Transforming Health Care Through Evidence and Collaboration
Transforming Health Care Through Evidence and Collaboration
HomeCategoriesThe Health Care Safety Net: Community Health Centers' Vital Role

The Health Care Safety Net: Community Health Centers' Vital Role

July 2016
Peter Shin, PhD, MPH, Associate Professor of Health Policy and Management, George Washington University

Despite substantial gains in insurance coverage linked to the Affordable Care Act (ACA), 9.1 percent of U.S. residents—or nearly 29 million people—remain uninsured.1 At the same time, rising out-of-pocket health expenses are limiting access and imposing financial hardship on increasing numbers of people who are insured, especially those at lower income levels. Many of these people are heavily reliant on the health care safety net and, in particular, on the care provided by the nationwide network of non-profit community health centers (CHCs).

In this essay, I describe the current status of CHCs and the post-ACA environment in which they are operating. The evidence indicates that even as we continue to expand coverage and improve care delivery under the ACA, strengthening the health care safety net by supporting CHCs must remain a priority.

Peter Shin
Peter Shin
What Are CHCs?

First launched in the mid-1960s, CHCs’ mission is to provide affordable care for medically underserved and low-income populations in both urban and rural communities. With a history of bipartisan support, the program has grown to over 1,300 health centers serving 24 million patients at over 9,000 service delivery sites.2

CHCs must accept all patients, regardless of insurance status or ability to pay, and they use multidisciplinary care teams to provide a comprehensive set of services, including dental, vision, behavioral health and pharmacy services as well as enabling services such as transportation and translation that are not typically covered by insurance. They are also uniquely staffed to help people with low health literacy, and most have online technology necessary for Medicaid and health insurance exchange enrollment. In 2014, 92 percent of CHC patients had incomes below 200 percent of the federal poverty level and 71 percent were living below the poverty line; 28 percent were uninsured.3

CHCs rely on a diverse mix of funding streams to cover their costs, including enhanced reimbursement from Medicaid, Medicare and private insurers; patient payments based on income-related fees; competitively-awarded federal grants; and other grants and contracts from state, local and private sources. In FY2015, 43 percent of all CHC revenue was from Medicaid and CHIP. Federal grants accounted for 22 percent of revenue and Medicare and private insurance payments added another 16 percent, while direct payments from patients constituted only 5 percent of CHCs’ revenue.4

Studies consistently show that CHCs improve the health status of communities and patients. Importantly, they have also been linked to costs savings through (a) reduced use of emergency rooms; (b) fewer preventable hospitalizations; (c) improved access to primary and prenatal care; (d) enhanced preventive and chronic care management; (e) fewer unnecessary tests; and (f) the more prevalent use of less expensive providers.5

CHCs and the Affordable Care Act

The ACA supported CHCs in several ways, most notably by providing $11 billion in new mandatory funding over five years to increase the number and capacity of CHCs. In 2015, Congress extended this funding through 2017. The ACA also enhanced Medicare reimbursement for CHCs by requiring a new payment system better reflecting their costs of care.6

The ACA’s coverage expansions through Medicaid and private insurance should help CHCs’ by increasing revenue from insured patients. Past experience leads us to expect these new resources will lead to expansions in CHC capacity and services.7

At the same time, the higher patient demand arising from expanded insurance coverage means CHCs—many of which are already straining under workforce shortages—will need to recruit additional staff. To help on that front, the ACA appropriated $1.5 billion over five years for the National Health Service Corps plus $230 million over the same period to support graduate medical education in CHCs and other community-based settings (both streams subsequently extended through 2017). These avenues are proven ways to address CHC staffing challenges.8

Lastly, the law designates CHCs as a type of essential community provider and requires private plans sold in the exchanges to offer a contract to at least one CHC in every county in their service area where a CHC is present. Plans must pay at least the enhanced Medicaid rates to these facilities, and negotiated rates could be higher.

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