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Low Budget Home Phone Services for Louisiana Residents

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									   Act 36 of the 2004 Regular
Louisiana State Legislative Session:

Federally Qualified Health Center
     and Rural Health Clinic
          Expansion Plan


               presented to
 the House and Senate Health and Welfare
               Committees




                                    December 2004
                                                  STATE OF LOUISIANA
                                          DEPARTMENT OF HEALTH AND HOSPITALS



Kathleen Babineaux Blanco                                                                                  Frederick P. Cerise, M.D., M.P.H.
       GOVERNOR                                                                                                      SECRETARY
                                                        January 18, 2005




                  The Honorable Joe McPherson, Chair
                  Louisiana Senate Health and Welfare Committee
                  880 Robinson Bridge Rd.
                  Woodworth, LA 71485

                  The Honorable Sydnie Mae Durand, Chair
                  Louisiana House Health and Welfare Committee
                  P.O. Box 2840
                  Parks, LA 70582

                  Dear Senator McPherson and Representative Durand:

                  In response to Act 36 (Senate Bill 690), the Louisiana Department of Health and
                  Hospitals (DHH), the Louisiana Primary Care Association, the Louisiana Rural Hospital
                  Coalition, the Louisiana Rural Health Association and the Louisiana Public Health
                  Institute submit the enclosed Federally Qualified Health Center and Rural Health Clinic
                  Expansion Plan to the Louisiana State Legislature’s Senate and House Health and
                  Welfare Committees for review. Act 36, co-authored by Senators Hines and Jackson, et
                  al., authorizes DHH to develop and implement a long-term plan to encourage expansion
                  and development of federally qualified health centers (FQHCs) and rural health clinics
                  (RHCs) throughout Louisiana’s health professional shortage areas. The bill directs DHH
                  to coordinate and cooperate with the aforementioned state health partners in the
                  development and implementation of this plan.

                  DHH’s Bureau of Primary Care and Rural Health (Bureau) convened a statewide
                  committee that worked over the last few months to develop the FQHC and RHC
                  Expansion Plan. The workgroup consisted of more than 30 representatives, including
                  members of the Louisiana State Legislature, local FQHC and RHC administrators,
                  representatives of each of the agencies identified in the bill and representatives from
                  other interested health care organizations.

                  I sincerely appreciate the group’s efforts to identify strategies for increasing access to
                  primary health care services in Louisiana’s underserved areas through RHC and FQHC
                  expansions. One of the major areas of focus for Governor Blanco’s health care reform



                                                      OFFICE OF THE SECRETARY
                             1201 CAPITOL ACCESS ROAD • P.O. BOX 629 • BATON ROUGE, LOUISIANA 70821-0629
                                               PHONE #: 225/342-9509 • FAX #: 225/342-5568
                                                 “AN EQUAL OPPORTUNITY EMPLOYER”
Senator McPherson
Representative Durand
January 18, 2005
Page 2


effort is to increase access to primary health care services. DHH accepts the
recommendations of the Act 36 Committee as a part of the solution for accomplishing
increased access to primary health care services for the underinsured and uninsured. It is
also important to note other ongoing efforts in the state aimed at increasing access to
critical health care services for this population. These include DHH’s efforts to secure a
State Planning Grant for the uninsured, integration of primary health care services into
the state’s parish health units and increasing access to primary health care services in
Louisiana State University Health Sciences Center’s outpatient clinics. While all of this
activity is occurring, a major budget shortfall is projected for the 2006 state fiscal year.
Therefore, the budget recommendations within the FQHC and RHC Expansion Plan must
be considered within the context of this budget shortfall and along with other competing
budget demands.

Committee representatives are scheduled to present this plan to the Joint Health and
Welfare Committee on February 17, 2005. We look forward to participating in this
presentation and to any comments you have regarding the plan. Please contact Kristy
Nichols at 225-342-3814 with any questions or comments.

                                              Sincerely,




                                              Frederick P. Cerise, M.D., M.P.H.
                                              Secretary

FPC/KHN/cba

c:     Senator Donald Hines, M.D.
       Senator Lydia Jackson
       Representative Michael Jackson
       Miles Bruder
       Mary O’Brien
       Ashley Ragusa Dupree
       Kristy H. Nichols
                 Act 36 of the 2004 Regular Louisiana Legislative Session

Overview
Senate Bill 690/Act 36, enacted in the 2004 Regular Louisiana Legislative Session, promotes the development of
federally qualified health centers (FQHCs) and rural health clinics (RHCs) to provide primary health care services for
the uninsured and underinsured in Louisiana’s medically underserved and health professional shortage areas.

As a result, the Department of Health and Hospitals (DHH) – Bureau of Primary Care and Rural Health, the
Louisiana Primary Care Association, the Louisiana Rural Hospital Coalition, the Louisiana Rural Health Association,
the Louisiana Public Health Institute and other health care representatives were charged with developing a plan for
the expansion of FQHCs and RHCs in Louisiana. The plan defines the FQHC and RHC primary care delivery
models, describes the state’s current primary care service needs and the current FQHC and RHC expansion
environment and identifies recommendations to alleviate current barriers to expanding FQHCs and RHCs.

Definitions
FQHCs include all organizations receiving grants under        RHCs are public, private or non-profit organizations
Section 330 of the U.S. Public Health Service Act,            that provide outpatient primary care through physician-
certain tribal organizations and FQHC Look-Alikes.            supervised nurse practitioners, physician assistants and
FQHCs serve a medically underserved area or                   certified nurse midwives. RHCs must be located in a
population, offer a sliding fee scale, provide                U.S. Census Bureau defined rural/non-urbanized area
comprehensive primary and preventive health care              and a medically underserved area, health professional
services for all life cycles, have an ongoing quality         shortage area (HPSA) or a Governor designated area.
assurance program and provide dental, mental health and       RHCs are licensed and certified by the State and
substance abuse services as well as transportation            qualify for enhanced reimbursement from Medicare
services necessary for adequate patient care. FQHCs are       and Medicaid, as well as other benefits. The two types
non-profit, community-based organizations governed by         of RHCs are independent RHCs, freestanding practices
a consumer board of directors, with a majority of health      that are not part of a hospital, skilled nursing facility or
center patients.       FQHCs qualify for enhanced             home health agency and provider-based RHCs, integral
reimbursement from Medicare and Medicaid, the 340B            and subordinate parts of a hospital, skilled nursing
Drug Pricing Program and malpractice coverage                 facility or home health agency. RHCs must provide
provided through the Federal Tort Claims Act. The             basic laboratory services and may offer other services.
federal Bureau of Primary Health Care makes Section           When licensed as part of a small rural hospital RHCs
330 grant award determinations through a highly               qualify for Medicaid disproportionate share hospital
competitive process. The maximum award is $650,000            payments for uncompensated costs including costs for
per applicant to subsidize care for the uninsured.            physician services.
Inventory                                                                  Figure A
There are 39 FQHC sites in Louisiana, which according to the
2003 Uniform Data System, provided services to 90,585 users
(Figure A, right). Seventy-one percent of these patients were
African Americans, 80% were below 100% of the federal poverty
level, 46% were uninsured, 39% were on Medicaid and 9% were
on Medicare. There currently are 27 provider-based RHCs and
37 freestanding RHCs in Louisiana (Figure A, right). An
estimated 48% of RHC users in 2002 were on Medicaid. It is
estimated that Louisiana’s 39 FQHC and 64 RHC sites employ a
total of 2,029 employees and have a total payroll of $54,483,000,
that is an overall economic and employment impact of 4,054 jobs
and $80,471,000 in local revenue.

                                                                                                                         i
                                                                                    Figure B
Need
Over 85% of Louisiana’s parishes are designated HPSAs,
indicating that there are too few primary care physicians
available to treat the general, low-income or Medicaid
populations (Figure B right). Based on HPSA data, the full
time equivalent of 143.3 additional physicians is needed to
support the primary care needs of Louisiana’s HPSAs.
According to Figure C, 67% (43 of 64) of Louisiana’s parishes
have poor health status (Figure C below). This poor health
status and limited primary care capacity in the state make it
imperative for Louisiana to invest in and concentrate on
expanding the primary care safety net in Louisiana’s HPSAs.
       Figure C

                                                     Existing Support
                                                     Many state organizations provide support for expansion of
                                                     primary health care services in Louisiana’s underserved areas
                                                     including the Louisiana Primary Care Association, DHH, the
                                                     Louisiana Rural Hospital Coalition, the Louisiana Public Health
                                                     Institute and the Louisiana Rural Health Association. In
                                                     partnership with these groups, DHH has implemented several
                                                     programs to provide communities with technical support, funding
                                                     and tools to develop effective primary health care services.
                                                     Specifically, DHH offers community-based technical support for
                                                     the development of health care services in HPSAs and
                                                     Community-based and Rural Health Program grants, which
                                                     provide $1 million in funding for communities to expand access
                                                     to community-based primary and preventive health care services.
  Expansion Plans
  According to the Louisiana Primary Care Association,            Figure D
  Louisiana’s health centers plan to apply for federal grant
  funding to support 14 new or expanded access points by
  2008, raising the total number of FQHC sites to 53, to serve
  an additional 39,025 unduplicated uninsured patients. In
  addition, eight Louisiana FQHC applications were submitted
  to the federal government in December 2004. Awards will
  be made in the summer of 2005. DHH has certified
  eligibility for 32 RHC requests. Currently, a number of
  these 32 RHCs are in development and seeking licensure.

  In total, there are 54 new FQHC and RHC sites planned or
  anticipated over the next five years (Figure D right). This
  number corresponds to a need for an additional 48 new
  primary care sites to serve more than 200,000 patients.

 Expansion Environment
 In 2002, a five-year $2.2 billion Community Health Center Initiative was launched by President Bush to expand the
 nation’s FQHC network by adding 1,200 new and expanded FQHC sites to increase the number of people served
 from 10 million in 2001 to more than 16 million by 2006. However, national competition is intense, and Louisiana
 has had a slow start. Since 2002, 4,104 FQHC grants have been awarded, but only five were to Louisiana grantees.

 In 2003, the 5th Circuit Court of Appeals ruled in favor of DHH and the Louisiana Rural Hospital Coalition’s request
 to pay provider-based RHCs and disproportionate share hospitals their uncompensated costs for caring for the
 uninsured. If approval is granted by the U.S. Centers for Medicare and Medicaid Services, DHH will have a
 substantial federal subsidy to reimburse provider-based RHCs for the costs of treating the low-income uninsured
 patients in Louisiana.                                                                                            ii
Recommendations to Alleviate Barriers
The FQHC and RHC Expansion Plan addresses the primary and preventive health care needs of Louisiana residents
by fostering growth in an expansion-friendly environment. The recommendations focus on collaborative efforts to
alleviate barriers. The development and expansion outlined here will be implemented in a way that is sensitive to
the health care needs of residents, while considering the economic impact to existing providers. The budget
recommendations within the plan also must be considered within the context a major budget shortfall projected for
the 2006 state fiscal year. The following are the recommendations of the Act 36 workgroup:

Capital Resources
•     Increase available capital for FQHC and RHC development through Louisiana Rural Loan Fund
•     Form a taskforce to review potential sources of affordable capital (loan funds, bond initiatives and loan
      guarantees)
•     Utilize existing infrastructure within the public health units, public hospitals, small rural hospitals and
      physician clinics for site expansion

State Policy
 •     Encourage all safety net providers in the state to implement a sliding fee scale for all uninsured patients.

Advocacy
•     Continue Administrative Branch’s commitment to advocating for expanding FQHCs and RHCs
•     Increase congressional delegation awareness and understanding of FQHCs and RHCs to foster advocacy for
      expansion

State Funding
•     Promote increase in state funding for the Community-based and Rural Health Program to support grants for
      expansion efforts
•     Provide state funding to cover costs associated with treating uninsured populations

Local Technical Support and Education
•     Prioritize and foster the development of FQHC satellite sites and special population health centers
•     Continue to engage communities in clinic and proposal development
•     Increase technical support services including community-based needs assessments, strategic planning, facility
      planning, resource development and grant writing training
•     Increase local and state officials’ understanding of unmet needs of local residents and the benefits FQHCs and
      RHCs provide

Reimbursement
•     Continue discussions with Louisiana Medicaid regarding development of effective Prospective Payment
      System rates for new sites
•     Expand existing Medicaid disproportionate share hospital payment methodology for provider-based RHCs to
      allow for uncompensated care cost reimbursement in first year of operation
•     Increase funding to reimburse 100% of provider-based RHC uncompensated care costs

Workforce Development
• Address health professional shortages in underserved areas through state and federal loan repayment,
  scholarship and recruitment programs and work with rural practice residency programs and state
  health professional task forces

     FQHC and RHC Expansion Plan
     Act 36 of the 2004 Regular Louisiana Legislative Session

                                                                        LRHA               Louisiana Rural
                                                                                            Louisiana Rural
                                                                                         Hospiittal Coalittiion, Inc.
                                                                                         Hosp al Coali on, Inc.
                                                                                                                        iii
  BACKGROUND AND OVERVIEW

  Federally Qualified Health Centers (FQHCs)
  Definition
  FQHCs include all organizations receiving operational grants under the Consolidated Health
  Center Program as authorized in Section 330 of the U.S. Public Health Service Act. Section 330
  grantees include: Community Health Centers, Migrant Health Centers, Health Care for the
  Homeless, Public Housing Health Centers and School-Based Health Centers. Other types of
  FQHCs include certain tribal organizations and FQHC Look-Alikes. FQHC Look-Alikes do not
  receive Section 330 grant funding; however, they are required to provide the full scope of
  services required within FQHCs.

  FQHCs must serve a medically underserved area or population, offer a sliding fee scale, provide
  comprehensive primary and preventive health care services and have an ongoing quality
  assurance program. FQHCs are non-profit, community-based organizations governed by a
  majority consumer board of directors comprised of patients who utilize the health center's
  services.

  Scope of Services
  FQHCs must provide primary and preventive health care services for all life cycles. FQHCs are
  also required to provide (either directly or by arrangement with another provider) dental services,
  mental health and substance abuse services and transportation services necessary for adequate
  patient care and hospital/specialty care.

  Reimbursement and Benefits
  FQHCs are eligible to receive cost-based reimbursement from Medicare and Medicaid as well as
  other benefits. FQHCs are reimbursed on an all-inclusive rate per covered visit for Medicare. In
  the federal fiscal year 2004, the Medicare per-visit rate was capped at $89.06 for rural FQHCs
  and $103.58 for urban FQHCs. FQHCs also are reimbursed on a per-visit basis for Medicaid
  services under a Prospective Payment System. The Prospective Payment System per visit rate is
  an all-inclusive, provider-specific rate initially established from an average of the 1999 and 2000
  finalized Medicaid cost reports. Medicaid and Medicare all-inclusive rates are adjusted annually
  based on the Medical Economic Index.

  The Health Resources and Services Administration’s federal Bureau of Primary Health Care
  provides operational grant funding to Section 330 grantees to subsidize primary and preventive
  health care for the uninsured. FQHC grant awards are highly competitive and cannot exceed
  $650,000 per applicant. FQHCs are also eligible to participate in the 340B Drug Pricing
  Program and benefit from malpractice coverage provided through the Federal Tort Claims Act.
  The 340B Drug Pricing Program provides substantial drug pricing discounts to federal
  purchasers and to certain grantees of federal agencies. Furthermore, by offering Federal Tort
  Claims Act coverage to FQHCs, the federal government has agreed to assume the responsibility
  for malpractice claims against covered centers and their practitioners, if certain conditions are
  met. Federal Tort Claims Act coverage and participation in the 340B Drug Pricing Program can
  provide FQHCs with substantial costs savings that enable increased access to health care
  services.


FQHC and RHC Expansion Plan                                                                        1
  Rural Health Clinics (RHCs)
  Definition
  The Rural Health Clinics Act was passed by Congress in 1977 and implemented in 1978. The
  federal government developed RHCs to encourage and stabilize the provision of outpatient
  primary care in rural areas through cost-based reimbursement provided by physicians, nurse
  practitioners, physician assistants and certified nurse midwives. RHC regulations distinguish
  between two types of RHCs: independent and provider-based. The independent RHC is a
  freestanding practice that is not part of a hospital, skilled nursing facility or home health agency.
  The provider-based RHC is an integral and subordinate part of a hospital, skilled nursing facility
  or home health agency.

  RHCs can be public, private or non-profit organizations. RHCs must be located in a rural/non-
  urbanized area as defined by the U.S. Census Bureau AND be located in a medically
  underserved area/population, health professional shortage area (HPSA) or a Governor designated
  area. RHCs are licensed and certified by the State.

  RHCs must also be staffed by at least one nurse practitioner, physician assistant or certified nurse
  midwife. The nurse practitioner, physician assistant or certified nurse midwife must be on-site to
  see patients at least 50 percent of the time that the clinic is open. A physician must supervise the
  midlevel practitioner in a manner consistent with state and federal law.

  Scope of Services
  RHCs must provide outpatient primary care services and basic laboratory services. RHCs can
  also offer other services such as mental health, dental and vision services.

  Reimbursement and Benefits
  RHCs are eligible to receive cost-based reimbursement from Medicare and Medicaid as well as
  other benefits. RHCs are reimbursed on an all-inclusive rate per covered visit for Medicare. In
  the federal fiscal year 2004, the Medicare rate per visit for RHCs was capped at $68.25;
  however, provider-based RHCs of small rural hospitals (>50 beds) are exempt from the per visit
  Medicare reimbursement cap. RHCs are also reimbursed on a per-visit basis for Medicaid
  services under the Prospective Payment System. The Prospective Payment System per-visit rate
  is an all-inclusive, provider specific rate initially established from an average of the 1999 and
  2000 finalized Medicaid cost reports. Medicaid and Medicare all-inclusive rates are adjusted
  annually based on the Medical Economic Index. When licensed as part of a small rural hospital,
  they qualify for Medicaid Disproportionate Share Hospital Program payments to cover their
  uncompensated care costs, including that portion of the cost associated with the physician
  services.

  Louisiana’s FQHCs and RHCs
  Statewide Inventory
  There are currently 18 FQHCs operating a total of 39 sites across the state. According to the
  2003 Uniform Data System, Louisiana’s FQHCs provided services to 90,585 users for a total of
  298,863 encounters. In 2003, 71 percent of health center patients were African Americans and
  80 percent were below 100 percent of the federal poverty level. Approximately 46 percent of


FQHC and RHC Expansion Plan                                                                          2
  these health center patients were uninsured, 39 percent were Medicaid recipients and almost nine
  percent were Medicare recipients.

  There are currently 64 RHCs in Louisiana – 27 provider-based RHCs and 37 freestanding RHCs.
  Although there is limited statewide data available on patient utilization within RHCs, it is
  estimated that RHCs’ average Medicaid utilization in 2002 was approximately 48 percent.

                                               Figure A




  Medicaid Expenditures and Utilization
  As noted, Medicaid and Medicare reimbursement and federal guidelines for FQHCs and RHCs
  provide each type of facility unique opportunities to serve as safety net providers for medically
  underserved populations. However, these requirements are distinctly different for FQHCs and
  RHCs, which can affect the patient populations served by each facility type. According to
  federal regulations, FQHCs are required to actively accept and treat Medicare beneficiaries and
  low-income patients (Medicaid and uninsured patients) regardless of their ability to pay. FQHCs
  must use a sliding fee scale with discounts based on patient family size and income in
  accordance with federal poverty guidelines.

  RHCs are not currently required to accept and treat Medicare beneficiaries and low-income
  patients; however, enhanced Medicare and Medicaid reimbursement provides an incentive for
  RHCs to serve these populations. Proposed RHC federal regulations promulgated in December
  2003 allow RHCs to become certified as “essential” providers if the RHC can verify that it is
  serving a large portion of the Medicare, Medicaid and uninsured populations and using a sliding
  fee scale. This "essential" provider status would allow the clinic to retain its RHC status even if
  the area in which the facility is located is reclassified as urban or the area’s HPSA designation is
  lost.


FQHC and RHC Expansion Plan                                                                         3
       Table 1 below is based on a Louisiana Medicaid analysis conducted in August 2004 by Myers
       and Stauffer, a certified public accounting firm contracted by DHH, and 2003 FQHC data
       submitted to the federal Bureau of Primary Health Care’s Uniform Data System. This table
       indicates that a significant portion of the care provided by Louisiana’s RHCs and FQHCs is for
       the Medicaid and uninsured populations. In state fiscal year (SFY) 2003, Medicaid utilization of
       RHCs was estimated at 48 percent, and FQHC Medicaid utilization was estimated at 39 percent.
       Uninsured utilization within FQHCs was estimated at 46 percent. Federal grant revenues for
       Louisiana’s FQHCs were approximately $19,405,973. This grant funding was used, in large
       part, to finance the care of the uninsured. It should also be noted that FQHCs received additional
       federal and state funding for public health services and programs and services for special
       populations (e.g., HIV/AIDs).

       Statewide data on uninsured individuals’ utilization of RHCs is not currently available.
       However, provider-based RHCs reported $1,324,756 in uncompensated care costs in SFY 2003
       indicating that RHCs are providing a significant portion of care to the state’s uninsured
       population.

       Table 1: FQHC/RHC Medicaid Expenditures SFY 2003
          Medicaid            Average               Uncompensated      Total Costs    Total # of   Average       Uninsured     Federal
          Expenditures        Encounter             Care Costs         to the State   Medicaid     Medicaid      Utilization   Grant
          SFY                 Rate SFY              Reimbursed by      SFY 2003       Recipients   Utilization   2003          Revenues
          2003                2003                  Disproportionate                  SFY 2003     RHC –                       2003
                                                    Share Hospital                                 SFY 2002
                                                    payments/ State                                FQHC –
                                                    General Fund                                   SFY 2003
RHCs      $16,323,628         $84.74                *$1,324,756        $17,648,38     39,899       47.54%        Unknown       N/A
                                                                       4
FQHCs     $9,372,990          $106.00               0                  $9,372,990     25,962       39.07%        46%           $19,405,973
       * provider-based rural health clinics only


       Financial Impact of Existing RHCs and FQHCs
       DHH’s Bureau of Primary Care and Rural Health utilizes an economic modeling system,
       IMPLAN, to analyze and quantify the financial and employment impact of the health care sector
       on Louisiana’s parishes. The U.S. Census Bureau estimates that the average number of
       employees within Louisiana’s primary care outpatient clinics is 19.7 with an average salary per
       employee of $26,852. Utilizing the IMPLAN modeling system’s multipliers and the U.S.
       Census Bureau’s employment and payroll averages, it is estimated that Louisiana’s 64 RHC and
       39 FQHC sites employ a total of 2,029 employees and have a total payroll of $54,483,000.
       Therefore, the overall economic and employment impact of Louisiana’s RHCs and FQHCs is
       4,054 positions and $80,471,000 in local revenue.

       PRIMARY CARE IN LOUISIANA

       Primary Health Care Provider Shortages

       Over 85 percent of Louisiana’s parishes are currently designated as whole or partial primary care
       HPSAs, indicating that there are too few primary care physicians available to treat the general,
       low-income or Medicaid populations (Figure B) throughout most of the state.

   FQHC and RHC Expansion Plan                                                                                                       4
                                              Figure B




  Based on data collected to identify and designate HPSAs, it is estimated that Louisiana is in need
  of an additional 143.3 full-time primary care physicians to support the primary care needs of
  Louisiana’s HPSAs (Figure C). This shortage of primary care physicians is directly linked to
  the poor health status prevalent in the majority of Louisiana’s parishes.

  According to the United Health Foundation, Louisiana was 50th in the nation in the 2004
  America’s Health: State Health Rankings. The health status of Louisiana’s parishes provides
  some insight into this national statistic. The federal Bureau of Primary Health Care assesses the
  overall health status of an area through a scoring methodology that takes into account geographic
  barriers, shortage of primary care physicians, percentage of individuals below 200 percent of the
  federal poverty level, percentage of uninsured individuals, unemployment rates and health
  disparity factors such as mortality rates and disease rates (cancer, asthma, diabetes, dental
  disease, obesity, hypertension, substance abuse, etc.). Utilizing this methodology for

FQHC and RHC Expansion Plan                                                                      5
  determining the overall health status of a parish or county, it is estimated that 67 percent (43 of
  64) of Louisiana’s parishes have poor health status. Forty-four percent (19) of the 43 parishes
  with poor health status are considered to be in very poor health.

                                               Figure C




  The poor health status and limited primary care capacity of the state make it imperative for
  Louisiana to invest in and concentrate on expanding the primary care safety net in Louisiana’s
  HPSAs. One way to accomplish this expansion is through the development of additional FQHC
  and RHC sites. This strategy has been employed by many other states in the country and in the
  southern region. For example, states with similar high poverty and uninsured rates, and a high
  proportion of minority populations, have far more FQHCs and RHCs than Louisiana (e.g.,
  Mississippi, Georgia and Texas). Recent research indicates that a lack of these types of
  providers available to serve the medically underserved population can directly impact the health
  status of an area.

  A report published by the George Washington University Medical Center in September 2003
  indicates that states with high FQHC penetration – 20 percent or more of the state’s percentage
  of low-income population is being served by FQHCs – were associated with significant and
  positive reductions in minority health disparities. Unfortunately, this report identified Louisiana
  among seven states with the lowest FQHC penetration in the country (Figure D).



FQHC and RHC Expansion Plan                                                                         6
                                               Figure D




                                                               Source: Center for Health Services Research and
                                                               Policy. George Washington University.



  Although it is difficult to determine the number of primary care sites needed to fulfill the primary
  care shortages of Louisiana’s HPSAs, estimates can be developed based on federal staffing and
  user requirements established by the federal Bureau of Primary Health Care. The federal Bureau
  of Primary Health Care suggests each new rural FQHC applicant have a total of three full-time
  primary care providers for every new FQHC site, with each primary care physician serving 1500
  patients annually. As noted, the total need for primary care in Louisiana’s HPSA is 143.3 full-
  time physicians. Utilizing the federal Bureau of Primary Health Care’s primary care provider
  staffing estimates, 48 (143 total physicians needed \ by three primary care providers per site)
  new primary care sites are needed to meet the primary care demands of Louisiana’s HPSAs. If
  developed, these sites would serve an estimated 214,500 new patients. In order to accomplish
  this level of primary care expansion through FQHC and RHC development, current
  environmental factors must be considered and many local, state and federal barriers must be
  overcome.

  RHC AND FQHC EXPANSION ENVIRONMENT

  President Bush’s Community Health Center Expansion Initiative
  In 2002, President Bush launched a five-year $2.2 billion initiative to expand the nation’s health
  center network. This expansion effort proposes to add 1,200 new and expanded health center
  sites and increase the number of people served annually from 10 million in 2001 to more than 16
  million by 2006. President Bush has requested a $219 million dollar funding increase in the
  2005 budget to serve a total of 16.6 million uninsured residents throughout the nation by
  expanding community health centers.

  President Bush’s substantial commitment to increasing the number of the nation’s health centers
  offers Louisiana an excellent opportunity to address the disproportionate low number of FQHCs
  in the state and potentially reduce the state’s health disparities over the long-term. However,
  FQHC grant funding is highly competitive. Since the President’s initiative began in January
  2002, a total of 4,104 FQHC grant applications have been funded. These applicants were funded
  to open 173 new starts, 237 expansion satellites sites and 278 sites that expanded medical
  capacity. Unfortunately, only five of these grantees were from Louisiana, for a total of nine new
  health center sites – two core sites and seven satellite sites.


FQHC and RHC Expansion Plan                                                                                7
  Our nation also is experiencing a significant increase in the number of migrant and seasonal farm
  workers and their families; underserved homeless populations; underserved public housing
  residents; and underserved school-aged children. In response to this epidemic, the Health
  Resources and Services Administration, through the health center network, has placed a
  reemphasis on funding Section 330 grant applications that include the provision of care to our
  nation’s special populations. Consequently, in the last two Section 330 funding cycles, a majority
  of the grants were awarded to communities that proposed to serve these populations.

  There are four special population centers operating in Louisiana: a school-based health center in
  Greensburg, a health care for the homeless center in New Orleans, a health care for the homeless
  center in Baton Rouge and a public housing primary care center in Monroe.

  Consequently, it is a critical time to direct federal, state and local resources toward supporting
  the creation and sustainability of health centers in Louisiana’s medically underserved areas.
  However, considering the national statistics on FQHC sites that were awarded funding, it is
  important to target our FQHC expansion efforts toward sites that have the highest probability in
  receiving Section 330 grant funding. As noted, satellite sites of existing FQHCs and new FQHC
  sites for special populations have been far more successful in the Section 330 grant funding
  process. Therefore, the prioritization of satellite site expansion and the development of new sites
  for special populations is a critical strategy to employ in order to increase our state’s ability to
  compete at the federal level.

  Considering the competition for federal FQHC grant funding, it is also important to explore the
  opportunities available for the expansion of RHCs that are able and willing to treat the low-
  income and uninsured populations. Although RHCs do not receive federal grant funding for
  caring for the uninsured, a recent 5th Circuit Court of Appeals decision provides reimbursement
  opportunities for the uncompensated care costs of provider-based RHCs.

  Uncompensated Care Reimbursement for Provider-based Rural Health Clinics

  Louisiana’s Dispute with the U.S. Centers for Medicare and Medicaid Services
  In 1997, the Louisiana Legislature enacted the Rural Hospital Preservation Act (LSA-RS
  40:1300.141 et. seq. (2001)). This law recognizes the critical role that small rural hospitals
  provide in the state’s health care delivery system and directs DHH to take certain steps to foster
  their survival, including “maximize[ing] existing disproportionate share funding to extent
  allowed by federal law” (La.R.S. 40:1300.144 (2001)). Because small rural hospitals bear
  significant costs for the important services they provide to low-income uninsured patients
  through their provider-based RHCs, in 1998, at the request of the Louisiana Rural Hospital
  Coalition, the trade organization of Louisiana’s small rural hospitals, state officials sought
  guidance from the federal government on how these costs could be taken into account as part of
  the rural hospital’s disproportionate share payment. In early discussions with the federal
  regulators, it appeared that a separately licensed rural health clinic could not be included in a
  hospital’s disproportionate share hospital payment calculation.

  The Louisiana Rural Hospital Coalition and DHH enlisted the assistance of U.S. Senators John
  Breaux and Mary Landrieu, who corresponded with U.S. Health and Human Services’ Secretary

FQHC and RHC Expansion Plan                                                                        8
  Donna Shalala, requesting clarification as to when RHC costs could be taken into account for
  Medicaid Disproportionate Share Hospital Program purposes. In response, Secretary Shalala
  indicated that the state had discretion to license or formally approve a hospital-based RHC as a
  hospital outpatient clinic for the purposes of the Medicaid Program. At the request of the
  Louisiana Rural Hospital Coalition, the Legislature enacted an amendment to the state licensing
  law permitting hospital-based RHCs to be licensed as part of a hospital, if and when DHH
  received a determination from federal regulators that such rural RHCs could be considered
  outpatient hospital services and eligible for uncompensated care cost reimbursement under the
  Medicaid Disproportionate Share Hospital Program.

  With the state law amended as a result of the Shalala correspondence, the state submitted a state
  plan amendment (SPA-01-03) implementing this new licensing and disproportionate share
  hospital reimbursement system. Although Secretary Shalala had suggested this statutory
  approach, the state plan amendment was rejected by the federal agency on August 15, 2001. In
  rejecting the plan, the federal regulators stated that the cost associated with provider-based RHCs
  could not be included in the disproportionate share hospital payment calculation. DHH’s
  reconsideration request was rejected and an administrative hearing was conducted on January 30,
  2002, in Dallas, Texas. During the hearing, DHH and the Rural Hospital Coalition offered
  substantial documentation and testimonial evidence supporting SPA-01-03 and legal arguments
  calling for the reversal of the state plan rejection. On June 7, 2002, the Hearing Officer issued
  the decision recommending that the disapproval be upheld, and on August 20, 2002, the U.S.
  Centers for Medicare and Medicaid Services’ Administrator, Tom Scully, adopted the Hearing
  Officer’s recommendation and upheld the disapproval. DHH and the Louisiana Rural Hospital
  Coalition appealed that decision to the federal court and argued the case before a panel of the
  United States 5th Circuit Court of Appeals in August 2003 in New Orleans, Louisiana. On
  September 22, 2003, a unanimous panel of the 5th Circuit reversed the U.S. Centers for Medicare
  and Medicaid Services’ decision and approved SPA-01-03. The federal agency neither sought a
  rehearing in the Court of Appeals or relief from the United States Supreme Court.

  Louisiana’s Unique Opportunity Under SPA-01-03
  The Medicaid Disproportionate Share Hospital Program takes into account the situation of
  hospitals, which serve a disproportionate share of low-income patients with special needs [42
  U.S.C. §1396a(a)(13)(A)(iv); §1396r-4(a)(i)]. Section 1923(g) of the Social Security Act
  authorizes disproportionate share hospital payments for “hospital services” without limitation [42
  U.S.C. §1396r-4(g)]. Payments may cover inpatient and outpatient hospitals services
  [H.R.REP.No.103-213 (Conf.Rep) at 835(1993) reprinted in 1993 U.S.C.C.A.N. 1088,1524].

  Although the federal agency has never defined “hospital services,” the federal appellate court
  took the view that when RHCs are licensed as part of a small rural hospital and satisfy the
  provider-based criteria, they fall comfortably within the definition of hospital outpatient services.
  Since rural health services include professional services of physicians and mid-level practitioners
  and because SPA-01-03 now permits Medicaid disproportionate share hospital reimbursement
  for the uncompensated care costs experienced by provider-based RHCs, licensed as part of a
  small rural hospital, Louisiana has another strategy for defraying the professional physician and
  mid-level practitioner expenses incurred in treating the uninsured. In essence, the state has a
  substantial federal subsidy for these professional services to the uninsured.

FQHC and RHC Expansion Plan                                                                         9
  There are no similar examples in the Medicaid Disproportionate Share Hospital Program through
  which hospitals can receive reimbursement associated with the professional services incurred in
  treating the poor.

  Last year, in recognition of the federal appellate court victory and with the opportunity to support
  this initiative, the Louisiana Legislature appropriated funds to defray the uncompensated costs
  experienced by small rural hospitals incurred in this service delivery model. The Louisiana
  Legislature also appropriated additional funding to reimburse the potential increase in Medicaid
  costs associated with expected growth of small rural hospital provider-based RHCs. While there
  has been some increase in the number of RHCs, unfortunately Louisiana’s small rural hospitals
  still face substantial barriers in establishing this uniquely reimbursed service delivery model.

  Existing Support for the Expansion of RHCs and FQHCs

  Many state organizations have partnered together and worked extensively to support the
  expansion of primary health care services in Louisiana’s underserved areas. These agencies
  include but are not limited to the Louisiana Primary Care Association, DHH, the Louisiana Rural
  Hospital Coalition, the Louisiana Public Health Institute and the Louisiana Rural Health
  Association.

  DHH, in partnership with all of these organizations, recently increased its focus on improving
  access to primary and preventive health care services in HPSAs. Several programs have been
  implemented by DHH to provide communities with technical support, funding and tools to
  develop appropriate and effective primary health care services, including RHCs and FQHCs.
  Specifically, DHH’s Bureau of Primary Care and Rural Health provides community-based
  technical support for the development of new and expanded primary health care services. The
  Bureau of Primary Care and Rural Health implemented its Health Systems Development
  Program in July 2003 to provide services that are necessary for the development of new primary
  health care services. The health systems development staff assists communities with health
  needs assessments and strategic planning; health sector economic impact studies; enhanced
  demographic scans, mapping services and health service market analyses; feasibility studies;
  practice management services; grant proposal development consultation; and resource
  development technical support.

  In addition, DHH’s Community-based and Rural Health Program grants provide $1 million in
  funding for communities to maintain, enhance or expand access to community-based primary
  and preventive health care services. As a result, DHH supported the development and
  submission of eight FQHC federal grant applications in the federal fiscal year 2003 and six
  submissions in 2004.

  The Louisiana Primary Care Association, the trade association for FQHCs, has also invested a
  significant amount of resources into assisting its FQHC members with their expansion and
  development efforts. The Primary Care Association currently provides its members with
  intensive Section 330 grant writing technical assistance and training, community development



FQHC and RHC Expansion Plan                                                                        10
  support, practice management, quality improvement assistance and provider recruitment and
  retention services.

  The Louisiana Rural Hospital Coalition and the Louisiana Rural Health Association provide
  substantial support for the state’s RHCs. The Louisiana Rural Hospital Coalition provides its
  members’ provider-based RHCs with legal, financial and legislative advocacy support, while the
  Louisiana Rural Health Association works to educate all of its members, including freestanding
  and provider-based RHCs, through valuable educational opportunities and training to improve
  the viability of these RHC practices.

  The Louisiana Public Health Institute, a non-profit organization committed to a healthier
  Louisiana through public/private partnerships, through its Center for Community Capacity,
  provides technical assistance to communities on effective processes for community organizing
  around access to health care. This assistance supports both strategies for clinical care capacity
  development and linkages of primary care to other health care and social services for more
  effective and efficient communities systems of care.

  RHC AND FQHC EXPANSION PLANS

  Federally Qualified Health Centers

  Louisiana now has an opportunity to invest in a system that has demonstrated potential to greatly
  improve the way health care is delivered to the uninsured and medically underserved in this state.
  The Louisiana Primary Care Association’s current five-year statewide strategic plan indicates
  that Louisiana’s health centers plan to apply for federal grant funding to support 14 new access
  points and expanded capacity grants, raising the total number of FQHC sites to 53. Most
  importantly, the statewide strategic plan would provide care to an additional 168,347 including
  39,025 unduplicated uninsured patients. In addition, eight Louisiana FQHC applications were
  submitted to the federal government in December 2004. Grantees from this cycle will
  announced in the summer of 2005.

  Rural Health Clinics

  DHH currently certifies eligibility for RHCs. Based on this data, 32 RHC certification requests
  have been submitted and approved; however, these sites have not currently been licensed as
  RHCs. Therefore, it is reasonable to expect that a large portion of these 32 RHCs are in
  development.

  Total Projections

  Figure E below represents existing and planned FQHCs and RHCs in the state based on RHC
  certification data and the Louisiana Primary Care Association’s expansion plan. As noted, there
  are a total of 54 new FQHC and RHC sites planned or anticipated over the next five years.
  The number of new sites planned directly corresponds to the state’s need for an additional 48
  new primary care sites in Louisiana HPSAs. If successful in these expansion plans, more than
  200,000 additional patients will have increased access to primary health care services.

FQHC and RHC Expansion Plan                                                                           11
                                              Figure E




  RECOMMENDATIONS FOR ALLEVIATING BARRIERS TO EXPANDING RHCS
  AND FQHCS

  The development and expansion recommendations outlined here will be implemented in a way
  that is sensitive to the health care needs of residents, while considering the economic impact to
  existing providers. The budget recommendations within the plan also must be considered within
  the context a major budget shortfall projected for the 2006 state fiscal year.

  Capital Resources
     • Increase the availability of capital resources for FQHC and RHC development and
         improvements through a $1 million state appropriation to the Louisiana Rural Loan
         Fund. The Loan Fund provides funds for rural communities through competitive and
         flexible finance plans. The program is designed to assist health care projects in rural
         communities with capital investment, technical assistance and resources to improve local
         health care access. The program assists applicants in preparing business plans, providing
         compensating deposits to help reduce interest rates on conventional loans and direct loans
         from the program’s venture capital funds.


FQHC and RHC Expansion Plan                                                                      12
     •   Form a taskforce to review potential sources of affordable capital, available loan funds,
         bond initiatives and loan guarantees.

     •   Utilize existing community capital resources and infrastructure when expanding and
         developing RHCs and FQHCs. This includes partnering with local parish health units,
         the Louisiana State University Health Sciences Center’s public hospital system, small
         rural hospitals, physician clinics and other existing primary care sites and resources.

  Advocacy
     • Continue the Administrative Branch’s commitment to and advocacy for expanding
        Louisiana’s FQHCs and RHCs.

     •   Increase the Louisiana Congressional Delegation, the Louisiana State Legislature and
         other advocacy organizations’ awareness and understanding of FQHCs and RHCs in
         order to improve their collective ability to advocate for FQHC and RHC expansion.

  State Policy
  • Encourage all safety net providers in the state to implement a sliding fee scale for all
      uninsured patients (currently, all providers are permitted and encouraged to do so by state
      law).

  State Funding
      • Expand DHH’s Community-based and Rural Health Program by $1 million to support the
         development of new FQHC and RHC sites.

             o Allocate $500,000 of this increase in grant funding for the expansion of existing
               FQHCs that meet the following criteria:
                      Positive financial position based on two to three years of financial audits;
                      In existence for two or more years;
                      A member of the Louisiana Primary Care Association that participated in
                      the Statewide Strategic Plan;
                      Prepared to open a new site within eight months with existing building or
                      open within 12 months with new construction; and
                      Area’s low-income and uninsured population can support the expansion
                      site.

             o Allocate the remaining $500,000 of the increase for the development of RHCs
               that agree to treat a significant portion of the uninsured population.

     •   Provide state funding to cover a portion of the costs associated with treating the
         uninsured populations within FQHCs and RHCs.

  Local Technical Support and Education
     • Prioritize and foster the development of FQHC satellite sites and special population
         health centers in order to increase Louisiana’s ability to compete in the federal Section
         330 grant process.
FQHC and RHC Expansion Plan                                                                          13
     •   Continue to engage and strengthen communities’ ability to develop appropriate and
         effective FQHCs and RHCs by increasing technical support available through DHH, the
         Louisiana Primary Care Association, the Louisiana Rural Hospital Coalition, the
         Louisiana Rural Health Association and the Louisiana Public Health Institute. Enhanced
         technical support services may include:
                 Community-based need assessments and strategic planning,
                 Facility planning,
                 Resource development support and
                 Grant writing training and technical assistance.

     •   Increase local and state officials and leaders’ understanding of the unmet needs of local
         residents and the benefits that FQHCs and RHCs provide.

  Reimbursement
     • Continue discussions between Louisiana Medicaid, the Primary Care Association and the
        Rural Hospital Coalition regarding Prospective Payment System rates for new FQHC and
        RHC sites.

     •   Continue building a relationship and better understanding between Louisiana’s FQHCs,
         RHCs and Medicaid agency.

     •   Expand existing Medicaid Disproportionate Share Hospital Program payment
         methodology to allow for reimbursement of uncompensated costs in year one of provider-
         based RHC operation.

     •   Increase funding to reimburse 100 percent of provider-based RHC’s uncompensated care
         costs.

  Workforce Development
    • Address health professional shortages in underserved areas by continuing to promote the
        use of the State Loan Repayment Program, federal scholarship and loan repayment
        opportunities available through the National Health Service Corps, Med Job Louisiana
        (the state’s primary care recruitment program) and the J-I Visa Waiver Program.

     •   Work closely with primary care residency programs in Louisiana to foster the
         development and placement of primary care providers that are willing to serve in
         Louisiana’s FQHCs and RHCs.

  CONCLUSION

  The need for expanded primary and preventive health care service capacity in Louisiana has been
  a long-standing issue. For a number of years, progress has been made, and over time key,
  organizations in the state have come to share a common vision for expanding primary care
  services for uninsured and low-income populations.



FQHC and RHC Expansion Plan                                                                          14
  As a result of Act 36, these organizations now have an opportunity to capitalize on collective
  resources and energy. Additionally, the current environment offers many opportunities for
  capitalizing on the benefits of the FQHC and RHC models for primary care service delivery.
  These primary care delivery models have been very successful in states throughout the country in
  addressing the needs of underserved and uninsured populations.

  FQHCs and RHCs are financially viable solutions to the health care problems in Louisiana
  because they have a positive economic impact on communities and provide options for
  subsidizing care for underserved and low-income populations. They positively affect local
  economies by creating jobs and revenue. They are also viable options for health care systems
  because they are eligible for enhanced reimbursement rates, federal grant monies and
  disproportionate share hospital payments for uncompensated care costs. Most importantly they
  positively affect the health status of their service populations (underserved and uninsured) by
  reducing health disparities.

  Currently, 20 percent of Louisiana residents are uninsured compared to the national average of
  15 percent. Projections indicate that the rate of uninsured residents in Louisiana will continue to
  rise. Without concerted intervention, the primary care needs for the uninsured and low-income
  populations will increase. Under such circumstances, the health status of Louisiana’s residents
  will worsen, thus the cost of providing health care will escalate.

  A unified effort by and commitment from all the statewide partners involved in this process as
  well as state and local governments, legislators and community leaders is needed to effectively
  reform Louisiana’s health care system. Though expansion efforts will continue whether the
  environment is friendly or hostile, state support of expansion efforts will result in an
  environment more amenable to rapid and successful expansion of both FQHCs and RHCs.




FQHC and RHC Expansion Plan                                                                         15
                              Act 36 Committee Membership List


  Eric Baumgartner                        Louisiana Public Health Institute

  Ben Bearden                             DHH/Bureau of Health Services Financing

  Marsha Broussard                        Louisiana State University Health Sciences Center

  Miles Bruder                            Governor’s Office/Health Care Reform Analyst

  Roderick Campbell                       Iberia Comprehensive Community Health Center

  Jonathan Chapman                        DHH/Bureau of Primary Care and Rural Health

  Marcia Daigle                           Louisiana State University Health Sciences Center

  Gerrelda Davis                          DHH/Bureau of Primary Care and Rural Health

  Jennifer Fabre                          Teche Action Clinic

  Pat Faxon                               DHH/Bureau of Media and Communications

  Randolph Fisher                         Fisher Consulting

  Trudy Horton                            DHH/Bureau of Media and Communications

  Ginger Hunt                             Primary Care Providers for a Healthy Feliciana

  Tracie Ingram                           DHH/Bureau of Primary Care and Rural Health

  Senator Lydia P. Jackson                Louisiana State Senate

  Brian Jakes                             Southeast Louisiana Area Health Education Center

  Sam Jones                               Governor’s Office/Office of Community Programs

  Mark Keiser                             St. Charles Community Health Center

  Dodie LaMott                            Southwest Louisiana Primary Health Care

  Ruth Landis                             Louisiana State University Health Sciences Center

  Rhonda Litt                             Louisiana Primary Care Association

  John Matessino                          Louisiana Hospital Association

  Linda Matessino                         Innis Community Health Center

FQHC and RHC Expansion Plan                                                                16
                                         Act 36 Committee Membership List



  Donna Newchurch                                          Louisiana Rural Health Association

  Kristy Nichols                                           DHH/Bureau of Primary Care and Rural Health

  Carla B. Pellerin                                        Community Health Systems of Louisiana

  Rene Repp                                                DHH/Bureau of Primary Care and Rural Health

  Joel Sellers                                             DHH/Bureau of Primary Care and Rural Health

  Maggie Shipman                                           DHH/Bureau of Primary Care and Rural Health

  Forest Smith                                             Louisiana Primary Care Association

  Jack Stolier                                             Louisiana Rural Hospital Coalition

  Erik Taylor                                              Community Health Center in Lake Charles

  Lee Tynes, M.D.                                          Jefferson Parish Human Services Authority

  Linda Welch                                              Louisiana Rural Hospital Coalition

  Frank Wesley                                             Southwest Louisiana Center for Health Services

  Willie White, III                                        David Raines Community Health Center




This public document was printed at a cost of approximately $375.00. In this printing, 50 copies were produced. This document was
produced by Department of Health and Hospitals/Bureau of Primary Care and Rural Health, P.O. Box 2870, Baton Rouge, LA 70821-2870.
It was printed in accordance with standards for printing by State Agencies established pursuant to R.S. 43:31.

BPCRH 01/2005

FQHC and RHC Expansion Plan                                                                                                17

								
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