Community Health Centers

GAO did not find an overall decline in Medicaid patients or Medicaid revenues at federal community and migrant health centers, which provide primary and preventive health care services for low-income people living in medically underserved areas. Given the challenges of Medicaid managed care, however, GAO urges that the Health Resources and Services Administration (HRSA) either improve the financial information reported in its Uniform Data System and administrative database of self-reported information from the centers or develop a better way to use the information from the centers' financial audits. GAO recommends that HRSA establish for the centers a systematic best practices program for their learning. GAO recommends that HRSA determine the cost-effectiveness of the centers' seeking accreditation from the Joint Commission on Accreditation of Healthcare Organizations rather than remaining with HRSA's own review process.

GAO noted that: (1) the Health Resources and Services Administration (HRSA) estimates that about half of the C/MHCs have some operational or financial problems and about 10 percent are struggling to maintain operations; (2) while approximately 2 percent lost federal grant funding each of the last 3 years, about the same number of grantees entered the program; (3) C/MHCs primarily serve children, low-income individuals, and minority populations; (4) a high- and increasing-proportion of the centers' patient population is uninsured and a significant proportion is enrolled in Medicaid; (5) in addition to primary care, C/MHCs provide ancillary services, but at times have had to curtail these services because of declining revenues; (6) while federal grant funding for the C/MHC program increased significantly in recent years, to about $1.02 billion for fiscal year 2000, the program's major source of funding since the 1980s has been Medicaid payments; (7) in implementing mandatory Medicaid managed care programs, some states discontinued cost-based reimbursements for C/MHCs and some health centers in these states experienced declines in Medicaid reimbursements; (8) the Balanced Budget Act of 1997 (BBA) allowed all states to gradually reduce reimbursement levels; (9) BBA also required states to make supplemental payments to centers participating in Medicaid managed care to cover differences between the managed care organizations' payments and the minimum reimbursement level established by BBA; (10) however, some states have been slow in giving centers these required payments, resulting in reduced Medicaid reimbursements at some centers; (11) most C/MHCs have adapted to recent changes in Medicaid and the overall health care environment; (12) GAO found that C/MHCs that have formed partnerships and networks and are participating in managed care are more likely to be successful; (13) attracting patients with diverse payment sources and pursuing other revenue sources have also contributed to better C/MHC financial performance; (14) C/MHCs that have not adjusted to the changes in Medicaid and the health care market and whose management and board have not paid sufficient attention to their financial operations are more likely to have problems; (15) to monitor the performance of C/MHCs, HRSA conducts onsite reviews and collects and analyzes program data; (16) for centers with performance problems, HRSA may provide certain assistance, such as developing a financial recovery plan; and (17) while such action has helped some struggling centers, HRSA's monitoring tools--as well as the timeliness of its intervention--could be improved.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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