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Community Health Centers Get Increased Oversight

Thursday, May 9, 2013   (0 Comments)
Posted by: Joy Ingram
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by David Fields, Senior Manager, BKD LLP

(This article was originally published on the BKD web site and is reprinted here with permission of BKD LLP.)

The community health center (CHC) program has experienced significant growth over the last decade, from funding through the American Recovery and Reinvestment Act (ARRA) to five years of significant additional funding through the Patient Protection & Affordable Care Act (ACA). The Government Accountability Office (GAO) specifically cited the increase in funding as the reason Congress asked it to examine the Health Resources and Services Administration’s (HRSA) oversight of health center grantees.

As a result of the GAO examination, HRSA has been revising its oversight processes, which likely will result in renewed focus on CHCs. The heightened awareness of many program aspects is likely to result in more questions and follow-up than in the past. It is very possible situations and circumstances that have existed for quite some time now will receive attention and require changes.

In addition to the historical HRSA oversight process, there has been an increase in CHC audits by the Department of Health and Human Services Office of Inspector General (OIG). There were 18 separate reports published in 2012; in more than half of the reports issued, the OIG recommended HRSA either require repayment of funds or work with the organization to determine whether any additional information was available to substantiate the expenditures. In some cases, the amounts in question have reached seven figures. Primary assertions by the OIG are that organizations “did not maintain after-the-fact certifications of activity for employees” and that “330 grant funds were not accounted for separate from other operational funds.” HRSA is still evaluating what additional documentation it may accept, but some of the settlements are significant enough that if HRSA chooses to require repayment, it could bankrupt the CHC. In its supplemental response to one OIG report, HRSA indicates it will “issue clarifying policy guidance to affirm this (applicability of federal cost principles) understanding.” CHCs should look for this guidance when it is released and make any necessary adjustments to their internal policies and procedures.

There has been a tendency by CHCs to assume they will not be selected for an OIG audit, but a wide variety have been selected. The OIG’s 2013 work plan (page 85) makes reference to CHCs receiving funding pursuant to the ACA being selected. Whether a CHC knows it or not, ACA funding is a component of the majority of Section 330 grants.

So what proactive steps can CHCs take in a new era of accountability? Consider the following:

CHCs are complex health care organizations with a variety of unique and specific requirements, including most facets of how a CHC operates, from governance to finance. There are a number of resources available to help you, including the National Association of Community Health Centers (NACHC), your state association and HRSA. Training is a key aspect of improving your CHC, and you should seek out the assistance you need to keep your CHC compliant.

As CHCs face increased oversight, they must understand the rules themselves have not changed. CHCs that have already received an OIG audit or received direct scrutiny from the normal HRSA oversight processes have offered similar explanations. They have explained that no one told them about a particular requirement or that they have been doing it this way for decades. They have shown that patients are benefiting from the services they are providing and explained their place in the communities they serve. These arguments, however, have not been persuasive. We encourage you to proactively evaluate your policies and procedures and implement changes, rather than waiting for the OIG or HRSA to investigate.

For more information, contact your BKD advisor.

NWRPCA welcomes and regularly publishes white papers and articles submitted by members, partners and associates with subject matter expertise. The appearance of any guest publication in our Health Center News database represents the views of the author and does not constitute endorsement by NWRPCA of the stated opinions or perspectives, nor does it suggest endorsement of the contributor's products or services.

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