The Impact of Federal Stimulus Funds C A L I FOR N I A on Community Health Centers in California H EALTH C ARE F OU NDATION Introduction federal and state levels, and communicate frequently California’s community health centers are critical with California officials, as some of the funding will components of the health care safety net, providing go directly to the state for disbursement. local, comprehensive primary care services in Issue Brief medically underserved areas regardless of patients’ This issue brief summarizes the many funding ability to pay. Like many entities that focus on opportunities in ARRA that could help bolster and the underserved, the 600-plus federally qualified improve California’s community health centers health centers (FQHCs), FQHC look-alikes,1 and during an especially onerous recession. (See the nonprofit centers in the state can be particularly Appendix for a snapshot.) hard-hit during an economic downturn by a combination of less available funding and more Funds for FQHCs people seeking services. The economic downturn has placed a heavier burden on community health centers that, The American Recovery and Reinvestment Act given their unpredictable funding streams, of 2009 (ARRA), the recently enacted federal were already struggling to deliver health care to stimulus package, recognizes community health underserved populations. Some are seeing a 10 centers’ crucial role. It allocates significant percent to 50 percent increase in the number funds for all types of community health centers, of uninsured patients they serve.2 In response, including $2 billion specifically for FQHCs and ARRA appropriates $2 billion in grant funding community health center-controlled networks. for FQHCs and community health center- This funding will help meet a variety of needs at controlled networks (support and collaboration community health centers—new sites and services, systems) in FY2009 and FY2010. Of that amount, new and improved infrastructure, adoption of $500 million is for new sites and services, and electronic health records (EHRs) and other health $1.5 billion is for infrastructure development. information technology, telehealth and broadband, Infrastructure costs have traditionally have been training of primary care professionals, Medicaid ineligible for federal funding. coverage assistance, and more. New Sites and Services Although some funding opportunities in ARRA In March 2009, the U.S. Department of Health have expired, others are forthcoming; the federal and Human Services (HHS) awarded 126 ARRA government has yet to announce funding amounts, grants totaling $155 million to support new eligibility, and project specifications. The time FQHCs and new sites at existing FQHCs. In between the announcement of a program and California, $15.6 million of that amount will awarding of funds is often very short. Therefore, support six new FQHCs and six new sites at to meet application deadlines, community health existing FQHCs to provide care to an additional J uly centers should diligently monitor events at both the 80,890 patients.3,4 2009 Also in March 2009, HHS awarded 1,128 ARRA grants Facility Investments totaling $338 million to expand services at FQHCs and This competitive Total: $515 million enable them to serve more patients. In California, 118 funding is for major Project period: FY2010–FY2011 FQHCs received $48.1 million.5 Maximum allocations capital improvements at Application deadline: August 6, 2009 were based on patient information the health centers FQHCs, with minimum Award date: FY2010 (date TBD) submitted in their 2008 Uniform Data System reports; and maximum awards each was eligible for a base amount of $100,000 plus $6 of $750,000 and per insured patient and $19 per uninsured patient. $12 million. Eligible projects, which should address immediate and pressing needs, must involve either: Infrastructure Funding n Alteration/renovation to modernize, improve, and/or The $1.5 billion in ARRA funds targeted to FQHC change the interior arrangements or other physical infrastructure will be awarded in three categories: capital characteristics of an existing facility, or to install improvements, health information technology (IT)/ equipment, without increasing total square footage; or networks, and facility investments.6 n Construction—permanently affixing a structure, such as a modular unit or prefabricated building, to real Capital Improvements property, or adding a new structure to an existing site, Maximum allocations were based on patient information thereby increasing the facility’s total square footage. the health centers submitted in their Total: $850 million Project period: July 1, 2009– USDA Loans and Grants 2008 Uniform Data June 30, 2011 Community health centers are often the only health care System reports; each Application deadline: providers in remote rural areas. ARRA allocates $1.2 was eligible for a base June 2, 2009 billion to the U.S. Department of Agriculture (USDA) amount of $250,000 Award date: July 1, 2009 to support its Community Facilities Loans and Grants plus $35 per patient. Program, which pays for the construction, enlargement, Funds must support or improvement of essential rural community facilities, construction, renovation and equipment, and health including community health centers.7 Eligible entities IT purchases. In addition, grantees must demonstrate include municipalities, counties, special-purpose improvements in access to health services for the districts (such as health or water districts), nonprofit underserved and create health-center and construction- organizations, and tribal governments serving a rural related jobs. area—any city, town, or unincorporated area with a population of 20,000 or less.8 USDA will process Health IT Total: ~$125 million applications on a rolling basis until the funds are Systems/Networks Project period: FY2009–FY2010 depleted or until a date in 2010 (to be determined).9 This funding is Application deadline: FY2009 for FQHCs and (date TBD) Award date: FY2009 Health IT Funding Under HITECH health center- (date TBD) The Health Information Technology for Economic and controlled networks Clinical Health Act (HITECH) in ARRA authorizes an in the form of health estimated $48 billion in health IT funding to be dispersed center network/supplemental grants, 2009 health IT over six years. About $46 billion of that amount will be competitions, other health IT adoption support, and new in the form of Medicaid and Medicare incentives to adopt EHR competitions. EHRs.10 The remaining $2 billion is for programs such as EHR planning and implementation grants; health IT   |  California HealthCare Foundation Figure 1. Federal Stimulus Funding Streams PROGRAM DISTRIBUTION FUNDING USE FUNDING RECIPIENTS/ AGENCY BENEFICIARIES FQHC grantees and FQHC-specific New sites and services, HHS health center-controlled funding infrastructure development networks Community health centers, rural USDA loan and Capital improvements community facilities USDA grant funding Requires “Meaningful” use of EHR Acute care hospitals, children’s hospitals Entitlement Funds: $46B Medicare payment Medicare carriers CMS incentives and contractors Physicians State Medicaid agencies Medicaid payment Nurse practitioners, incentives CMS Requires 30 percent share of midwives Medicaid (except for pediatricians and children’s hospitals) Federally qualified health centers Planning grants Designated state entity HITECH Health information exchange ONC planning and development Implementation grants • Nonprofits • Consultants Loan funds from states State • Vendors EHR adoption government ONC Loans loan program Appropriated Funds: $2B-$3B Loan funds for Indian tribes Indian tribes Provider HHS Health IT research center organizations Health IT (agency extension program TBD) Regional extension centers Least-advantaged • Nonprofits providers Workforce EHR and health informatics • Consultants HHS, NSF training grants in medical school curricula • Vendors Educational institutions Broadband and Service expansion FCC, USDA Community health telehealth funding and other purposes centers, other entities Title VII, VIII, and NHSC programs Educational institutions, Primary care Scholarships and loan HRSA students, primary care workforce training repayment programs physicians Medicaid coverage Vulnerable individuals, CMS State Medicaid agencies state government assistance Taxpayers making qualified investments, New markets Treasury Incentives for investment community health tax credits Department in communities served by centers and similar community health centers entities Eligible individuals, CDC community health HHS and Immunization and community Public health funding CDC prevention and wellness centers, states, other providers of public health services Source: Manatt Health Solutions. The Impact of Federal Stimulus Funds on Community Health Centers in California   |  regional extension centers, which will provide information data. The Centers for Medicare & Medicaid Services and technical assistance to clinicians; workforce (CMS), which will define meaningful use, expects to technology training; a new EHR loan fund; and new issue a proposed rule in late 2009.12 “Certified EHR” technology research and development.11 refers to systems that can perform particular minimum functions, including the ability to capture demographic Certain programs, such as the EHR-adoption incentives and clinical information about patients, provide clinical and EHR loan fund, would directly benefit eligible decision support, enable physician order entry, capture and community health centers. Centers would likely benefit query quality-related information, and exchange health indirectly from HITECH-supported initiatives that information with other sources. The EHR certification enhance the health care industry as a whole. Figure 1 process and certifying authorities are yet to be determined. shows the HITECH and other funding streams. EHR adoption incentives under Medicaid (Medi-Cal in EHR Adoption Incentives California) will be available to hospitals, physicians who The $46 billion in EHR adoption incentives will be treat adults, pediatricians, dentists, nurse practitioners, available to health care providers who can demonstrate nurse midwives, physician assistants, FQHCs, and “meaningful use” of a “certified EHR.” Under ARRA, rural clinics that provide a certain percentage of care meaningful use includes e-prescribing, which does not to Medicaid patients and, in the case of FQHCs and apply to hospitals; electronic health information exchange rural clinics, to uninsured patients. Third-party entities to improve the quality of care, such as better care designated by the state Medicaid agency promoting the coordination; and use of EHRs to report clinical quality adoption of certified EHRs may also be eligible for up to Figure 2. Timeline for Medicaid and Medicare EHR Incentives HHS develops MEDICAID Hospitals that adopt interoperability after 2017 not eligible standards for incentives (end on 2009) Incentives begin Nonhospital-based Physicians’ first-year physicians receive costs reimbursed payments through 2021 Standards completed until 2016 or for no more than 5 years 2009 2010 2011 2012 2013 2014 2015 2016 2017..... 2021 Incentives begin Medicare phases out Penalties begin for on October 20 incentives for physicians nonmeaningful use for hospitals (FY2015 for hospitals, calendar year 2015 for physicians) Incentives begin Physicians whose Incentives end on January 20 for first payment is nonhospital-based after 2014 receive physicians no incentives MEDICARE Source: Manatt Health Solutions.   |  California HealthCare Foundation 5 percent of incentives for eligible professionals, as long The federal government will soon issue more guidance as a professional agrees to participate in the entity’s EHR about the Medicaid and Medicare alternatives. Still adoption program. unclear is whether providers who acquire EHRs before the first year of incentive payments will be eligible for Hospitals can receive reimbursement for EHR adoption “purchase” funds, which have a higher dollar cap, or only under both Medicaid and Medicare. Other health care for “maintenance” funds. Given the potentially higher providers must choose one of the two options. The reimbursements per provider under Medicaid (depending timeline in Figure 2 shows important milestones between on the average allowable cost limit that CMS sets), most 2009 and 2021 for both options. physicians at community health centers in California are likely to select this option. Table 1 shows how the Medicaid Versus Medicare Incentives Medicaid incentives apply to each type of provider. State Medicaid programs have a great deal of discretion Table 1. Provider Eligibility for Medicaid EHR Payments in how they implement incentives for physicians and other professionals, but HITECH sets baseline rules. Medicaid Eligible Percent Match/ Patient Maximum Net Any time between 2011 and 2016, the programs may Provider Limit Volumes Allowable Costs make incentives available to eligible recipients who begin Independent 85 percent of net > 30 percent $25,000 for meaningful use of EHRs. The payments can continue physician who average allowable purchase, $10,000 treats adults costs for operations/ for a maximum of five years, but cannot extend beyond maintenance 2021. They are to be no more than 85 percent of the Pediatrician 85 percent of net > 20 percent $16,667 for average allowable cost set by CMS for purchasing, average allowable purchase, $6,667 implementing, or upgrading an EHR in the first year, costs for operations/ maintenance and for operating, maintaining, and using it over the subsequent five years. However, professionals who adopt, Dentist 85 percent of net > 30 percent $25,000 for average allowable purchase, $10,000 implement, or upgrade a certified EHR within the first costs for operations/ year need only demonstrate meaningful use of the system maintenance in that first year. The total cap on average allowable Nurse 85 percent of net > 30 percent $25,000 for midwife average allowable purchase, $10,000 costs per full-time-equivalent (FTE) provider is $75,000 costs for operations/ ($25,000 in the first year and $10,000 in each subsequent maintenance year) and the maximum reimbursement $63,750. The Nurse 85 percent of net > 30 percent $25,000 for cap for pediatricians is two-thirds of that for other practitioner average allowable purchase, $10,000 costs for operations/ professionals. States may decide whether or not to impose maintenance failure-to-adopt penalties. Acute care N.A. > 10 percent Limited to amount hospital calculated under All eligible nonhospital physicians can start receiving Medicare, by Medicaid share Medicare incentive payments in 2011. Physicians who do Children’s N.A. N.A. Limited to amount not begin meaningful use of their EHR until 2013 receive hospital calculated under lower incentive payments. Those who do not begin Medicare, by Medicaid share meaningful use until 2014 or later are not be eligible for any incentives. The maximum reimbursement per FTE Source: What California Stands to Gain: The Impact of the Stimulus Package on Health Care. California HealthCare Foundation: March 2009 (www.chcf.org/documents/policy/WhatCAStands provider is $44,000. Incentive payments end in 2016 and ToGainStimulusPackage.pdf). failure-to-adopt penalties start in 2015. The Impact of Federal Stimulus Funds on Community Health Centers in California   |  Regional Extension Centers ONC proposes to give preference to RECs that include Community health centers, health center-controlled collaborations of multiple stakeholders, leverage local networks (HCCNs), and consortia will benefit from resources,15 and identify viable sources of matching funds, a new regional extension center program. Regional such as grants from states and foundations, and payments extension centers (RECs) will provide technical and from providers. change-management assistance to all EHR adopters in their areas, giving priority to FQHCs; public, nonprofit, Under ONC’s proposal, providers can use Medicaid and and critical-access hospitals; rural or other health care Medicare incentives to pay for RECs’ implementation and providers that serve uninsured, underinsured, or medically meaningful-use support services. RECs may choose to underserved patients; and solo or small group practices. assist providers who are not in the safety net, and use those In May 2009, the Office of the National Coordinator revenues as matching funds for grant-funded activities. for Health Information Technology (ONC) published preliminary details about the required operations and ONC will formally solicit and evaluate REC proposals qualifications of RECs, although these requirements may after it considers public comments on the proposed change significantly in response to public comment.13 requirements it published in May 2009. The geographic ONC will evaluate applications and award funding. region and provider population an REC would serve, and its capacity to facilitate and support cooperation among RECs must be affiliated with a nonprofit organization, local providers, health systems, communities, and health which could include a community health center or information exchanges, will be among the evaluation HCCN, and: criteria. Depending on the final requirements, two-year n Define the geographic region and the provider awards could be made as early as the first quarter of population they would support in that region; FY2010, average $1 million to $2 million, and be up to a maximum of $10 million. The FY2010 awards may n Describe the levels and types of support; not require matching funds, due to current economic n Explain how the REC’s organization and staffing conditions. would give providers ready access to health IT extension agents, and how it would train and support EHR Loan Program the agents; Loans will be available from HHS to help community n Demonstrate they can facilitate, and support health centers and other health care providers purchase cooperation among, local providers, health systems, certified EHRs, enhance EHR systems (for example, communities, and health information exchanges; to upgrade them so they qualify for certification), n Demonstrate they can meet the needs of providers train personnel, and improve the security of electronic that have assistance priority14; and information exchange. The loans, which will flow through states and Indian tribes, should be available beginning in n Propose a feasible and efficient strategy for making January 2010.16 specialized expertise available to all providers the REC serves regarding organizational development; legal, Statewide Planning for economic, and financial issues; privacy and security; Health Information Exchange evaluation of effective EHR use; and other matters. California and the California HealthCare Foundation are The strategy should also specify how the REC’s collaborating on ways to strengthen health information interdisciplinary extension agents and agents assigned exchange (HIE) in the state and take advantage of federal to particular groups of providers would give intensive, health IT funding.17 They will develop a plan that individualized, and local assistance.   |  California HealthCare Foundation describes how to make HIE widely available and that that included $200 million for capital improvements promotes the use of such exchange to improve health care to expand and enhance medical education programs and make it more efficient. The plan aims to: at the University of California, with an emphasis on n Maximize California’s competitiveness in applying for telemedicine. In 2007, a broad coalition established HIE implementation funding in HITECH; the California Telehealth Network to build a statewide broadband network to improve health care in rural and n Support collaborative and coordinated efforts among urban areas. A $22.1 billion award from the Federal diverse health care stakeholders to encourage them Communications Commission (FCC) will enable the to adopt health IT, exchange health information, network to connect more than 300 health care providers, and develop and comply with statewide information including community health centers. These successes put policies, standards, and technical approaches; community health centers in a strong position to take n Integrate and synchronize planning for and advantage of broadband and telehealth funding in ARRA implementation of HIE, telehealth, and EHR for purposes of health IT and HIE.20 adoption incentives in ARRA; n Ensure accountability in public fund expenditures; Clinical and administrative information technology, and such as interoperable EHRs that enable providers n Improve public health through stronger health in different settings to readily exchange patient surveillance and emergency response capabilities. information and thus improve access to and the quality of health care, makes telehealth encounters most The state is simultaneously examining other relevant effective. And secure, reliable broadband connections funding aspects of the HITECH Act, including those are crucial in making telehealth and information related to RECs, the EHR loan program, workforce exchange possible. Broadband and telehealth funding in training and development, and research and new ARRA will level the playing field for community health technologies. The foundation’s and state’s parallel efforts centers, especially those in rural areas. are expected to generate strategic plans by the end of August 2009.18 Broadband Technology Opportunities Program The Broadband Technology Opportunities Program Regulations and Technical Standards (BTOP) allocates $4.7 billion to expand affordable New federal regulations will guide the implementation and quality broadband service to underserved of many HITECH provisions. Although the release date populations and to community and public institutions for these regulations is still unclear, ONC issued a plan by aggregating demand for service.21 This ensures in May 2009 describing how and when it intends to community involvement and fosters the development of execute the provisions.19 HHS must issue an interim final new applications, thereby creating jobs and stimulating rule adopting HITECH-related technical standards by economic growth. BTOP builds on the Department of December 31, 2009. Commerce’s Technology Opportunities Program, which has invested $233.5 million in state broadband initiatives Broadband and Telehealth Funding over the last 10 years. California has a long history of support for broadband and telehealth, which can help meet the needs of The National Telecommunications and Information community health centers in remote areas of the Administration (NTIA) will administer BTOP in state. In November 2006, California voters approved consultation with the FCC. The program also seeks to Proposition 1D, a higher-education bond measure promote broadband awareness, education, training, access, The Impact of Federal Stimulus Funds on Community Health Centers in California  |  equipment, and support at community organizations, Indian Health Service Programs including health care providers, entities that facilitate ARRA appropriates $85 million for Indian Health Service more broadband use by or through these organizations, (IHS) health IT activities related to telehealth service and entities that facilitate vulnerable populations’ access development and infrastructure. Funds will also support to care. activities that fit the IHS mission to improve access to and the quality and safety of health care, and to improve Of the $4.7 billion in BTOP funding, at least $250 the overall health of Native American and Alaska Native million is for innovative programs that encourage patients and populations. In California, 108 federally sustainable adoption of broadband services. The recognized tribal governments participate in consortia that remaining amounts are for expansion of the number of operate 31 tribal health programs in 57 ambulatory clinics publicly available computers and existing broadband under the authority of the Indian Self Determination Act. deployment programs, administration and oversight of These programs had 130,855 registered users and 76,505 BTOP, development and maintenance of a broadband active service users in FY2008.23 inventory map, and development of a national broadband strategy. IHS recognizes the critical role that health IT plays in efficient and effective care for patients. Nearly 30 years USDA Broadband Program ago, it developed the Resource and Patient Management ARRA appropriates $2.5 billion to the USDA Rural System, a clinical information system. Last year, IHS Utility Service (RUS) for expansion of broadband modernized the EHR in this system to incorporate infrastructure and technical assistance in rural areas important clinical functions, such as e-prescribing. Most through a combination of loans, loan guarantees, ARRA funding for IHS has been allocated for improving and grants. These efforts, part of a new Broadband this EHR. IHS and tribal governments are discussing Initiative Program (BIP), will also facilitate economic health IT priorities for ARRA funds and recently development in rural areas, where more than 5 million submitted a report to Congress describing their general Californians reside. expenditure plan. Community health centers may benefit from BIP and Because IHS clinics are either FQHCs or FQHC look- BTOP either directly, by receiving funds for equipment alikes and serve many Medicaid patients, some will and training, or indirectly from the services and be able to get HITECH funding through Medicaid equipment provided by other program participants. incentives for meaningful EHR use, purchase, and Because BIP and BTOP funding cannot overlap, implementation. Apart from HITECH, funds will be organizations must carefully consider how best to apply available to regional IHS offices to pay for health IT to each of the programs and coordinate their efforts. hosting and hardware at clinics. These clinics may also On July 2, 2009, RUS and NTIA, which will distribute seek funding for software. the funds, issued a notice of availability of funding.22 It tentatively plans to solicit proposals for second- and Training of Primary Care Professionals third-round funding in October and December 2009, ARRA allocates $500 million to foster a skilled and in spring 2010, respectively. workforce and boost the service capacity of community health centers and hospitals. Of this amount, $300 million is for the National Health Services Corps and $200 million, in Title VII and Title VIII training   |  California HealthCare Foundation program grants from the Health Resources and Services Title VII and Title VIII Training Programs Administration, is for hospitals and medical, nursing, Title VII and VIII training programs in the Health dental, and public health schools. Resources and Services Administration (HRSA) offer grants to educational institutions for scholarships, loan National Health Services Corps repayment, faculty development, and residency activities. The National Health Services Corps (NHSC) recruits The $200 million in ARRA for these programs is not clinicians to work in underserved communities by giving likely to benefit community health centers directly. scholarships to students and helping health professionals But over the long term, the funds will help ensure the repay education loans. Recipients commit to delivering availability of primary care professionals that community primary care services in designated high-need areas, often health centers need. In addition, some of the $200 at community health centers.24 million may ultimately go to area health education centers (AHECs). Community health center consortia and large Of the $300 million for NHSC, $200 million is for the clinic systems sponsor eight of California’s 12 AHECs. corp’s Loan Repayment Program.25 The program awards Because HRSA has not yet indicated how it will allocate up to $50,000 to primary care medical, dental, and the funds, the extent of this benefit is still unclear. mental health clinicians in exchange for service at any site in a NHSC-certified health professional shortage Medicaid Coverage Assistance area (HPSA). In certain cases, additional funds may be California’s community health centers are likely to available for extended service. Sites are ranked based on benefit indirectly from funding and administrative a HPSA score; NHSC funds go first to the most needy changes in coverage assistance programs identified in sites. Under ARRA, community health centers stand to ARRA. In California, some Medi-Cal beneficiaries will benefit because the minimum HPSA score will be lower, receive additional coverage, thereby ensuring that as thus enabling more centers to take advantage of NHSC’s many patients as possible who receive care at community incentives. The application period began June 5, 2009, health centers are insured and reducing the amount of and ends September 30, 2010, or when all funds have unreimbursed care the centers provide. been expended. Transitional Med-Cal and The remaining $100 million of the total $300 million in Qualifying Individual Programs NHSC funding is for scholarships through the 2011 school ARRA extends, to December 31, 2010, two programs— year for medical, dental, nurse practitioner, certified nurse Transitional Medi-Cal and Qualifying Individual—that midwife, and physician assistant students.26 After they help vulnerable people get access to health care. graduate, recipients spend two to four years at a NHSC- approved service site. The scholarships will entice students In Transitional Medi-Cal (TMC), 150,000 Californians to practice in areas served by community health centers. moving from welfare to work are eligible for up to a A center may directly benefit if it is a NHSC-approved year of coverage; their work income would otherwise site and can arrange school support for a student who has disqualify them from receiving benefits. Under ARRA, expressed interest in working there after graduation. states must maintain their current level of eligibility for transitional Medicaid assistance because these programs Although the FY2009 application period for scholarships get federal matching funds. ARRA gives states two new has closed, more funds will be available when the options for simplifying and expanding application period for the 2010–2011 school year begins in spring 2010. The Impact of Federal Stimulus Funds on Community Health Centers in California  |  eligibility criteria: (1) eliminate onerous income- Other Medicaid Funding Changes reporting requirements that families must meet to retain The Bush Administration imposed four regulations, coverage, and instead automatically provide 12 months of and proposed three others, eliminating certain federal continuous coverage, or (2) waive the current Medicaid Medicaid reimbursements to hospitals and other minimum enrollment requirements that families must health care providers for graduate medical education, meet to qualify for transitional coverage. intergovernmental transfers, rehabilitation services, provider taxes, school-based administration and States can choose one or both options, or neither. Both transportation services, targeted case management, and options would cost California about $59 million. Given outpatient hospital services. These regulations would the current budget crisis, the state is unlikely to choose have cost California an estimated $10 billion over five either or both. years and negatively impacted health care providers and vulnerable patient populations. Some of the regulations About 15,500 Californians in Medi-Cal’s Qualifying have been delayed or rescinded under ARRA or by CMS, Individual Program (QI-1), which is funded by a federal and federal action on the others is unlikely. The net effect block grant, would benefit from an ARRA provision that is that, for now, community health centers that rely on extends QI-1’s end date to December 31, 2010, from these Medicaid reimbursements can continue to rely on December 31, 2009. QI-1 helps low-income elderly them as a source of revenue. people—those whose income is between 120 percent and 135 percent of the federal poverty level and whose New Markets Tax Credit Program assets total no more than $4,000 (individuals) or $6,000 This program is part of the U.S. Treasury Department’s (couples)—pay their Medicare Part B premiums. Community Financial Institutions Fund, which provides incentives for investment in low-income communities, Higher Federal Matches for Medicaid the kind that community health centers primarily, if not State Medicaid spending is matched by federal funds. exclusively, serve. Centers can spend the grants on new The annually adjusted federal match rate is calculated capital projects or improvements.27 using a formula based on a state’s “wealth” relative to the rest of the country. Under ARRA, the match rate The New Markets Tax Credit Program (NMTC) derives increases between October 1, 2008, and December 31, its name from the federal income tax credit taxpayers 2010, boosting total federal Medicaid support by $87 receive for making qualified investments in community billion. States can access these funds through the standard development entities—U.S. Treasury-designated Medicaid claims process. intermediary organizations that provide investment capital to low-income persons and communities.28 ARRA adds California’s federal match rate is expected to rise to 61.1 $1.5 billion to the program’s $23 billion. About $5 billion percent from 50.0 percent, yielding an additional $9 available in the 2009 funding cycle should be awarded in billion to $10 billion. To receive these funds, the state October. More grants will be awarded in the 2010 cycle.29 must pledge to use them to meet the higher demand for Medi-Cal coverage, not to replace lost revenues. Some community health centers with poor liquidity have financed the construction or modernization of health care facilities in impoverished areas by combining NMTC grants with loan guarantees from HRSA’s Bureau of Primary Health Care.30 Although restrictions and 10  |  California HealthCare Foundation eligibility requirements make it very difficult to arrange Conclusion these transactions, they may be an important source for Billions of dollars in the federal stimulus package could community health centers and similar entities that cannot directly or indirectly benefit community health centers. otherwise obtain capital financing. At a time of severe economic hardship, the funding opportunities would help a variety of community Public Health health centers in California to construct or improve About $1 billion in ARRA funding will support several infrastructure, adopt electronic health records and other public health activities through a prevention and wellness health IT, leverage broadband and telehealth, recruit fund. Of this amount, $300 million will supplement and retain primary care professionals, improve services, the Section 317 Immunization Grant Program at the stabilize the safety net, and much more. However, to Centers for Disease Control and Prevention (CDC), the take advantage of these opportunities now and in coming primary funding source for state immunization efforts. years, community health centers must closely monitor The CDC, states, and territories will spend two-thirds of events at the state and federal levels, and communicate the $300 million to purchase vaccines administered by with state officials in a timely manner, as California will Section 317 grantees. Community health centers stand disburse some of the stimulus funds. to benefit indirectly because the immunization program will help ensure the availability of vaccines to their patient populations. Up to $650 million in ARRA funds may ultimately About the Authors become available to various entities for evidence-based This report was prepared by Manatt Health Solutions, clinical and community-based prevention and wellness a division of Manatt, Phelps & Phillips, LLP. efforts. HHS has yet to outline this program in detail, but some of the funds may enable community health centers to implement prevention and wellness strategies. The Impact of Federal Stimulus Funds on Community Health Centers in California  |  11 A p p e n d i x : ARR A F u n d i n g R e l e va n t to C o m m u n i t y H e a lt h C e n t e r s Program Funding Amount and Purpose Distribution Process and Recipients Award Dates Funding for federally qualified $2 billion: $500 million for new sites and From U.S. Department of Health and Human March 2009 through the end of health centers (FQHCs) services, $1.5 billion for infrastructure Services (HHS) to FQHC grantees, private FY2011 development institutions, and public, nonprofit institutions Loans and grants from the $1.2 billion for capital improvements From USDA to rural municipalities, counties, Rolling, through FY2010 U.S. Department of Agriculture special-purpose districts, nonprofits, and (USDA) tribal governments Medicaid and Medicare Up to $46 billion for implementation and use From Centers for Medicare & Medicaid FY2011–FY2016. Payments adoption incentives of EHRs Services/state agencies to FQHCs, health care continue through FY2021. professionals, and hospitals Grants for EHR-related adoption $2 billion for planning, implementation, From the Office of the National Coordinator Beginning in FY2010 regional extension centers (RECs), workforce for Health Information Technology (ONC) to training, loan fund, and research and develop- states and state-designated entities for distri- ment. REC awards will average $1 million to bution to health care providers $2 million. Up to $10 million per REC. Funding for Native American $85 million for telehealth, related infrastruc- From ONC to Indian Health Service regional TBD projects ture, and EHR infrastructure offices Broadband and telehealth $4.7 billion through the Broadband From the National Telecommunications December 2009 funding Technology Opportunities Program (BTOP) for and Information Administration/Federal service expansion, and $2.5 billion through Communications Commission (BTOP) and the Broadband Initiative Program (BIP) for USDA (BIP) to community organizations, infrastructure and technical assistance including providers and entities that facilitate access to care Grants, scholarships, and loan $500 million: $300 million to the National Loan repayments and scholarships from NHSC FY2009–FY2010 repayments for training of Health Services Corps (NHSC) and $200 to primary care students. Title VII and VIII primary care professionals million to Title VII and Title VIII programs grants from HRSA to educational institutions. in the Health Resources and Services Administration (HRSA) Medicaid coverage assistance Additional year of coverage for vulnerable Standard Medicaid claims process Present–FY2010 individuals. Total increase of $87 billion in Medicaid support ($10 billion for California). New Markets Tax Credit $1.5 billion in incentives for investment in Federal income tax credit for investment in FY2009– FY2010 Program low-income communities served by commu- community development entities nity health centers Public health funding $1 billion, including $300 million for immuni- From HHS to the Centers for Disease TBD zation grants and up to $650 million for Control and Prevention for vaccines, and to prevention and wellness. community health centers for prevention and wellness. Source: Manatt Health Solutions. 12  |  California HealthCare Foundation Endnotes state or regional hospital organizations; large health centers and networks of rural and/or community health centers; area health 1.Look-alikes do not receive grant support under Section 330 of education centers; health information exchanges; government the Public Health Services Act, but they meet all Section 330 entities, such as public health agencies, libraries, and information requirements and receive many of the same benefits as Section 330 centers, that have health professional and community outreach grantees. programs; and consumer/patient organizations. 2.Nielson, J. District Level Impact of Two-Year Suspension of 16. The California Health & Human Services Agency is hosting Clinic Programs, Assembly District 2. California Primary Care workgroups to discuss EHR loan funding availability and other Association: June 2009. programs. For more information, see www.chhs.ca.gov/initiatives/ 3.Ibid. HealthInfoEx/Pages/Default.aspx. 4.New Access Points Community Health Care Services Grants by 17. An advisory board oversees this collaborative effort. The board’s State/Territory. U.S. Department of Health and Human Services co-chairs are Kim Belshe, secretary of the California Health and (transparency.cit.nih.gov/RecoveryGrants/grant.cfm?grant=nap). Human Services Agency, and Paul Tang, MD, vice president and 5.A complete list of grant awards in California is available at chief medical officer of the Palo Alto Medical Foundation. www.hhs.gov/recovery/programs/hrsa/california.html. 18. More information about these efforts is available at www.chhs. 6. More information about funding in these three categories is ca.gov/initiatives/HealthInfoEx/Pages/default.aspx. available at www.hhs.gov/recovery/reports/plans/healthcenters 19. ONC’s implementation plan is available at www.hhs.gov/recovery/ capital.pdf. reports/plans/onc_hit.pdf. 7. Essential rural community facilities include dental clinics, nursing 20. For more information on the state’s progress to date, see homes, assisted living facilities, physician clinics, hospitals, California Telehealth Network—Frequently Asked Questions medical rehabilitation centers, psychiatric hospitals, outpatient (www.caltelehealth.org/documents/faqs.pdf ) and Connecting clinics, police and fire stations, schools, and child care centers. See California: The Impact of the Stimulus Package on Broadband and www.rurdev.usda.gov/rhs/cf/essent_facil.htm and www.rurdev.usda. Telehealth Expansion. California HealthCare Foundation: April gov/ca/pdf%20files%20and%20documents/cf%20direct.pdf. 2009 (www.connectedhealthca.org/pdf/ 8. 7 U.S.C. 1991(a)(13)(C). CCCH-stimuluspackageIB04022009.pdf ). 9.For additional guidance on eligibility and availability of funds, 21. More details about BTOP are available at www.recovery. see www.rurdev.usda.gov/ca/pdf%20files%20and%20documents/ gov/?q=content/program-plan&program_id=7795. cf%20direct.pdf and www.rurdev.usda.gov/ca/cf/index.htm. 22. The notice is available at broadbandusa.sc.egov.usda.gov/files/BB% 10.More details about the Medicaid and Medicare incentives for 20NOFA%20FINAL%20with%20disclaimer_1.pdf. eligible professionals and hospitals are available at hhs.gov/ 23. Connecting California: The Impact of the Stimulus Package on recovery/reports/plans/hit_implementation.pdf. Broadband and Telehealth Expansion. California HealthCare 11. For an analysis of the HITECH Act and recommendations on Foundation: April 2009 (www.connectedhealthca.org/pdf/ how California can prepare for, compete for, and use the state’s $3 CCCH-stimuluspackageIB04022009.pdf ). billion portion of funds, see An Unprecedented Opportunity: Using 24. For information on high-need designations, see www.bhpr.hrsa. Federal Stimulus Funds to Advance Health IT in California gov/shortage and nhsc.hrsa.gov/communities. (www.chcf.org/documents/chronicdisease/AnUnprecedented 25. More information about NHSC loans and the types of health Opportunity.pdf ). care professionals who qualify for them is available at nhsc.hrsa. 12. On June 16, 2009, the Health IT Policy Committee, an HHS gov/loanrepayment. advisory committee, issued draft recommendations regarding objec- 26. For scholarship eligibility information, see nhsc.hrsa.gov/ tives for “meaningful use.” The recommendations are available at scholarship/apply.htm. healthit.hhs.gov/portal/server.pt/gateway/PTARGS_0_11113_ 872720_0_0_18/Meaningful%20Use%20Preamble.pdf. However, 27. More information about the Community Financial Institutions the committee has tabled them and is expected to issue substantially Fund is available at www.cdfifund.gov. revised recommendations at its next meeting on July 16, 2009. 28. More information about certification of community development 13. Notices. Federal Register 2009;74(101): 25550–25552 (edocket. entities is available at www.cdfifund.gov/what_we_do/programs_ access.gpo.gov/2009/pdf/E9-12419.pdf ). id.asp?programID=10. 14. Under ARRA, RECs must offer information access and some 29. The application deadline for the 2009 funding cycle was in level of assistance to all health care providers in a designated April. Application, funding, and other dates for 2010, as yet region. Entities that will receive priority are public and nonprofit unannounced, may be similar to those in the 2009 cycle. hospitals; critical access hospitals; FQHCs; entities for uninsured, 30. This program provides loan guarantees—up to 80 percent of the underinsured, and medically underserved people; and solo or principal amount on loans from nonfederal lenders—to FQHCs small group practices whose focus is mostly primary care. for constructing, renovating, and modernizing medical facilities. 15. Local resources include universities with health-related programs; More information about the program is available at bphc.hrsa. medical or professional societies; state primary care associations; gov/policy/pin9720.htm. The Impact of Federal Stimulus Funds on Community Health Centers in California  |  13