Questions over the cost and mechanics of expanding access to health coverage have dominated the early stages of the new federal health reform law’s rollout. Less attention has been focused on who will treat as many as 32 million people, including five million Californians,  expected to gain access to care through the law. Community health centers already care for millions of low-income people, and under the health reform law, CHCs will become the primary source of care for millions more.

Background on CHC Model

Since 1965, CHCs have served in a safety-net capacity, annually providing primary care and other basic services to about 20 million people in the U.S., many of whom are immigrants and residents of rural areas and inner cities. CHCs have a significant presence in California, according to the National Association of Community Health Centers. More than 2.5 million patients were treated at the state’s 1,049 CHCs in 2008.

Advocates of the clinics note that CHCs have filled gaps in the U.S. health care system for relatively minimal cost. Patients who visit CHCs are charged based on their ability to pay. The clinics’ staff members receive salaries and, as a result, have little incentive to order additional tests or procedures to generate more revenue, a criticism of fee-for-service payment methods.

However, CHCs have drawn criticism from some private practices that contend the clinics provide unfair competition. The centers also have had difficulty recruiting staff, in part because of low compensation.

Reform Package Aims To Grow CHC Presence

Nationwide, the federal government currently funds more than 8,000 CHCs — also known as federally qualified health centers — which are administered by the Health Resources and Services Administration and operated by roughly 1,200 grantees.

The number of CHCs grew sharply under President George W. Bush, who doubled the annual discretionary funding for CHCs to $2.2 billion by fiscal year 2008. The clinics also received about $2 billion dollars from the 2009 federal economic stimulus package, helping them to serve an additional three million patients.

Anticipating a potential rush of newly insured patients, federal lawmakers designed the health reform package to double access to CHCs by 2015. The package puts $9.5 billion toward a new trust fund to expand CHCs’ operational capacity between 2011 and 2015, intended to help CHCs add another 15,000 providers to their staffs. Another $1.5 billion is earmarked for the clinics’ capital needs.

The National Association of Community Health Centers estimates that the funding would help the clinics reach an additional 20 million patients per year. The overhaul also allocated some funding for medical students’ tuition as an incentive to work in primary care clinics.

Private funding also has begun to trickle to CHCs as the health reform overhaul begins to take effect. For instance, Sutter Health recently awarded $1.48 million in grants to 18 community health clinics located across Northern California.

CHCs are well-positioned to address some of the gaps in the overhaul. Some patient advocates in California have expressed concern that the state’s 2.6 million undocumented immigrants will have fewer options for medical care, as hospitals and physicians likely will prioritize the growing number of insured patients. Many of these undocumented immigrants are expected to turn to CHCs, which also offer translation and interpretation services.

CHCs’ team-based approach to primary care also may serve as a model for the medical home initiatives encouraged in the overhaul, according to a recent essay in the New England Journal of Medicine.

Administration Efforts

• HHS Secretary Kathleen Sebelius in a letter to congressional leaders on Monday said that the Obama administration has made “significant progress” in implementing the new health reform law, Politico reports. The letter promotes the establishment of early provisions, like establishing high-risk pools, that could curb negative perceptions of the law. According to Politico, the declaration is, in part, meant to “convey the impression that the debate is over and the health care train is leaving the station” (Haberkorn, Politico, 5/10).
• CMS is informing pharmaceutical companies that it expects them to provide discounts on brand-name drugs on the formularies of Medicare prescription drug plans approved for 2011, CQ HealthBeat reports. The recently enacted national health reform law stipulates that makers of brand-name drugs reach agreements with CMS to halve the cost of prescription drugs for those who are affected by the so-called Medicare prescription drug benefit’s “doughnut hole,” or coverage gap (Reichard, CQ HealthBeat, 5/5).

Reform Reaction

• The new health reform law has “quietly reignited” a debate over balancing patients’ rights to receive care with some health workers’ moral and religious objections to certain services and procedures, the Washington Post reports. Supporters of increased “conscience” protections for health workers argue that the new law “leaves vulnerable” those who oppose abortion, emergency contraception, stem cell research and some end-of-life care, the Post reports. Advocates for patients’ rights counter that the legislation favors those who oppose such services and creates new hurdles for women seeking abortions and patients who are dying (Stein, Washington Post, 5/11).
• The health reform law could provide Medicare beneficiaries with an opportunity to maintain aggressive cancer treatment while simultaneously receiving end-of-life counseling and care, the Philadelphia Inquirer/Kaiser Health News reports. Previously, patients needed to forgo aggressive treatment in order to receive end-of-life care in hospices. Health experts say the dual approach, known as “concurrent care,” could be especially useful for patients requiring dialysis treatment and for those waiting for organ transplants. Proponents of the approach also say that it could encourage people with a terminal illness to take advantage of hospice care earlier (Rau, Philadelphia Inquirer/Kaiser Health News, 5/10).
• The health reform law presents opportunities for health payment changes, but the results might not be visible for years, according to a government panel on payment innovation sponsored by the non-partisan Alliance for Health Reform, CQ HealthBeat reports. Gail Wilensky, a health economist, said there is widespread agreement that the traditional Medicare fee-for-service payment system should be altered. Stuart Guterman, assistant vice president for the Commonwealth Fund‘s program on payment system reform, said that there is no single correct way to set up health payments but that results from whatever system is established should be consistent (Norman, CQ HealthBeat, 5/10).

From the States

• Bills moving through the Vermont House and Senate call for the creation of a commission to consider options for lowering state health care costs and ensuring insurance coverage for all state residents, HealthLeaders Media reports. The legislation (S 88) stipulates that one option for achieving those goals is a government-administered and taxpayer-financed single-payer system. The two chambers still must reconcile differences between the bills, and it remains unclear whether Gov. Jim Douglas (R) will approve a final version (Bakhtiari, HealthLeaders Media, 5/4).

On the Hill

• Senate Commerce, Science and Transportation Committee Chair Jay Rockefeller (D-W.Va.) on Monday warned that health insurers could exploit new medical-loss ratio standards in the health reform law and asked for stricter requirements, CQ Today reports (Ethridge, CQ Today, 5/10). The reform law mandates that insurers spend 85 cents of every premium dollar in large group health plans and 80 cents of every dollar in small-group and individual plans on medical care (Heavey, Reuters, 5/10). In a letter to HHS Secretary Kathleen Sebelius and National Association of Insurance Commissioners President Jane Cline, Rockefeller said insurers might capitalize on a lack of clarity on the ratio ‘and “game” the system by reclassifying administrative costs as medical claims. HHS is accepting public comment on the medical-loss ratio regulations through the end of the week (CQ Today, 5/10).

Employer Fallout

• Four major employers concluded that they could save millions of dollars by dropping health coverage for employees and accepting new government penalties, according to newly revealed documents obtained by Fortune magazine. The four companies — AT&T, Caterpillar, Deere and Verizon Communications — all announced in March and April that the health reform overhaul would cost them as much as $1 billion because of a provision that curbs employers’ tax deductions. The newly revealed documents suggest that one “unintended consequence” of the reform bill could be significant changes to the U.S. model of employer-based health coverage, according to Fortune (Tully, Fortune, 5/6).

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