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

Letter

Background

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.

While Health Centers’ Revenue Doubled from 2010 through 2017, the Share of Revenue from Grants Decreased

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.

HRSA Awarded CHCF Grants Primarily to Support Ongoing Operations and Services at Health Centers

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.

Agency Comments

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.

Appendix I: Information on Health Centers and Patients Served

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.

Appendix II: Sources and Amounts of Revenue for Health Centers, Calendar Years 2010 through 2017

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.

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

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

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.