On June 21, 2012, members of the U.S. Congress released a Government Accountability Office (GAO) report concluding that the Health Resources and Services Administration (HRSA) does not adequately oversee grantee compliance with the federal Health Center Program requirements. The congressional representatives also sent HRSA a letter calling for immediate action to ensure more effective management of the Health Center Program. In light of this increased scrutiny, HRSA is likely to reform its oversight process and impose stricter monitoring measures on Health Center Program grantees. In enacting such reforms, it is possible that HRSA also may examine and increase monitoring of federally qualified health center (FQHC) look-alike entities under its purview, which do not receive grant funds but are required to meet Health Center Program requirements. This GAO report and congressional scrutiny follow on the heels of the recent GAO report and congressional inquiries related to HRSA’s oversight of the 340B Drug Pricing Program (see Foley’s Legal News Alert: Health Care, dated May 30, 2012, http://tinyurl.com/csygj6f) that have resulted in increased compliance enforcement efforts by HRSA. Entities participating in any programs overseen by HRSA can expect increased scrutiny and should prepare themselves by reviewing their policies and practices to ensure compliance with applicable program requirements.
Health Center Program Grants
The Health Center Program provides grants under Section 330 of the Public Health Service Act (PHSA) to health centers that serve high-need communities, provide comprehensive primary health care, and offer services on a sliding scale. Administered by HRSA, in 2010 the Health Center Program supported more than 1,100 health center grantees that served nearly 19.5 million people, most of whom had income at or below the federal poverty level. To receive continued funding, health center grantees must comply with 19 program requirements that cover patient need, provision of services, management and finance, and governance. HRSA reviews grantee compliance with these 19 program requirements as part of its oversight activities.
GAO Report Findings
The GAO report surveyed the three primary methods HRSA uses to oversee Health Center Program grantees: 1) annual compliance reviews, 2) site visits, and 3) routine communications. During annual compliance reviews, HRSA project officers review both information submitted by the grantee and outside information like independent financial audits. Annual compliance reviews do not include site visits, but project officers generally have the option to contact the grantee for clarification about any information it has submitted. Since 2008, HRSA project officers have assessed grantee compliance with each of the 19 program requirements, rather than making one overall assessment of compliance.
HRSA conducts site visits to assess grantee compliance and provide technical assistance or training. Some site visits include a full compliance assessment with all 19 program requirements, while others include a limited compliance assessment or no assessment at all. Reports from site visits that include a compliance assessment will document any areas of noncompliance identified during the visit and recommend steps that the grantee can take to ensure compliance or improve its performance.
Routine communications, the third primary method of oversight, consist of email correspondence and phone calls between project officers and health center grantees. These communications give project officers the chance to learn about any significant new developments that might impact a grantee’s compliance with Health Center Program requirements.
The GAO report found that HRSA’s annual compliance reviews did not identify all instances of Health Center Program grantee noncompliance. The GAO report noted that HRSA annual reviews not only failed to identify instances of noncompliance, but sometimes concluded that a grantee was in compliance with program requirements even though the reviewer did not have enough information to evaluate. For example, project officers incorrectly marked a health center grantee as in compliance with after-hours coverage requirements based only on the grantee’s description of its health center’s 24-hour answering service. In another instance, HRSA improperly found a grantee in compliance with sliding-fee discount requirements without verifying the grantee’s assertion that it used an up-to-date sliding-fee discount schedule.
Additionally, the GAO report concluded that HRSA’s use of site visits to assess compliance was limited. In an approximately 10-month period, the GAO estimated that only five percent of health center grantees had site visits to review compliance with all 19 requirements, and another six percent had site visits that may have included a limited compliance assessment. However, the frequency of site visits is likely already on the rise. HRSA officials have indicated that in 2012 the agency increased its planned number of compliance-related site visits to meet a goal of reviewing each grantee’s compliance with all 19 requirements at least once every five years.
Another key issue in the GAO report was inconsistent identification and documentation of grantee noncompliance by HRSA project officers. In part, the inconsistency was due to varying interpretations among the project officers of what constituted compliance with the Health Center Program requirements. However, the report also noted that HRSA sometimes failed to place conditions on grants even when the project officer identified grantee noncompliance.
The GAO report also stressed that HRSA’s annual compliance reviews placed too little emphasis on documenting the basis for the project officers’ decisions, especially with respect to findings of compliance. HRSA’s policies directed project officers who were unsure about a grantee’s compliance to indicate on the review that the grantee was in compliance and then make a note to follow-up later. However, project officers did not always follow-up, and subsequent auditors could not consistently determine from review records whether a grantee marked as compliant was known to be compliant or merely assumed to be compliant because of a lack of sufficient information.
Finally, the GAO considered HRSA’s process for addressing grantee noncompliance, but the report concluded that the current process was implemented too recently for an adequate evaluation.
Likely HRSA Oversight Reforms
Upon release of the GAO report, members of Congress sent a request to HRSA asking the agency to provide a detailed plan explaining the steps it will take to implement the report’s recommendations. The letter called for immediate action, requesting that HRSA provide a reform plan by July 27, 2012. The letter also referred favorably to the GAO report’s own outline of specific steps that HRSA can take to improve its program.
The GAO report recommended that HRSA address the inadequacies in its oversight of Health Center Program grantees by implementing the following six reforms:
- Create a system for recording, tracking, and following-up on instances when project officers cannot determine compliance during an annual review
- Require project officers to document their basis for determining that grantees are in compliance (in addition to documenting any noncompliance)
- Provide guidance to ensure that project officers accurately and consistently assess grantee compliance with Health Center Program requirements
- Ensure that electronic site visit data are complete, reliable, and accurate
- Establish procedures so that noncompliance with program requirements consistently results in the placement of a condition on a health center grantee
- Periodically assess whether the process for addressing grantee noncompliance works as intended
The Department of Health and Human Services has indicated that it concurs with all six of the GAO report recommendations and that HRSA has already begun planning and implementing many of them. Additionally, because FQHC look-alike entities are required to meet Health Center Program requirements, HRSA likely will extend its oversight reforms to these entities as well.
HRSA has already indicated a willingness to reform its oversight of Health Center Program grantees. In response to the GAO report’s release and the accompanying letter expressing congressional concern, HRSA is likely to tighten its oversight policies and increase the number of compliance-related site visits it conducts. Accordingly, grantees should review their policies and practices and ensure compliance with the 19 program requirements, as well as any other applicable program rules and guidance. Grantees should ensure that they have sufficient documentation available to demonstrate their compliance to a HRSA reviewer during a site visit. HRSA also may further reform its oversight policies in response to continued congressional scrutiny and may choose to extend their reforms to other programs under its purview such as the FQHC look-alike program.