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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