Ryan White 2012 Grantee Meeting November 28, 2012 What Does It Take to Become an FQHC? Jacqueline C. Leifer, Esq.

History of the Health Centers Program 1964: Congress passed Title VI of the Economic Opportunity Act Created the Office of Economic Opportunity First health center model, combining community resources with Federal funds to establish neighborhood clinics 1965: First two “neighborhood health center” demonstration projects funded in Boston and Mound Bayou, Mississippi

FQHC Defined A Federally Qualified Health Center (FQHC) is a public or non-profit private entity that provides primary and preventive health care, including enabling services, to a medically underserved population or residents of a medically underserved area

Health Center Facts Currently, there are over 1,200 Federally Qualified Health Centers (FQHCs) serving 20 million patients (38% of whom have no health insurance and another 36% of whom are reliant on Medicaid) at 7,500 sites located in all of the 50 states, Puerto Rico, the District of Columbia, the U.S. Virgin Islands and Guam FQHC patients: 71% have incomes at or below the Federal Poverty Level 50% live in rural areas, and the other 50% tend to live in depressed inner city areas FQHCs derive revenue from public and private insurance, as well as federal, state, and local grants and contracts Public Health Service Act grants account for 18.3% of FQHC revenue Medicaid accounts for 37% of FQHC revenue The Patient Protection and Affordable Care Act (PPACA) provides funding to double current patient capacity to 40 million by 2015 Estimated cost savings created by health centers Up to $122 billion in total health care costs would be saved between 2010 and 2015 As much as $55 billion for Medicaid over the five-year period ($32 billion in savings for the Federal government, with the rest to states)

FQHC Scope of Project Defines the who, what, where and how of providing access to care in the community Defines what the total grant-related project budget (including program income and other non-section 330 funds) and related benefits support How and where Federal grant dollars and pledged program income/resources will be used Scope of Federal Tort Claims Act (FTCA) coverage (in general) Site information for the 340B Drug Pricing Program Approved delivery sites and services for enhanced Medicaid and Medicare reimbursement

Benefits Available to Section 330 Grantees and Look-Alikes Opportunity to apply for Federal grants, including expanded medical capacity and direct services grants, to support the otherwise uncompensated costs of furnishing primary and preventive health care and enabling services to medically underserved communities Access to reimbursement under the Prospective Payment System (PPS) or other state-approved alternative payment methodology (which is predicated on a cost-based reimbursement methodology) for Medicaid and CHIP services and cost-based reimbursement for services provided under Medicare; “wraparound” payments for difference between Medicaid and CHIP managed care capitation and PPS; wraparound on Medicare managed care payments effective FY 2006 and on CHIP payments effective FY 2010 There are site certification requirements under Medicare, and additional site certifications may apply under Medicaid Access to favorable drug pricing under Section 340B of the Public Health Service Act 6

Benefits Available to Section 330 Grantees and Look-Alikes Reimbursement by Medicare for "first dollar" of services rendered to Medicare beneficiaries, i.e., deductible is waived Safe harbor under the Federal anti-kickback statute for waiver of co-payments to the extent a patient’s income is below 200% of Federal poverty guidelines Access to providers through the National Health Service Corps Access to the Federal Vaccine For Children program and eligibility to participate in the Pfizer Sharing the Care Program 7

Benefits Available to Section 330 Grantees Only Access to Federal Tort Claims Act (FTCA) coverage, in lieu of purchasing malpractice insurance Safe Harbor under the Federal anti-kickback statute for certain arrangements with other providers or suppliers of goods, services, donations, loans, etc., which benefit the medically underserved populations served by the FQHC Access to grant support/loan guarantees for capital improvements 8

FQHC Scope of Project Five Elements Service Area: Geographic area served by the center Target Population: Medically underserved community or population served by the center Providers: Individual health care professionals who exercise independent judgment and deliver services on behalf of the center on a regularly scheduled basis Services – see next slides Service Sites – see next slides

Scope of Project: Services Health Resources and Services Administration (HRSA) expects FQHCs to have a system of care that Ensures access to a comprehensive scope of primary and preventive services, as well as enabling services and, as appropriate and necessary, additional health services, either directly or through established written arrangements and referrals Assists in providing access to other comprehensive health and social services, including inpatient, specialty, and ancillary care

Scope of Project: Services Service delivery model must include Locations that are reasonably accessible and appropriate to the target population and the community as a whole Hours of operation that Result in services being reasonably available and accessible Meet the specific needs of the target population Manner of service delivery that ensures access for all life cycles of the target population Directly on-site Contractual agreements Formal (written) referral agreements Informal referral arrangements (non-required services only) Professional coverage for when the center is closed

Scope of Project: Service Sites Any location where a FQHC provides primary health care services to a defined service area or target population Must meet all of the following conditions FQHC generates face-to-face encounters which are documenting in the patients’ medical record Providers exercise independent judgment Services are provided directly by or on behalf of the FQHC, whose governing Board retains control and authority over the provision of the services at the location Services are provided on a regularly scheduled basis (note – unless State law requires otherwise, no minimum number of hours per week required to be a site)

Scope of Project: Service Sites Service sites include Permanent (year round, fixed location) Seasonal (less than year round, fixed location) Intermittent (limited period of time and change locations) Mobile medical/dental vans Migrant voucher screening sites

Core Requirements: Governance HRSA expects FQHCs to have a governing body that Assumes full authority and oversight responsibilities Maintains compliant size, composition, and meeting schedules Carries out legal and fiduciary responsibilities Establishes appropriate committee structure Provides opportunities for Board training and development

Governance Requirements Distinguishing feature of FQHCs is governance by a community-based Board Size should be between 9 – 25 members, and appropriate for the complexity of organization A minimum of 51% of Board members (at least a majority) must be active consumers of the FQHC’s services No Board member can be an employee or a spouse, child, parent or sibling (by blood or marriage) of an employee Executive Director may serve as an ex-officio non-voting member of the Board

Governance Requirements Composition Consumer Board members Receive health care services at the health center Must, as a whole, reasonably represent the patient population served in terms of demographic factors such as race, ethnicity and gender

Governance Requirements Composition (cont.) Non-consumer Board members Should be representative of the community served and be selected for expertise in areas such as finance and banking, legal, community affairs, etc. Should live or work in the service area No more than one half of non-consumer members can derive more than 10 percent of their income from the health care industry

Governance Requirements Governing Board should establish appropriate procedures Monthly meeting schedule (required) and minutes, which are approved at subsequent meeting Selection procedures that allow for a self-perpetuating Board (i.e., the Board elects itself) Appropriate committees and committee meeting schedules Board orientation, training and development Board-approved policy (or Bylaws provision) managing actual or potential conflicts of interest by Board members, employees, consultants and those who furnish goods/services to the FQHC Disclosure Recusal from voting (and possibly discussion)

Governance Requirements Waivers for governing Board composition and monthly meeting requirements Waivers allowed for programs funded ONLY under 330(g) (migrant and seasonal), 330(h) (homeless) and/or 330(i) (residents of public housing), provided that there is a showing of “good cause” and an appropriate plan is presented to assure consumer input into the governance process Waivers are not allowed for programs receiving 330(e)(community health center) funding

Governance Requirements Community-based Board must autonomously exercise certain key authorities Selecting, evaluating and dismissing the Executive Director Establishing health care policies and procedures Locations and hours of services Scope and availability of services Quality of care audit procedures Establishing personnel policies and procedures Selection and dismissal procedures Salary and benefit scales Employee grievance procedures Equal opportunity practices

Governance Requirements Key authorities (cont.) Establishing and approving financial management practices System to assure accountability for center resources and monitoring of organizational assets Annual project budget and plan Center priorities Eligibility for services including criteria for partial payments schedules Long-term financial planning Reviewing regular financial reports and approving the annual grant application and budget Engaging the auditor and accepting the annual audit Engaging in strategic and operational planning

Governance Requirements Key authorities (cont.) Measuring and evaluating the FQHC’s activities Service utilization patterns Productivity Patient satisfaction Achievement of annual and long-term programmatic and financial goals and objectives (and, as necessary, revising mission, bylaws, goals, objectives, plans and budgets) Process for hearing and resolving patient grievances Assuring the FQHC’s compliance with applicable law and regulation

Governance Requirements HRSA affiliation policies: PIN 97-27 Corporate Structure No parent/subsidiary or similar structures (e.g., Sole Member) unless FQHC retains all Board selection and composition requirements, and exercises all prescribed authorities and The structure is specifically approved by HRSA

Governance Requirements PIN 97-27: Board must remain compliant with all Section 330-related selection and composition requirements and retain all prescribed authorities No other entity or appointed individual may Select the majority of FQHC Board members, non-consumer members, or members of the Executive Committee, or function as Board chair Preclude the selection, or require the dismissal, of Board members not appointed by that party Have overriding approval authority, veto authority or “dual majority” authority

Governance Requirements PIN 97-27 Management and Finance No other entity/individual can employ Executive Director/CEO No other entity/individual can employ CFO and/or CMO, subject to good cause exception Health Services/Clinical Operations No other entity/individual can employ the majority of FQHC’s primary care providers, subject to good cause exception Non-exclusivity: no other entity/individual can control FQHC’s relationships with other providers unless control will not impact FQHC’s ability to collaborate and coordinate with other local providers

Core Requirements: Schedule of Discounts FQHCs must provide services to all residents of the service area regardless of ability to pay Schedule of charges designed to cover the reasonable costs of operation and consistent with locally prevailing rates Should not be unreasonably low “Consistent with” does not mean “equal to” Corresponding schedule of discounts, adjusted on the basis of ability to pay, for uninsured or underinsured patients: At 101-200% of poverty guidelines – “slide” fees At or under 100% poverty – full discount (nominal fee permitted) Income above 200% of the federal poverty income guidelines - NO DISCOUNTS

Payment for Services FQHCs must make “every reasonable effort” To secure payments from patients in accordance with fee schedule & schedule of discounts To collect reimbursement for services provided to persons covered by Medicare, Medicaid, any other public assistance program, or private health insurance, on the basis of full amount of fees and payments without application of any discount

Payment for Services FQHCs must assure that No patient will be denied health care services due to an individual’s inability to pay for such services Any fees or payments required by the FQHC for such services will be reduced or waived to fulfill assurance of access to care Individualized determinations of financial need

Compliance with 45 CFR Part 74 Section 330 grantees must comply with the requirements and standards set forth in 45 CFR Part 74 regarding Financial management systems Procurement of goods and services utilizing Federal funds (in whole or in part) Acquisition, management and disposition of property and equipment, acquired or improved with Federal funds (in whole or in part)

Health Reform: Reimbursement FQHC Benefits Health Reform: Reimbursement Expands Medicaid eligibility to cover all non-elderly adults up to 133% of FPL, effective 2014 Requires that FQHCs be paid no less than FQHC Medicaid PPS rates from private plans participating in State-based health insurance exchanges; recent CMS rulemaking softens this requirement 30

Current Climate Community Health Center Trust Fund: Affordable Care Act included an $11 billion trust fund for health centers $9.5 billion in operational funding over 5 years (in addition to FQHC discretionary funding) $1.5 billion to provide enhanced funding for National Health Service Corps Appropriations: FY 2011-2013 Appropriations (for Section 330 grants) 2011: Cut discretionary funding from $2.19 billion to $1.59 billion and $1.0 billion was then transferred from the Trust Fund 2011 funding: $2.59 billion = net increase of $400 million over FY 2010 2012: 2011 levels plus $200 million 2013: Senate Appropriations bill includes $3.1 billion $1.6 billion in discretionary funding + $1.5 billion in funding from the Trust Fund = $300m increase New Access Point Funding: HRSA made 219 awards on June 20, 2012

jleifer@ftlf.com www.ftlf.com (202) 466-8960 Questions? Jacqueline C. Leifer, Esq. Feldesman Tucker Leifer Fidell LLP 1129 20th Street N.W. – Suite 400 Washington, D.C. 20036 jleifer@ftlf.com www.ftlf.com (202) 466-8960