Question

Case 1: Primary Care Financial Management

            The Health Center Program provides grants to nonprofit private and public entities that serve designated medically underserved populations and areas and vulnerable populations of migrant and seasonal farmworkers, homeless individuals, and public housing residents. These grants are commonly referred to as “section 330 grants.”

Under the American Recovery and Reinvestment Act of 2009, P.L. No. 111-5 (Recovery Act), enacted February 17, 2009, HRSA received $2.5 billion, $2 billion of which was to expand the Health Center Program by serving more patients, stimulating new jobs, and meeting the expected increase in demand for primary health care services among the Nation’s uninsured and underserved populations. HRSA awarded a number of grants using Recovery Act funding in support of the Health Center Program, including Health Information Technology Implementation (HIT), Capital Improvement Program (CIP), New Access Point (NAP), and Increased Demand for Services (IDS) grants.

Neighborhood Care, is a nonprofit organization that operates community health centers in San Antonio, Texas, and the surrounding area. Neighborhood Care provides medical, dental, and mental health services and is funded primarily by patient service revenues and Federal grants. During fiscal years 2010 and 2011 (February 1, 2009, through January 31, 2011), Neighborhood Care received approximately $9.8 million (Federal share) in section 330 grant funding to supplement its health center operations. For project periods ranging from March 2009 through May 2012, HRSA awarded Neighborhood Care funding for five Recovery Act grants totaling $7,518,980: $4,024,697 under two HIT grants, $1,447,420 under a CIP grant, $1,300,000 under an NAP grant, and $746,863 under an IDS grant.

OBJECTIVES

Our objectives were to determine whether:

(1) The costs that Neighborhood Care claimed were allowable and

(2) Neighborhood Care had adequate controls over its financial management system.

SUMMARY OF FINDINGS

Of the $16,020,116 that we reviewed, $3,417,461 was allowable. We could not determine whether salary and fringe benefit costs totaling $12,543,068 that Neighborhood Care claimed were allowable because Neighborhood Care did not maintain personnel activity reports for employees who worked on its section 330, HIT, NAP, and IDS grants and because the accounting records for the section 330 and NAP grants did not separate expenditures related to the Federal grants from those related to other funding sources. Neighborhood Care recorded additional potentially unallowable costs of $50,240 for compensation increases and $9,347 for interest expense.

Neighborhood Care did not have adequate controls over its financial management system. Specifically, Neighborhood Care did not draw down funds based on the cash needs for each project and did not prepare and complete bank statement reconciliations in a timely manner. Also, Neighborhood Care did not have adequate procurement procedures to ensure that it obtained reasonable pricing when procuring goods and services.

QUESTIONS

The Health Center Program provides grants to health centers. What is a health center and its purpose? Who can receive services at a health center?

As a designated health center, patients cannot be denied care regardless of their ability to pay. How are fees for services determined at a health center?

Provide 2 recommendations that Neighborhood Care should implement to tighten up the financial management of the practice?

Answer 1

A health center is a public or private entity that provides comprehensive, high-quality primary health care services. It is a non-profit organization. The health center overcomes geographic, cultural, linguistic and economic barriers and delivers coordinated and comprehensive primary health care services. This care thus results in a reduction of health disparities. With continuous and efficient health management and education a health center extends quality health care to the under privileged.

A health center works with the following principles:

1. To provide high quality health services to the under privileged and deprived.
2. To provide comprehensive health services
3. To ensure that the health needs are met by not only offering health care services but also transportation, health education and all supportive pre and post medical care
4. To maintain an affordable rate for the services rendered and offer the services free of cost where required.
5. To develop systems of integrated health care that are patient oriented or patient centred.

Health care services are provided to:

• Designated medically underserved populations  
• Vulnerable populations of migrants
• Vulnerable populations of agricultural workers
• Homeless individuals and families
• Public housing residents.
• Nation's veterans

It also provides

1. Access to pharmacy services
2. Substance abuse disorder services
3. Oral health services
4. Psychiatric and mental health services  

These services are offered in areas where cultural, economic and geographic conditions restrict access to affordable health care.