Community health centers enlist Congress in fight for increased Medicaid reimbursement

Come hell or high water, the nation’s federally qualified health centers (FQHCs) want to be compensated for the costs of treating the nation’s growing number of uninsured.

The centers this summer are backing the Safety Net Preservation Act of 1999, which requires Medicaid programs to pay them reasonable costs in fiscal year 2000 and establishes a Medicaid prospective payment system (PPS) for subsequent years. The safety net legislation would undo provisions of the 1997 Balanced Budget Act that chip away at the existing federal law requiring cost-based Medicaid reimbursement. Under the BBA, Medicaid payments would drop to 95% of costs for the fiscal year beginning Oct. 1, 2000, 90% in 2001, 85% in 2002, and 70% in 2003.

The proposals nowhere suggest that health centers return to cost-based Medicaid reimbursement. "Our friends on Capitol Hill are saying, We love you, but forget cost-based,’" says Dan Hawkins, vice presi dent of the National Association of Community Health Centers (NACHC).

Meanwhile, the centers have succeeded in getting 27 states to commit to some type of cost-based Medicaid reimbursement for FQHCs through such vehicles as legislation, budget authority, or administrative action, says Mr. Hawkins. (See listing at right and on p. 9.)

"What the PPS bill does is essentially set a national floor. It gives states the flexibility to build above that floor if they choose to, or to continue cost-based reimbursement or continue some other alternative, as long as it is fair to the center and the center agrees to it," says Mr. Hawkins. Whatever the specific mechanism, the federal Health Care Financing Administra tion will provide FQHCs the full federal Medicaid match in states that go beyond the BBA minimum, up to 100% of costs.

'No change, no progress’

Tennessee is described by the NACHC as one of the states where the cost-based reimbursement battle has been won, but the view closer to the front is a bit bleaker for the centers.

"We’re continuing to be in contact with the state, but we still don’t have cost-based reimbursement," says Kathy Wood-Dobbins, executive director of the Tennessee Primary Care Association. In the early part of 1999, the association’s 17 federally funded centers were working to get the state’s Medicaid program to cover more than 60% of the centers’ costs. (See State Health Watch, February 1999, p. 1.)

"There’s been absolutely no change, no progress," says Ms. Wood-Dobbins. "It’s not a question of how to do it, it’s a matter of their will to do it. We’ve never gotten to the point of working out how to do it."

Medicaid comprises about 30% — and sometimes as much as 50% — of the operating budget for most the nation’s 900-odd FQHCs and similar organizations. Grant funding, about $925 million in the current fiscal year, comprises about 28%. Fees and other sources of income make up the rest of the centers’ income.

The $925 million in grant funds is an increase of $100 million over the previous year, and health centers are optimistic about receiving an increase in the federal grant funds for fiscal year 1999-2000. Still, centers are telling lawmakers that about $50 million more will be needed just to make up the first-year Medicaid shortfall created by the BBA.

Contact Mr. Hawkins at (202) 659-8008 and Ms. Wood-Dobbins at (615) 329-3836.