Section 330 of the Public Health Service Act, which authorizes the  Health Center Program, requires health centers to provide a  comprehensive set of primary health care services, including enabling  services—such as language translation and transportation—that facilitate  access to health care. HRSA Revised 2011 Award Process, and Most New Access Point Grants Went to Health Centers Serving Special Populations

HRSA revised its New Access Point award process for fiscal year 2011 to  increase the emphasis on need and on the designated special  populations. As a result of these changes and HRSA’s receiving less  fiscal year 2011 funding than it had anticipated, a high proportion of  grants went to health centers serving the designated special populations. HRSA Increased Weight Given to Need and Emphasized Special Populations in 2011 Award Process

HRSA revised the New Access Point grant application and award process  for fiscal year 2011. HRSA did this to help it  continue to meet the Public Health Service Act requirements regarding  these populations.applicants seeking to serve high-poverty areas to further increase the  emphasis on need in the award process. Health Centers and Other Providers Reported Collaboration and Little or No Competition, but Rural Areas Have Greater Potential for Competition

Health centers in the communities we studied collaborate with other  providers in their service area. Health centers and other providers said  they generally did not compete for patients, but we found greater potential  for competition in rural areas. Health Centers in Communities We Studied Collaborate with Other Providers

Health centers in the communities we studied collaborate with other  providers to meet the health care needs of patients in the health center’s  service area. Officials we interviewed from each of the health centers  described at least one collaborative relationship with another provider— such as local hospitals and specialty care providers—to provide access to  services not available through the health center. Health Centers and Other Providers Generally Did Not Encounter Significant Competition for Patients, but Rural Areas Have Greater Potential for Competition

In the communities we studied, health centers and other providers in their  service area generally do not compete for patients. HRSA and PCA  officials told us that health centers typically serve patients not treated  elsewhere, such as uninsured and Medicaid patients. HRSA’s service area overlap policy is designed to help the agency avoid  awarding grants for new delivery sites in areas where other safety net  providers are already serving the population’s need, and this may reduce  competition between health centers and other safety net providers. care if health centers did not offer these services, because some dentists  are unwilling to serve Medicaid patients. receive grant funding for construction or renovations, which gives them a  competitive advantage. PCA and health center officials we interviewed more frequently raised  concerns about the potential for competition between health centers and  rural health clinics, in part because there are more similarities in the  services they provide to patients in rural communities. Certain populations—migrant and seasonal  farmworkers, homeless people, and residents of public housing—are  particularly vulnerable and often have specific health and access  problems. However, because the extra points were not sufficient to ensure that  HRSA met its statutorily required funding proportion for migrant health  centers, HRSA also moved applicants serving this population ahead of  other applicants to ensure the required proportion was met, a step that  was not specifically described in the application guidance. Although  HRSA had used such an approach before, the effect in fiscal year 2011  was magnified by the combined effect of the reduction in program funding  and HRSA’s need to increase the share of funding awarded to the  designated special populations as a result of not applying the proportions  when awarding grants with Recovery Act funds in fiscal year 2009. HRSA  has periodically needed to take actions to meet its statutory obligations  and may face such a situation in the future. Recommendation for Executive Action

To ensure that in the future HRSA can effectively target limited Health  Center Program resources through a transparent grant award process,  the Secretary of HHS should direct the Administrator of HRSA to evaluate  the fiscal year 2011 New Access Point grant award process to identify  lessons learned and potential improvements for future funding cycles,  including consideration of (1) the effect of the change in the need score  on targeting grants to communities with demonstrated need, (2) the effect  of actions taken to target grants to applicants proposing to serve the  designated special populations and sparsely populated and high-poverty  areas, and (3) the transparency of the process to applicants, Congress,  and the public. HHS agreed with our findings and recommendation. GAO-11-643T. Health Resources and Services Administration: Many Underserved Areas  Lack a Health Center Site, and the Health Center Program Needs More  Oversight.
Why GAO Did This Study

Health centers funded in part by grants from HRSAs Health Center Program, under Section 330 of the Public Health Service Act, provide comprehensive primary care services for the medically underserved, including many poor, uninsured, and Medicaid patients. Legislation enacted in 2009 and 2010 provided additional funding that could significantly expand health center capacity over the next several years. GAO was asked to review HRSAs process for awarding grants for new delivery sites and possible effects of health centers, such as competition, on other providers. This report examines (1) the actions HRSA has recently taken to target its grants for new delivery sites to health centers in communities with demonstrated need and the outcome of HRSAs award process in recent years, and (2) the extent to which HRSA-funded health centers collaborate and compete with other health care providers in their service area. GAO focused its work on NAP grants, HRSAs primary means of establishing new health centers and delivery sites, during fiscal years 2008 through 2011. GAO analyzed HRSA documents and interviewed HRSA officials, and interviewed officials from 11 health centers and providers and officials in their service areas.

What GAO Found

The Department of Health and Human Services (HHS) Health Resources and Services Administration (HRSA) revised its New Access Point (NAP) competitive award process in fiscal year 2011 to increase the emphasis on the need for services in the applicants proposed service area, and on the three special populationsmigrant and seasonal farmworkers, homeless people, and residents of public housingdesignated by the Public Health Service Act. The act requires that certain proportions of Health Center Program funding go to health centers serving the special populations. To increase the emphasis on need, HRSA increased the weight given to need in the application review process. To target health centers serving special populations, HRSA gave extra points in the application process to applicants proposing to serve them. When this was insufficient to meet the required proportions, HRSA moved some applicants ahead of others in the award rank order list, a method it had used in the past. The effect of HRSAs actions on the award outcome was magnified in fiscal year 2011 because (1) HRSA received less program funding than it had anticipated, and (2) it needed to increase the share of grants going to health centers serving the special populations because HRSA had not applied the statutory proportions when it used American Recovery and Reinvestment Act funding to award grants in fiscal year 2009. As a result, HRSA awarded 67 NAP grants in fiscal year 2011, 57 of which went to applicants proposing to serve at least one special population; 13 of the 57 received grants by being moved ahead of other applicants with equal or higher review scores. HRSA announced the extra points in application guidance, but not the potential moving of some applicants ahead of others. As HRSA has periodically needed to take actions to meet its statutory obligations and may need to do so again, evaluating the effectiveness and transparency of its most recent New Access Point grant award process could help it identify lessons and possible improvements for the future.
Health centers in the communities GAO studied collaborate with other providers and generally do not compete with them for patients, but GAO found greater potential for competition in rural areas. Health center officials described collaborative relationships with other providers that give patients access to services not available through the health center. Health centers and other providers told GAO they generally do not compete for patients; health centers typically serve patients not treated elsewhere, such as uninsured and Medicaid patients. However, because the health center grant covers, on average, about 20 percent of a centers budget, other funding must also be secured, such as by serving insured patients, for the center to be financially sustainable. This can result in competition with other providers in its service area. During the award process, HRSA takes steps to reduce competition by identifying nearby safety net providers and assessing whether the level of unmet need in the area warrants a grant for a new health center or delivery site. Greater potential for competition exists in rural areas because patients there are more likely to be insured and rural health clinics and certain hospitals might seek to serve some of the same patients as health centers, although they may not offer all of the services required of health centers.

What GAO Recommends

The Secretary of HHS should direct the Administrator of HRSA to evaluate the fiscal year 2011 NAP grant award process for effectiveness and transparency, identify lessons learned, and incorporate any improvements for future funding cycles. HHS agreed with GAOs findings and recommendation and said HRSA has begun to take action.