparities and improving the health status of vulnerable populations

who receive care at their sites. Indeed, a major report by the George Washington

University found that high levels of health center penetration among low-income

populations generally results in the narrowing or elimination of health disparities

in communities of color.

Historic Expansion of Access Through the Health Centers program

While health centers have had four decades of success, there has been no brighter

moment in the life of the program than now. NACHC and health centers are deeply

grateful to Congress for its support of the Health Centers program. In Fiscal Year

(FY) 2005, Congress appropriated $1.7 billion in overall funding for the Health Centers program, a $566 million increase in funding over FY 2002.

These increases have enabled hundreds of additional communities to participate

in the Health Centers program and to deliver community-based care to more than

4 million people in the past 4 years. We are also very grateful that Congress has

provided additional funding for base grant adjustments for existing health centers,

which have seen unexpected increases in the number of uninsured patients coming

through their doors at the very same time they continue to battle the continuously

rising cost of delivering health care in their communities. These base grant adjustments have allowed health centers across the country to stabilize their operations

and continue to provide care to their existing patients, while also looking for ways

to expand access to necessary care.

We also appreciate the President’s strong support for the program and his historic

request for a $304 million increase in FY 2006, which would bring overall health

center funding to $2 billion. This year we expect health centers to serve nearly 16

million people in every state across the country. This would be a tremendous boost

for those lacking care in their communities and we wholeheartedly support the Administration’s request, which would meet the 5-year goal of the President to serve

an additional 6.1 million patients at 1,200 new health centers.

Despite the expansion of the program, the demand for health centers is at record

highs—in 2004, we estimate that there were over 430 applications for new access

points, only 91 of which received funding—a 21 percent success rate, making health

centers’ funding on the same level with other competitively awarded grant programs

under HHS. Indeed the application process is rigorous, and it should be. Health center program funds are awarded on a nationally competitive basis, ensuring that the

highest possible quality projects receive approval. Organizations can apply for new

access point funding (which is for new starts and new sites), or for expanded medical capacity funding to serve additional patients at existing sites, or to make new

services such as dental or mental health services available to patients.

Given the increasing need for health centers, we are extremely grateful that the

President has committed to continue the growth of program by announcing a continuation of his Health Center Initiative into the future. This new announcement

will focus on placing new health centers in poor counties that currently lack a

health center site, a very ambitious goal. To begin this effort, the President has requested $26 million in FY 2006 to fund 40 new access points in high need counties.

Given the President’s new initiative, we have also examined the need in poor

counties. NACHC and the George Washington University estimate that there are

approximately 929 poor counties in need of a health center, from Kentucky to Michigan. Through this continued expansion, we believe that millions of additional patients would have access to care at a health centers. We commend the President for

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his continued support of the Health Centers program and we look forward to working with Congress to ensure it reaches every community in need.

Authorization of the Health Centers program

As we look forward in the life of this 40-year experiment in community health

empowerment, I note that the Health Centers program was last reauthorized in

2002, as a part of the Health Care Safety Net Amendments Act. The program is

scheduled for reauthorization next year. Health centers are grateful to the Committee for its leadership role in strengthening and improving the Section 330 statute

in 2002, further modernizing it to serve millions of new patients. Most importantly,

in reauthorizing the program the Committee and Congress reaffirmed its four core

elements, as it has consistently over the entire life of the program. These core elements, which have greatly contributed to its continued success, require that health

centers: 1) be governed by community boards a majority of whose members are current health center patients, to assure responsiveness to local needs; 2) be open to

everyone in the communities they serve, regardless of health status, insurance coverage, or ability to pay; 3) be located in high-need medically-underserved areas; and

4) provide comprehensive preventive and primary health care services.

In reauthorizing these bedrock requirements, Congress sent a clear message that

it sees patient involvement in health care service delivery as key to health centers’

success in providing access and knocking down barriers to health care. Active patient management of health centers assures responsiveness to local needs. This begins with community empowerment, through the patient-majority governing board

that manages health center operations and makes decisions on services provided,

and leads to the fulfillment of the other core elements of the program.

Through the direction and input of these community boards, health centers can

identify their communities’ most pressing health concerns and work with their patients, providers, and other key stakeholders to address these issues. This has been

particularly valuable as health centers address and work to eliminate health disparities in their patient population. Board members with unique and direct community connections determine the best approach for removing barriers to health care,

helping health centers to meet their patients where they are, not where they want

them to be. The critical, distinguishing feature of the health center model of community empowerment is that the community has been directly involved in virtually

every aspect of the centers’ operations, and, in turn, each health center has become

an integral part of its community, identifying the most pressing community needs

and either developing or advocating for the most effective business or public policy

solutions.

I also want to expand on the other core features of the Section 330 program, each

of which has played a key role in the continued success of the Health Centers program. First, health centers are unique among health providers and systems in its

statutory requirement that they be open to all in the community regardless of ability to pay. Like the community board requirement, this element is what links health

centers the local neighborhoods they serve. There is no cherry picking at health centers; everyone—the uninsured, underinsured, those on Medicaid and Medicare, and

those who have private coverage can receive quality health care at health centers.

Consequently, health centers have a very diverse payor mix, in which the federal

grant constitutes approximately 25% of center revenues. Medicaid and SCHIP make

up 40% of revenue, private insurance constitutes 15%, and Medicare approximately

6%. Health centers are interested in addressing health needs on a truly communitywide basis, and the requirement that they be open to all in the areas they serve

allows them to do just that.

Second, health centers are required under the statute to be located in high-need,

medically-underserved areas. In reauthorizing the provision in 2002, Congress

sought to ensure that much-needed, precious resources are allocated to the communities most in need of the services of a health center. Location of health centers in

MUAs prevents the duplication of services, and establishes health centers in newly

identified communities or expands the work of existing centers where there are welldocumented gaps in care.

Third, health centers are distinctive in the broad range of required and optional

primary and preventive health and related services they provide under Section 330.

This also includes a range of enabling services that ensure optimal access to care.

In 2002, Congress not only reauthorized this requirement, but added to the list by

including appropriate cancer screenings and specialty referrals as required services

and behavioral health, mental health, substance abuse, and recuperative care treatment as optional services that health centers may provide.

We believe that these core statutory requirements provide the crucial framework

for success of the Health Centers program. The program simply would not be where

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it is today without these critical elements, and we commend Congress for safeguarding these requirements in every reauthorization of the Section 330 since its

inception.

Need for Construction Assistance

While health centers greatly appreciate the ongoing effort of the federal government to expand the reach of the program, we must acknowledge the growing need

for support for facility construction, renovation, and modernization. Currently, we

estimate that over two-thirds of health centers need to upgrade, expand, or replace

their facilities. Approximately 30% of health center buildings are more than 30

years old and 65% operate in facilities that are more than 10 years old. The average

cost of a facility project is estimated to be $1.8 million, but projects can range in

size from a small $400,000 project to a major $20 million effort. NACHC estimates

that the current unmet need among health centers for capital projects is approximately $1.2 billion.

We strongly believe that the delivery of quality care to patients at health centers

hinges greatly upon the quality of the facilities where care is provided. Prior to

1996, health centers could use a small portion of their grant funding for construction, renovation, and modernization of their facilities; elimination of this authority

during the 1996 reauthorization and the failure to restore it during the 2002 process

has severely undermined health centers’ ability to successfully address their most

pressing capital needs. As just one example, wiring a health center for high-speed

IT systems or secure wireless networks, which will be crucial as we move to electronic health records, is not an allowable grant cost today.

Given this limited access to capital resources, health centers were very pleased

that the Bureau of Primary Care Loan Guarantee Program was revised as part of

the 2002 reauthorization to allow health centers to use loans not only for the development of managed care networks, but also for the purchase of equipment and to

refinance existing loans previously made for facility construction. However, these

funds still cannot be used for capital projects, and the guarantee covers only 80%

of the value of the loan. Consequently, health centers participation has been limited,

as many centers find it difficult to cover 20% of initial loan value, because of very

slim financial margins as non-profit organizations serving low-income, underserved

populations.

Despite this, health centers have worked hard to leverage resources to participate

in other federal programs that offer capital assistance. Health centers in rural areas

have been very successful in obtaining funding for facility improvement from the

Department of Agriculture’s Rural Housing Administration programs, which provide

loan guarantees up to 90% of loan value. Health centers have had more limited success in accessing facility assistance through the Department of Housing and Urban

Development (HUD) programs. If health centers were able to access HUD’s loan

guarantee and mortgage insurance, they would have an important tool with which

to address facility concerns. We look forward to working with Congress to ensure

that health centers are given the tools to expand, modernize and, when needed, to

build new facilities in order to serve additional patients.

Above all, we stand ready to assist the Committee as you move forward next year

to reauthorize the Section 330 Health Centers program and its core elements.

The Importance of Health Centers and Medicaid

I want to turn for a moment to the importance of Medicaid to the Health Centers

program. Since their creation back in 1965, Medicaid and health centers have enjoyed a special relationship, as twin pillars of a broad strategy whose goal was to

dramatically improve health care for poor, minority, and underserved Americans.

Today, that unique relationship continues: just as health centers rely on Medicaid

revenues, Medicaid beneficiaries rely on health centers for their care. Health centers

are major providers of primary and preventive care services in Medicaid today, caring for nearly six million Medicaid recipients. In fact, Medicaid is currently the single largest beneficiary of health center services, as well as health centers’ single

largest source of financing. Keenly recognizing the importance of health center services to Medicaid beneficiaries, Congress in the Omnibus Budget Reconciliation Act

of 1989 made the services of a Federally Qualified Health Centers (FQHCs) a guaranteed Medicaid benefit offered to beneficiaries in every State Medicaid program.

Most important, Congress recognized and acknowledged that Medicaid reimbursement to FQHCs must be sufficient to assure that health centers were paid their full

reasonable costs for serving Medicaid patients (so that they would not have to use

their Public Health Service Act grant funds to subsidize low Medicaid payments).

In the accompanying Committee report, lawmakers wrote:

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‘‘The Subcommittee on Health and the Environment heard testimony that, on

average, Medicaid payments to Federally-qualified health centers cover less

than 70 percent of the costs incurred by the centers in serving Medicaid patients. The role of the programs funded under sections 329, 330, and 340 of the

PHS Act is to deliver comprehensive primary care services to underserved populations or areas without regard to ability to pay. To the extent that the Medicaid program is not covering the cost of treating its own beneficiaries, it is compromising the ability of the centers to meet the primary care needs of those

without any public or private coverage whatsoever.’’ (U.S. Congress, 1989, p.

415).

In the 16 years since enactment of the FQHC Medicaid requirement, health centers have increased their capacity for uninsured care by 3 million people—double

the number of uninsured patients served in 1990, a rate of growth that is more than

twice that for the nation’s uninsured population. Alternatively stated, the Congress

has received a higher rate of return on its annual appropriations investment in

health centers because Medicaid cost-based reimbursement was in place.

In 2000, under the leadership of former Republican Congressman (now Senator)

Richard Burr and his Democratic colleague Congressman Edolphus Towns, and with

the support of the overwhelming majority of the Energy and Commerce Committee,

Congress reaffirmed the continued importance of adequate Medicaid reimbursement

to health centers by creating a prospective payment system for FQHCs that (1)

assures continued access to care for Medicaid patients, (2) protects Federal grant

funds to provide care for the uninsured, and (3) gives state Medicaid agencies greater flexibility in designing their Medicaid programs and predictability in the cost of

payments to health centers.

Today, health centers continue to deliver significant savings to all payers, and especially to Medicaid. They control health care costs by providing primary and preventive services, reducing the need for more costly hospital care down the road. In

South Carolina, for example, the state health department analyzed their annual

costs for patients who have diabetes as a primary or secondary diagnosis. They

found that patients of CareSouth, a health center system that had participated in

the Diabetes Collaborative, had annual health costs of $343.00 per patient, while

patients of other providers had a cost of $1,600 and specialists had a cost of $1,900.

The health center had produced those results by reducing the average blood sugar

level of their diabetic patients from 11 to 8—a 3 point drop (a 1 point decrease

translates into a 17% decrease in mortality, an 18% decrease in heart attacks, and

a 15% decrease in strokes) (Health Resources and Services Administration, 2003).

In addition, according to another study, communities served by health centers had

5.8 fewer preventable hospitalizations per 1,000 people over three years than other

medically underserved communities not served by a health center (Epstein, 2001).

Another study found that Medicaid beneficiaries who seek care at health centers

were 22 percent less likely to be hospitalized for potentially avoidable conditions

than beneficiaries who obtained care elsewhere (Falik, 2001) Several other studies

have found that health centers save the Medicaid program more than 30 percent

in annual spending per beneficiary by successfully managing their patients’ care in

ways that reduce the need for, and use of, specialty care referrals and hospital admissions (Braddock, 1994: Duggar, 1994a; Duggar, 1994b; Falik, 2001; Starfield,

1994; Stuart, 1995; Stuart, 1993).

Growing Challenges

Beyond paying its fair share for health center services provided to beneficiaries,

Medicaid plays an important role by providing its beneficiaries access to comprehensive services beyond those available at health centers. However, as the health care

needs of low-income individuals continue to grow, so do the challenges to health centers in sustaining their ability to provide quality care to Medicaid beneficiaries and

other patients.

Undoubtedly, one of the greatest of these challenges is the increasing number of

states in the past few years that have sought to limit the scope and the breadth

of services provided to enrollees in their state Medicaid programs as well as implementing so-called ‘‘cost-containment’’ measures. Cutbacks in Medicaid eligibility levels or benefits, caps in enrollment, or forgone expansion plans naturally are presenting significant difficulties for health centers. What’s more, these actions are occurring at the same time as employers are either shifting more of the rising cost

of health insurance onto their workers or to dropping the coverage altogether. As

other health care providers have begun cutting back on the uncompensated or charity care they provide, the result is that health centers are serving an ever-increasing

number of uninsured individuals who previously were covered under Medicaid or

through their employers.

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Compounding this challenge is the increasing level of discretion being provided to

the states in the operation of their Medicaid programs through HHS’ issuance of

Section 1115 waivers—under which State Medicaid agencies are permitted to reduce

benefits, increase cost sharing requirements, and adjust reimbursement rates.

Health centers have already experienced the impact of this increased state flexibility in some fifteen states during the 1990s. In most cases, the ability of health

centers to care for both their Medicaid and their uninsured patients during this period was negatively impacted when their Medicaid payments were reduced below

the cost of providing care. In many of those states, other providers decided not to

participate or limited their care to only a few Medicaid patients, leaving health centers as one of the few remaining sources of primary and preventive care to this population.

While these and other changes in the health care system have put a tremendous

strain on the overall Health Centers program, health centers remained committed

to providing access to care for everyone that walks through their doors, regardless

of their health status, insurance coverage, or ability to pay for services. Put simply,

health centers will continue to provide care for those whom other providers cannot

or will not serve.

Health Centers and Medicaid Reform

As Congress moves forward on considering ways in which to reform Medicaid, it

is critical that it keep in mind the important role health centers play in their communities and the unique relationship between these centers and the Medicaid program. Indeed, as the Kaiser Family Foundation points out, ‘‘[t]he fundamental interrelationship between Medicaid and health centers... suggests, by extension, that dynamics in one domain are bound to have important impacts in the other.’’ It is

therefore imperative that lawmakers working on Medicaid reform consider the impact of any changes in that program on the ability of health centers to fulfill their

public policy mission.

All health care providers must seek to cross-subsidize when payments from a

third party source are insufficient. However, unlike most physician practices that

have paid for indigent care services by cross-subsidies from their commercial payers,

health centers do not have a substantial commercially insured patient base from

which to draw. Evidence abounds that the traditional response by physicians and

other providers to reduced Medicaid or Medicare payments has been to restrict or

reduce the number of publicly-insured patients they serve, often accompanied by a

reduction in the amount of indigent care they provide as well.

Because of the shortage of commercial payments, health centers have three options if Medicaid, their largest third party payer, does not cover the cost of providing

care to its beneficiaries. They can (1) reduce health care services or reduce the number of health care access points, (2) close their doors entirely—likely resulting in

communities having little or no access to primary health care services—or (3) cover

Medicaid shortfalls with their PHSA grants intended to defray the cost of caring for

the uninsured.

Ensuring the adequacy of payments under Medicaid, regrettably, is not a new

issue for health centers. It in fact has been an ongoing concern since the 1990s, during which the relationship between health centers and Medicaid experienced significant challenges as a result of the increased use of Section 1115 waivers in many

states. In most cases throughout this period, the ability of health centers to care

for Medicaid and uninsured patients was severely damaged when Medicaid payments were cut to only a fraction of the cost of providing care. Moreover, in many

of those states, other providers refused to participate or limited their care to only

a few Medicaid patients, leaving health centers as one of the few remaining sources

of primary and preventive care to this population.

One of the states in which health centers were most impacted during this period

was Tennessee. In 1998, the certified public accounting firm of Goldstein, Golub,

Kessler and Company (GGK) examined the impact of low-Medicaid payments on

health centers in the state under the TennCare program. In GGK’s study they found

that, while the number of TennCare visits to health centers increased, the gap between revenues and costs per TennCare visit widened, resulting in significant revenue losses for health centers.

By 1996, Tennessee’s health centers were losing almost $28 per TennCare patient

visit. This created an unfunded gap in reimbursement that forced health centers to

cover these losses out of their PHS Act grants. The result was a reduction in the

number of uninsured persons receiving care at Tennessee’s health centers, and the

virtual elimination of all ‘‘supplemental’’ services, including health and nutrition

education, parenting classes and community outreach—all of which have been proven highly effective in improving the overall health of patients.

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Increasingly, health centers today continue face many of the same challenges with

1115 waivers as they did in the 1990s. Originally created to allow states to try innovative health care approaches, many recently approved waivers have instead been

used to limit benefits, increase cost sharing, and reduce enrollment. In some cases,

Medicaid provider payments have been cut dramatically, causing other providers to

severely limit or end their participation in Medicaid, and leaving health centers—

whose mandate is to serve everyone regardless of ability to pay—as one of the few

remaining sources of primary and preventive care to this population. If states are

permitted to cut Medicaid payments to health centers under these waivers, their

ability to care for both Medicaid-covered and uninsured patients would be severely

damaged. For these reasons, health centers believe strongly that Medicaid waivers

should be approved only if they ‘‘promote the objectives of’’ Medicaid, and do not

erode the program’s ability to provide comprehensive services to beneficiaries.

As Congress begins to consider reforms to Medicaid, it will be important for lawmakers to appreciate the integral role of health centers and other core safety net

providers in Medicaid, and ensure that these providers are adequately paid for the

reasonable costs of health care they provide to enrollees. We look forward to continuing to work with Congress in these efforts.

The Importance of Ensuring Future Health Centers Success

Health centers have successfully stood the test of time over the past four decades,

not only because they are rooted in the communities they serve, but because of their

attention to continuous quality improvement and technical assistance. Since 2002,

health centers have expanded to serve an additional 4 million people, adding approximately 3,000 clinicians and several thousand other staffers at centers across

the country. With hundreds of new health centers, staff and patients, it is imperative that health centers, whether brand new or established, receive the technical assistance and training required to successfully expand to provide high quality care.

NACHC and State and Regional Primary Care Associations (S/R PCAs) remain

fully committed to and engaged in technical assistance activities with health centers. We have long recognized that the success of the program—and current and future expansion initiatives—depends on the ability of health centers to carry out the

requirements of the statute and program expectations.

While HRSA has restructured the availability of technical assistance through its

project officers, and decreased funding available for on-site assistance for many new

centers, HRSA has been able to help health centers plan and implement effective

expansion strategies through a cooperative agreement with NACHC and grants to

S/R PCAs,. NACHC and the PCAs also conduct trainings for health center staff regarding financial management, clinical practice guidelines, regulatory and legal requirements and consumer board trainings. NACHC also assists communities seeking to apply for new health center funding to meet the federal requirements of the

grant.

I am very pleased to report that, over the past few years, NACHC has dramatically increased the frequency and types of education, training and technical assistance it provides. Indeed, since the beginning of the expansion initiative, NACHC

has conducted 44 health center grant proposal trainings, some in cooperation with

the Bureau of Primary Health Care, PCAs and other organizations, and involving

over 3000 individuals interested in starting a health center. In addition to onsite

trainings conducted at our two annual conferences, NACHC has also conducted

trainings in 12 states. We average 300 technical assistance calls a month. We have

also held six onsite orientations for new health centers, and six new start teleconference sessions, providing training for approximately 1100 individuals who are on the

staffs and boards of the newly-funded health centers in their communities.

Additionally, NACHC has conducted 35 new health center medical director orientation sessions, providing intensive training to over 1100 medical directors representing 1000 health centers, since 2001. Over this same period of time, our clinical

team has also conducted quality management trainings for approximately 720

health centers and their clinicians. NACHC also provides trainings and technical assistance on other key aspects of health center operations, including board governance, financial management, corporate compliance, and strategic business planning.

We stand ready to continue our activities in all of these areas to ensure that health

centers can build on their record of success over the past 40 years and in this current expansion effort.

Conclusion

Health centers appreciate the unwavering support of Congress for the program

over the past four decades. In the past 40 years, health centers have produced a

return on the federal investment in the program, by providing access to care and

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a health care home to millions of patients in medically-underserved communities

across the country. Because Congress has continued to reaffirm the core elements

of the program; that health centers are open to all, run and controlled by the community, located in high need medically-underserved areas, and provide comprehensive primary and preventive services, the program has successfully faced challenges

posed by our ever-changing health care system. On behalf of health centers across

the country, their staffs, and the patients they serve, we stand ready to work with

you to ensure that health centers continue to provide a health care home for everyone who needs their care. Thank you once again and I would be happy to entertain

questions from the committee.

Mr. WHITFIELD. Thank you, Mr. Hawkins.

And Dr. Goetcheus, you are recognized for your opening statement. And be sure and turn your microphone on.

TESTIMONY OF A. JANELLE GOETCHEUS

Ms. GOETCHEUS. Thank you for holding these hearings. Thank

you for the opportunity to share today.

I am Janelle Goetcheus. I am the Medical Director of Unity

Health Care, which is a federally qualified health center here in

Washington. Unity operates a large number of community health

centers throughout DC, last year seeing over 55,000 individual patients, representing 240,000 patient visits.

Unity began in 1985 as a health care for the homeless project.

And a lot we did here in DC was to place health services directly

in the shelters. One of those shelters is just a few blocks away from

here at 2nd and D. I think some of the committee members have

been there to visit, and we would welcome any others who would

want to. A thousand people in one building. We have a health service that runs 6 days a week. It is constantly busy. We have another

outreach van with a medical team that goes along Pennsylvania

Avenue and some of the parks in the adjacent area looking for

homeless folks who need access into health care.

But through the years, we have spread into community health

centers throughout the District. And what we have known is it was

more than just a doctor’s office visit that we needed to provide. We

needed to provide a comprehensive set of services, wrap-around

services, and so we include mental health and dental and pharmacy. And one of the most important ones is social work. I often

say, as a physician, I could never practice without social workers

with me. For example, this week, I was with a person who came

in who had cancer and was also mentally ill. And I needed to work

with a social worker myself to try to get Medicaid for that person

in order that I could get chemotherapy for them.

I guess, if anything I would like to share today, and I have heard

it here today, is in terms of the quality of the health care that happens in these community health services. I really do think it is

equal to any care that you would get in any other place of choice.

One of the things that has helped has been these collaboratives,

and you have heard some mention of that today.

We participate in a diabetic collaborative. What that means is if

a patient comes in to see me who has diabetes, they don’t just see

me as a primary care provider, they also see the nurse care manager who sits with the patient, teaches them about their illnesses,

and helps them set goals for themselves. And we have, and the Bureau of Primary Health Care, has the outcomes related to these initiatives and really can show that we have decreased hospitalizaVerDate 11-MAY-2000 10:41 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6602 20751.TXT HCOM1 PsN: HCOM1
55

tions, decreased emergency room, and decreased all of the complications that diabetes can bring, the early amputations, the early

dialysis.

Another great source of help has been the National Health

Corps, and I think you would hear this from all of us at the table.

We have, for instance, in some of the poorest areas here in DC, we

have six health services out there. All of them have National

Health Corps physicians. Two of those have been out today making

home visits in some of the housing projects, accessing elderly people who otherwise never would have health care.

We also multiply. We take the Federal dollars and we multiply

them in various ways. For example, United Health Care this year

gave us a $1 million grant, and it will be a multi-year grant to establish improved care at some of our community health centers in

these areas. NIH has also been a great partner. They provide care

not only on our specialists but also access patients into their own

campus. Volunteers also help us. We look forward to hopefully further legislation that would allow the Federal tort to cover volunteer

physicians, especially specialists that we often have a great deal of

difficulty finding.

We face lots of challenges. You have heard today in terms of the

base funding issues, we have benefited by the expanded grants that

have come. What we have done from one of our grants is we have

gone into the jail, because here in DC, there are over 50 people a

day who are coming out of DC jail into the community and another

2,400 that are coming from Federal prisons around the Nation and

coming back into the District, and we are trying to connect those

folks into ongoing primary health care.

But I think most of all what we do is bring hope to people, not

only good primary care, but we bring hope. One of those I think

most often of is my friend Robert who I met not very far from here

one night, a very cold night, and they were standing around a barrel. And they had built a fire with just some papers to try to keep

warm, a group of men. He had a blood pressure of 190 over 135,

which is dangerously high, and he is a 54-year-old gentleman. He

had worked day labor most of his life and had gotten to that age

and couldn’t do the heavy lifting anymore, and so he was homeless.

But now, instead of around that fire barrel, he was able to move

into his own apartment. So I think these community health centers

bring good primary care, but they bring hope and they bring hope

to many, many Roberts around this Nation.

Thank you.

[The prepared statement of A. Janelle Goetcheus follows:]

PREPARED STATEMENT OF A. JANELLE GOETCHEUS, CHIEF MEDICAL OFFICER UNITY

HEALTH CARE, INC.

Good afternoon, my name is Dr. Janelle Goetcheus, Chief Medical Officer of Unity

Health Care, Inc. (Unity), Washington, D.C., a Federally Qualified Health Center

(FQHC) that operates a large network of health centers which provided health care

services to 55,500 patient in 2004, generating over 240,000 patient encounters.

It is a privilege to testify before this Sub-Committee and I thank you Mr. Chairman for the opportunity to do so.

I have over 20 years of experience serving the medically underserved in Washington, D.C., and I wish to speak to you today about the unique value of a community health center in addressing the health care needs of the medically underserved.

Let me first tell you about Unity, and the people we serve. Unity began as a private

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non-profit with funds from the Robert Wood Johnson/Pew Charitable Trust providing health care services to homeless persons. In 1987 we were one of the first

federally funded programs under the Stewart B. McKinney Homeless Assistance

Act. Over time we expanded our services to include provision of health services in

neighborhood/community settings. Today we are the recipient of federal grants

under the Community Health Center Consolidated Act, with grants to serve fixed

populations in community health centers, homeless persons and we also receive a

school based health grant.

Unity provides primary health care services, mental health services, case management, pharmacy, dental, WIC and HIV/Hep-C services throughout the eight (8)

wards of the District of Columbia. We do this in fixed sites, homeless shelters, and

outreach mobile vans. We have a total of 31 access points throughout our Citywide

network.

Of the approximately 55,500 persons served by Unity in 2004 over:

• 75% of them were at 200% or lower of the Federal Poverty Level, most of them

were actually 100% or below,

• 74% were uninsured

• 16% were recipients of Medicaid

• 10% Medicare and other

• of our total population served 21% were homeless (on the streets or in shelters)

Of the homeless persons we see approximately:

• 36% are substance abusers

• 19% have mental health issues; much higher percentage for women

• 16% are dually diagnosed

• 20% are veterans, and

• 12% are person living with HIV/Aids.

The ethnic make up of Unity’s population is as follows:

• 77% are African American

• 18% are Latino

• 4% other

• 21% are best served by a language other than English.

I share these statistics only to point out that health centers are adept at cultural

competence, able to recognize the unique needs of their patients, address them in

their own language and culture, and thus remove barriers to care that are often

present when serving a mixed racial, ethnic and low income population.

It is important to recognize that health centers provide comprehensive primary

health care. This federal requirement to provide comprehensive services enables patients to have the majority of their health care needs addressed in a one stop setting. The comprehensive nature of the care provided goes far beyond a doctors visit.

My role as a provider in the health process is important, but I could not practice

medicine without the support of a myriad of other providers/services that go into

this healing process. Patients we serve have a host of problems, beyond chronic illness. Social workers are an essential part of the provision of health care in a community health center. They assist the provider with arranging for entitlements, and

in some cases housing, since over 20% of our patients are homeless, or living in

shelters, and many of them suffer from chronic illnesses. As a primary care provider, I often rely on the psychiatrist or mental health worker on staff to link that

patient to them so that they can begin to address underlying problems that often

go much deeper than the initial presenting symptom. Our patients experience trauma, domestic violence, a family facing eviction, a person with a cocaine addition, a

grieving mother; all of these issues can be addressed in a comprehensive manner

within a community health center setting.

As the Bureau of Primary Health Care (BPHC) increasingly encourages health

center grantees to participate in the Disease Collaboratives, the role of comprehensive health care, and coordinated care management is further emphasized. The Disease Collaboratives are a model of care that places the patient at the center of the

care, and he/she is supported in their goal of self-management by a Care Management Team often consisting of a nurse care manager, a social worker, the provider,

and other support personnel as needed, such as mental health therapist, pharmacist

and speciality providers, i.e. ophthalmologist, podiatrist, in the case of diabetes.

The Chronic Disease Collaboratives nationally have shown that even an indigent

and hard to manage population can still generate good health outcomes and improve

health status if the care is provided in a coordinated manner. The community health

center is the ideal location for the implementation of these Disease Collaboratives

because most of the services are on site and the support offered by the overall care

team goes far beyond the type of care that an individual physician could provide

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alone. The clinical data collected through these Disease Collaboratives substantiates

the effectiveness of this model of care.

Patients who participate in this model of care have expressed their satisfaction

with it, and many for the first time are taking ownership of their health status and

realize that their own self involvement, and reliance on support from the care management provided between physician appointments plays a crucial role in their

health status.

Unity Has in addition, to the care management structure outlined above,

launched its own initiative called ‘‘open access’’ or ‘‘same day appointment’’. This

process again calls for a radical re-design of the traditional doctors office visit. A

pilot program, with guidance from the Institute for Health Care Improvement (IHI),

Unity staff and providers are accommodating patients within 24 hours of their request for care. Traditionally patients requesting care would call up and unless it

was an emergency, would be given an appointment on the next available opening

which could be weeks or months away. The theory behind ‘‘same day access’’ is to

‘‘do today’s work today’’, to address the needs of the patient immediately, and to reduce waste and lost time both for the patient and the staff of the health center. This

initiative is now operative in three (3) of Unity’s major sites with plans to expand

it to the whole network over time.

I point this initiative out as another example of the creativity and adaptability

of health centers in addressing the needs of their community, as well as pointing

out that health centers are in the forefront of the provision of state of the art health

care. Health Centers are extremely creative in their ability to generate revenues to address the ever increasing number of uninsured and working poor who are coming

through their doors. We multiply the Federal dollars made available through the

federal grant.

Unity like all other Community Health Centers faces this challenge on a daily

basis. We must constantly insure that our ability to survive as a private non-profit

is essential, so that we can continue to remain faithful to our mission, a mission

‘‘to provide health care to all regardless of ability to pay’’. Unity currently participates in a District of Columbia sponsored Alliance program, which is essentially a

local sponsored uncompensated care pool for uninsured patients under 200% of poverty. We rely on Medicaid, and a vital component of the Medicaid program for us,

and for all health centers is the Prospective Payment System (PPS). The PPS system is a method which enables health centers to be compensated for the care they

provide to Medicaid patients at a reasonable rate of reimbursement. In a time of

budget crunch at the Federal and State levels it is important that the PPS system

remains in place for the viability of health centers.

While we are extremely grateful for the President’s Five Year Initiative to expand

access to care through Community Health Centers it is also important to point out

that Unity’s base grant has remained stagnant for almost five (5) years. The President’s Initiative increases access through ‘‘new starts’’ and ‘‘new access points’’ but

does not provide for any base adjustment to existing grantees like Unity, whose

numbers of uninsured are rising. Unity like most health centers is creative in building partnerships with other entities, hospitals, health care institutions and corporations to support the strategic interests of their mission. One such partnership of

which Unity is extremely proud is our partnership with United Health Care

(United), Minnesota. This joint venture results in an annual investment of

$1,000,000 over several years by United to one of Unity’s health centers to develop

a ‘‘Center of Excellence’’ where the model of care management can be implemented

in treating several chronic diseases, such as diabetes, cardio-vascular, and asthma,

as well as the development of systems to insure improved outcomes in the area of

pre-natal care. This ‘‘Center of Excellence’’ drawn from many of the concepts of the

Institute for Health Care Improvement (IHI) will serve as a model for further expansion of the concept throughout Unity. Without the financial support of United

Health Care, Inc. Unity could not from its existing revenue undertake such a broad

based initiative.

For over twenty years it has been my privilege to serve the patients who come

to our health centers. I am grateful for how they challenge us, and for the trust

they place in us. I have also been privilege to work alongside a committed group

of health care professionals, physicians, nurse practitioners, physician assistants,

specialists, nurses and social workers. Their commitment to Unity and indeed to the

health center movement nationwide is the soul of our success. Many of these professionals come to us through the National Health Service Corps (NHSC) or the Corps

Loan Re-Payment Program. This is a vital cog in the machine of recruitment and

retention for our health centers. At Unity we witness young African American physicians returning to their neighborhoods giving back to the very people who are

58

their neighbors. Their willingness to come to Unity, often for salaries much less

than could get in the commercial market, is another example of the unique role that

health centers play in the community, because of their ability to attract such dedicated, committed professionals.

I thank you again for allowing me to testify before you Sub-Committee and I am

available to answer any questions.

Mr. WHITFIELD. Thank you, Dr. Goetcheus.

And Mr. Manifold, thank you for joining us. As you can tell, our

schedule is so chaotic around here, we do appreciate your coming

in. I introduced you earlier, but I am going to call on Dr. Shi to

go on and make his statement, and then we will go back to you.

Would you turn your microphone on?

TESTIMONY OF LEIYU SHI

Mr. SHI. Thank you, Mr. Chairman. Thank you, members of the

subcommittee for inviting me to testify at your hearing, a review

of community health centers: issues and opportunities.

My name is Leiyu Shi. I am a faculty member of the Johns Hopkins Bloomberg School of Public Health. I am also co-director of the

Johns Hopkins Primary Care Policy Center for the under-served

populations.

For the past 15 years, I have conducted research related to various aspects of community health centers. Today, I would like to

share with you some of my and our team’s research work related

to the role of health centers in improving health care access, quality, and outcome for the Nation’s vulnerable populations, particularly the uninsured and racial/ethnic minorities.

Due to time constraints, I will highlight the findings in my presentation and the PowerPoint slides provide the specifics of the findings. Data from which these studies were conducted come from a

variety of sources, including that regularly submitted by the federally qualified health centers, regular surveys targeting health centers, new data collection by myself or our research team, and also

existing national surveys. The published studies are listed at the

end of the handouts and are available upon request.

I would like to start by highlighting the profile of health center

patients. Those are in part one of the handouts.

Health center patients are predominantly racial/ethnic minorities. Over 64 percent of those are minorities. Health centers rely

heavily on Medicaid funding. Indeed, Medicaid is the single most

important funding for health centers for the past 14 years. Health

centers are primary care safety net providers for the uninsured, as

over 41 percent of health center users are uninsured. They are also

primary care safety net providers for the poor, as over 65 percent

of health center users are below the Federal poverty line.

Health center patients are sicker than patients seen in any other

settings in the country, except emergency rooms. I would like to

give some examples of research comparing access to primary health

care between health center patients and patients seen in other settings. Those are in part two of the power point handouts.

Among the uninsured patients, those seen by health centers are

more likely to have usual source of care than those seen in any

other places, 97.5 percent versus 64.9 percent. Health center uninsured patients also have more doctor visits than uninsured patients

seen elsewhere, 56 percent versus 33.3 percent with four or more

59

visits per year. Health center patients even outperform nationally

privately insured patients on certain access indicators. For example, 97.4 percent health center uninsured and 99.3 percent health

center Medicaid patients have usual source of care compared to

91.2 percent nationally privately insured with usual source of care.

Over 54 percent of health center uninsured and 65 percent health

center Medicaid patients have four or more visits per year compared to 55 percent of nationally privately insured patients with

four or more doctor visits per year.

I would like to now provide examples of research comparing access to preventive health care between health center patients and

patients seen elsewhere. Those are in part three of the handouts.

In terms of cancer screening, pap tests among health center females remain significantly higher than females below 200 percent

Federal poverty line in the Nation. Mammography screening

among health center females remains significantly higher than the

females below 200 percent Federal poverty line in the Nation.

Health center diabetic patients use more preventive services, including eye exam, foot exam, flu shot, than diabetic patients nationwide. Health center uninsured and Medicaid adults are more

likely to receive health promotion counseling, including smoking,

alcohol, exercise, diet, drugs, STDs, than U.S. Medicaid and uninsured patients seen elsewhere.

Let us turn to examples of research comparing quality of health

care between health center patients and patients seen elsewhere.

Those are in part four of the slides. Health center Medicaid patients are significantly less likely to be hospitalized for potentially

avoidable conditions than those obtaining care elsewhere. Health

centers patients receive comparable or even better quality primary

care services than managed care HMO patients, especially in the

comprehensiveness of services provided and the continuity of care.

Finally, I would like to summarize that the above examples of research indicate that health centers provide better access to and

quality of care for the Nation’s uninsured and low-income minorities than elsewhere for the same vulnerable groups. Their continuous support is critical to the Nation’s uninsured and low-income

individuals. Providing basic primary health care services to all is

a valued national health policy objective.

Thank you very much.

[The prepared statement of Leiyu Shi follows:]

PREPARED STATEMENT OF LEIYU SHI, CO-DIRECTOR, JOHNS HOPKINS PRIMARY CARE

POLICY CENTER FOR UNDERSERVED POPULATIONS, JOHNS HOPKINS UNIVERSITY

BLOOMBERG SCHOOL OF PUBLIC HEALTH

Distinguished representatives, dear ladies and gentlemen, thank you for inviting

me to testify at your hearing titled ‘‘a review of community health centers: issues

and opportunities.’’

My name is Leiyu Shi. I am a faculty member from the Johns Hopkins Bloomberg

School of Public Health. I am also Co-Director of the Johns Hopkins Primary Care

Policy Center for the Underserved Populations. I have a doctorate in public health

and masters in public administration and business administration. For the past 15

years, I have conducted research related to various aspects of community health

centers. Today I would like to share with you some of my and our team’s research

work related to the role of health centers in improving access, quality, and outcome

for the nation’s vulnerable populations particularly the uninsured and racial/ethnic

minorities. Due to time constrain, I will highlight the findings in my presentation.

The attached power point slides provide the specifics of the findings. Data from

60

which these studies were conducted come from a variety of sources including data

regularly submitted by federally qualified health centers (e.g., the Uniform Data

System), regular surveys targeting health centers (e.g., Health Center User/Visit

Survey), new data collection by myself or our research team (e.g., Sentinel Centers

Network Project, numerous surveys of health centers), and existing national surveys

(e.g., National Health Interview Survey). The published studies are listed at the end

of the slides and are available upon request. Further questions, comments, or discussions can be directly to me through e-mail at lshi@jhsph.edu.

I’d like to start by highlighting the profile of health center patients (see Part I

of the power point slides). Health center patients are predominantly racial/ethnic

minorities (64%). Health centers rely heavily on Medicaid funding (33%). Health

centers are primary care safety-net providers for the uninsured (41%) and the poor

(65% below FPL). Health center patients are sicker than patients seen in other settings.

I’d like to give some examples of research comparing access to primary health

care between health center patients and patients seen in other settings (see Part

II of the power point slides). Among the uninsured patients, those seen by health

centers are more likely to have usual source of care than those seen elsewhere

(97.5% vs. 64.9%). Health center uninsured patients also have more doctor visits

than uninsured patients seen elsewhere (56% vs. 33.3% with 4 or more visits per

year). Health center patients even outperform nationally privately insured patients

on certain access indicators. For example, 97.4% health center uninsured and 99.3%

health center Medicaid patients have usual source of care compared to 91.2% nationally privately insured with usual source of care. Over 54% of health center uninsured and 64.6% of health center Medicaid patients have 4 or more doctor visits per

year, compared to 54.9% of nationally privately insured patients with 4 or more doctor visits per year.

I’d like to provide examples of research comparing access to preventive health

care between health center patients and patients seen elsewhere (see Part III of the

power point slides). In terms of cancer screening, pap tests among health center females remain significantly higher than females below 200% FPL in the nation.

Mammography screenings among health center females remain significantly higher

than the females below 200% FPL in the nation. Health Center diabetic patients

use more preventive services (including eye exam, foot exam, flu shot, pneumovax)

than diabetic patients nationwide. Health center uninsured and Medicaid adults are

more likely to receive health promotion counseling (including smoking, alcohol, exercise, diet, drugs, STDs) than U.S. Medicaid and uninsured patients).

Let’s turn to examples of research comparing quality of health care between

health center patients and patients seen elsewhere (see Part IV of the power point

slides). Health center Medicaid patients are significantly less likely to be hospitalized for potentially avoidable conditions than those obtaining care elsewhere. Health

centers patients receive comparable or even better quality primary care services

than managed care (HMO) patients especially in the comprehensiveness of services

provided and the continuity of care.

Finally, I’d like to share examples of research comparing outcomes of care between health center patients and patients seen elsewhere (see Part V of the power

point slides). Babies born to health center mothers enjoy lower rates of low birth

weight than those born elsewhere. There is significantly less racial disparity in low

birth weight rate within health centers than within the nation as a whole (3.25

times vs. 5.6 times). Had the health center program become available to all the lowincome blacks in this country, 17,107 fewer low birth weight incidences would result

annually.

In conclusion, I would like to emphasize that the above examples of research indicate that health centers provide better access to and quality of care for the nation’s

uninsured and low-income minorities than elsewhere for the same vulnerable

groups. Their continual support is critical to the nation’s uninsured and low-income

individuals if providing basic primary health care services to all is a valued national

health policy objective.

Mr. WHITFIELD. Thank you, Dr. Shi.

And at this time, Mr. Manifold, as you are aware, this is an investigative hearing, and I would like to swear you in for your testimony.

[Witness sworn.]

Mr. WHITFIELD. Thank you very much, and you may proceed

with your opening statement.

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TESTIMONY OF RODERICK V. MANIFOLD

Mr. MANIFOLD. Thank you for your indulgence, Mr. Chairman,

members of the committee.

Thank you for inviting me to testify before you today about Central Virginia Health Services, our community health center in central Virginia. I am Rod Manifold, and I am the CEO of CVHS. Our

health center really got started back in 1968 when a lady named

Buelah Wiley slumped down in a chair at the local Community Action Program offices and said, ‘‘We should not have to drive an

hour and a half one way to take a child to see the doctor.’’ From

that moment, community activities began that culminated in the

establishment in 1970 of Central Virginia Community Health Center, now called Central Virginia Health Services.

Today, our health center is a 10-site family of health centers

serving 18 counties and cities that are located from the northern

neck of Virginia to the city of Petersburg, south to the North Carolina State line and west as far as Albemarle County and Charlottesville. Central Virginia Health Services is the oldest community health center organization in Virginia and is celebrating its

35th year of operation in 2005. Last year, Central Virginia served

over 34,000 people, and it is still operated as it was in 1970 by a

board of directors made up of community members that are committed to its mission. In fact, 63 percent of our board members are

users of our services. This community representation tempered

with the responsibility for the mission of the entire health center

is one of the hallmarks of the health center movement.

As in the 1970’s, poverty and lack of access to care are still primary reasons for the existence of Central Virginia and the many

other health centers around Virginia and around the country. Lack

of income, racial disparities, and lack of access are all reasons why

health centers are needed in central Virginia. In the Central Virginia Health Services sites in 2004, more than half of our patients

were minorities, 30 percent were below the Federal poverty guideline, and 31 percent were completely uninsured.

As you may know, community health centers do charge fees to

all of these patients. These are not free clinics, because Congress

in its wisdom set them up to collect fees on a sliding scale basis

from each and every one of our patients. All consumers of our services participate in funding their community health center based

upon their ability to pay. It gives them a kind of ownership of the

health center in their community, and it clearly states to them that

these services have a value.

In recent years, under the President’s initiative to expand health

centers, Central Virginia, like many other health centers around

the country, has been able to expand services and add additional

access points for care in many communities. We competed for and

received a grant for a new access point in Charles City County that

has helped create a totally new health center with medical, dental,

and behavioral health services in a county that previously had one

part-time doctor serving the community only three half-days per

week and no dentist or psychologist. Additionally, we receive

grants to expand medical capacity in two existing health centers,

and we also received a grant to add dental services in a health center that was previously providing only medical services. All of these

62

additional services and sites would not have been possible without

the HRSA grants awarded under the President’s initiative.

In addition to thanking this subcommittee for its support of the

expansion of the program, I would be remiss if I didn’t also discuss

the critical importance of the Medicaid program to our health center. We respect that your committee has a very difficult challenge

in looking at reductions in the Medicaid program. That being said,

we do want to make one thing very clear. The prospective payment

system that Congress has given to health centers because of our

unique place in the safety net is very important to health centers.

We know that our patients in that safety net will be our patients

regardless of what sort of payment methodology is created here.

Obviously, if the PPS was tinkered with, health centers could suffer greatly. In addition, if Medicaid primary care benefits are reduced, our patients will still need those services. We will just have

to use the Federal grant, which is designed to serve the many uninsured patients in our centers, to subsidize the Medicaid program

and its patients.

In conclusion, Mr. Chairman and members of the subcommittee,

I appreciate the opportunity to discuss our work at Central Virginia Health Services, and we appreciate the recent expansion opportunities provided to all health centers. We also stand ready to

work with you as you debate changes in the Medicaid program that

may have a significant impact on our operations and the patients

we serve.

Thank you for your time, and I am happy to answer any questions you may have.

[The prepared statement of Roderick V. Manifold follows:]

PREPARED STATEMENT OF RODERICK V. MANIFOLD, EXECUTIVE DIRECTOR, CENTRAL

VIRGINIA HEALTH SERVICES, INC.

In 1968 a staff member named Beulah Wiley of the Community Action Program

in Cumberland County, Virginia returned from taking a child to the doctor at the

University of Virginia Medical Center. She reportedly slumped down in a chair at

the CAP offices and said, ‘‘We should not have to drive an hour and a half, one way,

to take a child to see the doctor.’’ From that moment community activities (and I

emphasize that word community) began that culminated in the establishment in

1970 of Central Virginia Community Health Center, located in Buckingham County

and serving three counties.

Today that health center has grown to a ten-site family of health centers serving

18 counties and cities that are located from the Northern Neck of Virginia to the

city of Petersburg, south to the North Carolina state line and west as far as Albemarle County and Charlottesville. Central Virginia Health Services, as it is called

today, is the oldest community health center organization in Virginia and is celebrating its 35th year of operation in 2005. Last year Central Virginia served a diverse population of over 34,000 people in rural and urban sites across its many community service areas. It is still operated, as it was in 1970, by a board of directors

made up of community members that are committed to its mission. In fact, as many

of you may know, at least 51% of the board members of a community health center

must be consumers of the health center’s services. Last year, 63% of our board members were users of our services. This community representation tempered with responsibility for the mission of the entire health center is one of the hallmarks of

the health center movement. Being patients as well as leaders of the policy-setting

board makes our members the best possible representatives of their communities

and of the thousands of patients we serve.

As in the 1970’s, poverty and lack of access to care are still primary reasons for

the existence of Central Virginia and the many other health centers around Virginia

and around the country. The high poverty rate, severe health care disparities, and

the lack of access to the health care system are all reasons why health centers are

needed in central Virginia. In the Central Virginia Health Services sites in 2004,

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for example, more than half (51%) of our patients were minorities, 30% were below

the federal poverty guideline, and 31% were completely uninsured. These numbers

of high need are not unusual for a community health center. In fact, in one of our

urban centers, over 50% of our patients are uninsured and fully 70% are below the

federal poverty guideline.

As you may know, community health centers do charge fees to all of these patients. These are not free clinics, because Congress in its wisdom set them up to

collect fees on a sliding scale basis from each and every one of our patients. All consumers of our services participate in funding their community health center based

upon their ability to pay. It gives them a kind of ‘‘ownership’’ of the health center

in their community, and it clearly states to them that these services have a value.

Last year Central Virginia Health Services collected from our various payer sources

(not including the federal grant we receive to assist the uninsured patients), 24%

of our patient income from private insurance companies, 30% from Medicaid, 20%

from Medicare, and 26% directly from patients’ payments. As an example of those

patient payments, we have a collection rate of over 95% from our Medicare patients

for the services they receive from our providers. While these numbers are not the

same in every health center, virtually all health centers work to develop a broad

spectrum of payer sources, in addition to the HRSA grant.

In recent years, under the President’s initiative to expand health centers, Central

Virginia, has been able to expand services and add additional access points for care

in many communities. We competed for and received a grant for a new access point

in Charles City County, a jurisdiction with a minority population of over 75%. This

grant helped to create a totally new health center with medical, dental and behavioral health services in a county that previously had one part-time private doctor

serving the community only three half days per week and no dentists or psychologists. Additionally we received grants to expand medical capacity in two existing

health centers, and we also received a grant to add dental services in a health center that was previously providing only medical services. All of these additional services and sites would not have been possible without the HRSA grants awarded

under the President’s Initiative and funded by Congress. And these grants have

stimulated private foundations to provide funding for additional services to be provided in several of our existing health centers.

Of perhaps even more compelling interest to this subcommittee and your full committee, are some issues related to Medicaid and Medicare. Frankly, as a community

health center director, I worry about these two major payer sources for our patients.

Remember that we health centers are the true safety net providers of primary care

for many of our nation’s most vulnerable citizens. And I mean, we really are working in the frayed bottom of that safety net. We live day to day, and we get very

concerned when Congress begins to discuss cuts to the Medicaid program. We respect that your committee and the Medicaid Commission have a very difficult challenge in looking at reductions in the Medicaid program. That being said, we do want

to make one thing very clear: the prospective payment system (PPS) that Congress

has given to health centers because of our unique place in the safety net is very,

very important to health centers. We know that our patients in that safety net will

be our patients regardless of what sort of payment methodology is created here. Obviously, if the PPS was tinkered with, health centers could suffer greatly. In addition, if Medicaid primary care benefits are reduced, our patients will still need those

services. We will just have to use the federal grant, which is designed to serve the

many uninsured patients in our centers, to ‘‘subsidize’’ the Medicaid program and

its patients. Furthermore, if Medicaid eligibility limits are lowered, and more patients are moved off the Medicaid rolls, we in health centers will still serve those

patients, only they will then join the ranks of the uninsured. Reductions in benefits

and/or eligibility levels for Medicaid will be a real double whammy to health centers

and their patients, and could well bring about drastic reductions in programs and

services—exactly the opposite of the goal for the President’s Initiative. At Central

Virginia, our providers and staff know these patients very well, and we know that

they will look to us for their care, regardless of whether they have Medicaid or not.

Also of interest to this subcommittee, of course, is the Medicare Part D program.

The provision of pharmaceuticals to Medicare patients will be the largest contributor to better health outcomes for our health center Medicare patients since the inception of the Medicare program itself. We look forward to 2006 and we hope that

the development of training and orientation programs and materials for seniors and

for us caregivers of seniors will come in time for every Medicare recipient to benefit

fully from this new service. We know that CMS and other agencies are working to

meet the deadline set by Congress for the initiation of this program. Please know

that we in community health centers will do everything possible to assist in this

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monumental effort, because we truly know how important it is to the health of our

individual patients.

I would like to tell you about another part of the community health center story

in one of our communities: Farmville and Prince Edward County, Virginia. In the

mid-1980’s the Piedmont Health District serving these two localities and the surrounding counties had one of the highest infant mortality rates in the Commonwealth of Virginia. In 1985 Central Virginia Health Services, the Virginia Department of Health, and the federal government collaborated to open the Women’s

Health Center in Farmville. This OB-Gyn practice started small with one physician

and a tiny group of support staff. The Health Center for Women and Families, as

it is called today, now provides the only obstetric services in this rural community.

Our center there has two full time OB-Gyn physicians, one full time family practice

physician, and one part time nurse midwife doing deliveries in the local hospital

and, along with a full time nurse practitioner, they also provide virtually all of the

prenatal care for the community. This is a real success story for Farmville and the

surrounding area. While several community hospitals in Virginia have recently

closed down their labor and delivery service due to skyrocketing malpractice insurance and other factors, Southside Community Hospital, with our assistance, has

been able to not only keep its community obstetric program, but to make it grow

and thrive. By the way, the infant mortality rate has gone down over the past twenty years and the community and its families are all the better for that positive outcome.

I would like to close with a story about the first community health center patient

in Virginia. Dr. Mike Shepherd, a University of Virginia physician and the first physician of Central Virginia Community Health Center, recounts this story of opening

day on the Friday after Thanksgiving in 1970. I have told it many times because

I believe it illustrates why health centers are an absolute necessity in many communities around our country. A woman in her eighties was brought to the center by

her family on that first day. She was being interviewed by the nurse taking her

health history. The nurse asked the woman when was the last time she was seen

by a doctor. The woman thought for a few moments and finally said, ‘‘Nineteen and

twenty-three.’’ And that is why health centers are needed. Here was woman who

was not seen by a doctor for nearly 50 years. And, while we don’t find many patients

these days with such a long time between visits, we do know that we serve people

who need us and who would not be seen if it were not for the health center in their

communities.

Mr. WHITFIELD. Thank you, Mr. Manifold.

And I would ask all of you, are any of you familiar with some

community health centers over the last couple of years that have

gone into bankruptcy or have gone out of operation? Are any of you

aware of any that have gone out of business?

Mr. HAWKINS. On a national level, Mr. Chairman, what I can tell

you is I have not seen data for the last couple of years, but I have

no reason to suspect it is different from the data I have seen for

the previous 10 years. In any given year, three to five health centers will have their grant pulled. They will be defunded. They will

be folded into another center. An effort is always made by, I am

going to call them the feds, HRSA to keep the services going when

an existing health center runs into trouble. But that is three to five

out of 1,000. So that is a failure rate of less than 1 percent. I have

never seen it exceed 1 percent.

Mr. WHITFIELD. And they are basically folded in with another

when that occurs?

Mr. HAWKINS. Most often. I think it is quite rare when HRSA

has pulled the resources completely out of the community, but they

do insist that centers be well managed.

Mr. WHITFIELD. Right. Now patients pay on a sliding scale. Some

do not have to pay anything, and others pay full price. Those of you

who operate a center, could you tell me the range of prices that are

paid per visit by a patient? From zero to what?

65

Mr. MANIFOLD. Well, we established these sets of charges based

on the statute that basically sets it at the cost of doing business

the usual and customary in the community. So you could be, in

some communities, as much as $50 or $60 or $70 a visit for someone who is able to pay the full charge.

Mr. WHITFIELD. So if I come in and I am over the poverty level,

and say I am at 200 percent of the poverty level, and I come in Petersburg, Virginia to the clinic, what would I be expected to pay per

visit?

Mr. MANIFOLD. If you are over 200 percent of the poverty level?

Mr. WHITFIELD. Yes.

Mr. MANIFOLD. You would pay the full charge, whatever it is in

that particular community.

Mr. WHITFIELD. So it would be, maybe, $50 or $60?

Mr. MANIFOLD. It could be, yes. I can’t tell you right off the top

of my head what it is. Part of it depends on your health and what

sort of services you receive at that time.

Mr. WHITFIELD. Okay. So it does depend on the service? It is not

just the one fee.

Mr. MANIFOLD. Just like any other health care institution, yes.

Mr. WHITFIELD. Okay. Now I have heard some discussion about

the President’s budget and even though he is requesting more

money for the centers, people are concerned that because each center receives a grant each year, that even though more money being

available and wanting to create more new centers that the existing

centers are a little bit concerned about whether or not they are

going to continue to receive their grant each year. Is that a concern

or is that not a concern?

Mr. HAWKINS. Nationally, I think, Mr. Chairman, every health

center must go through a competing grant renewal process every,

what is it, Rod, 3 years or 5?

Mr. MANIFOLD. Yes, three to five.

Mr. HAWKINS. Three to 5 years depending on how good their

record is and how well they are operated. The best operated ones

perhaps every 5 years. They do have to submit documentation and

annual audits, et cetera, every year. I will let the actual health

center folks answer, but I will tell you what we have heard from

health centers is not so much that they are concerned about losing

their current grant, it is that the grant doesn’t keep pace with the

increased costs.

Mr. WHITFIELD. Okay.

Mr. HAWKINS. Health center cost increases on a per-patient basis

are among the lowest in the health care system, usually about 4

percent a year, and that is over the last 8 years.

Mr. WHITFIELD. And what is the maximum grant that one can

receive?

Mr. HAWKINS. There is no ceiling on that. Although not on a formula basis, it is done often related to per-patient cost or per-uninsured patient——

Mr. WHITFIELD. Well, what grants do you all receive? The ones

here.

Mr. MANIFOLD. Well, at Central Virginia, we have added various

sites over the years from that original site in 1970.

Mr. WHITFIELD. Right.

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Mr. MANIFOLD. And so each time that we have been able to add

a site, we have been able to get additional funding for that site,

which then stays with it?

Mr. WHITFIELD. How much?

Mr. MANIFOLD. Well, I can tell you that in 1995, we were getting

$250,000 per year to start a new health center site. Now you must

provide more services. You must provide dental, behavioral

health——

Mr. WHITFIELD. But do you have an overall figure of what your

center receives?

Mr. MANIFOLD. What Central Virginia receives?

Mr. WHITFIELD. Yes.

Mr. MANIFOLD. We receive $5.2 million in Central Virginia.

Mr. WHITFIELD. Okay. Okay.

Mr. MANIFOLD. It is about 34 percent of our operation——

Mr. WHITFIELD. Okay. What about you, Ms. Sibilsky, in Michigan?

Ms. SIBILSKY. I am a primary care association.

Mr. WHITFIELD. Right.

Ms. SIBILSKY. We are not a health center, specifically.

Mr. WHITFIELD. Oh, you are not?

Ms. SIBILSKY. No.

Mr. WHITFIELD. So——

Ms. SIBILSKY. We are a Statewide association that works with

health centers.

Mr. WHITFIELD. So you don’t receive any grants?

Ms. SIBILSKY. We do receive a grant to do technical assistance

and support to health centers as well as going to communities to

help them get ready to be able to provide that primary care.

Mr. WHITFIELD. How much is your grant that you receive?

Ms. SIBILSKY. We receive about $625,000 for the technical assistance component.

Mr. WHITFIELD. Okay. Okay. And what about you, Dr.

Goetcheus?

Ms. GOETCHEUS. I was just getting the answer to that, $6.4 million is what we——

Mr. WHITFIELD. $6.4 million.

Ms. GOETCHEUS. [continuing] receive.

Mr. WHITFIELD. Okay.

Ms. GOETCHEUS. Just in regard to what was asked as far as the

base funding, we do get concerned. The health care costs for insurance for our folks go up——

Mr. WHITFIELD. Right.

Ms. GOETCHEUS. [continuing] as well as just basic expenses, so

we do get very concerned about base funding.

Mr. WHITFIELD. Now I have heard different answers on this

question. Can you or can you not spend money on capital projects

from the grant money?

Mr. HAWKINS. On acquisition and lease, yes; on construction,

modernization, renovation, no.

Mr. WHITFIELD. But on acquisition and lease, yes.

Mr. HAWKINS. Yes.

Mr. WHITFIELD. But for renovation and modernization, no.

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Mr. HAWKINS. Any bricks and mortar. If you need to put in an

elevator to make the facility ADA compliant, no go.

Mr. WHITFIELD. Okay.

Mr. HAWKINS. If you need to wire the facility for electronic health

records, no.

Mr. WHITFIELD. Right.

Mr. HAWKINS. If you need to paint the interior of the facility, you

may not use the grant dollars for that purpose. It is prohibited.

Mr. WHITFIELD. Okay.

Mr. HAWKINS. That was stripped from the statute 10 years ago.

Mr. WHITFIELD. Okay. Okay. Now someone made the comment

that community health centers provide care for 10 percent of the

Medicaid population at a cost of only 1 percent of the total Medicaid dollars. Is that correct?

Mr. HAWKINS. That is correct, Mr. Chairman. Six million people,

it is less than $3 billion. The last number I have is $2.5 billion in

total Medicaid payments to health centers for approximately 6 million Medicaid recipients. That is under $500 per patient per year

for the four visits that Dr. Shi mentioned.

Mr. WHITFIELD. And some of you may have heard in my opening

statement I made the comment we have people on Medicare, we

have people on Medicaid, and then we have a lot of uninsured who

are working who have jobs, but their employer does not provide

their health insurance. They are paying taxes for Medicare and

taxes for Medicaid, but they can not afford to buy their own health

insurance and they maybe do not have a community health center

area to visit. So I would ask the question, do you believe that community health centers have the capacity with the right resources

available to be the primary health and preventive care providers

for the country for the uninsured, let us say? Or is that capability

not——

Ms. SIBILSKY. It would be a wonderful model with limitless resources to be able to provide. I believe in the model I worked with

modeled for 26 years, comprehensive, primary care, prevention,

and community based. It is also a wonderful part of a whole system

of care, and that is the way I think we have to look at it, because

there are not limitless resources. It is a tremendous model, especially in under-served communities.

Mr. HAWKINS. It is a model for primary care, Mr. Chairman. I

have been in it for 35 years, and I don’t know that even I, in my

ideal world vision, would see health centers even as the primary

care provider for all Americans, although there are those who

would say that they would only wish that they could get primary

care for their family like they have seen delivered at a health center. But for uninsured, for low-income, both publicly insured and

uninsured, for isolated rural, for inner city communities, for those

working people that you talk about, with or without insurance coverage, every American needs, and Dr. Shi can speak to this, two

things for good health, and plus their own thing, and that is insurance coverage to make the care affordable and a health care home,

a family doctor who is the organizer of their care. I don’t see health

centers doing specialty care, doing inpatient hospital, or long-term

care, but primary care and being the care manager for each individual, organizing referrals, et cetera, down the road.

68

Mr. SHI. I just want to add that I do believe that the community

health centers are a very well suited model for community-based

primary care for all Americans. And many physicians’ offices are

not equipped to provide enabling services and culturally sensitive

care that community health centers are able to provide.

Mr. WHITFIELD. Right. Okay. And you studied them quite a bit.

So thank you.

Mr. SHI. Yes.

Mr. WHITFIELD. My time is expired, so I recognize Mr. Stupak.

Mr. STUPAK. Thank you, Mr. Chairman, and thank you all for

being here and doing what you do. I have quite a few health centers in my District, and I am always amazed at the work they do

on a very, very thin dime.

Why was the brick and mortar stripped out 10 years ago? You

said that. Was it alleged abuse within the program or what happened? Because I mean, it seems to be a big issue with health care

centers.

Mr. HAWKINS. It is a cautionary tale, and what can happen some

time when something is inadvertent and unintentional. In the process of stripping out language that related to the Davis Bacon wage

and hour law, which had been in the statute since 1978, the Congress inadvertently, we believe, and certainly even those who were

involved in it told us they never intended to strip out the authority

for construction, only the language that related to the Davis Bacon

law. Unfortunately, what was stripped was all of the construction

modernization and expansion language. And attempts to restore

that since that time have not been successful.

Mr. STUPAK. Is there opposition from others for——

Mr. HAWKINS. No one opposes restoring the construction authority. The authority for health centers to use even a small portion,

no one believes that a big part of the health center funding should

go for bricks and mortar. It is patient care dollars. But no one opposes restoring the authority for some portion of that to be used

for bricks and mortar. The divide, Mr. Stupak, is literally over

whether to restore it without Davis Bacon or with Davis Bacon,

and there, unfortunately, quite frankly, I don’t think it is a divide

up here. It is a divide out there.

Mr. STUPAK. Well, let me ask this question. There are a number

of health care centers that have increased significantly in the last

few years, and there is an increased likelihood that centers will be

located in areas where they are in competition with other health

centers and private practitioners. With resources being stretched,

what safeguards are used, if you know, in the grant review process,

this is really a question I had for HRSA, but I never got to it, to

ensure that placement of health centers are in the proper location

so that agency gets the best bang for its buck, its Federal dollars?

How do you do that? I mean, actually some folks have said we don’t

want health centers where we have other private practitioners.

And is that part of the problem here?

Mr. HAWKINS. It may be in some communities. I remember in

south Texas 35 years ago a grave concern among the local private

practice physicians at the startup of our health center, they all understood that there was a population that they didn’t have the resources to care for. And they were happy to have the health center

69

care for that population. They were deeply concerned about that

center then being a place that might encourage people with private

insurance to go.

Mr. STUPAK. I see.

Mr. HAWKINS. As time went on, I think all of the private practitioners, in fact, they all donated their time to the facility, they

came to see, and I will defer to my colleagues who are out there

today.

Mr. STUPAK. Sure, I would be interested to what Dr. Goetcheus

thought on that one.

Mr. HAWKINS. They came to see it much more as a benefit than

not.

Ms. GOETCHEUS. In terms of DC, the need is so great that two

of the new starts that have just come are within a few blocks of

one of our health services. The need is so great; we are all very

busy. I think——

Mr. STUPAK. Do specialists, though, not want you in the area because you may detract from their patients? Specialists?

Ms. GOETCHEUS. Specialists are hard to obtain, and they are very

hard to obtain in terms of accepting Medicaid or here in the District, trying to find those specialists who will accept that kind of

insurance. That is why we have brought specialists to our sites.

One of the limiting factors has been in terms of the Federal tort

for them. For example, we have so many HIV patients, so we have

hired two infectious disease physicians to be a part of our staff, because trying to find access otherwise for them with Medicaid or no

insurance is very hard.

Mr. STUPAK. It is very difficult. Sure.

Mr. Chairman, if I may, with your permission, the reinstatement

of oral health benefits for Medicaid adults, I think every one of our

witnesses here this afternoon mentioned adult oral health care and

the benefits thereof, and this actually happens to be from Ms.

Sibilsky’s group. It is a three-page document, and if you don’t

mind, I would like to place it into the record and—well, it is already in the record. Okay. Great.

But Kim, could you just mention some of the highlights you

found? I found this really fascinating. Michigan did it for the first

time, and then unfortunately we have to cut it out after being so

successful because there is no money there. But you have all mentioned it, and I just want to——

Ms. SIBILSKY. Yes. For a $9.2 million savings in general fund for

the State budget, we have done an assessment of inappropriate

care in the emergency room, which begins to approach that $9.2

million. When you then look at the Medicaid managed care billings

that are addressing the issues that would appropriately be handled

within the health centers in their dental component, you get very,

very close to the $9.2 million savings. And that doesn’t even address how ill people get when they have that primary infection in

their mouth: heart disease, diabetes, perinatal health is just directly impacted. I think that it is a service that has been seen to

be not a primary care service, but is now being looked at and sadly

being looked at so closely because we are in such big trouble with

it. I would hope that some day it is seen to be a mandatory service

70

under Medicaid and not an optional service, because it is such a

critical need.

Mr. STUPAK. And then I am a little confused, and maybe you can

help me on this. From what I have read, the Surgeon General of

the United States keeps saying that we don’t need this service, the

oral health care for folks, or do I have that right? He encourages

or discourages it?

Ms. SIBILSKY. I can’t speak to that, Mr. Stupak. I am sorry.

Mr. STUPAK. Okay. So in Michigan now, are they getting dental

care, the patients?

Ms. SIBILSKY. At this point, under the Medicaid program, only

emergency care is being delivered and paid for. For any dental

services beyond that to adults that are being delivered in the

health centers is being subsidized by the Federal grant as uninsured. So you have Medicaid-covered adults categorized as uninsured for dental services. So the grant is subsidizing Medicaid on

those services.

Mr. STUPAK. Okay. I talked about, earlier, rural programs, and

I didn’t get to ask all of my questions, because I was concerned

about the nursing act. I was concerned about the huge cut that we

saw in the funds to try to lure specialists to our rural areas or

under-served areas. And in those two programs, I think one was

cut like $100 million this year and then next year it is going to be

$11 million and then that just about wipes about that program.

That is the program to attract specialists to our areas. And if we

don’t fund these programs, what is going to happen to bring your

specialists in? You all talk about collaborative efforts you have with

other people. Are these specialists volunteering their time, or do

they expect some kind of reimbursement, because I just don’t see

how we are going to continue to do what you are doing as we are

expanding the number of health care centers when the programs

we have to provide rural health and to recruit physicians and everything else is being severely cut? I mean, Dr. Burgess talked

about we need, for doctors, higher reimbursement, but you have got

to have doctors there first before you have to worry about reimbursements, and we are not getting the doctors. Am I wrong?

Ms. SIBILSKY. I would like to cite the large amount of volunteerism that is actually happening within the State of Michigan

right now. Physicians went into health service for altruistic reasons, and when they feel the intensity of the problem the way that

they are feeling it today, they do volunteer. And that is why the

Federal torts claims act coverage for free clinics has been very

helpful and why extending that into health centers is going to be

even more important. The training programs are under siege with

the State budgets. For them to be under siege with the Federal

budget puts us, once again, right in the middle of the fire. This is

not a simple Medicaid issue that we are dealing with. We are

under duress on every side. And so the programs you asked about,

for example, the rural health outreach program that has helped

communities innovate in order to attempt to invent themselves out

of these problems through collaborative efforts and outreach efforts.

To have those zeroed out is also a very big problem for rural communities.

Mr. STUPAK. Yes, it is about a 70 percent cut.

71

Mr. Manifold, how about the rural flexibility grant programs?

Have you used that? Has that helped? Michigan, right now we

have got some high unemployment. We are having some tough

times in Michigan, but Virginia seems to be doing a little bit better

from what I read in the local papers.

Mr. MANIFOLD. We do not use that program in Virginia, that I

know of, not in the health center arena, so I can’t speak to that

issue.

Mr. STUPAK. That is interesting.

Mr. MANIFOLD. Unless I am not understanding the terminology.

Mr. STUPAK. Well, the rural flexibility grant program actually

helps our hospitals in northern Michigan go into the critical access

hospitals, which are the smaller hospitals that provide critical access in really remote rural areas, and they get a pretty good reimbursement. And that program actually is one of those that has really been a great help to us, and we see it zeroed out in the budget,

so I thought you just might have the same thing.

Mr. MANIFOLD. Yes. Because the critical access hospitals in Virginia are few and far between, many in southwest Virginia, I can’t

say that our particular arena of health centers in Central Virginia

has any connection directly with any critical access hospitals in

Virginia.

Mr. HAWKINS. Mr. Stupak, if I could add, though.

Mr. STUPAK. Sure.

Mr. HAWKINS. Across the country, we have heard from health

centers who have worked very closely with critical access hospitals

in their communities. Health centers help those hospitals keep

their doors open. They staff them, especially in the taking evenings

and weekends, et cetera, and they have reported. I mean, the affiliation is in partnerships that have developed across the country between health centers and hospitals and especially in rural communities where they are so crucial to one another. They are interdependent. It is heartening to see, because each is helping to keep

the other in business for the benefit of the community.

Mr. STUPAK. Sure. One more, if I may.

Dr. Shi, you mentioned in your oral testimony that health center

patients receive ‘‘comparable or even better quality primary care

services than managed care HMO patients, especially in the comprehensiveness of service provided and the continuity of care.’’

When I was asking Mr. Smith the questions there, and even Dr.

Duke, they kept talking about other sources of funding. The only

other sources of funding I have really seen being pushed is probably managed care or, as you all do, private fundraising to keep

you guys open. If we continue to move toward HMOs or managed

care, do you feel there will be a decline in the quality of service

provided to our patients?

Mr. SHI. Compared to community health centers, I agree. Yes, it

is on my page 36 of the handouts. I have the details of that study.

Mr. STUPAK. Okay.

Mr. SHI. It compares HMO with health center patients in terms

of the primary care they received from the doctors. And we look at

various domains of primary care using our primary care assessment tool. We find that——

Mr. STUPAK. There it is.

72

Mr. SHI. Yes. If you look at comprehensiveness of services, health

centers are rated much higher than HMOs, and the continuity of

care, they are also rated higher than HMOs. On the other indicators of primary care quality, they are comparable. And the overall

primary care score is also higher among health center patients

than among HMOs.

Mr. STUPAK. Thank you. Thank you for the time.

Mr. WHITFIELD. There are a number of areas I want to get into

in just a minute here.

On the managed care issue, I know there was some testimony

that because managed care pays so little on reimbursement, that

the State, I believe, has to make up that difference in the reimbursement to the community health center in most States or all

States, is that correct?

Mr. HAWKINS. All States.

Mr. WHITFIELD. Okay. Okay. And so Dr. Shi is making the argument that the managed care, we are underpaying but they are not

providing the quality of health care. But on Michigan just a

minute, the dental program in Michigan was dropped. That was a

decision that the State of Michigan made, and it sounds like it was

a short-sighted decision, because they are saving $9.2 million by

dropping it, but maybe infection rates have gone up and health

care has gone up and so overall Medicaid costs have probably escalated. Is that right?

Ms. SIBILSKY. We are seeing symptoms of that.

Mr. WHITFIELD. Okay. Now I know that there are some loan

guarantee programs out there for the community health centers.

And maybe you, Ms. Sibilsky, have even made the argument during the 1980’s that some changes were made to the community

health center program that gave you the flexibility of running it

more as a business than as a government entity and that sort of

freedom provided you with some innovative opportunities. Would

you expand on that a little bit for us?

Ms. SIBILSKY. I believe that much of the value of health centers

has been displayed in its ability to be a business and be viable and

be managed accordingly. It has spurred innovation to keep us viable. It has also helped us, I believe, to become a bipartisanly supported program.

Mr. WHITFIELD. Right.

Ms. SIBILSKY. Communities, as Mr. Manifold says, and I will

yield to him, want to participate in something that they can pay

for and receive value.

Mr. WHITFIELD. Right.

Ms. SIBILSKY. And I believe very strongly in those precepts in our

program.

Mr. WHITFIELD. Well, you know, one of the frustrating things for

me, having been elected to Congress in 1994, we have been talking

about trying to address the uninsured program, and I know people

go in and out of uninsured status, but we have some areas of the

country that have wonderful community health centers, like your

area, Mr. Manifold, where more and more people are going to those

centers. And then we have other centers that the taxpayers don’t

have anything. And so we have some people paying taxes, and they

have a tremendous program, and others are paying taxes that have

73

nothing. And that is why I was asking this question about using

this as a model to be the primary care for the Nation. And I think

the consensus was, among this group at least, that you would probably agree with that.

Now let me ask this question. Would you agree if State Medicaid

programs individually could use their Medicaid dollars to expand

community health centers? I mean, they are already paying a lot

of health care providers. Maybe they could get a group together

and say won’t you provide this service under the community health

center umbrella. Would you support that kind of a concept?

Mr. HAWKINS. Mr. Chairman, if it were an allowable use of Medicaid dollars. Although, I suppose, under administrative cost expenses, and I assume what you are talking about is the startup

costs for establishing and getting a health center going.

Mr. WHITFIELD. Right. Right.

Mr. HAWKINS. The one big question, then, that would come up

is the Federal grants that Mr. Manifold receives, that Dr.

Goetcheus’ center receives really, if you look at how a health center

budget breaks out, and then the patient population by payer

source, the Federal grants really truly go to cover care for the uninsured. So I guess the only question left would be, then, would Medicaid be paying for the uninsured? They don’t at health centers

today.

Mr. WHITFIELD. Right.

Mr. HAWKINS. And there is always a concern. We have heard

that from Medicare and Medicaid. We are happy to pay for care for

our beneficiaries, but we don’t want to be paying for others.

Mr. WHITFIELD. Right. Well, just kind of discussing things here,

I read an article not too long ago that General Motors is now paying more for its health care costs than it is for its material for the

car or the vehicles that they produce. What would you think about

if General Motors could put money into establishing a community

health center under all of the Federal guidelines with all of the

drug discounts, the tort claim liability protection and whatever, but

they had to put the money into it to expand it to make it available

to more people? Is that a concept that would be totally ridiculous,

or is that one that you would be willing to maybe explore?

Mr. HAWKINS. I don’t think it is ridiculous at all, Mr. Chairman.

The same day that the CEO of GM came out and made that statement about the sheer cost of health care there was an article in the

Wall Street Journal, and I will be happy to get you a copy of it for

the record. A company named Quad Graphics in Wisconsin, it is a

printing company, and it does business with Mars Bars and M&M

and places all over the country. It makes the wrapper paper. The

article pointed out that Quad Graphics is a relatively small employer. It has got printing plants around the country. It was fed up

with its increasing health insurance costs, and it opened up a primary care center in its main printing plant in Wisconsin and

watched its total health care bill drop like a rock.

Mr. WHITFIELD. Really?

Mr. HAWKINS. Yes. Saving 15 percent or more in health care

spending. They are, obviously, a self-insured plan. So they reap the

benefits of the investment in that primary care center. It is a measure for the ages, because it is not just any kind of primary care

74

when you have organized primary care with a focus on, through the

collaboratives, providing quality care, the kind of standards that

health centers must operate under. And then I would argue, the

strong community oversight that ensures that that center responds

to the real local problems, that is the measure for success.

Mr. WHITFIELD. Right.

Mr. HAWKINS. And I think that Quad Graphics got it right, as

one business.

Mr. WHITFIELD. Would you give us a copy of that?

Mr. HAWKINS. I would be glad to do so, sir.

Mr. WHITFIELD. All right. Provide that for us.

Do you have any questions, Mr. Stupak?

Mr. STUPAK. Mr. Chairman, I want to ask Ms. Sibilsky this.

You all do a great job, and I am seeing this. I am really concerned about this expansion on community health centers and how

we are going to get reimbursed. It just seems to me, and I tried

to get more out of Mr. Smith that during these difficult economic

times, while Michigan is having it, and I am sure other parts of

the country are, too, that Medicare reimbursement should be going

up as you are seeing more and more people. And I think I pointed

to Michigan with a 30-percent increase but yet we have been able

to hold the cost at about 5 percent.

Ms. SIBILSKY. Right.

Mr. STUPAK. And when I was trying to ask these questions, I

kept hearing about other sources of funding and all of that. And

the only other sources of funding that I really know or see is your

great job in getting private contributions into the system. And it

certainly helps out a lot. And you mentioned this in your written

testimony about the prospective payment system gives community

health centers a higher fee per office visit than a private physician

would receive, and you explained that at a center might include

other services not included in an office visit with a private doctor.

Could you explain that a little bit more just to clarify it for me?

Ms. SIBILSKY. Right. An encounter is the terminology we use,

and an encounter is all of the services delivered to an individual

in a day at a health center for medical. Now since we have gone

into mental health and substance abuse services and dental care,

you could actually have three encounters a day. But if you are talking about the medical encounter, it can include lab, it can include

x-ray, it can include education, our whole bundle, pharmacy. It is

the whole bundle of services delivered to an individual in 1 day is

one encounter.

Mr. STUPAK. So the reimbursement is for that one encounter?

Ms. SIBILSKY. Correct.

Mr. STUPAK. Okay. So if I go in and I have got a bad knee and

I want you to look at it, but you might talk to me about——

Ms. SIBILSKY. Your weight.

Mr. STUPAK. What is wrong with it?

Ms. SIBILSKY. Excuse me. I am sorry. I have no intention of——

Mr. STUPAK. I am only teasing. I am only teasing.

Ms. SIBILSKY. I am sorry, Mr. Stupak.

Mr. STUPAK. No, no, no. I am only teasing.

Ms. SIBILSKY. But one person’s weight.

75

Mr. STUPAK. How about my blood pressure being here in Congress?

Ms. SIBILSKY. Okay. Blood pressure.

Mr. STUPAK. So that is the difference. So if I went to a doctor’s

office, I would get multiple bills, then, would I not, for the service,

but not for the encounter of the day?

Ms. SIBILSKY. Yes, you would. Absolutely.

Mr. STUPAK. I see. I see.

Ms. SIBILSKY. Absolutely. And so when we were talking about it

is the benefit of prospective payment to our health centers allowing

us to be able to budget, we know, on a prospective basis, what we

are going to be receiving from Medicaid.

Mr. STUPAK. Okay.

Ms. SIBILSKY. And so we can project what we can spend.

Mr. STUPAK. Sure.

Ms. SIBILSKY. And it forces us to economize and to creative, in

the legal sense of the term, work.

Mr. STUPAK. Okay. But then in your testimony you also talked

about how the waiver program may threaten the prospective payment system.

Ms. SIBILSKY. Yes.

Mr. STUPAK. Okay. Explain that.

Ms. SIBILSKY. Well, for example, with the SCHIP program, when

it came into Michigan, we were very supportive of that program,

of course. And we are not concerned especially about receiving the

FQHC prospective payment assurances under SCHIP, because it

was going to be for kids.

Mr. STUPAK. Right.

Ms. SIBILSKY. And kids are lower cost. However, under the

Michigan adults benefit waiver, as you recall, that is an SCHIP

waiver that covers childless adults up to 35 percent of poverty.

These are people who have been out of health care, except perhaps

through a voucher, for years. And so what it does is it gives the

SCHIP payment for adults who are terribly complicated. I mean,

Dr. Goetcheus sees these people. They are on the streets. They are

dual diagnosis: mental health and substance abuse, and they are

expensive. So waiver programs, we believe that population should

be served, and we are seeing half to two-thirds of those folks within

our clinics, but actually at about 85 percent of fee for service, which

is, itself, at about 60 percent of reasonable cost.

Mr. STUPAK. Well, but 60 percent. What are you actually getting

paid, then, for these adults? Because SCHIP, it is not very large

reimbursement at all.

Ms. SIBILSKY. No, it is probably between $25 and $30 for an encounter.

Mr. STUPAK. For everything for that day?

Ms. SIBILSKY. For everything, because all of the people who we

serve receive the same types of services, the FQHC bundle of services.

Mr. STUPAK. And obviously the sliding scale doesn’t help you, because there is nothing there.

Ms. SIBILSKY. Thirty-five percent of poverty is about $260 a

month.

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Mr. HAWKINS. In Medicaid or SCHIP, you can’t bill for any underpayment. That would be balance billing. It would violate the

Federal statute.

Ms. SIBILSKY. Right.

Mr. STUPAK. Okay.

Mr. WHITFIELD. Dr. Goetcheus, one question I just want to ask

you.

You mentioned something about 2,400 individuals are coming

from prison back to DC. Is that per year?

Ms. GOETCHEUS. Per year.

Mr. WHITFIELD. Is that right?

Ms. GOETCHEUS. And they are scattered all over the United

States.

Mr. WHITFIELD. Each year.

Ms. GOETCHEUS. For instance, in Rivers, North Carolina, there

are 1,000 District residents in that prison. What we have set up

is some telecommunication so we can try to have, even in groups

and individuals, to try to talk with them about when you get back

into the District, you need your medications. This is where you

come. If you are coming to a homeless shelter, because a lot of

them end up in homeless shelters, this is the shelter we want you

to come to, because we have a health service there and we want

you to come in. And we have social workers there, and we will try

to get you jobs. And but it is 2,400 a year coming from the prisons

around the United States back into the District and 50 a day coming out of DC jail back into the community.

Mr. WHITFIELD. Per day?

Ms. GOETCHEUS. Per day.

Mr. STUPAK. I found this statement intriguing and the theory.

Mr. Hawkins, I think you mentioned it. For 1 percent, you are providing for 10 percent of the people, right?

Mr. HAWKINS. That is correct, Mr. Stupak.

Mr. STUPAK. So in theory, if we gave you 2 percent, could you

provide for 20 percent?

Mr. HAWKINS. In theory, yes.

Mr. STUPAK. Could you go 10 percent at 100 percent?

Mr. HAWKINS. For 100 percent?

Mr. STUPAK. No, no, no, 10 percent for 100 percent.

Mr. HAWKINS. Well, and keep in mind, please, that that is 2 percent of total Medicaid spending, which includes hospital and nursing homes.

Mr. STUPAK. Sure.

Mr. HAWKINS. But about 25 percent of Medicaid goes for physician services. And so by dint of that, your math is good. For 10 percent of Medicaid spending, or about half of what is spent on physician services today, yes, we could provide the care for 100 percent

of Medicaid beneficiaries. Certainly, for the 40 million who are nondisabled, non-aged. You know, we do have health centers that provide care to frail elderly and disabled individuals, but those who

need to be institutionalized in a nursing home or what have you,

you know, we do the visits, inpatient visits. I don’t know that we

could do the long-term care. That is a huge expense. But for the

40 million Medicaid beneficiaries who are adults, children mostly,

and relatively non-disabled adults, yes, we could do it. And we

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would save, just as we do now, Medicaid more money today than

all of the money that Medicaid pays health centers. In effect, they

get that care for free, and we still give them a further return on

investment. The savings exceed the $2.5 billion that Medicaid pays

health centers today compared to any other providers. That is what

the record shows. So for 10 percent of the dollars, we would give

you 100 percent of the patients and give you an even greater return. Lower hospitalizations, fewer specialty referrals, most importantly, a healthier population.

Mr. STUPAK. Sure. Someone said, you know, that they feel that

health care is a right and not necessarily a privilege in this country. If we did the uninsured population and gave them the option,

if you will, of moving either into a CHIPs program, a Medicare program, or a Federal health employees benefit package, in your opinion, would it be—I am trying to find a way to ensure, you know,

everyone who doesn’t have health care coverage, and we are actually working on some legislation to do this, to give them an option.

If you are child is on the SCHIP program, or in Michigan we call

it ‘‘My Child’’, why can’t that, usually a single parent, get on the

program, too? Or going through the Medicaid program, why can’t

people under 65 buy into the Medicare system sooner? Why can’t

those who fall in between come into the Federal employees’ health

benefit package, because I am sure you must see Federal employees at some of your clinics, because we are in remote areas? I am

just trying to find a way to find coverage and at the same time

keep the costs reasonable for everybody. Comments on that crazy

utopian idea?

Mr. HAWKINS. No, no, not necessarily.

I think two things, too. I mean, the question you want to ask is

for the 6 counties in your District and for the 16 in yours, Mr.

Chairman, that don’t have a health center today and our poor

county. Their low-income population is above the national average.

Why can’t they have a health center? You asked that earlier of the

appropriate authorities.

Mr. STUPAK. Right.

Mr. HAWKINS. I wish I could answer it. If only we had it. I think

in an ideal world, something like that, giving people a choice but

giving them an option of coverage, would be incredibly important.

I just want to say one other thing. I am no Ellen Greenspan, but

I think there is a business argument to be made for the fact that

we are not competitive in this global environment, because of the

costly fragmented health care system we have today with multiple

payers, each of whom plays games and tries to push the cost off

on somebody else.

Mr. STUPAK. Sure.

Mr. HAWKINS. I think there is a good business argument to be

made for a system, and I don’t understand why America’s businesses, GM included, they are the first ones to be speaking out.

They are picking up 50 percent of the tab today. I don’t understand

why they are not demanding change for this. But I am not in that

part of the business world.

Mr. STUPAK. Thank you, Mr. Chairman.

Mr. WHITFIELD. Thank you.

I just want to ask one brief question, and then we will conclude.

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On this issue of physicians, we touched on it a little bit, but how

difficult is it to find physicians, and what are the retention issues?

And would you all comment on that, those of you involved?

Mr. MANIFOLD. I will make a comment on that.

We have had awfully good luck at Central Virginia over the

years. Now one of the reasons why we have that luck, and it is not

luck in that sense, is because of the support systems, for example

the National Health Service Corps has helped us to recruit. But we

have also had good relationships with the two teaching institutions

in Virginia, the Medical College of Virginia and the University of

Virginia. And with those arrangements, we actually, in our particular situation, and I know there are other health centers that do

this, we actually teach residents at our site. Medical residents come

out. We even have had dental students over the years. And now we

have psychology students coming out to our sites and being taught.

And that helps us to get to know them. They get to know us. Those

kind of arrangements like that, where we have a good teaching

kind of relationship, does help us to find good providers along the

way, and we have even had people who said, ‘‘Gosh, I came out

here to your health center. I learned something. I don’t want to be

a primary care doctor. I am going into surgery.’’ You know. ‘‘This

is not what I want to do.’’

Mr. WHITFIELD. Right.

Mr. MANIFOLD. So you have both sides of that coin, and that is

a good thing, because had that gentleman come to us at work and

then said, ‘‘Wait a minute here. I don’t like this,’’ the connection

with the teaching institution is very strong.

Mr. WHITFIELD. Ms. Sibilsky?

Ms. SIBILSKY. Yes, I would like to support what Mr. Manifold

said. I would also like to cite an example of that where 100 percent

of the fourth year dental students at the University of Michigan

are rotating through community health centers, and as a result,

the recruitment rates have just escalated beautifully because they

have learned that they are valued organizations and in good communities. Also, the Area Health Education Center, the AHEC program, funded to the Bureau of Health Professions, which we were

just funded for in Michigan about a year ago, is starting to develop

those kinds of relationships for us. Also, the waiver program has

been a real benefit. And we have found amazing acceptability of

those providers within rural and remote communities. So thank

you.

Mr. SHI. I just want to add that in addition to physicians, nonphysician primary care providers also are the backbone in community health centers. Those include nurse practitioners, physician

assistants, and other advanced nurses. And we did studies showing

that they provided comparable quality care to primary care physicians in most of the primary care services.

Mr. WHITFIELD. Right. Good point. Good point.

Dr. Goetcheus?

Ms. GOETCHEUS. I would just echo the same. We have relationships with all of the medical schools. There are three here in DC

that have students and residents, have four family practice fellows

that spend clinical time with us has been a wonderful way to recruit, but the most important way has been because of National

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Health Corps. And one of the things I always say is that because

many of the physicians who have come to us are minority. And

some of them have grown up in these very neighborhoods where

they have been out east of the river, and what a wonderful witness

that is to that community. So I don’t know, we could not, in terms

of recruitment, do it. It would be much more difficult without National Health Corps. I am just, every day, grateful for it.

Mr. HAWKINS. I would just say nationally that one thing health

centers have learned over the last 40 years is there are three strategies to recruit and keep your staff. No. 1, get your staff involved

with teaching hospitals. They are part of that system. They are not

renegades and mavericks and lone rangers. They are actually

mainstream. No. 2, expose those new, soon-to-be doctors to the experience of working in a health center, and you will, more often

than not, have someone who is very interested in coming to work

for you down the line. And the third successful strategy that many

health centers have employed is grow your own. Find young people

in your community who have the promise and the hope and who

look like the people you serve and help send them off to get an education, a medical education, a dental education, a nursing education, and they will come back. They will come back and serve the

community that grew them.

Ms. SIBILSKY. I would like to give Mr. Stupak an example of that.

I was the administrator of the health center in Alcona County,

which is one of yours, and I think this was about 20 years ago. I

was administering that clinic, and a young medical student came

in, and he said to me, ‘‘Do you think you will be recruiting doctors

in about 10 years when I come out of medical school and residency

program?’’ I said, ‘‘I venture to say we would be delighted to have

you, and I would almost give you a guarantee of hire.’’ He came

back in 10 years and was also married to a doctor, and we got two

out of that one.

Mr. STUPAK. That is great. You know, you mentioned doctors, but

what about nurses? One of the questions I was going to ask earlier,

you know, we had the nurse reinvestment act on this committee,

and I think we all supported it. And back last time we had a nurse

shortage I think was in the mid 1970’s or so. Back then, Congress

put in like $150 million to help nurses, to recruit them and pay for

their education. Well, I think it was actually $153 million. This

past year, we only put in $150 million. I mean, in 30 years, if my

math is right, we haven’t increased the funding for the program,

but yet the demand is just as great. I mean, in the 1970’s, we had

it for a while and then it went away. Now it is back again, because

we have this shortage. Do you recruit and use nurses? And you

must, in your fields all of the time, right?

Ms. GOETCHEUS. It is one of our most difficult people to recruit

is to get nurses. It is very, very difficult. And as we are talking

about the collaboratives and the importance of education and care

management, the nurses are key here. And so at least for us, it has

been very, very difficult to recruit nurses.

Mr. STUPAK. And the nurses we talked to, they say at $150 million, which was 30 years ago, like 98 percent of them are rejected

for any financial aid, even though we have this great need for

nurses. I mean, I just can’t figure this one out other than we need

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some more bucks here just to help them out. I mean, they are not

asking for a lot, just a little help with their schooling and come

work in your clinics and centers. It would be of great help to us

all.

Mr. HAWKINS. Health centers are up against shortages in any

number of areas. Nursing is one. Dentists. The number of dentists

are declining in the dental school. We actually started, we, the National Association, working with a medical school to help start a

dental school, because the need is so great. Primary care physicians, pharmacists, and mental health counselors are all in significantly short supply.

Mr. STUPAK. Thank you.

Mr. MANIFOLD. We have six dental sites in our Central Virginia

family, and four of the positions are filled right now and two are

not filled. And we have a mighty strong effort. We have gotten

some changes to Virginia law that helps to allow for more dentists

to come into the State. And it is still virtually a nightmare for us,

because we have the money, we have the chairs, we have everything we need, and it is still very, very difficult to find those dentists.

Mr. WHITFIELD. Well, I want to thank you all so much for your

testimony. We really enjoyed spending Wednesday afternoon with

you, and I am sure Mr. Stupak and I both would say that we look

forward to maintaining contact with you as we move forward to try

to address some of these issues. So thank you for your time and

your testimony.

And I will say that we will keep the record open for 30 days, and

we are going to ask members to submit any questions that they

have for the record within the next 7 days.

And with that, the hearing is adjourned.

[Whereupon, at 6:03 p.m., the subcommittee was adjourned.]

[Additional material submitted for the record follows:]

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