Health Center Program: Improved Oversight Needed to Ensure Grantee Compliance with Requirements
Published: 2012-05-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Under the Health Center Program, HRSA provides grants to eligible health centers. HRSA is responsible for overseeing over 1,100 health center grantees to ensure their compliance with Health Center Program requirements. GAO was asked to examine HRSAs oversight. This report (1) describes HRSAs oversight process and (2) assesses the extent to which the process identifies and addresses noncompliance with what HRSA refers to as the 19 key program requirements. GAO reviewed and analyzed HRSAs policies and procedures and available programwide data related to HRSA's oversight of health centers, interviewed HRSA officials, and reviewed documentation of HRSAs oversight from 8 selected grantees that varied in their compliance experience, as well as other factors.
section_title: What GAO Found
paragraphs: The Department of Health and Human Services (HHS) Health Resources and Services Administration (HRSA) relies on three main methods to oversee grantees compliance with the 19 key program requirements.
Annual compliance reviews. HRSA project officers review available information, including that submitted by grantees, to determine whether the grantee is in compliance with each of the 19 program requirements.
Site visits. HRSA and its consultants visit grantees to review documentation, meet with officials, and tour the health center. Some of these visits are intended to assess compliance with some or all program requirements.
Routine communications. Project officers communicate with grantees via phone and e-mail to learn about issues that may affect their compliance.
When HRSA identifies noncompliance with program requirements, it uses a process, implemented in April 2010, to address this with a grantee. This process provides a grantee with defined time frames for addressing any identified noncompliance. If a grantee is unable to correct the compliance issue by the end of the process, HRSAs policy is to terminate the health centers grant.
HRSAs ability to identify grantees noncompliance with Health Center Program requirements is insufficient.
HRSA does not require project officers to document their basis for determining that a grantee is in compliance with a requirement. When project officers are uncertain about compliance, HRSA instructs them to consider a grantee in compliance and to note the lack of certainty in a text field of their evaluation tool. However, HRSA has no centralized mechanism to ensure this occurs. Thus, it is unclear whether project officers' decisions that a grantee is in compliance with a requirement are because there was sufficient evidence demonstrating compliance or the project officer failed to document that compliance was uncertain.
The number of compliance-related visits conducted may be limited. HRSAs available data indicates that only 11 percent of grantees had a compliance-related site visit from January through October 2011; less than half of which had a visit that assessed compliance with all 19 program requirements.
HRSAs project officers do not consistently identify and document grantee noncompliance. Project officers GAO interviewed had different interpretations of what constitutes compliance with some program requirements and therefore when they should cite a grantee for noncompliance.
HRSAs process for addressing grantee noncompliance with program requirements seems to provide both the agency and grantees with a uniform structure for addressing noncompliance. However, the extent to which this process is adequately resolving grantee noncompliance or terminating grantee funding is unclear because HRSAs experience with this process is too recent for GAO to make an overall assessment.
section_title: What GAO Recommends
paragraphs: GAO recommends that, among other things, HRSA improve its documentation of compliance decisions, strengthen its ability to consistently identify and cite grantee noncompliance, and periodically assess whether its new process for addressing grantee noncompliance is working as intended. HHS concurred with all of GAOs recommendations, and stated that HRSA has already begun implementing many of them. HHS, however, did not concur with what it characterized as certain conclusions drawn from the findings. HHS based its comments on only some of the evidence. GAOs analysis of all the evidence and HRSAs planned implementation of the recommendations confirm the validity of the findings and conclusions.

section_title: Letter
paragraphs: The nationwide network of health centers in the federal Health Center  Program is an important component of the health care safety net for  vulnerable populations, including Medicaid beneficiaries, people who are  uninsured, and others who may have difficulty obtaining access to health  care. To fulfill the Health Center Program’s mission of providing  comprehensive, quality primary health care services for the medically  underserved, the Department of Health and Human Services’ (HHS)  Health Resources and Services Administration (HRSA) provides grants to  eligible health centers under Section 330 of the Public Health Service  Act. These grants are an important part of successful health center  operations and viability. In 2010, Health Center Program grants helped  fund more than 1,100 health center grantees that provided services at  more than 8,100 health care delivery sites and served nearly 19.5 million  people—72 percent of whom had income at or below the federal poverty  level. These grants made up over 20 percent of all health center grantees’  revenues in 2010.
To continue receiving program funds, health center grantees must comply  with a number of requirements. For example, HRSA identified what it  refers to as the 19 key program requirements, which the agency indicated  are based on requirements outlined in the Public Health Service Act and  regulations. HRSA groups these 19 program requirements into four  broad categories: patient need, the provision of services, management  and finance, and governance. For example, the provision of services  category includes requirements for health center grantees to provide  comprehensive primary health care services, including preventive,  diagnostic, treatment, and emergency services; provide professional  coverage after normal business hours; and have a system for adjusting  fees based on a patient’s ability to pay. Project officers in HRSA’s Bureau  of Primary Health Care (BPHC) are primarily responsible for overseeing  health center grantees to ensure their compliance with the Health Center  Program requirements.
Funding for the Health Center Program has increased substantially during  the past decade. The Health Center Program’s annual funding more than  doubled from approximately $1.3 billion to about $2.8 billion, from fiscal  year 2002 through fiscal year 2012. This funding includes the amount of  program funds HRSA allocated from its annual appropriations during the    period, as well as amounts the agency received through other legislation. Specifically, the program’s fiscal year 2009 funding included $2 billion that  HRSA received through the American Recovery and Reinvestment Act of  2009,$2.2 billion HRSA received through the Patient Protection and Affordable   and its fiscal years 2011 and 2012 funding included a total of   Care Act (PPACA). Furthermore, for fiscal years 2013 through 2015,  PPACA appropriated an additional $7.3 billion to HRSA to provide grants  for the operation and expansion of health centers.center capacity is expected to expand over the next several years.
As a result, health  Given the past and expected increases in program funding, you asked us  to examine HRSA’s oversight of health center grantees. In this report, we  (1) describe the process HRSA uses to oversee grantee compliance with  Health Center Program requirements, and (2) assess the extent to which  HRSA’s process identifies and addresses noncompliance with these  program requirements.
To describe the process HRSA uses to oversee compliance with the  Health Center Program requirements, we reviewed key documents  related to HRSA’s oversight process. These documents included  regulations governing the Health Center Program, HRSA’s standard  operating procedures for monitoring and assessing grantees’ compliance,  and guidance that HRSA provides to its project officers and grantees  regarding compliance with the 19 program requirements. We also  interviewed knowledgeable HRSA officials about the agency’s oversight  process, as well as any significant changes to this process over the past  several years.
To assess the extent to which HRSA’s process identifies and addresses  noncompliance with Health Center Program requirements, we reviewed  and analyzed HRSA’s standard operating procedures, and the tools and  guidance HRSA provides to project officers related to its oversight  process. We also discussed the oversight process with cognizant HRSA  officials. To gain a more in-depth understanding of the extent to which  HRSA’s process identifies and addresses noncompliance, we also  reviewed and analyzed HRSA’s oversight of eight selected health center  grantees. The grantees were selected to provide variation in: size, as  determined by the number of delivery sites; length of time as a Health  Center Program grantee; and the number of findings of noncompliance— referred to as conditions—that HRSA had cited for each grantee that  were unresolved as of July 11, 2011. (See app. I for additional  information about the grantees we selected.) We also selected the eight  grantees to ensure that each of the eight had a different HRSA project  officer and was located in a different state. For each of the selected  grantees, we reviewed documentation of HRSA’s oversight activities;  including documentation of the most recently completed assessment of  the grantees’ compliance with the 19 program requirements. During our  review, we identified whether HRSA staff were following the agency’s  procedures for identifying and addressing noncompliance, and whether  the process was consistent with internal control standards for the federal  government. For part of our review, we focused on HRSA’s oversight of  the eight selected grantees’ compliance with 6 of the 19 program  requirements; we judgmentally selected 2 requirements from each of the  provision of services, management and finance, and governance  categories. Some of the selected requirements pertain to how health  center grantees operate, such as the requirement that grantees provide  sliding discounts to patients based on their ability to pay (known as the  “sliding fee discounts” requirement), and the requirement that a health  center grantee has a governing board, the majority of whose members  are patients of the health center (board composition). Other  requirements we selected are important because compliance with them  helps to ensure the financial viability of health center grantees, such as  the requirement that grantees implement systems to maximize revenue  collections to cover the costs of providing services (billing and  collections). The remaining 3 requirements we selected for review were  those requiring grantees to: provide professional coverage, such as  access to a physician, for patients after normal health center hours (after  hours coverage); possess sufficient management expertise to run the  health center (key management staff); and have a policy to prevent  conflicts of interest (conflict of interest). Additionally, we interviewed the  relevant HRSA project officers and their supervisors, known as branch  chiefs, about the criteria they used to assess whether grantees were in  compliance with the 6 selected program requirements. Collectively, these  project officers and branch chiefs were responsible for overseeing or  supervising the oversight of almost 500 grantees.
We also assessed the extent to which HRSA’s process identifies and  addresses noncompliance with the 19 program requirements by reviewing  and analyzing programwide data HRSA had available on its use of site  visits to health center grantees and the conditions issued to grantees for  noncompliance with these requirements. We obtained and analyzed  HRSA’s data on site visits—on-site assessments of grantees’  performance in providing services to patients or compliance with Health  Center Program requirements—conducted between January 1, 2011, and  October 27, 2011, and determined the frequency with which visits were  conducted over this period. In addition, we analyzed programwide data  on noncompliance issues HRSA cited from April 9, 2010, through October  7, 2011, and determined, among other things, the number and types of  issues, and proportion of grantees cited for noncompliance. We  discussed both the site visit and noncompliance data with knowledgeable  HRSA officials and reviewed the data for accuracy and consistency. We  found a number of anomalies with the site visit data, including that certain  data fields could not be updated for changes, and concluded that the data  were of an undetermined reliability. We determined that the  noncompliance data were sufficiently reliable for the purposes of our  review.
We conducted this performance audit from July 2011 to May 2012 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Health Center Program grantees are private, nonprofit community-based  organizations or, less commonly, public organizations such as public  health department clinics. Health centers funded through HRSA’s Health  Center Program are typically managed by an executive director, a  financial officer, and a clinical director, and provide comprehensive  primary care services including enabling services, such as translation and  transportation, that help facilitate access to health care.
subsections: section_title: HRSA’s Health Center Program
paragraphs: HRSA identified 19 program requirements, which it indicated were based  on Section 330 of the Public Health Service Act and regulations, which  health center grantees must meet to continue receiving grant funding.  HRSA groups these 19 program requirements into four broad categories:  patient need, the provision of services, management and finance, and  governance. Table 1 provides a summary of the 19 requirements.
HRSA uses a competitive process to award Health Center Program  grants. This process applies both to health centers receiving a grant for  the first time—known as new starts—and to existing health center  grantees that must compete periodically for grants. In either case,  prospective or existing grantees are required to submit the applicable  grant application to HRSA, and if approved, receive grants to provide  services to individuals located in a specified area, known as their service  area.
HRSA approves funding for health centers for a specified time period,  known as a project period. Currently, HRSA approves new start grantees  funding for a 2-year project period, and existing grantees funding for  project periods of 1, 3, or 5 years. The length of the project period for  existing grantees is determined, in part, based on how well grantees are  complying with the 19 program requirements. Each year of a project  period is referred to as a budget period. After the competitive award of a  grant for the first year, or budget period, HRSA awards noncompetitive  continuation grants for each remaining budget period if funds are  available, and the grantee demonstrates satisfactory progress in  providing its services. A grantee demonstrates satisfactory progress by  submitting a budget period progress report for HRSA’s review. In both the  competitive grant application and the budget period progress report, a  grantee is, among other things, required to describe the services offered,  provide a listing of its key management staff, and include a detailed  narrative description of the current status and any changes in its  operations related to the 19 program requirements.
In addition to maintaining compliance with the 19 program requirements  and submitting annual budget period progress reports, health center  grantees are required to periodically submit other information to HRSA.  For example, grantees are required to submit to HRSA an annual  independent financial audit in accordance with federal audit requirements.  In addition, in the first quarter of every year, grantees must submit a  variety of information to HRSA’s Uniform Data System (UDS); UDS tracks  a variety of information on Health Center Program grantees, including  information on their patient demographics (e.g., race/ethnicity, insurance  status, income level); revenues; expenses; quality of care measures; and  health center staffing and patient utilization patterns.
section_title: HRSA’s Bureau of Primary Health Care
paragraphs: HRSA’s BPHC has primary responsibility for overseeing health center  grantees’ compliance with program requirements. This includes  monitoring grantees to determine if they are in compliance with the   19 program requirements and addressing cases of grantee  noncompliance. BPHC has four operating divisions, each containing five  branches; the branches correspond to specified geographic locations.  Within each branch there are project officers who are responsible for the  ongoing oversight of an assigned portfolio of grantees. As of March 2012,  HRSA had 111 project officers, whose portfolios ranged from 4 to   17 health center grantees; the average portfolio size was 10 grantees per  project officer. Each project officer reports to a supervisor, known as a  branch chief. HRSA project officers use an on-line electronic system,  called the Electronic Handbook, to document their oversight activities, as  well as correspond with and exchange documents with health center  grantees. The system contains several different modules within which  project officers record such information.
To help them conduct their oversight, project officers have a variety of  internal and external resources. For example, officials from the BPHC’s  Office of Policy and Program Development can assist project officers in  interpreting program guidance and Health Center Program requirements.  In addition, project officers have access to consultants through an over  $30-million, 4-year contract with Management Solutions Consulting  Group, a nationwide management consulting firm that provides HRSA  access to approximately 300 to 350 consultants. The consultants are to  provide a range of services, including conducting site visits and helping  assess the results of health center grantees’ annual financial audits.
section_title: HRSA Uses Three Main Methods to Oversee Grantee Compliance and Has a Process to Address Noncompliance
paragraphs: HRSA primarily relies on three main methods to oversee grantees’  compliance with Health Center Program requirements: annual compliance  reviews, site visits, and routine communications. Additionally, when  HRSA identifies noncompliance with these requirements, the agency has  a recently revised process to address this with its grantees.
subsections: section_title: HRSA Primarily Relies on Annual Compliance Reviews, Site Visits, and Routine Communications to Oversee Grantees
paragraphs: HRSA relies on three main methods to oversee grantees’ compliance with  Health Center program requirements.
To oversee health center grantees’ compliance with the 19 program  requirements, HRSA requires project officers to conduct an annual  compliance review for each of the grantees in their assigned portfolios.  During this review, project officers are responsible for determining  whether a health center grantee is in compliance with each of the   19 program requirements. The annual compliance review process begins  when a health center grantee submits an application for a competitive  grant or submits a budget period progress report to HRSA. When  conducting a compliance review, HRSA project officers are responsible  for reviewing information contained in the grantee’s submission, such as  information on the grantee’s policies and a narrative explaining how the  grantee believes it meets, or plans to meet, the 19 program requirements.  HRSA also expects project officers to review other available information  about the grantee, such as results from the grantee’s annual financial  audit and UDS information. Project officers generally have the option to  contact the grantee during their annual review if they need clarification  about the information in a grantee’s application or budget period progress  report.
HRSA provides guidance to project officers for determining whether  grantees are meeting each of the 19 program requirements. In particular,  HRSA provides project officers with a list of key factors and questions  related to the 19 program requirements to consider when making their  assessment of compliance. Table 2 includes examples of the factors and  questions provided to project officers for the 6 program requirements we  selected for more in-depth review.
To conduct and document their compliance review, project officers use an  electronic evaluation tool that is contained in the Electronic Handbook.  The evaluation tool lists each of the 19 program requirements, and,  among other things, asks project officers to indicate whether the grantee  is in or out of compliance. If after reviewing available information, the  project officer remains uncertain whether or not the grantee has  demonstrated compliance with a requirement, then, according to HRSA’s  guidance, the project officer should indicate that the grantee is in  compliance until noncompliance is clearly determined. In such cases,  HRSA’s guidance instructs project officers to document their concerns  about compliance by writing a comment in a text field of the evaluation  tool. In addition, as part of the review, a project officer may decide to  designate a performance improvement area. According to HRSA,  performance improvement areas are actions or other measures that  project officers recommend to help grantees improve their delivery of  services and, ultimately, patient outcomes. Performance improvement  areas are intended to promote continuous improvement for grantees  above and beyond compliance with the 19 program requirements; they  are not intended to address findings of noncompliance with these  requirements. Once project officers complete their review, branch chiefs  are responsible for reviewing and approving project officers’  assessments, including their determinations regarding compliance and  the identification of performance improvement areas. According to HRSA  officials, branch chiefs are responsible for providing leadership and  guidance in areas such as program evaluation and monitoring, which  establishes an important quality control for the annual compliance  reviews.
While HRSA has conducted annual reviews of grantees’ compliance for  several years, the process for conducting these reviews has changed. To  improve their oversight process, in 2008 HRSA officials revised the  annual compliance evaluation tool to link the annual compliance reviews  to each of the Health Center Program requirements. As a result of this  change, project officers now make an assessment of whether grantees  are in compliance with each requirement, rather than just an overall  assessment of compliance. In addition, HRSA officials indicated that they  continually assess the annual review process, and have recently made  changes such as requiring grantees to submit more detailed narrative  descriptions and an updated sliding fee discount schedule for the fiscal  year 2012 reviews.
section_title: HRSA’s Process for Identifying Noncompliance Is Insufficient, and It Is Too Soon to Assess the Revised Process for Addressing Noncompliance
paragraphs: HRSA’s process for identifying noncompliance is insufficient as annual  compliance reviews do not identify all instances of noncompliance and  the extent to which HRSA uses site visits to assess compliance is  unclear, but appears to be limited. Moreover, HRSA’s project officers do  not consistently identify and document grantee noncompliance. Finally,  HRSA’s ability to address noncompliance is unclear as the agency’s  process for doing so has recently changed.
subsections: section_title: Annual Compliance Reviews Do Not Identify All Instances of Noncompliance
paragraphs: HRSA’s annual compliance reviews do not identify all instances of health  center grantee noncompliance that other methods, such as site visits,  have identified. Among the eight grantees included in our review, we  identified 10 instances where the project officer determined that a grantee  was in compliance with a program requirement during the annual  compliance review, but a site visit a short time later found the grantee to  be noncompliant with the same requirement. For example, in April 2010,  a project officer completed an annual compliance review and found that a  grantee was in compliance with 16 of the 19 program requirements.  However, in July 2010, just 3 months later, a HRSA consultant completed  an operational assessment site visit and found that the grantee was not in  compliance with 10 of the 19 requirements; this included 7 requirements  for which the project officer had previously concluded the grantee was in  compliance. During the annual compliance review, for instance, the  project officer determined that the grantee was in compliance with both  the board composition and board authority program requirements.  However, the site visit found, among other things, that the board had less  than the minimum number of required members, did not meet monthly as  required, and was not fulfilling its required duties and responsibilities to  oversee the operations of the center—key aspects of these 2 program  requirements. HRSA officials could not definitively explain why the site  visit identified these issues of noncompliance, when the annual  compliance review had failed to do so. HRSA officials speculated that  because this grantee was having management problems, its performance  may have rapidly deteriorated since the annual review was completed.  Although the grantee may have been experiencing management  problems, the consultant’s site visit report indicates that the grantee did  not fall out of compliance with all 7 of these requirements in the  intervening 3 months. Rather, the report indicated that several of these  noncompliance issues were ongoing, including one that had existed for  several years. Additionally, none of the 10 annual compliance review  decisions included an indication that the project officer was uncertain  about whether or not the grantee demonstrated compliance. Thus, it does  not appear that the affirmative compliance decisions were due to project  officers indicating that a grantee is in compliance until noncompliance is  clearly determined.
In addition to finding instances where the annual compliance review failed  to identify grantee noncompliance, our review of HRSA’s oversight  documentation of selected grantees revealed that project officers  frequently determined a grantee was in compliance with selected program  requirements without having sufficient information to make such  decisions. Our analysis of 48 compliance decisions that project officers  made during their fiscal year 2011 annual compliance reviews for our  eight selected grantees found that in 43 cases (90 percent) project  officers determined grantees were in compliance with requirements.However, in 23 of these 43 cases (53 percent), we were unable to find  sufficient information to support the project officer’s compliance decision  and the project officers did not indicate that they were unable to clearly  determine compliance, which is what HRSA guidance instructs them to do  if they are uncertain about whether or not the grantee demonstrated  compliance, for example:
Project officers determined that all eight selected health center  grantees were in compliance with the after hours coverage  requirement. However, it appears that six of the eight project officers  had insufficient information when making their assessments. Our  review of HRSA’s oversight documentation found that information  grantees provided ranged from a sentence or two in their budget  period progress report narrative stating they had a 24-hour answering  service that will arrange for contact with an on-call clinician, to no  mention of how they were meeting the after hours coverage  requirement. In contrast, we found the other two project officers had  information from recent site visits to assess compliance with this  requirement.
Project officers determined that six of the eight selected health center  grantees were in compliance with the sliding fee discounts  requirement. However, we found that four of six project officers who  made this determination did not, at the time, have a current, updated  version of their grantees’ sliding fee discount schedule to review.  These project officers made their compliance decisions based on  limited information, including grantee assertions that they had a  current and up-to-date schedule. According to HRSA officials,  beginning with the fiscal year 2012 annual compliance reviews,  grantees will be required to submit an updated sliding fee discount  schedule.
While HRSA requires project officers to document their basis for finding a  grantee out of compliance with a requirement, it does not require project  officers to document their basis for finding a grantee in compliance.  Therefore, there were often no records documenting how or why a project  officer determined a health center grantee was in compliance with the  requirements. In 26 of the 43 compliance decisions (60 percent) we  reviewed in which project officers determined grantees were in  compliance with selected program requirements, the project officers had  not documented the basis for their decisions. The lack of documentation  is not consistent with internal control standards for the federal  government, which indicate “that all transactions and other significant  events need to be clearly documented” and stress the importance of “the  creation and maintenance of related records which provide evidence of  execution of these activities as well as appropriate documentation.”
The absence of such documentation may limit HRSA’s ability to ensure  that project officers have identified all cases of grantee noncompliance  during the annual compliance review and make it more difficult for HRSA  to keep track of issues affecting grantee compliance especially when  oversight responsibilities transfer among staff. For example, without such  documentation, it is difficult for supervisors to appropriately assess the  basis for project officers’ decisions. Further, according to HRSA, about   40 percent of grantees have had a change in their assigned project officer  and branch chief over the past few years due in part to HRSA’s hiring of a  significant number of new project officers to meet the expected increase  in the number of health center grantees. While HRSA officials indicated  they have a process to ensure a smooth transition between oversight  staff, we found the absence of documentation can present challenges.  For example, each of the eight project officers we interviewed had been  assigned to their grantee for 2 years or less, and some of the project  officers were unable to answer questions about why previous project  officers determined their grantees were in compliance with specific  requirements.
Additionally, when project officers are uncertain about compliance, HRSA  instructs project officers to consider grantees in compliance. As noted  earlier, HRSA’s guidance indicates that project officers are to document  these instances when compliance is unclear by writing a comment in a  text field of the evaluation tool, but HRSA has no centralized or  automated mechanism to ensure this occurs. The lack of such a  mechanism, coupled with the lack of documentation of project officers’  basis for finding a grantee in compliance, limits HRSA’s ability to  determine whether a project officer decided a grantee was in compliance  with a requirement because the file contained evidence demonstrating  compliance, or because the project officer was unsure about compliance  and simply defaulted to an affirmative compliance decision without  including documentation of his or her concerns.
section_title: HRSA’s Use of Site Visits to Assess Compliance Is Unclear, but Appears to Be Limited
paragraphs: Data limitations make it difficult to determine the extent to which HRSA  uses site visits to assess compliance; however, our analysis of these data  suggest that the number of compliance-related site visits is limited. HRSA  does not have aggregate, readily available data on site visits conducted  prior to January 2011. Consequently, to determine which health center  grantees had compliance-related site visits prior to January 2011, HRSA  officials would have to manually compile a list by accessing each site visit  report located in each individual grantee’s file.
To help the agency in planning site visits, HRSA began requiring that all  site visits be recorded in its on-line Electronic Handbook in January 2011.  However, the reliability of at least some of the data elements, including  the type of site visit, is uncertain. After a site visit record is created in the  Electronic Handbook, which is the first step for documenting a planned a  site visit, the system prevents project officers from editing certain fields,   As a result, if the  including the field for the type of site visit conducted.site visit type changes after project officers create the site visit record, the  record will be inaccurate. Further, project officers are not required to  update certain other fields, such as the site visit start and end dates,  which increases the potential for data inaccuracies. While HRSA officials  indicated that the type of site visit does not frequently change, when we  compared the site visit data to information contained in site visit reports,  we found that the type of site visit had changed for one of the five visits  that took place at our selected grantees since January 2011. After  discussing this with HRSA officials, the officials indicated that they would  alter their electronic system to allow project officers to revise the site visit  type; however, they have yet to do so. In addition, HRSA officials  indicated the electronic system does not have a mechanism to ensure  that a cancelled site visit is properly recorded. Therefore, when a planned  site visit is cancelled, the record is removed only if a project officer  proactively takes action to remove it. If the project officer fails to remove  the record, the database will contain inaccurate information. From the  programwide site visit data we received, we determined that the data  included at least one site visit that had been cancelled, but not removed  from the database. However, there may be other instances that we were  unable to identify based on the available data.
As noted earlier, HRSA considers site visits an important tool for  assessing and assuring grantee compliance with Health Center Program  requirements. According to our analysis, site visits were conducted at 417  (37 percent) of the 1,128 health center grantees between January 1, 2011  and October 27, 2011. A total of 472 site visits were conducted during  this period because some grantees had multiple visits. Although HRSA’s  data on the type of site visit conducted has inaccuracies, these data  suggest that only a small portion of grantees had compliance-related  visits. HRSA’s data indicate that 58 grantees, or 5 percent of all health  center grantees, had site visits to review compliance with all 19 program  requirements during this time period.(6 percent) had a site visit that may have assessed compliance with some  of the 19 program requirements. The remaining grantees either did not  have a site visit during the period or had a site visit which was not  intended to assess compliance with the 19 program requirements.
Although HRSA’s standard operating procedures do not currently specify  how frequently compliance-related site visits should be conducted, HRSA  officials indicated that, beginning in 2012, the agency is requiring that  project officers schedule an operational assessment—a site visit intended  to assess compliance with all 19 program requirements—for each grantee  at least every 5 years. At their current rate and assuming the number of  grantees remains the same, it would take HRSA over 15 years to conduct  an operational assessment visit at each of the over 1,100 health center  grantees. HRSA officials recognized that in order to meet this goal, they  will have to increase the number of operational assessment site visits  which are conducted annually. Along those lines, officials indicated that  HRSA increased the amount of funding and planned number of  operational assessment site visits to be provided through their current  nationwide contract for conducting site visits.
section_title: HRSA’s Project Officers Do Not Consistently Identify and Document Grantee Noncompliance
paragraphs: HRSA’s project officers do not consistently identify noncompliance and  document it through the placement of conditions. For three of the six  program requirements we reviewed, the HRSA project officers we  interviewed did not have consistent interpretations of what constitutes  compliance and what should therefore result in the placement of a  condition on a health center’s grant, raising concerns about the adequacy  of HRSA’s guidance and training for project officers. The project officers  we spoke with had different interpretations regarding the board  composition, after hours coverage, and key management requirements.
Health center grantees are required, by statute and regulations, to  have a governing board, the majority of whose members are patients  of the center and who demographically represent the population  served by the grantee. However, some project officers we spoke with  indicated that the lack of an appropriately representative board would  not result in a condition; these project officers did not consider the  lack of an appropriately representative board an issue of  noncompliance.
While HRSA’s guidance for project officers indicates that, at a  minimum, a grantee’s after hours coverage system should ensure that  patients have telephone access to a clinician who can assess whether  they need emergency medical care, some of the project officers we  spoke with indicated that they would consider using a performance  improvement area, not a condition, if a health center had only an  answering machine directing patients to the emergency room. Other  project officers stated that if a grantee had only an answering machine  directing patients to the emergency room they would not be in  compliance with this requirement.
HRSA guidance instructs project officers to assess whether a health  center grantee maintains a fully staffed management team as  appropriate for the size and need of their health center. When asked  about the criteria they use for determining whether grantees are in or  out of compliance with the key management staff requirement, two  project officers told us that they base their compliance decision on  whether the grantee’s management staff includes a Chief Executive,  Financial, and Medical Officer. In contrast, the other six project  officers said that a grantee did not necessarily need to have all of  these positions staffed.
We also found one instance where HRSA’s guidance on what constitutes  compliance is inconsistent with Health Center Program requirements, and  thus project officers may not be making correct decisions regarding  grantee compliance and appropriately addressing noncompliance. In this  particular instance, HRSA guidance instructs project officers to use a  performance improvement area, not a condition, if a grantee has not used  the most recent federal poverty guidelines for developing their sliding fee  discounts; the guidance therefore indicates that grantees are to be  considered in compliance with the requirement even if their sliding fee  discount schedule is outdated. Health Center Program regulations,  however, require a grantee’s sliding fee discounts to be based on the  most recent guidelines. As a result, a grantee that has not used the  correct federal poverty guidelines should be deemed noncompliant with  this program requirement and a condition should be placed on its grant.  When we raised this issue with HRSA officials, they acknowledged that  the guidance was not consistent with requirements, and that it would be  revised. They also confirmed that if a grantee has not used the correct  federal poverty guidelines in its sliding fee discount schedule, a project  officer should deem the grantee noncompliant and that a condition should  be issued. HRSA officials further indicated they are developing a policy  notice on the sliding fee discounts program requirement, and the  guidance will specify that a grantee’s sliding fee discounts must be  revised annually to reflect updates to the most recent federal poverty  guidelines.
Finally, we found instances where grantee noncompliance was identified  through site visits, but HRSA failed to place conditions on the grant.  According to HRSA’s standard operating procedures, when a site visit  determines that a grantee is noncompliant with at least one of the   19 program requirements, a project officer must place a condition on the  health center’s grant. However, as part of our review of the eight selected  grantees, we identified five site visits from 2009 through August 2011 that  clearly identified findings of noncompliance with some of the 19 program  requirements, but HRSA did not issue conditions to grantees for the  majority of these findings. For example, one site visit found that a grantee  was not in compliance with 16 of the 19 requirements, but HRSA did not  issue any conditions to the grantee. At the time of the site visit, this  grantee had been receiving HRSA funding for about 15 months, and had  been experiencing compliance issues for at least 12 months. Despite this,  HRSA officials told us that because it was a new grantee that was  receptive to technical assistance, HRSA wanted to give the grantee more  time to address their compliance issues before placing numerous  conditions on it. Another site visit found that a grantee was not in  compliance with the board authority and conflict-of-interest policy  requirements, but HRSA did not issue any conditions to the grantee as a  result of this site visit. Instead, HRSA arranged for a consultant to provide  the grantee with technical assistance to revise and update its bylaws to  address these issues.
section_title: HRSA’s Ability to Address Noncompliance Is Unclear As the Agency’s Process Has Recently Changed
paragraphs: The extent to which HRSA’s revised process—the progressive action  process—is adequately resolving conditions or terminating grantee  funding is unclear because HRSA’s experience with this revised process  is too recent to make any overall assessment. The progressive action  process, which was implemented in April 2010, can potentially take over a  year to move through all of the phases. Completing the first three phases  of the progressive action process can take up to 9 months, while grantees  with conditions that allow for a 120-day implementation phase can take   Thus, HRSA has limited  up to 19 months to fully complete the process.experience with the process to date, and does not have sufficient data to  assess the extent to which the process is effective in bringing grantees  into compliance or in addressing those grantees that have failed to  achieve compliance by the end of the final phase.
During the first 18 months that the progressive action process has been in  place—from April 9, 2010, through October 7, 2011—HRSA issued   1,017 conditions for grantee noncompliance to a total of 417 different  grantees (approximately 37 percent of all grantees), with some grantees  having multiple conditions. Over half of the conditions were for grantee  noncompliance with requirements related to the management and finance  category. (See app. II for additional information about the conditions  placed during this time period.) As of November 10, 2011, 775 conditions  (76 percent) were resolved and 240 conditions (24 percent) were still in  process. The remaining 2 conditions, which belonged to the same  grantee, were not resolved in the allotted time; thus, HRSA officials  indicated that the agency was is in the process of terminating the  grantee’s funding.
section_title: Conclusions
paragraphs: HRSA’s Health Center Program provides access to health care for people  who are uninsured or who face other barriers to receiving needed care.  Over the past decade the program has expanded and, given the  additional funding appropriated by PPACA, will likely continue to do so  over the next few years. As such, it will play an increasingly greater role  as a health care safety net for vulnerable populations. Particularly in light  of the growing federal investment in health centers, it is important for  HRSA to ensure that health centers are operating effectively and in  compliance with Health Center Program requirements. HRSA has taken  steps to improve its oversight of health center grantees over the past few  years, such as by standardizing its process for addressing grantee  noncompliance. Despite these efforts, however, HRSA’s oversight is  insufficient to ensure that it consistently identifies all instances of grantee  noncompliance with Health Center Program requirements.
Although HRSA has devoted substantial resources to overseeing  grantees—including having over 100 project officers to perform annual  compliance reviews and having a more than $30-million contract for  consultants who conduct site visits and provide other assistance— limitations in HRSA’s oversight methods have affected the agency’s  performance in identifying issues of noncompliance. The annual  compliance reviews place too little emphasis on documenting project  officers’ basis for making their compliance decisions, while HRSA’s  guidance instructs project officers to indicate that a grantee is in  compliance with Health Center Program requirements, even if the project  officer is uncertain about the grantee’s compliance. Further, HRSA does  not have a systematic process for tracking and following-up on instances  when project officers are uncertain about a grantee’s compliance to  ensure that compliance is ultimately demonstrated. The lack of such a  process, coupled with the lack of documentation of project officers’ basis  for finding a grantee in compliance, limits HRSA’s ability to assess  whether project officers accurately determined that grantees were actually  in compliance with a requirement, or whether they were simply unsure  about compliance. This is especially problematic because project officers  we interviewed had different interpretations of what constitutes  compliance with certain requirements and therefore, when they should  place a condition on a health center’s grant.
Additionally, while HRSA officials indicated, and we found, that site visits  are an important tool for overseeing grantees and verifying compliance  with Health Center Program requirements, the agency’s use of  compliance-related site visits appears to be limited. HRSA has a goal of  having an operational assessment visit to each grantee at least once  every 5 years. The agency’s ability to effectively meet this goal, however,  is challenged by a lack of comprehensive and reliable data on which  grantees have had various types of site visits. To the extent HRSA is able  to develop and analyze accurate data on site visits, it will be in a better  position to target its resources to those grantees that may be in greater  need of such visits. Furthermore, HRSA needs to ensure that when site  visits are conducted, the information obtained is appropriately used, for  example, by ensuring that instances of noncompliance identified during a  site visit result in the placement of a condition on a health center’s grant.
Finally, HRSA’s recently revised process for addressing grantee  noncompliance with the 19 program requirements seems to provide both  the agency and grantees with a uniform structure for addressing  compliance deficiencies. However, given the length of time the  progressive action process provides grantees to address noncompliance,  HRSA has had limited experience with the process, and thus it is too  early to tell whether this revised process is effective. As HRSA gains  more experience with the process, it will be important for the agency to  assess whether the process is functioning as intended and whether any  changes are needed to make the process more effective.
section_title: Recommendations for Executive Action
paragraphs: To improve HRSA’s ability to identify and address noncompliance with  Health Center Program requirements, the Administrator of HRSA should  take the following six actions:
Develop and implement a mechanism for recording, tracking, and  following-up on instances when project officers are unable to  determine compliance during the annual compliance review process.
Require that when completing annual compliance reviews, project  officers clearly document their basis for determining that grantees are  in compliance with program requirements.
Clarify agency guidance and provide training, as needed, to better  ensure that project officers are accurately and consistently assessing  grantees’ compliance with program requirements.
Ensure that site visit data contained in HRSA’s electronic system are  complete, reliable, and accurate to better target the use of available  resources and to help ensure that all grantees have compliance- related site visits at regular and timely intervals.
Develop and implement procedures to ensure that instances of  noncompliance with program requirements consistently result in the  placement of a condition on a health center’s grant.
Periodically assess whether its new progressive action process for  addressing grantee noncompliance, including the time frames allotted  for grantees to respond, is working as intended and make any needed  improvements to the process.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to HHS for its review, and HHS provided  written comments (see app. III). HHS concurred with all six of our  recommendations and indicated that while resource availability may  impact the extent of certain actions, HRSA is already in the process of  planning and implementing many of the recommendations. For example,  HHS indicated that HRSA is in the process of enhancing the electronic  evaluation tool, known as the Program Analysis and Recommendations  tool, which project officers use to conduct and document annual  compliance reviews. HRSA is also working on issuing additional policies,  procedures, and guidance documents to better ensure that project  officers are consistently assessing grantee compliance and documenting  noncompliance.
While HHS concurred with our recommendations and indicated that the  report’s findings were helpful in informing ongoing efforts to improve  oversight of the Health Center Program, it did not concur with what it  characterized as some of the central conclusions drawn from the report’s  findings. First, HHS indicated that it did not concur with what it  characterized as our conclusion that HRSA’s process for identifying  noncompliance is insufficient because annual compliance reviews do not  identify all instances of noncompliance. HHS indicated that HRSA’s active  monitoring of grantees is not limited to the project officer’s annual  compliance review, but is accomplished through a variety of available  resources including, but not limited to, the review of grantee data reports,  independent annual audit reports, quarterly conference calls, site visits,  and correspondence from the grant recipient. We agree with HHS’s  statement, and our report reflects that HRSA uses multiple methods to  oversee grantees. However, we believe that HHS mischaracterized the  nature of our conclusion. Our conclusion that HRSA’s oversight of health  center grantees is insufficient was not based solely on our assessment of  HRSA’s annual compliance reviews, but rather was based on our  assessment of several key oversight methods described throughout our  report including HRSA’s use of site visits, the consistency of project  officers’ oversight, and the use of programwide data to aid oversight  across grantees.
HHS also did not concur with what it characterized as our conclusion that  HRSA’s process for identifying noncompliance is insufficient because  HRSA’s project officers do not consistently identify and document grantee  noncompliance. In explaining its concerns, HHS focused on instances  where project officers cannot definitively determine whether or not  grantees are complying with program requirements. For example, HHS  noted that when project officers are uncertain about compliance, HRSA’s  standard operating procedures require project officers to record these  areas of uncertainty for follow-up action. However, our findings about the  lack of consistency in the identification and documentation of grantee  noncompliance are not limited to instances when project officers are  uncertain about compliance. Rather, as the report indicates, we found  that project officers we interviewed did not have consistent interpretations  of the criteria for assessing compliance and what should therefore result  in the placement of a condition on a health center’s grant. Furthermore,  we found one instance where HRSA’s guidance on what constitutes  compliance is inconsistent with Health Center Program requirements and  found several instances where identified noncompliance did not result in  the placement of a condition on a health center’s grant. As the report  notes, in cases when project officers may be uncertain about compliance,  we found that HRSA did not have a centralized mechanism to ensure that  project officers are recording such instances. Additionally, despite HHS’s  comment stating that HRSA’s procedures provide for such follow-up, it  agreed with our recommendation that HRSA should develop a  mechanism for ensuring that recording, tracking, and following up on such  instances occurs.
Finally, HHS did not concur with our finding that the lack of  documentation in the annual compliance review is not consistent with  internal control standards for the federal government. HHS indicated that  HRSA established its annual compliance review tool to record  documented findings of noncompliance and utilizes a standard  progressive action process to resolve these areas consistent with its  overall internal control procedures. While we agree that HRSA’s process  provides for both documenting areas of identified noncompliance and a  standard process for resolving these issues, our findings were not limited  to an assessment of what HRSA has included in its oversight process, but  also takes into account what HRSA did not include in this process. Thus,  our findings take into account the fact that HRSA does not require project  officers to document their basis for finding a grantee in compliance.  Therefore, as stated in the report, we found there were often no records  documenting how or why a project officer determined a health center  grantee was in compliance with the requirements. The lack of such  documentation makes it difficult for managers to assess the accuracy of  project officers’ decisions and assure that grantees are in compliance with  applicable laws and regulations, which is a key purpose to having  effective internal controls. Thus, we continue to believe that this lack of  documentation is not consistent with internal control standards for the  federal government, which indicate “that all transactions and other  significant events need to be clearly documented” and stress the  importance of the creation and maintenance of related records which  provide evidence of execution of these activities as well as appropriate  documentation.
As noted above, our conclusion that HRSA’s oversight of health center  grantees is insufficient was based on our overall assessment of HRSA’s  key oversight methods. In addition to finding limitations with HRSA’s  annual compliance reviews and a lack of consistency among HRSA  project officers, we also found that HRSA’s use of site visits to assess  compliance has been limited. Thus, we stand by our conclusion that  HRSA’s process for identifying noncompliance is insufficient. We are  pleased that HRSA is already taking steps to implement our  recommendations and encourage the agency to continue to take actions  to help to improve its oversight of health center grantees.
HHS also provided technical comments, which we incorporated as  appropriate.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  Administrator of HRSA. In addition, the report is available at no charge on  the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or draperd@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix IV.
section_title: Appendix I: Characteristics of Selected Health Center Grantees
paragraphs: As part of our assessment of the extent to which the Health Resources  and Services Administration’s (HRSA) process identifies and addresses  noncompliance with Health Center Program requirements, we reviewed  HRSA’s oversight of eight selected health center grantees. The grantees  were selected to provide variation in: size, as determined by the number  of delivery sites; length of time as a Health Center Program grantee; and  compliance experience, as determined by the number of the number of  findings of noncompliance—referred to as conditions—that HRSA had  cited for each grantee that were unresolved as of July 11, 2011. (See  table 4.)
section_title: Appendix II: Summary of Noncompliance Data for the Health Center Program
paragraphs: During the first 18 months of HRSA’s progressive action process, from  April 9, 2010, through October 7, 2011, HRSA issued 1,017 conditions to  417 health center grantees, with some grantees having multiple  conditions during this time period. Specifically, the number of conditions  HRSA issued to the 417 grantees ranged between 1 and 17 conditions  per grantee, with HRSA issuing between 1 and 3 conditions to most of  these grantees. (See fig. 2.) HRSA issued conditions for each of the   19 program requirements, with the greatest numbers issued for the  financial management and control policies, program and data system  reporting, and board composition requirements. (See fig. 3.) Grantees  can have multiple and simultaneous conditions associated with the same  program requirements, with each condition being related to a different  component of the requirement. For example, in fiscal year 2011, there  were 3 possible conditions related to the financial management and  control policy requirement.
section_title: Appendix III: Comments from the Department of Health and Human Services
section_title: Appendix IV: Contacts and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, key contributors to this report  were Michelle B. Rosenberg, Assistant Director; Krister P. Friday; David  Lichtenfeld; Lillian Shields; and Jennifer M. Whitworth.