Congress may not push community health center funding off the cliff

Johnson Health Center in Lynchburg, Va., funds 15% of its budget from federal grants, helping to pay for such community work as managing chronic care and helping patients find resources that can address their social needs.

That percentage translates to more than $3 million of Johnson Health’s $20 million annual budget coming from federal grants, largely through the Section 330 program. Part of the Public Health Service Act, Section 330 authorizes grant awards to federally qualified health centers and sets eligibility requirements for grants.

“We are really heavily engaged with our patient population on programs that don’t bring in any revenue, but touch the patient,” CEO Gary Campbell said.

Procuring a major share of that grant funding has become an increasingly daunting task. “The difficulty for us is that every couple of years we have to allocate a lot of advocacy work toward maintaining our funding,” Campbell said.

That’s because the largest share of Johnson Health’s federal grant funding comes from the Community Health Center Fund; the CHCF program was created by the Affordable Care Act in 2010 and awards grants to community health centers whose patients come from medically underserved populations. The vast majority of the more than 1,400 community health centers throughout the country are in a similar position of not knowing if and how much of that federal grant money will be awarded.

Though the fund has historically enjoyed bipartisan support, efforts to renew its funding before the program expires have run into some challenges. For the past two reauthorization cycles, partisan debates over more contentious policy issues have turned the CHCF program into a political bargaining chip that led to funding being passed either at the last minute or months after it expired, the latter known as going off the fiscal cliff.

The fund is once again set to expire in September. But this time advocates say lawmakers are giving them hope there won’t be a repeat of 2017’s delayed reauthorization process, but that instead more-stable, longer-term funding will be approved.

A House Energy and Commerce subcommittee this month voted to move forward on the Community Health Investment, Modernization, and Excellence Act, which would provide four years of CHCF funding. A Senate version of the bill was introduced in January by Sens. Roy Blunt (R–Mo.) and Debbie Stabenow (D–Mich.). And in late June, the Senate Health, Education, Labor and Pensions Committee passed the Lower Health Care Costs Act, which included a proposal to extend CHCF funding from two years to five years.

“We’ve had five, now six, different bills introduced with long-term extensions of our funding,” said Jennifer Taylor, director of federal affairs for the National Association of Community Health Centers. “That is very different from where we were in that last funding-cliff authorization.”

“This year right out the gate people were really rushing to be able to offer proposals to get on the record early in favor of doing this,” she added. “There is a real good-faith show of support from all sides here that they would like to avoid going over the cliff.”

Initially designed to help community health centers invest in expanding services and health sites, the CHCF has increasingly been used to cover daily operational expenses. An analysis published in early July by the Government Accountability Office found nearly 80% of the $15.8 billion in grants funded by the CHCF from 2011 through 2017 went toward supporting ongoing operations and services, while only $3.2 billion of the grants were awarded for projects to increase services.

Advocates have credited the added revenue from the fund with providing community health centers with more fiscal stability that allows them to better budget over the shorter and longer term. “It allows our health centers to be able to better prepare for the next several years when we know that the (funding) is going to be provided,” said Steve Carey, chief strategy officer for the National Association of Community Health Centers. “That’s the added benefit from our perspective.”

Federal grant funding comes from both the CHCF as well as an annual discretionary appropriation that can fluctuate in size from year to year.

But rather than eliminate budget uncertainty, the growth of the CHCF and the increased reliance on it as a revenue source has only helped to highlight the financial tightrope many community health centers are forced to walk each time the program is up for reauthorization.

“The room for error on this is very narrow,” said Sara Rosenbaum, chair of the health policy department at the Milken Institute School of Public Health at George Washington University. “They’ve got to get this fund extended and it would be a much better thing if it were extended before the current time period expires.”

Both the annual discretionary funding and the mandatory CHCF funding comes from Section 330 grants administered by the Health Resources and Services Administration. In 2011, less than half of Section 330’s $2.1 billion in appropriations came from the CHCF. By 2017, the fund accounted for 70% of Section 330’s $4.9 billion allocation, according to the GAO report.

Rosenbaum said that when Congress fails to appropriate new annual discretionary funding, the amount community health centers receive automatically reverts to the previous year’s funding levels. But CHCF funding must be re-authorized before it expires, or the program effectively goes away, leaving health centers with nothing.

The impact of facing that kind of a hard stop in funding can be severe. In 2015, lawmakers waited until just a few months before the CHCF was set to expire on Sept. 30 of that year before passing its reauthorization for two more years. When it came up for reauthorization again in 2017, Congress missed the deadline altogether, which led to a four-month delay until a funding bill was finally passed in March 2018 that allocated $7 billion over the next two years.

Even a relatively short delay in CHCF funding has resulted in community health centers making cuts in services and personnel in order to make up for the projected loss in revenue. A February 2018 survey published by the Kaiser Family Foundation found 20% of community health centers had already instituted a hiring freeze and 4% reported implementing layoffs within the four months after the CHCF expired.

Rosenbaum said reliance on the CHCF raises the question of whether community health centers might be better served if more funding was shifted toward increasing the annual discretionary appropriation to avoid creating these funding cliffs every few years.

“Probably things would be better if we went back to a world where the fund was for capital investment, expanding services and sites,” Rosenbaum said. “When it comes to ongoing operations, you’d want to have that coming out of the discretionary appropriations.”

“We might see the kinds of delays that have happened before, but I don’t think Congress is going to go home for Christmas and not do anything,” Rosenbaum said.