PCASG fund recipients that responded to our October 2008 survey reported that they used PCASG funds to hire or retain health care providers and other staff, add primary care services, and open new sites. (See table 1.) Recipients also said that the PCASG funds helped them improve service delivery and access to care for the patients they served. As of September 20, 2009, PCASG recipients reported to LPHI that they had used PCASG funds—in conjunction with other funds, such as other federal grants and Medicaid reimbursement—to support services provided to almost 252,000 patients. These patients had over 1 million encounters with a health care provider, two-thirds of which were for medical and dental care and one-third of which were for mental health care. A small number of encounters were for specialty care. The patients served by the PCASG fund recipients were typically uninsured or enrolled in Medicaid. We reported in July 2009 that for the first several months during which PCASG funds were available, at more than half of the PCASG fund recipients, at least half—and at times over 70 percent—of the patient population was uninsured. Of the 20 recipients that reported in our October 2008 survey that they used PCASG funds to hire health care providers, half hired both medical and mental health providers. (See fig. 1.) One recipient reported that by hiring one psychiatrist, it could significantly increase clients’ access to services by cutting down a clinic’s waiting list and by providing clients with a “same-day” psychiatric consultation or evaluation. Another recipient reported that it hired 23 medical care providers, some of whom were staffed at its new sites. Some recipients reported that hiring additional providers enabled them to expand the hours some of their sites were open. Of the 23 recipients that responded to our survey, 17 reported they used PCASG funds to retain health care providers, and 15 of these reported that they also used grant funds to retain other staff. For example, one recipient reported that PCASG funds were used to stabilize positions that were previously supported by disaster relief funds and donated services. Nineteen of the 23 PCASG fund recipients that responded to our survey reported using PCASG funds to add or expand medical, mental health, or dental care services, and more than half of these added or expanded more than one type of service. Specifically, 11 added or expanded medical care, 15 added or expanded mental health care, and 4 added or expanded dental care services. In addition, PCASG fund recipients also reported using grant funds to add or expand specialty care or ancillary services. One recipient reported that it used PCASG funds to create a television commercial announcing that a clinic was open and that psychiatric services were available there, including free care for those who qualified financially. Almost all of the PCASG fund recipients that responded to our survey reported they used PCASG funds for their physical space. Ten recipients that responded to our survey reported using grant funds to renovate existing sites, such as expanding a waiting room, adding a registration window, and adding patient restrooms, to accommodate more patients. Officials from one PCASG fund recipient reported that relocating to a larger site allowed providers to have additional examination rooms. PCASG fund recipients that responded to our survey reported that certain program requirements—such as developing a network of local specialists and hospitals for patient referrals and establishing a quality assurance and improvement program that includes clinical guidelines or evidence-based standards of care—have had a positive effect on their delivery of primary care services. In addition, they reported that the PCASG funds helped them improve access to health care services for residents of the greater New Orleans area. For example, one PCASG fund recipient reported that the PCASG funds have helped it to expand services beyond residents in shelter and housing programs to include community residents who were not homeless but previously lacked access to health care services. Representatives of other PCASG fund recipients have reported that their organization improved access to care by expanding services in medically underserved neighborhoods or to people who were uninsured or underinsured. Representatives of local organizations also told us the PCASG provided an opportunity to rebuild the health care system and shift the provision of primary care from hospitals to community-based primary care clinics. PCASG fund recipients also used other federal hurricane relief funds to help support the restoration of primary care services. According to LDHH data, as of August 2008, 11 PCASG fund recipients expended $12.9 million of the SSBG supplemental funds that were awarded to Louisiana and that the state designated for primary care. They used these funds to pay for staff salaries, purchase medical equipment, and support operations. For example, one recipient used SSBG supplemental funds to hire new medical and support staff and, as a result, expanded its services for mammography, cardiology, and mental health. The two PCASG fund recipients that received a total of almost $12 million in SSBG supplemental funds designated for mental health care used those funds to provide crisis intervention, substance abuse, and other mental health services, mostly through contracts to other organizations and providers. The majority of funds were expended on the categories LDHH identified as “substance abuse treatment and prevention services,” “immediate intervention and crisis response services,” and “behavioral health services for children and adolescents.” As of August 2008, most of the 25 PCASG fund recipients had retained or hired a health care provider who had received a Professional Workforce Supply Grant incentive payment to continue or begin working in the greater New Orleans area. Among the health care providers working for PCASG fund recipients, 69 received incentives that totaled $4.5 million. The number of those health care providers who were employed by individual PCASG fund recipients ranged from 1 or 2 at 7 recipient organizations to 10 at 2 recipient organizations. Three-quarters of recipients of incentive payments were existing employees who were retained, while one-quarter were newly hired. PCASG fund recipients face significant challenges in hiring and retaining staff, as well as in referring patients outside of their organizations, and these challenges have grown since Hurricane Katrina. Recipients are taking actions to address the challenge of sustainability, but are concerned about what will happen when PCASG funds are no longer available. Although most of the 23 PCASG fund recipients that responded to our October 2008 survey hired or retained staff with grant funds, most have continued to face significant challenges in hiring and retaining staff. Twenty of the 23 recipients reported the hiring of health care providers to be either a great or moderate challenge. Among those, over three-quarters responded that this challenge had grown since Hurricane Katrina. For example, in discussing challenges, officials from one recipient organization told us that after Hurricane Katrina they had greater difficulty hiring licensed nurses than before the hurricane and that most nurses were being recruited by hospitals, where the pay was higher. Moreover, officials we interviewed from several recipient organizations said that the problems with housing, schools, and overall community infrastructure that developed after Hurricane Katrina made it difficult to attract health care providers and other staff. In addition, 16 of the 23 recipients reported that retaining health care providers was a great or moderate challenge. Among those, about three-quarters also reported that this challenge had grown since Hurricane Katrina. An additional indication of the limited availability of primary care providers in the area is HRSA’s designation of much of the greater New Orleans area as health professional shortage areas (HPSA) for primary care, mental health care, and dental care. Specifically, HRSA designated all of Orleans, Plaquemines, and St. Bernard parishes, and much of Jefferson Parish, as HPSAs for primary care. While some portions of the greater New Orleans area had this HPSA designation before Hurricane Katrina, additional portions of the area received that designation after the hurricane. Similarly, HRSA designated all four parishes of the greater New Orleans area as HPSAs for mental health in late 2005 and early 2006; before Hurricane Katrina, none of the four parishes had this designation for mental health. In addition, HRSA has designated all of Orleans, St. Bernard, and Plaquemines parishes and part of Jefferson Parish as HPSAs for dental care; before Katrina, only parts of Orleans and Jefferson parishes had this designation. The PCASG fund recipients that primarily provide mental health services in particular faced challenges both in hiring and in retaining providers. Six of the seven that responded to our October 2008 survey reported that both hiring and retaining providers were either a great or moderate challenge. Officials we interviewed from one recipient told us that while the Greater New Orleans Service Corps, which was funded through the Professional Workforce Supply Grant, had been helpful for recruiting and retaining physicians, it had not helped fill the need for social workers. Furthermore, officials we interviewed from two recipients told us that some staff had experienced depression and trauma themselves and found it difficult to work in mental health settings. Beyond challenges in hiring and retaining their own providers and other staff, PCASG fund recipients that responded to our survey reported significant challenges in referring their patients to other organizations for mental health, dental, and specialty care services. We also reported on a lack of mental health providers in our July 2009 report that examined barriers to mental health services for children in the greater New Orleans area. Specifically, 15 of the 18 organizations we interviewed for that work identified a lack of mental health providers— including challenges recruiting and retaining child psychiatrists, psychologists, and nurses—as a barrier to providing mental health services for children. In addition, we reported that HRSA’s Area Resource File (ARF)—a county-based health resources database that contains data from many sources including the U.S. Census Bureau and the American Medical Association—indicated that the greater New Orleans area has experienced more of a decrease in mental health providers than some other parts of the country. For example, we found that ARF data documented a 21 percent decrease in the number of psychiatrists in the greater New Orleans area from 2004 to 2006, during which time there was a 1 percent decrease in Wayne County, Michigan (which includes Detroit and which had pre- Katrina poverty and demographic characteristics similar to those of the greater New Orleans area) and a 3 percent increase in counties nationwide. In our July 2009 report on the PCASG, we found that an additional challenge that the PCASG fund recipients face is to be sustainable after PCASG funds are no longer available in September 2010. All 23 recipients that responded to our October 2008 survey reported that they had taken or planned to take at least one type of action to increase their ability to be sustainable—that is, to be able to serve patients regardless of the patients’ ability to pay after PCASG funds are no longer available. For example, all responding recipients reported that they had taken action—such as screening patients for eligibility—to facilitate their ability to receive reimbursement for services they provided to Medicaid or LaCHIP beneficiaries. Furthermore, 16 recipients that responded to our October 2008 survey reported that they were billing private insurance, with an additional 5 recipients reporting they planned to do so. However, obtaining reimbursement for all patients who are insured may not be sufficient to ensure a recipient’s sustainability, because at about half of the PCASG fund recipients, over 50 percent of the patients were uninsured. Many PCASG fund recipients reported that they intended to use Health Center Program funding or FQHC Look-Alike designation—which allows for enhanced Medicare and Medicaid payment rates—as one of their sustainability strategies. Four recipients were participating in the Health Center Program at the time they received the initial disbursement of PCASG funds. One of these recipients had received a Health Center New Access Point grant to open an additional site after Hurricane Katrina and had also received an Expanded Medical Capacity grant to increase service capacity, which it used in part to hire additional staff and buy equipment. Another of these recipients received a New Access Point grant to open an additional site after receiving PCASG funds. Beyond these four recipients, one additional recipient received an FQHC Look-Alike designation in July 2008. HRSA made additional grants from appropriations made available by the American Recovery and Reinvestment Act of 2009, awarding five PCASG fund recipients with additional Health Center Program grants totaling $7.4 million as of October 19, 2009. Specifically, three PCASG fund recipients were awarded New Access Point grants totaling $3.9 million, five received Capital Improvement Program grants totaling more than $2.4 million, and five received Increased Demand for Services grants totaling nearly $1.1 million. Of the remaining 18 recipients that responded to our survey, 6 said they planned to apply for both a Health Center Program grant and an FQHC Look-Alike designation. In addition, one planned to apply for a grant only and another planned to apply for an FQHC Look-Alike designation only. Although many recipients indicated that they intended to use Health Center Program funding as a sustainability strategy, it is unlikely that they would all be successful in obtaining a grant. For example, in fiscal year 2008 only about 16 percent of all applications for New Access Point grants resulted in grant awards. About three-quarters of PCASG fund recipients reported that as one of their sustainability strategies they had applied or planned to apply for additional federal funding, such as Ryan White HIV/AIDS Program grants, or for state funding. In addition, a few reported that they had applied or planned to apply for private grants, such as grants from foundations. In our fall 2009 interviews, LPHI and PCASG recipient officials told us that there is uncertainty and concern among the PCASG fund recipients as the time approaches when PCASG funding will no longer be available. LPHI officials told us that they expect that some PCASG fund recipients might have to close, and others could be forced to scale back their current capacity by as much as 30 or 40 percent. For example, one PCASG fund recipient official we spoke with in November 2009 told us that the organization’s mobile medical units may not be sustainable without PCASG funding; services provided by mobile units are not eligible for Medicaid funding without a referral and collecting cash from patients could make the units targets for crime. LPHI officials said they expect that the loss of PCASG funds would most affect PCASG fund recipients that serve the largest number of uninsured patients. To help PCASG fund recipients achieve sustainability, the LPHI developed a sustainability strategy guide in April 2009. This guide suggests actions that the recipients could take to become sustainable entities, such as maximizing revenues by improving their ability to screen patients for eligibility for Medicaid and other third party payers, enroll eligible patients, electronically bill the insurers, and collect payment from insurers. LPHI and a PCASG fund recipient have identified additional potential approaches for securing revenues to decrease what LPHI estimated would be a $30 million gap in the PCASG fund recipients’ annual revenues when PCASG funds are no longer available. The LPHI sustainability strategy guide proposed that expanding Medicaid eligibility through a proposed Medicaid demonstration project that HHS is reviewing could result in a decrease in the number of uninsured people; these are the patients for whom PCASG fund recipients are most dependent on federal subsidies. The LPHI guide also suggested that it could be helpful if Louisiana received greater flexibility to use Medicaid disproportionate share dollars for outpatient primary care not provided by hospitals. In addition, a PCASG fund recipient official told us in November 2009 that a no-cost extension for PCASG funds might help some PCASG fund recipients if they are able to stretch their PCASG dollars beyond September 30, 2010. Although PCASG fund recipients have completed or planned actions to increase their ability to be sustainable and have received guidance from LPHI, it is unclear which recipients’ sustainability strategies will be successful and how many patients recipients will be able to continue to serve. With the availability of PCASG funds scheduled to end in less than 10 months, preventing disruption in the delivery of primary care services could depend on quickly identifying and implementing workable sustainability strategies. Mr. Chairman, this completes my prepared remarks. I would be happy to respond to any questions you or other members of the committee may have at this time. For further information about this statement, please contact Cynthia A. Bascetta at (202) 512-7114 or bascettac@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Key contributors to this statement were Helene F. Toiv, Assistant Director; Carolyn Feis Korman; Deitra Lee; Coy J. Nesbitt; Roseanne Price; and Jennifer Whitworth. This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Summary: The greater New Orleans area--Jefferson, Orleans, Plaquemines, and St. Bernard parishes--continues to face challenges in restoring health care services disrupted by Hurricane Katrina which made landfall in August 2005. In 2007, the Department of Health and Human Services (HHS) awarded the $100 million Primary Care Access and Stabilization Grant (PCASG) to Louisiana to help restore primary care services to the low-income population. Louisiana gave PCASG funds to 25 outpatient provider organizations in the greater New Orleans area. GAO was asked to testify on (1) how PCASG fund recipients used the PCASG funds, (2) how recipients used and benefited from other federal hurricane relief funds, and (3) challenges recipients faced and recipients' plans for sustaining services after PCASG funds are no longer available. This statement is based on a recent GAO report, Hurricane Katrina: Federal Grants Have Helped Health Care Organizations Provide Primary Care, but Challenges Remain (GAO-09-588), other GAO work, and updated information on services, funding, and sustainability plans, which we shared with HHS officials. For the report, GAO analyzed responses to an October 2008 survey sent to all 25 PCASG fund recipients, to which 23 responded, and analyzed information related to other federal funds received by PCASG fund recipients. GAO also interviewed HHS and Louisiana Department of Health and Hospitals officials and other experts. PCASG fund recipients reported in 2008 that they used PCASG funds to hire or retain health care providers and other staff, add primary care services, and open new sites. For example, 20 of the 23 recipients that responded to the GAO survey reported using PCASG funds to hire health care providers, and 17 reported using PCASG funds to retain health care providers. In addition, most of the recipients reported that they used PCASG funds to add primary care services and to add or renovate sites. Recipients also reported that the grant requirements and funding helped them improve service delivery and expand access to care in underserved neighborhoods. As of September 2009, recipients used PCASG funds to support services for almost 252,000 patients, who had over 1 million interactions with a health care provider. Other federal hurricane relief funds helped PCASG fund recipients pay staff, purchase equipment, and expand mental health services to help restore primary care. According to data from the Louisiana Department of Health and Hospitals, 11 recipients received HHS Social Services Block Grant (SSBG) supplemental funds designated by Louisiana for primary care, and 2 received SSBG supplemental funds designated by Louisiana specifically for mental health care. The funds designated for primary care were used to pay staff and purchase equipment, and the funds designated for mental health care were used to provide a range of services including crisis intervention and substance abuse prevention and treatment. Most of the PCASG fund recipients benefited from the Professional Workforce Supply Grant incentives. These recipients hired or retained 69 health care providers who received incentives totaling over $4 million to work in the greater New Orleans area. PCASG fund recipients face multiple challenges and have various plans for sustainability. Recipients face significant challenges in hiring and retaining staff, as well as in referring patients outside of their organizations, and these challenges have grown since Hurricane Katrina. For example, 20 of 23 recipients that responded to the 2008 GAO survey reported hiring health care providers was a great or moderate challenge, and over three-quarters of these 20 recipients reported that this challenge had grown since Hurricane Katrina. PCASG fund recipients also reported challenges in referring patients outside their organization for mental health, dental, and specialty care services. Although all PCASG fund recipients have completed or planned actions to increase their ability to be sustainable, recipients are concerned about what will happen when PCASG funds are no longer available. Officials of the Louisiana Public Health Institute, which administers the PCASG locally, expect that some recipients might have to close and others could be forced to scale back capacity by as much as 30 or 40 percent. They have suggested strategies to decrease what they estimate would be a $30 million gap in annual revenues when PCASG funds are no longer available. With the availability of PCASG funds scheduled to end in less than 10 months, preventing disruptions in the delivery of primary care services could depend on quickly identifying and implementing workable sustainability strategies.