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Health Centers Play Bigger Role in California Health Care

Federally funded health centers, originally designed to serve the poor, are assuming a larger role in California and may become a more important part of a reformed national health care system.

Nationally, the clinics will treat an estimated 20 million patients this year, an increase of more than two million from last year and twice the patient load from a decade ago, according to the National Association of Community Health Centers.

Started more than 40 years ago during President Lyndon Johnson’s war on poverty, the clinics got a boost from former President George W. Bush, who doubled financing for the centers, and from President Obama who earmarked $2 billion for federal health centers in his stimulus package.

The clinics offer comprehensive primary care services on a sliding scale related to the patient’s ability to pay. According to the National Association of Community Health Centers, about 40% of the centers’ patients are uninsured, about 35% are covered by Medicaid, and about 16% have private insurance, although many have only limited coverage.

Medicare and other public plans cover the remainder.

Not only are the safety net clinics — known as federally qualified health centers — seeing more patients from a more diverse demographic range, they’re also becoming a more attractive career option for family practice physicians in California and offering new solutions for county governments struggling to fulfill their obligation to care for the state’s indigent population.

“I think they’re a very good thing,” said Eric Ramos, a member of the California Academy of Family Physicians.

“The increased remuneration for FQHCs and for rural health centers is an important tool to provide for the underserved populations in California. It’s vital that we continue that support,” Ramos said.

Federally qualified health centers, as well as clinics designated as “rural,” receive higher reimbursements for treating beneficiaries of Medicaid, Medi-Cal in California.

Standard reimbursement rates for Medi-Cal beneficiaries in California are among the lowest in the country and are exacerbating an already short supply of family physicians in the state, according to many industry sources. California’s 6.8 million Medi-Cal beneficiaries make it the country’s largest Medicaid program by far. Some say the extra Medi-Cal money at federally qualifying clinics helps keep family docs in practice and in the state.

“If you’re a solo doc, trying to make ends meet is difficult enough, but if you treat a lot of Medi-Cal patients, it’s almost impossible to just break even in California,” said Ramos, medical director at Del Puerto Health Center in Patterson and chief medical officer at Doctors Medical Center in Modesto. Medi-Cal reimbursements to the Patterson clinic are enhanced because of its rural designation.

“If you have FQHC or rural designation, you can get enough money for those patients to make ends meet,” Ramos said.

Career Option

For California’s family physicians, federally qualified centers offer a stable work model, akin in practice — if not salary — to working for a large system such as Kaiser Permanente or Sutter. Often salaried at the low end of the scale, these health center positions can be attractive to family docs hesitant to go it alone but not wanting to ignore the growing ranks of underinsured and uninsured.

“Most docs do want to do the right thing, they just never got taught how to do it,” said Hector Flores, a member of Family Care Specialists Medical Group in Los Angeles. 

“A lot of family physicians look for salaried positions at large organizations like Kaiser and Sutter, but those organizations by and large don’t serve the Medi-Cal population. If we’re going to do right by the safety net, we have to have other solutions — like FQHCs or like our group’s policy of making sure that at least 10% of our practice includes providing care for uninsured,” Flores said.

“If everybody did that — had 10% of their patient-load set aside for the underserved — we’d go a long way to solving a lot of our health care problems in this state,” Flores said.

Established physicians aren’t flocking to federally qualified centers in significant numbers, according to industry sources, but the option is becoming more attractive to younger physicians in California, especially those recently completing residencies and looking at the daunting prospect of going into private practice in austere times.

Even with increased payments, the future isn’t rosy at federally qualified clinics. The issues of low pay and long hours follow primary care specialists wherever they go.

County-Run ‘Look-Alikes’

Several California counties have fashioned FQHC “look-alike” health centers to take advantage of the increased Medi-Cal reimbursements. State law requires counties to provide medical care for indigents, and many counties with under-funded public health systems have turned to the FQHC model for relief.

Public entities must establish a community governance system for health centers to qualify for increased reimbursements. Public health centers are not eligible for more than 300 federal grants, as are privately run FQHCs.

“There are drawbacks to seeking look-alike status,” said Del Morris, medical director of the Stanislaus County Health Services Agency in Modesto, a federally approved look-alike program. “But the advantages outweigh the drawbacks in our situation.”

Stanislaus County’s public hospital closed in 1997. County officials began the look-alike process in 2004 when it became clear the county could not otherwise meet its obligations to care for the county’s indigent population.

“The low reimbursement rate for Medi-Cal in California is really a disincentive for family physicians to treat Medi-Cal patients,” Morris said. “When you’re a county doc or a private doc and you get $17.50 for treating a Medi-Cal patient while the FQ up the road gets $120 for the same treatment, you know it doesn’t pay to keep doing it that way.”

Reform Proposals May Boost Centers

Most of the reform proposals working their way through Congress this fall include increased funding for federal health centers, partly in response to already increased caseloads because of economic hard times, but also in anticipation of waves of newly insured if reform passes.

A proposal in the House would add $38 billion over a decade, which could double the number of patients clinics could treat.

California, with the largest Medicaid population and the most federally qualified centers in the nation, could benefit greatly, industry sources said.

By the most recent official count (2007), California had 110 FQHCs, about 10% of the nation’s total of 1,067 and almost twice as many as the next state on the list, Texas, with 58.

Related Topics

Health Industry Insight Insurance Medi-Cal