Health Centers: Trends in Revenue and Grants Supported by the Community Health Center Fund
Released: 2019-07-01T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: In 2017, nearly 1,400 health centers provided care to more than 27 million people, regardless of their ability to pay. Health centers were established to increase the availability of primary and preventive health services for low-income people living in medically underserved areas. Health centers rely on revenue from a variety of public and private sources, including revenue from CHCF grants. HRSA began awarding grants funded by the CHCF in fiscal year 2011.

GAO was asked to review the sources and amounts of health center revenue. This report describes (1) trends in health centers' revenue and (2) the purposes for which CHCF grants have been awarded.

GAO analyzed HRSA data collected from health centers and compiled in its Uniform Data System to identify the sources and amounts of revenue health centers received from 2010 through 2017, the most recent data at the time of GAO's analysis. GAO also reviewed HRSA grant documentation for grants funded by the CHCF for fiscal years 2011-2017—the most recent data at the time of GAO's analysis—including information on the award amount and purpose of the grant, and reviewed published studies that described the purposes for which CHCF grants have been made. Additionally, GAO interviewed HRSA officials, authors of the published studies, and an association representing health centers.

GAO provided a draft of this report to HHS. HHS provided technical comments, which GAO incorporated as appropriate.

section_title: What GAO Found
paragraphs: Health centers' revenue more than doubled from calendar years 2010 through 2017, from $12.7 billion to $26.3 billion. Health centers' revenue comes from a variety of sources, including reimbursements from Medicaid, Medicare, private insurance, and federal and state grants. While total health center revenue increased from 2010 through 2017, the share of revenue from each source changed in different ways. In particular, revenue from federal and state grants decreased from 38.0 percent of total revenue in 2010 to about 30.2 percent of total revenue in 2017 while reimbursements from Medicaid, Medicare, and private insurance increased. Over the same time period, the number of health centers increased from 1,124 centers in 2010 to 1,373 centers in 2017. In addition, the number of patients served over the same time period increased by 7.7 million patients, from 19.5 million to 27.2 million.

GAO's analysis of Health Resources and Services Administration (HRSA) data shows that from fiscal years 2011 through 2017, health centers received approximately $15.8 billion in federal grants funded by the Community Health Center Fund (CHCF), which was established by the Patient Protection and Affordable Care Act in 2010. Of this total amount, 79.7 percent—or $12.6 billion—was awarded for the purpose of maintaining operations at existing health centers (see figure). According to HRSA officials, these CHCF grants are used to fill the gap between what it costs to operate a health center and the amount of revenue a health center receives. As such, officials explained, the awards are a primary means through which health centers provide health care services that may be uncompensated, including services for uninsured patients or services not typically reimbursed by other payers, such as adult dental care. The remaining $3.2 billion in CHCF grants were made to increase the amount of services provided at existing health centers; increase the number of health centers and sites; and other special initiatives, such as implementing health information technology.

section_title: Letter
paragraphs: Health centers were established to increase the availability of primary and  preventive health care services for low-income people living in medically  underserved areas. These outpatient facilities receive federal funding and  serve as an important safety net provider as the majority of their patients  are uninsured or enrolled in Medicaid. The majority of health centers  serve the general population within a designated area, while other types  of health centers provide care to more specific populations, including the  homeless, residents of public housing, and migrant and seasonal  farmworkers. Regardless of type, health centers are required to provide  health care to individuals who are members of the health center’s target  population or to all individuals located in the health center’s service area,  regardless of their ability to pay. In some communities, these centers may  be the only primary care providers available to certain vulnerable  populations. In 2017, nearly 1,400 health centers operated more than  11,000 sites that provided care to more than 27 million people in the  United States, including 1 in 9 children; 1 in 5 rural residents; 1 in 3 living  in poverty; and more than 355,000 veterans.

Health centers rely on revenue from a variety of public and private  sources, including federal, state, and local governments; and payments  for services from Medicaid, Medicare, private insurance, and patients.  This revenue includes grants awarded by the Health Resources and  Services Administration (HRSA) through its Health Center Program. In  2010, the Patient Protection and Affordable Care Act (PPACA)  established an additional source of funding for the Health Center  Program’s grants: the Community Health Center Fund (CHCF). The  CHCF supports a variety of grants to health centers for health care  services for low-income populations.

You asked us to review health centers’ revenue, including its sources and  uses. In this report we describe  1.  trends in health centers’ revenue from 2010 through 2017; and  2.  the purposes for which CHCF grants have been awarded.

To describe trends in health centers’ revenue, we analyzed data from  HRSA’s Uniform Data System for calendar years 2010 through 2017, the  most recent data at the time of our analysis. These data include data  reported annually by health centers on their patient-related revenue, such  as payments from Medicaid and Medicare, as well as other revenue  provided from HRSA grants, other federal grants, and non-federal grants  or contracts. All revenue data are reported as nominal dollars. We also  interviewed HRSA officials about the sources of revenue provided to  health centers since 2010, including how those sources may or may not  have changed over time.

To describe the purposes for which CHCF grants have been awarded, we  reviewed HRSA policy and grant documentation, such as HRSA grant  funding announcements that outline the purpose of the grants funded by  the CHCF. We also reviewed a list provided by HRSA that includes all 52  awards funded through 28 CHCF grants from fiscal years 2011 through  2017. This list included the award purpose and funding amount. Each grant could represent multiple awards to health centers. To corroborate  the list of awards provided by HRSA, we reviewed descriptions of the  grants contained in the funding opportunity announcements and grant  award announcements for a random sample of 10 percent of the 52  awards made, including those for the largest grants. We also analyzed  information on health center sites reported by health centers to HRSA— known as Form 5 B Service Site data—to determine the number and  location of new health centers from fiscal years 2011 through 2017.  These data show the location of each health center site. We reviewed  some published studies identified through web searches that describe  how the CHCF has been used since fiscal year 2011, such as studies  published by the Congressional Research Service and George  Washington University’s Milken Institute, and we interviewed the studies’  authors. Lastly, we interviewed HRSA officials and the National  Association of Community Health Centers—an organization representing  health centers—about the use of CHCF grant funding.

We assessed the reliability of the Uniform Data System and Form 5 B  Service Site data used in this report by reviewing relevant documentation  and interviewing officials knowledgeable about the data. Based on these  steps, we found the data were sufficiently reliable for the purpose of our  reporting objectives.

We conducted this performance audit from November 2018 to May 2019  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: The federal Health Center Program was established in the mid-1960s in  an effort to help low-income individuals gain access to health care  services. The Health Center Program, authorized in Section 330 of the  Public Health Service Act, is administered by HRSA’s Bureau of Primary  Health Care and makes grants—known as Section 330 grants—to four  types of health centers that primarily serve low-income populations:  1.  Community health centers. These health centers serve the general  population with limited access to health care. They are required to  provide primary health services to all residents who reside in the  center’s service area. More than three-quarters of health centers are  community health centers.  2.  Health centers for the homeless. These health centers provide  primary care services to individuals who lack permanent housing or  live in temporary facilities or transitional housing. These centers are  required to provide substance abuse services and supportive services  targeted to the homeless population.  3.  Health centers for residents of public housing. These health centers  provide primary health care services to residents of public housing  and individuals living in areas immediately accessible to public  housing.  4.  Migrant health centers. These health centers provide primary care to  migratory agricultural workers (individuals whose principal  employment is in agriculture and who establish temporary residences  for work purposes) and seasonal agricultural workers (individuals  whose principal employment is in agriculture on a seasonal basis but  do not migrate for the work).

HRSA’s Section 330 grants are funded by a combination of discretionary  appropriations and, since 2011, mandatory appropriations provided from  the CHCF. From fiscal years 2010 through 2017, total funding  appropriated for Section 330 grants—which includes funding from  discretionary appropriations and the CHCF—increased from about $2.1  billion to $4.9 billion (see fig. 1).

According to HRSA data, approximately 70 percent of appropriations for  Section 330 awards in fiscal year 2017—or about $3.5 billion—were  funded by the CHCF. HRSA officials also told us that the total amount of  CHCF appropriations may differ from the total amount of awards funded  because, for example, appropriations may be (1) used for administrative  costs, (2) reduced because of sequestration, or (3) carried over between  fiscal years.

Health centers are required to provide comprehensive primary health  services, including preventive, diagnostic, treatment, and emergency  health services. (See table 1.) All services that health centers provide  must be available to patients at the center regardless of patient payment  source or ability to pay and must be available (either directly or under a  referral arrangement) to patients at all health center service sites.  Services are provided by clinical staff—including physicians, nurses,  dentists, and mental health and substance abuse professionals—or  through contracts or cooperative arrangements with other providers.

In addition to the services they provide, health centers are also required  to document the unmet health needs of the residents in their service area  and to periodically review their service areas to determine whether the  services provided are available and accessible to area residents promptly  and as appropriate. Health centers also must have a sliding fee scale  based on a patient’s ability to pay and to be governed by a community  board of which at least 51 percent of the members are patients of the  health center. HRSA determines whether health center grantees meet   these and other health center program requirements when making award  determinations.

section_title: While Health Centers’ Revenue Doubled from 2010 through 2017, the Share of Revenue from Grants Decreased
paragraphs: Our analysis shows that total revenue received by health centers  nationwide more than doubled from calendar years 2010 through 2017— from about $12.7 billion to $26.3 billion (see fig. 2). Over the same time  period, both the number of health centers and the number of patients  served also increased. The number of health centers increased from  1,124 centers in 2010—operating 6,949 sites—to 1,373 centers in 2017— operating 11,056 sites. In addition, the total number of patients served  at health centers over the same time period increased by 7.7 million  patients, from 19.5 million to 27.2 million. See appendix I for additional  information.

While the total revenue received by health centers more than doubled  from 2010 through 2017, the share of revenue received from grants— including Section 330 grants and other federal and non-federal grants— decreased, from 38.0 percent of total revenue in 2010 to about 30.2  percent in 2017. During the same time period, the share of revenue  health centers received from Medicaid, Medicare, and private health  insurance increased (see fig. 3). (See app. II for more information on  health centers’ revenue from 2010 through 2017.)

While the share of health centers’ total revenue coming from all grants  decreased from 2010 to 2017, the share of revenue from one type of  grant—Section 330 grants—increased. Specifically, the share of revenue  health centers received from Section 330 grants—a portion of which are  funded by the CHCF—increased from 15.7 percent of health centers’ total  revenue in 2010 to 18.0 percent in 2017 (see figure 4).

Our analysis also shows that the share of revenue health centers receive  from Section 330 grants varies by state. As figure 5 below shows, in  2017, health centers in 2 states received more than 40 percent of their  total revenue from Section 330 grants, while health centers in 18 states  received less than 20 percent of total revenue from these grants.

section_title: HRSA Awarded CHCF Grants Primarily to Support Ongoing Operations and Services at Health Centers
paragraphs: Our analysis of HRSA data shows that for the 7-year period from fiscal  years 2011 through 2017, HRSA provided health centers with about  $15.8 billion in Section 330 grants funded by the CHCF. Most of this  funding—$12.6 billion, or nearly 80 percent of all grants awarded through  the CHCF during this period—was awarded for the purpose of service  area funding, which supports ongoing operations and services across the  nearly 1,400 health centers nationwide (see fig. 6). The remaining $3.2  billion in CHCF grants were awarded to increase the amount of services  provided at existing health centers; to increase the number of health  centers and sites; and for other special initiatives, such as initiatives to  support health information technology.

Service area funding. From fiscal years 2011 through 2017, HRSA used  the CHCF to provide health centers with approximately $12.6 billion in  grants for service area funding, which supports ongoing operations and  service delivery. HRSA officials told us that these CHCF grants are  used to fill the gap between what it costs to operate a health center and  the amount of revenue a health center receives. As such, the awards are  a primary means through which health centers provide health care  services that may be uncompensated, including services for patients who  are uninsured or services not typically reimbursed by other payers, such  as adult dental care, or other services such as transportation and  nutritional education. These awards can cover uncompensated care costs  for patients with incomes low enough to qualify for sliding fee assistance,  which reduces or waives the cost of services for patients based on their  ability to pay. In addition, these awards can cover patients who have  private insurance but face substantial deductibles and cost-sharing.  Officials we interviewed from the Congressional Research Service,  George Washington University’s Milken Institute, and the National  Association of Community Health Centers similarly noted that CHCF  grants support services not typically covered by public health insurance,  such as adult dental care services not generally covered by Medicare or  Medicaid.

Increasing services at existing health centers. From fiscal years 2011  through 2017, HRSA used the CHCF to provide health centers with about  $1.2 billion in grants to help increase the amount of services offered at  existing health centers that chose to apply for an award. This amount  included funding to increase the availability of specific health care  services, such as dental care, as well as funding to support health  centers’ efforts to extend service hours or increase the number of  available providers. Specifically, these grants were awarded for the  following:

Behavioral and mental health, substance abuse. Three grants totaling  about $400.8 million were awarded to expand access to behavioral  health, mental health, and substance abuse services. These awards  focused primarily on integrating primary care and behavioral health  care services and expanding substance use services at existing  health centers, such as medication-assisted treatment for opioid-use  disorder.

Oral health. A grant for about $155.9 million was awarded to increase  access to oral health services and improve oral health outcomes by  funding new onsite providers and supporting the purchase and  installation of dental equipment.

Expanding Services. Two grants—one in fiscal year 2014 for $295.6  million and another in fiscal year 2015 for about $349.6 million—were  made to increase access to comprehensive primary health care in  various ways, at the discretion of individual health centers. At existing  sites, health centers may have chosen to expand service hours,  increase the number of health care providers, or expand services  such as oral health, behavioral health, pharmacy, and vision services.

Increasing the number of health centers and sites. From fiscal years 2011  through 2017, HRSA awarded about $1.1 billion—or about 7 percent of  total CHCF funds—to organizations to help establish new health centers  or new sites at existing health centers. Specifically, HRSA awarded  grants for the following purposes:

New Access Point (NAP) Awards. Most of the funding to increase  access to health centers—about $648.5 million of the $1.1 billion— was provided through what are called NAP awards. According to  HRSA officials, there are two primary ways these funds can be  used—either to allow a new organization to become a health center  (about 30 percent of grant applicants) or for an existing health center  to add one or more service sites (about 70 percent of grant  applicants). HRSA officials told us that they funded 1,059 NAP  awards to new and existing health centers from fiscal year 2011  through 2017 for a combined total of 1,609 proposed new health  centers or sites. These awards included 295 awards to new  organizations and 764 awards to existing health centers adding one or  more service sites. (See table 2 below for more information on the  increase in health centers resulting from NAP awards.) Among the  1,609 total proposed new health centers or sites, 686 were in rural  areas, including 191 new health centers and 495 additional sites at  existing centers.

Construction Grants. HRSA awarded construction grants totaling  about $411.3 million through the Health Infrastructure Investment  Program to help existing health centers alter, renovate, expand, or  construct a facility. According to HRSA officials, construction grants  may increase the number of health center sites or may result in the  consolidation of sites while still expanding access to care.

Health Center Planning Grants. HRSA awarded a Health Center  Planning grant in fiscal year 2011 for about $10.3 million to support  planning and development of comprehensive primary care health  centers.

Collectively, a total of 5,536 new health center sites were added in the  United States from fiscal year 2011 through 2017. Of these new sites,  3,838 were in urban locations and 1,698 were in rural locations. While  many of these new health center sites were from NAP awards, as  previously described, other grants either funded by the CHCF or by  discretionary appropriations may have contributed to the establishment of  new health center sites. For example, HRSA officials told us that health  center sites may be added through a change of scope to their service  area competition award or through other types of grants funded by the  CHCF, such as grants to increase adult dental services. However,  according to HRSA officials, the data do not allow for directly associating  the number of new sites with those grants, as the grants may be used for  multiple purposes. Figure 7 below shows the locations of health center  sites added during this time period that are active as of February 2019.

Other special initiatives. From fiscal years 2011 through 2017, HRSA  awarded about $898.9 million of CHCF funds for grants to health centers  to support other special initiatives and to address identified priorities or  emerging health care needs. Specifically, HRSA awarded grants to those  health centers that chose to apply for the following purposes:

Health information technology. Three grants totaling about $243.4  million were awarded to advance the adoption and implementation of  health information technology. For example, the purpose of one  grant—the Health Center Controlled Networks—was to advance the  adoption, implementation, and optimization of health information  technology. Another grant provided supplemental funding to improve  the electronic reporting capabilities of health centers in Beacon  Communities.

HIV. Two grants totaling about $23.8 million were awarded with the  goal to increase access to HIV care and services. One specifically  targeted prevention and treatment services in those communities  most affected by HIV.

Outreach and enrollment. $222.0 million in grant funding was awarded  to support health centers in raising awareness of affordable insurance  options and providing eligibility and enrollment assistance to  uninsured patients of health centers and residents in their approved  service areas.

Patient-Centered Medical Home. About $84.6 million in grant funding  was awarded to support HRSA efforts to expand the number of  patient-centered medical homes with a particular focus of improving  quality of care, access to services, and reimbursement  opportunities.

Quality improvement. Approximately $305.1 million in grant funding  was awarded to support health centers that displayed high quality  performance so they can continue to strengthen quality improvement  efforts. Specifically, the funds were to support health centers to further  improve the quality, efficiency, and effectiveness of health care  delivered to the communities served.

Training and technical assistance. Two grants totaling about $14.3  million were awarded to support training and technical assistance for  health centers in order to support programmatic, clinical, and financial  operations. One grant focused on the delivery of training and technical  assistance by national organizations and the other grant was based  on statewide and regional needs.

Zika. A grant for about $5.7 million was awarded to health centers that  chose to apply to expand their existing activities to strengthen the  response to the Zika virus in Puerto Rico, the U.S. Virgin Islands, and  American Samoa. These activities included outreach, patient  education, screening, voluntary family planning services, and/or  treatment services.

See appendix III for a complete list of all grants awarded through CHCF  by category.

section_title: Agency Comments
paragraphs: We provided a draft of this report to HHS. HHS provided technical  comments, which we incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further action until 30 days from the report  date. At that time, we will send copies of this report to the Secretary of  Health and Human Services and other interested parties. In addition, the  report will be available at no charge on GAO’s 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 at farbj@gao.gov. Contact points for our Office  of Congressional Relations and Office of Public Affairs can 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: Information on Health Centers and Patients Served
paragraphs: This appendix provides information on health centers and patients  served. Specifically,  figure 8 illustrates the number and location of health centers in 2017;  figure 9 illustrates the growth in health centers and sites since 2010;  figure 10 illustrates the growth in patients served at health centers  since 2010; and  table 3 provides information on how the payer mix for patients served  at health centers has changed since 2010.

section_title: Appendix II: Sources and Amounts of Revenue for Health Centers, Calendar Years 2010 through 2017
paragraphs: HRSA’s Uniform Data System defines other public insurance as state and/or local government  programs, such as Washington’s Basic Health Plan or Massachusetts’ Commonwealth plan, that  provide a broad set of benefits for eligible individuals.  Other federal grants in HRSA’s Uniform Data System include Medicare and Medicaid Electronic  Health Record Incentive grants.  HRSA’s Uniform Data System defines non-federal grants and contracts as revenue from contracts  that are not tied to the delivery of services and revenue received from state and local indigent care  programs.  HRSA’s Uniform Data System defines other revenue as non-patient related revenue not reported  elsewhere. Examples include revenue from fund-raising, rent from tenants, medical record fees, and  vending machines.

section_title: Appendix III: Community Health Center Fund Awards for Health Centers, Fiscal Years 2011 through 2017

section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Kristi Peterson, Assistant  Director; Amy Leone, Analyst-in-Charge; Margot Bolon, Krister Friday,  Jeff Tamburello, and Eric Wedum made key contributions to this report.  Also contributing were Vikki Porter, Rotimi Adebonojo, Giselle Hicks, and  Jennifer Whitworth.

Fast facts: Community health centers provide outpatient health care in places where there aren't enough doctors or hospitals. In 2017, these health centers served more than 27 million people, regardless of their ability to pay.

Health centers received $15.8 billion in grants from the federal Community Health Center Fund from FYs 2011-2017—mostly for ongoing operations. According to officials, these grants fill the gap between health center costs and revenue from private insurance, patients, and others. As such, they are the primary source of funding for uncompensated health care services, including services for uninsured patients.

Question-summary annotations: questions: question: What makes up health center revenue?
answer: Health centers' revenue comes from a variety of sources, including reimbursements from Medicaid, Medicare, private insurance, and federal and state grants.

question: How did health center revenue change from 2010 to 2017?
answer: Health centers' revenue more than doubled from calendar years 2010 through 2017, from $12.7 billion to $26.3 billion.
child_questions: question: How did the makeup of the revenue change?
answer: While total health center revenue increased from 2010 through 2017, the share of revenue from each source changed in different ways.
child_questions: question: How did federal and state grant revenue change?
answer: In particular, revenue from federal and state grants decreased from 38.0 percent of total revenue in 2010 to about 30.2 percent of total revenue in 2017 while reimbursements from Medicaid, Medicare, and private insurance increased.

question: How did health centers change in the 2010 to 2017 period of time?
answer: Over the same time period, the number of health centers increased from 1,124 centers in 2010 to 1,373 centers in 2017.

question: How did patients served from 2010 to 2017 change?
answer: In addition, the number of patients served over the same time period increased by 7.7 million patients, from 19.5 million to 27.2 million.

questions: question: How was the HRSA aided by federal grants from 2011 to 2017?
answer: GAO's analysis of Health Resources and Services Administration (HRSA) data shows that from fiscal years 2011 through 2017, health centers received approximately $15.8 billion in federal grants funded by the Community Health Center Fund (CHCF), which was established by the Patient Protection and Affordable Care Act in 2010.
child_questions: question: To what extent did this amount go towards operation costs?
answer: Of this total amount, 79.7 percent—or $12.6 billion—was awarded for the purpose of maintaining operations at existing health centers (see figure).

question: Why does the HRSA rely on CHCF grants?
answer: According to HRSA officials, these CHCF grants are used to fill the gap between what it costs to operate a health center and the amount of revenue a health center receives.
child_questions: question: Why are these grants so critical?
answer: As such, officials explained, the awards are a primary means through which health centers provide health care services that may be uncompensated, including services for uninsured patients or services not typically reimbursed by other payers, such as adult dental care.

question: What are the remaining amounts of CHCF grants used for?
answer: The remaining $3.2 billion in CHCF grants were made to increase the amount of services provided at existing health centers; increase the number of health centers and sites; and other special initiatives, such as implementing health information technology.

questions: question: How did health centers provide for individuals in 2017?
answer: In 2017, nearly 1,400 health centers provided care to more than 27 million people, regardless of their ability to pay.
child_questions: question: How do health centers impact low-income individuals?
answer: Health centers were established to increase the availability of primary and preventive health services for low-income people living in medically underserved areas.

question: How do CHCF grants affect health centers?
answer: Health centers rely on revenue from a variety of public and private sources, including revenue from CHCF grants.

question: How did the HRSA collaborate with the CHCF?
answer: HRSA began awarding grants funded by the CHCF in fiscal year 2011.

questions: question: What information was used to analyze the HRSA?
answer: GAO analyzed HRSA data collected from health centers and compiled in its Uniform Data System to identify the sources and amounts of revenue health centers received from 2010 through 2017, the most recent data at the time of GAO's analysis.
child_questions: question: How did the GAO additionally use CHCF information?
answer: GAO also reviewed HRSA grant documentation for grants funded by the CHCF for fiscal years 2011-2017—the most recent data at the time of GAO's analysis—including information on the award amount and purpose of the grant, and reviewed published studies that described the purposes for which CHCF grants have been made.

question: How did the GAO gather new information from people?
answer: Additionally, GAO interviewed HRSA officials, authors of the published studies, and an association representing health centers.