Reproduced with permission from BNA’s Health Care Daily Report, 140 HCDR (July 24, 2009). Copyright 2009 by The Bureau of National Affairs, Inc. (800-372-1033)

House Reform Bill Could More Than Double Capacity of Health Care Centers, Report Says

The George Washington University (GWU) July 23 released a report on the effects of the House reform bill on health centers, saying it could more than double their capacity.

H.R. 3200, the proposed America’s Affordable Health Choices Act of 2009, would expand Medicaid coverage, subsidize insurance through a national exchange program, and implement both individual and employer insurance mandates.

The report, Estimating the Effects of Health Reform on Health Centers’ Capacity to Expand to New Medically Underserved Communities and Populations, attributes the increase not only to the proposed expansion of Medicaid, but also to increased funds appropriated in the bill.

H.R. 3200 would provide health centers with a funding increase of $1 billion in 2010, increasing to $4.4 billion by 2015 and $6.4 billion by 2019. These funding increases would come on top of the current appropriations level of $2.2 billion per year.

The funds coordinate with the expected number of patients health care centers would serve if the bill is passed. According to the report, health centers provided primary care to a total of 16.1 million people in 2007, and GWU estimates that number will double to 35.6 million in 2013 and increase to 39 million in 2019. The number of health care center sites also would likely double from 6,700 sites in 2007 to accommodate the increase in patients, the report said.

‘Conservative’ Estimates

GWU acknowledged its estimates were “conservative” compared with conclusions of other reports, including a study recently released by the National Association of Community Health Centers (NACHC). More potential patients could be served if other streams of revenue increase faster, it said.

Federally qualified community health centers (FQHCs) use federal funding to provide primary care to low-income individuals regardless of the patient’s ability to pay. In 2007, 39 percent of patients served at FQHCs were uninsured, and 35 percent were covered by Medicaid. The report said 90 percent of all health center patients have family incomes below 200 percent of the federal poverty line.

Because health centers provide care regardless of payment, there are often gaps in payments. The report found the average gap in payments from patients with the following insurance:

• Medicaid—14.9 percent;

• Medicare—28 percent;

• Other public insurance—34.4 percent;

• Private insurance—42.5 percent; and

• Self-pay/uninsured—77.6 percent.

Health centers make up for these gaps through federal, state, local and private grants, contracts, and contributions. Health reform also would reduce drastically the number of uninsured patients cared for at health centers, which would in turn reduce the overall payment gap, allowing health centers to allocate that money toward other services and resources, the report said.

Prospective Payments

Currently, Medicare and Medicaid also make cost-related prospective payments (PPS) to health centers to ensure the cost of treating their patients is mostly covered. Since private insurance payments fall far below a health center’s reasonable operating cost, GWU recommended that plans that sell through the proposed insurance exchange pay the PPS rate.

GWU said that if this issue is not addressed in the health reform bill, exchange plans will continue to underpay health centers by 43 percent.

GWU based its analysis on administrative data about FQHCs reported in the annual Uniform Data System (UDS) reports and the Congressional Budget Office’s preliminary analysis of the draft House proposal (137 HCDR, 7/21/09).

GWU projected that the cost per patient at health centers would grow at an average rate of 4.3 percent per year, based on the past five years of data. It also assumed that the average total costs per patient by insurance type remained proportionate to their 2007 levels.