Authorizing Safety Net Public Health Programs

Subcommittee on Health
August 1, 2001
10:00 AM
2322 Rayburn House Office Building 

Ms. Kathryn S. Benjamin M.A., M.S.
Executive Director
Southeast Lancaster Health Services
625 South Duke Street
P.O. Box 598
Lancaster, PA, 17608-0598

Chairman Bilirakis, Ranking Member Brown, and Members of the Subcommittee:

My name is Kathryn Benjamin. I am Executive Director of SouthEast Lancaster Health Services (SELHS). SELHS is an independent community health center, located in the poorest and most diverse section of the City of Lancaster, Pennsylvania. Almost 60 employees serve over 11,000 patients each year with high quality, culturally competent medical and dental services, and are dedicated to eliminating all barriers to such care as we strive to continually improve the quality of life for the underserved.

I want to thank you for the opportunity to come here today and testify in support of the reauthorization of the section 330 health centers program and the National Health Service Corps, and on the importance of these programs in providing care to the uninsured and underserved in our community. I particularly want to thank my congressman, the Honorable Joseph Pitts, for your support of our health center and your kindness in asking Chairman Bilirakis if I could come before this Subcommittee today. Mr. Pitts, all of us at SELHS appreciated that you took time from your busy schedule last week to come and visit our center and see our work. We look forward to working with you on these important programs.

SELHS is situated in the middle of a diverse, urban, and medically underserved community. The South East area neighborhood is comprised of over 22,000 people from whom the health center draws most of its patients. In the past twenty years this neighborhood has changed significantly in its cultural make-up. Whereas twenty years ago most of the residents were African American, today it is comprised of 54% Hispanic residents, 32% African American, 5% Asian/Pacific Islanders or American Indian, and 9% white. A majority of the Hispanic residents in Lancaster are recent immigrants from Puerto Rico and the Dominican Republic and, because of this, many of them have little or no English language proficiency. At our health center, 64% of our patients are Hispanic, and 17% are African American.

It was estimated in 1999 that 63% of the residents of the South East Lancaster MUA and HPSA had incomes below 200% of the poverty level, and 35% had incomes below 100% of the poverty level. 95% of our patients live below 200% of the poverty level, and 62% live below 100% of the poverty level. In this community there is only one full-time physician providing services to Medicaid patients for every 6,642 residents, and one full-time dentist providing services to Medicaid patients for every 4,580 residents, indicating the area is a low-income Health Professional Shortage Area or HPSA. The remaining sections of the City of Lancaster that lie outside the HPSA are comprised of less than 7% minority and low- income residents.

SELHS had humble beginnings. Thirty years ago two physicians and a nurse volunteered to provide desperately needed care to patients who were not welcome in private practices because they had no money. Small donations from local organizations and philanthropists covered their supply costs. As the noble gesture of these efforts spread, more donations came. Grant funding was applied for and received and in 1980 SELHS became a community health center when it received a grant under section 330 of the Public Health Service Act. Slowly, more services were offered, staff began to receive compensation and more were hired. The organization has not stopped growing during its 30-year lifespan.

Our participation in the Community Health Center (CHC) program has been invaluable for SELHS, both from a financial and a programmatic standpoint. The Bureau of Primary Health Care provides not only monetary support for the center to achieve its mission, but it also provides key technical assistance necessary to develop a voluntary organization into one with a continually, financially viable business plan and appropriate managerial organizational structure. Without the section 330 program, SELHS would not be able to adapt to the rapid changes in the health care industry.

The section 330 health center requirements and program expectations ("the program rules") are stringent. They cover areas such as board composition and responsibilities, management and financial practices, medical and dental standards of care, best practices and treatment protocols, culturally and linguistically competent staff, and the provision of services that eliminate barriers to accessing care. The rules provide a well thought through recipe to ensure that: patients of SELHS are given expert care when they are in the clinical areas; all members of the community are able to access this care when they need it; that patients understand their providers and that their providers understand them; that chronic illnesses are prevented rather than simply treated; and that racial and ethnic health disparities will soon become a condition of the past. The rules ensure that the federal investment in the program and our health center is used wisely and cost-effectively.

SELHS' primary medical services include two family practice physicians, two internists, and four mid-level practitioners. Services are provided in "pods", each staffed by a provider, an LPN, a medical assistant, and a patient care coordinator during each session. Patients are immediately taken into a private room and all services are provided to the patient in that room. Weights, labs, provider visits, social services, treatments, billing and collections are all provided in the privacy of the patient room. This has dramatically increased patient satisfaction, privacy, and efficiency. The patient no longer needs to move from station-to-station during the visit and wait for staff to be "freed up" to take care of their needs. Our staff go to where the patient is.

Additionally, we have part time contractual agreements with a part-time pediatrician, obstetrician/gynecologist, cardiology group, nephrologist, and chiropractor, all of whom treat referral patients at our main site. The availability of these services has dramatically improved our ability to diagnose and treat a fuller range of diseases, as well as remove several access barriers for our patients who would otherwise not be able to see a specialist in his/her office.

Our prenatal care program is just one example of how SELHS has thrived under the CHC program rules, as have our patients. The prenatal program alone has all but eliminated racial and ethnic disparities in the area of low birth-weight babies. Last year the average Black, Hispanic and White baby of SELHS weighed the same healthy weight. Why does a program like this work? In addition to the bi-weekly and weekly visits with medical providers, SELHS offers an intense, nurse driven perinatal program.

Unlike in private practice medicine, SELHS' perinatal nurses work intensively with each expecting mother on a bi-weekly and weekly basis throughout her pregnancy. These nurses evaluate every aspect of the expecting mother's life and lifestyle. A few of the areas covered are nutrition counseling and the provision of vitamins, stop smoking programs, home visits, preventive health training, birthing classes, parenting classes, and dental care. The goal of our program is to ensure the mother is at her healthiest throughout the pregnancy, is prepared to bring a healthy life into this world, and is prepared to raise a child in a mentally and physically healthy environment. School aged moms are taught how to raise a child while completing their educations. Rarely are babies not wanted by our patients, but if this situation should arise, nondirective counseling on all alternatives, including adoption, is provided.

Programs such as these are expensive and only partially funded by the CHC program. Other local organizations contribute to the costs. Each of these organizations realizes how valuable preventive care is, and that the return on the investment is almost astronomical if we can prevent the use of the neonatal intensive care unit, prevent developmental delay, and ensure that when a child is born it is as healthy as possible. Local donors realize that SELHS cares for the most at-risk population in the community, and that our programs, tailored to the patients' cultural, linguistic, and financial needs, far surpass any other services available in the community. Eliminating barriers is the key to our success.

In addition to our medical services, primary dental services are offered on-site by three, full-time general dentists and a part-time pediadontist. Preventive and screening services for children are offered by our hygienist, who works with the local Head Start Program. The dental and prenatal departments work closely together. The prenatal staff refer patients to the dental department as soon as they enter the program. Our dentists not only treat them, but also teach them about taking care of their baby's teeth. Additional dental education is provided in specific courses that are a part of the prenatal/birthing classes.

SELHS has a pharmacy program funded partially by the health centers program, but primarily by local organizations and private donors. The most common acute medicines are purchased in bulk, kept in the clinical areas, and dispensed as needed by the providers, at the center's cost. The auxiliary of the local medical society coordinates the pick-up of unused pharmaceutical samples from area physicians, organizes them, and delivers them to the center at least twice a year. And SELHS has a staff member who coordinates our large pharmaceutical company "chronic disease" medicine program. Low income, uninsured and under-insured patients with chronic diseases are eligible to receive free medicines from many of the large pharmaceutical companies. The requirements are not as difficult as they are cumbersome. On a frequent basis the patient's physician must complete forms verifying that the patient is in need of the medicines, and SELHS must verify the patient's income level and insurance status. The medicines are then mailed to SELHS where staff coordinate patient pick-up and dispensing.

The other major part of our pharmacy program is the acute medicine voucher program. About $10,000 per year is donated from local businesses, organizations and private donors, to pay for 100% of individual acute prescriptions for patients who do not have the immediate funds to pay for them.

SELHS offers free prostate screening annually with the help of a local hospital that provides nurses and covers promotional expenses, and a group of volunteer urologists. This year 174 men were screened who might otherwise have not received this valuable check-up. Excellent communication to the community through our board's close relationship with the faith-based organizations has increased the success of this program significantly.

Free HIV screening and counseling is provided on a daily basis in a dedicated office at our main site. The local AIDS Community Alliance provides trained counselors, who work closely with the medical providers, greatly enhancing compliance with treatment protocols and the continuity of care.

SELHS provides more than episodic medical and dental care, and continues to care for patients during periods when they lose their health insurance. There are many services that SELHS provides uniquely in the community. Social services, nutritional counseling, incentives for up-to-date immunizations, and the Reach Out And Read program are highlights of some of the other services that contribute to our success.

Recognizing that many of our patients face challenges in their daily lives that limit their ability to comply with treatment regimens, SELHS employs clinical support staff who follow the patients after their visits, and provide assistance when barriers come up. Case managers, social workers, eligibility specialists, physician assistants and nurse practitioners intervene when needed. All patients with chronic diseases are "tracked" or followed by staff who find out if they keep specialist appointments, fill their prescriptions, get their laboratory work done at appropriate intervals, and keep appointments at SELHS. When a patient faces trouble in any of these areas our staff offer assistance. Sometimes a simple reminder phone call helps, and sometimes our social worker gets involved, and other times a visit to the patient's home is necessary.

Our experience has shown that once an individual has begun to fully comply with healthy lifestyle changes and/or is following treatment protocols for a period of time, they not only establish life-time patterns of behavior, but they affect their entire family and social network. This is why we are so strongly dedicated to changing the lives of our patients and our commuity, one life at a time.

Environmental issues, such as lead paint, the existence of fire-arms in households, and home safety hazards are all discussed in office visits. School aged children from underserved homes often do not have many of their own books, so we give each child a book of their own at each visit. And we have started the Reach Out and Read program, which provides additional, age appropriate books and readers in our pediatric waiting rooms as well.

From our board of directors to our translators, SELHS is committed to providing healthcare and education to our patients and the community in a culturally and linguistically friendly manor. Studies continue to support the theory that people learn best and are most likely to comply with suggested lifestyle changes and treatment programs when they are delivered in their primary language and in a manner that respects and acknowledges their traditional cultural beliefs.

SELHS is the only provider in the community that ensures the availability of translators in the clinical area for those providers who are not bilingual. Employees at SELHS can provide medical translation in almost a dozen languages. Quarterly staff meetings target various cultures and their health beliefs, as part of a program to continually educate, update, and brainstorm on ways to improve our services to all members of the diverse population we serve.

Recruiting bicultural and bilingual providers has been difficult for SELHS. Whereas in the past, the National Health Service Corps (NHSC) has successfully provided loan repayment opportunities to several of our providers, this year we lost a bilingual and bicultural physician because of the shortage of funds in the NHSC program. A year prior we had the good fortune to hire a multi-lingual, bi-cultural, board certified, family practitioner. He would only agree to an extended contract if he would be able to receive loan repayment through the NHSC. Five months after he began employment he received bad news: NHSC was under-funded and, although he qualified for the loan repayment program, there were insufficient funds for that year, and he was welcome to apply the following year. He graciously completed a full year of employment, and then, having no faith in the NHSC, he left our employ.

Hiring bilingual and bicultural, or minority providers has always been a challenge for SELHS. The NHSC offered us a great recruiting tool in the past. The fact that its funding has not been dependable has all but crippled the center's recruitment efforts. Bilingual and bicultural providers are recruited with significant compensation packages all over the country. The fact that the cost of living is significantly lower in Lancaster, PA than the large urban areas is not a sufficient draw. Knowing, without a doubt, that the NHSC loan repayment program is sufficiently funded is paramount to our efforts in recruiting culturally and linguistically competent providers at SELHS. If there is anything you can do to help assist with this problem, we would greatly appreciate it. Please reauthorize the NHSC program and strengthen it as suggested by the National Association of Community Health Centers. I have attached their recommendations to my testimony.

Like every health center, SELHS is governed by a board from the community. The composition of our board of directors reflects the diversity of our community and the patients we serve. Over half of our board members are patients of the center and more than two thirds represent minorities. Board members offer substantial expertise in the areas of business, healthcare finance, faith-based community organizations, human resources, law, and local and regional government. Three pastors sit on the board of SELHS, representing large minority congregations. They provide valuable insight into the healthcare needs of the underserved community. As a result of this relationship, the planning has begun to operate a clinic in the new "community building" to be built next year, adjacent to the largest African American church in Lancaster. Construction funding is greatly needed, as will be ongoing operating funds to provide not only acute health services, but also on-site screening for chronic diseases such as diabetes, heart disease and HIV, as well as preventive health programs such as smoking cessation, nutrition counseling, healthy lifestyle and community education programs.

The patients SELHS serves are very poor and have few financial resources: 40% percent are uninsured; 42% have Medicaid coverage; 5% Medicare; and 13% private insurance (including the SCHIP program). We cared for 11,344 patients last year, with 28,360 patient visits. No other organization in our community offers patients a sliding fee based on family size and income. 95% of our patients qualify for some level of reduced fees, most fees being reduced to the minimum fee of $6 for a visit.

The health center grant is the financial underpinning of our ability to care for our patients. Last year, our $864 million grant helped us to write off uncompensated care for the uninsured and underinsured and to provide translation services. Private donations and Medicaid and Medicare payments also support the services we provide. Other grants and private donations contribute to our other enabling programs, such as the outreach programs, perinatal program, Reach Out and Read, our mammogram fund, and our pharmacy fund.

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SELHS is seen as an organization that touches the lives of almost all, if not all, of the underserved in this community. It therefore serves as a vital link to these individuals from the perspective of many other organizations. The barriers we eliminate come in many shapes and sizes. Financial barriers were the first ones SELHS sought to eliminate. The underserved community knows that they can come to SELHS at any time and never be refused acute treatment for financial reasons. Additional barriers, such as transportation, language, culture, obtaining medications, and scheduling conflicts are all minimized if not eliminated at SELHS.

What is the future of care for the residents of our community? Current market trends have left thousands of underserved members of the community without essential medical and dental services. As more and more people go off of the Welfare rolls, the number of uninsured and underinsured people increases. Few of these people gain employment in organizations that offer medical and dental coverage, and when coverage is available, annual out-of- pocket expenses are high.

SELHS remains the safety net provider for many people who are newly enrolled in managed care plans and assigned to a specific primary care provider. Many are assigned to a provider without their "understanding" because of linguistic issues. These individuals still come here, and we help them navigate the managed care world. We help them make and carry out choices and take care of their needs while they move through the system.

SELHS will remain the safety net provider to patients whose providers stop accepting Medicaid. For decades local providers referred their Medicaid and uninsured patients to SELHS. As private managed care grew, physicians soon realized that Medicaid paid as well as the private HMOs, and began opening their doors to the Medicaid recipients once again. With Medicaid HMOs being mandatory this year, two of the three local hospitals have begun to close down their outpatient clinics. Many private physicians in the community are pulling out of the Medicaid program. Two hospital sponsored dental clinics closed last year, leaving over 5,000 Medicaid patients without a dental home.

SELHS is the designated safety net provider whenever these changes occur. We expanded our dental staff when the hospital clinics closed and have had to prioritize on emergency dentistry first, and preventive dentistry second. We have plans to open a new clinic with some local financial support, but need additional health center grant funds for construction and to ensure continued financial viability.

As more clinics close and physicians refuse to treat Medicaid patients, we must plan to expand to fill the void. And, as we continue to screen and provide outreach education to those with undetected chronic diseases we must be prepared to provide comprehensive care for them in our system. We are ready to continue to meet the challenges of caring for our community - but we need your help to do so.

We support the changes suggested by the National Association of Community Health Centers to improve the health centers program. I have included them as an attachment to my statement. I want to address specifically how some of these will help our center.

1. Reauthorize the program and increase the level of funding

I want to thank you for everything Congress has done to increase funding for health centers over the past few years. We used what we received from increased funding to stabilize and expand services at SELHS, and to begin to fill the void left when other local providers closed their doors to the underserved. SELHS has received service adjustment awards and several increases to our base grant over the past 5 years equaling almost half a million dollars. We received increases in 1999 of $100K, in 2000 of $70K, and $100K for 2001. These increases have made a substantial difference in our community.

SELHS is in a position to triple its capacity to care for the underserved, but will need additional continued financial support to sustain the physical expansions and programs. As more outreach and community education is provided, SELHS must grow to bring these previously untreated members of the community into programs of ongoing medical and dental care. Current projects planned by SELHS that would utilize these funds include the clinic in the African American church, a new medical site without construction costs to serve 5,000 patients, and a new site with construction costs to house both medical and dental, and education services, for 10,000 patients. We cannot do this without the reauthorization and expansion of the program.

SELHS has long recognized the need for a community health center in a neighboring community, in which almost 5% of the center's current patients reside. A new clinic would have to be built to extend services to this community and not only would some construction costs be necessary, but some ongoing operational assistance will be necessary as well. Restoration of the ability for health centers to use a small portion of grant funds for construction down payments will enable us to meet the needs of this neighboring community. Also, if we take on some of the clinics being closed by a local hospital, we will need funds for renovation.

As well as a down payment, the facility construction and renovation needs I discussed above and expansions will all require facility financing. Of paramount importance will be the availability of low cost loans with guarantees that would cover a substantial percentage of the cost of this financing -- so revision of the loan guarantee program is critical to our work.

SELHS is a member of CISNP (Community Integrated Services Network of Pennsylvania), a community health center owned network that provides shared expertise in the areas of clinical outcomes management, operations benchmarking, management tools, and managed care contracting. One current CISNP program we hope to participate in is a Management Information Systems program that will lower our costs by jointly contracting for an MIS program and sharing technical expertise. Permitting the grant funds to be used for these purposes would greatly help us reach this goal.

In summary, SELHS and the community it serves is grateful for the support of this Subcommittee for this work. We cannot continue to eliminate disparities in our health care system without the reauthorization and improvement of the health centers program and the NHSC. We urge the Subcommittee to act as soon as possible to reauthorize these important programs. Thank you for the opportunity to appear today. I would be glad to answer any questions.

The National Health Service Corps (NHSC) plays a critical role in providing care for underserved populations by placing clinicians in urban and rural communities with severe shortages of health care providers. Currently 2500 NHSC clinicians, including physicians, dentists, nurse practitioners, physician assistants, nurse midwives, and behavioral health professionals, provide health care services to 4.6 million Americans, including 2.2 million Health Center patients.

While the NHSC program has proven successful in addressing health professional shortages in many areas, funding limitations have restricted the program's ability to meet its primary goal. According to HHS, more than 12,000 physicians would be needed to place sufficient providers in all health professions shortage areas (4 times the current number of NHSC providers), and more than 20,000 would be needed to bring all areas of the country to the same staffing ratios for providers that are used by both managed care organizations and Health Centers (8 times the current number of NHSC providers). The NHSC also needs to be streamlined to work more effectively with safety net providers, including Health Centers, which share the goal of improving health care access in underserved areas.

Although the NHSC's most recent reauthorization was for a ten-year period, most parties agree that five years is preferable this time. A five-year reauthorization demonstrates continued support for the purpose and role of the NHSC as a federal safety net program; provides for continuity in the administration of the program; and also allows for a more timely opportunity for Congress to review and make modifications in response to changes in the health care environment. The NHSC also warrants a substantial funding increase to address the significant need in designated underserved areas for NHSC Scholarship and Loan Repayment program recipients, and to support other critical activities such as site development, evaluation, faculty and student placement, retention incentives and research.

2. Automatically designate all Federally Qualified Health Centers and Federally Certified Rural Health Clinics that meet the accessibility and affordability requirements (above) as Health Professional Shortage Area (HPSA) facilities.

The NHSC and the Health Centers Programs are intended to address the same goal (to meet the health care needs of underserved populations) and are administered by the same federal agency, the Bureau of Primary Health Care. Requiring a health center to obtain a Health Professional Shortage Area (HPSA) designation, even though each health center already serves a "medically underserved area or population" creates a bureaucratic hurdle to placement of NHSC personnel at health centers. Providing automatic HPSA facility status to health centers and rural health clinics, thus making them eligible for placement of NHSC personnel, will reduce bureaucratic barriers and allow coordinated use of federal resource in meeting the health care needs of areas that lack sufficient health care services.

After completing their taxpayer-funded medical education, many NHSC Scholars request -- and HHS often approves -- a waiver of their NHSC service obligation if they agree to establish a "private practice option (PPO)" in a designated HPSA. In most such cases, the Scholar is free to practice in virtually any HPSA (whereas those who fulfill their service obligation through assignment are targeted to high-need HPSAs). Currently, these "private practice option" clinicians are not subject to the requirement that they open their practice to all in the community regardless of ability to pay; and, in some cases, these NHSC-subsidized for-profit practices have been found to resist caring for uninsured - and even Medicaid-covered - patients, instead referring them to nearby health centers and other local safety net providers. Congress should remedy this by restricting PPO placements to HPSAs that are not currently being served by a health center or rural health clinic, except where the PPO clinician is placed at the center or clinic.

While intended to ensure that all Corps placements were made in areas of highest need, the current criteria used to determine whether a site is included on the high priority placement list has actually had the effect of discriminating against health centers and other similar entities, because it severely restricts the Secretary's flexibility to consider certain factors as indicators of need, including documented access barriers such as linguistic or cultural isolation, transportation barriers, and other factors highly correlated with underservice - such as large uninsured, elderly, disabled, or minority populations. Thus, an area or population distinguished by the above-noted characteristics, but with a relatively low infant mortality rate or what appears to be an adequate supply of health professionals, for example, would be penalized by being deemed a low priority for the placement of a new NHSC assignee.

Under current law, the Secretary is required to notify interested organizations and individuals in an area of that area's de-designation as a HPSA, but is not required to follow the same procedure in the case of a population group's or facility's de-designation. Furthermore, while current law requires the Secretary to publish annually list of priority placement sites for new NHSC assignments, it does not require notice to entities that are not included on the list, nor does it provide any due process rights to such entities to provide supplemental information or to file an appeal of their exclusion. Such due process rights are a central part of many other statutes, and should be included in the NHSC law, particularly in view of the consequences of the loss of HPSA designation or priority status to areas that had previously been considered high-priority shortage areas.

6. Allow NHSC scholarship and loan repayment program recipients to fulfill their commitment on a part-time basis. This option would only be available if such service is agreed to by 1) the placement site or sites as well as the scholarship and loan repayment recipients and 2) so long as the total obligation is fulfilled.

Flexibility should be provided to enable Scholarship or Loan Repayment program recipients to complete their service obligation on a full-time or part-time basis, with the approval of the placement site. Many small rural communities may not have sufficient volume to support a full-time health care practitioner. In addition, some sites may not need particular types of providers on a full-time basis. Flexibility should be given to the Department to permit part-time service in meeting community needs. In addition, some practitioners may find part-time service more attractive, which in turn could improve both recruitment and retention at these sites.

The NHSC was created to meet the needs of communities that lack access to health care services. In many cases, those shortage communities require physical, oral, and mental/behavioral health care services. Over the years, the NHSC has recognized that each community has unique health needs and has placed a wide variety of health professionals in sites to meet those needs. However, many believe that the NHSC needs to dedicate additional resources to inform and educate communities about the variety of placement opportunities provided by the NHSC, and to assess the real health care needs of communities that are applying for placement of personnel. In order to ensure that communities receive the maximum benefit from the program, the NHSC should allot adequate resources to inform communities of the variety of health care resources available through the NHSC and how those resources can best be used to meet the unique health needs of communities, in collaboration with those communities and other health partners.

8. Assist communities and sites in developing incentives to support the retention of NHSC providers beyond their obligation.

Many current and former NHSC recipients have expressed concerns about professional isolation and burnout during their term of obligated service. While most initially declare their intent to remain after completing their obligation, many change their minds by the time their assignments are completed. In many communities, the NHSC recipient may be the only health care professional. As such, they are "on" 24 hours per day, 7 days per week. Providing scheduled breaks for professional development or personal time will increase the likelihood that recipients will remain in these communities beyond the period of their assignment. Examples of incentives might include support for locum tenens, mini-sabbaticals, continuing professional education, and increased practice management technical assistance for current scholarship and loan repayment recipients.

Section 334 of the Public Health Service Act ("Cost Sharing") requires that an entity to which a member of the NHSC is assigned must reimburse the Federal government for the cost of that NHSC member. In practice, this requirement is waived in almost all cases. In 1998, the cost-sharing requirement was waived in at least 95% of cases and the cost of collecting the remaining 5% of payments exceeded the funds received. This provision should be eliminated because it creates an undue burden on communities (which are economically unstable by definition) in seeking an NHSC clinician, and it poses an unnecessary administrative burden on the NHSC. Clearly, these dollars could be better used in providing access to care. This action is consistent with the spirit of the Paperwork Reduction Act and will facilitate increased usage of NHSC' clinicians by underserved communities.

Section 334 (repealed above) included language requiring that Corps personnel ".to the maximum extent feasible, provide.services.to all individuals in, or served by, such HPSA regardless of their ability to pay for services.." These provisions need to be retained elsewhere in the NHSC statute and to be clarified to reinforce the principle that a vital purpose of the NHSC is to reduce access barriers for everyone living in communities lacking health professionals, regardless of their income or ability to pay for services. In addition, language is needed to require DHHS to monitor this requirement to determine whether Corps personnel and their sites are actually meeting these requirements and to enforce compliance.

1. Exclude from Federal income, FICA, and self-employment taxation tuition, fees and related educational expenses to individuals participating in the NHSC Scholarship, Loan Repayment, Community Scholarship and State Loan Repayment program (group with other retention provisions).

Although this falls under the jurisdiction of other Congressional Committees, and must therefore be moved through separate legislation, all parties agree with the NHSC and the NHSC Advisory Council that taxing students adversely affects the financial incentive to participate in the NHSC and provide health care services in underserved communities, many of which are frontier communities.

In the 35 years since their creation, America's Community Health Centers have proven their durability as a model health care program and their resilience in adapting to a dramatically changed American healthcare system while maintaining their original mission and purpose.

Health centers were established to provide access to quality preventive and primary health care for the medically underserved - including the millions of Americans without health insurance, low income working families, members of minority groups, rural residents, homeless persons, agricultural farmworkers, and those living with HIV or with mental health needs. Since their inception, health centers have served as a prototype for effective public-private partnerships, demonstrating their ability to meet pressing local health needs while being held accountable for meeting national performance standards. The success of the Health Centers program can be directly traced to the core elements found in Section 330 of the Public Health Service Act, its authorizing statute. These elements stipulate that each federally-supported health center must:

Be located in, and serve, a community that is designated as "medically underserved," thus ensuring the proper targeting of federal resources on areas of greatest need;

Make its services available to all residents of the community, without regard to ability to pay, and to make those services affordable by discounting charges for otherwise uncovered care to low income families in accordance with family income;

Provide comprehensive primary health care services, including preventive care (such as regular check-ups and pap smears), care for illness or injury, services which improve the accessibility of care (such as transportation), and the effectiveness of care (such as health/nutrition education);

Be governed by a board of directors a majority of whose members are active, registered patients of the health center, thus ensuring that the center is responsive to the health care needs of the community it serves.

In 1996, the Congress consolidated four separate targeted primary care programs (Migrant Health, Health Care for the Homeless, Public Housing health centers, and Community Health Centers) under a single authority, extending the consolidated program for five years. The new authority also included a limited new provision to fund health center-led networks and a new federal loan guarantee program. The consolidated Health Centers authority, at Section 330 of the Public Health Service Act, expires on September 30, 2001, and therefore requires reauthorization this year.

President Bush has publicly unveiled a multi-year plan to double the number of people served by health centers. More than 60 percent of Members of Congress have endorsed a similar plan. The Congress began that effort by providing $1.169 billion for FY 2001 for Section 330, a $150 million (15 percent) increase from the previous year. This year, a funding increase of at least $175 million will be needed to sustain and continue that effort. Under this plan, more than 10 million Americans will gain access to health center services in thousands of communities across the country.

Many health centers operate in facilities that desperately need renovation or modernization. In some cases, rapidly growing patient populations have strained the capacity of existing facilities-these facilities must be expanded. Other facilities are old, or inadequate for the efficient delivery of primary health care-these facilities must be modernized or replaced. A recent survey of health centers in 12 states found that almost two-thirds of them currently need to upgrade, expand or replace their current facilities. Moreover, many needy communities are not yet served by health centers-new facilities will have to be built (or existing facilities modernized, expanded or replaced) in order to extend health center services there.

However, most health centers have limited financial capacity to undertake needed facility improvements, expansions or new site development. Because health centers serve a large and growing uninsured patient base, operating margins are slim to non-existent for most health centers. That means that most health centers have only a very limited ability to support loans for their facility needs, and thus must rely on grants and charitable contributions. Yet, because they serve low-income individuals who generally cannot contribute significantly to capital campaigns, health centers have great difficulty raising charitable contributions.

At the same time, construction costs have soared in the strong economy. As a result, the gap between what health centers can afford and the cost of capital projects is growing. Restoring the government's ability to make grants for capital projects is critical to enabling health centers to maintain, modernize and expand their current facilities - or to replace old facilities or build new ones - to meet the growing demand for their safety net services.3. Enhancement of current Loan Guarantee authority in Section 330 to cover facility loans

Health centers' capital needs could also be more successfully met by enhancing the current federal Loan Guarantee authority in Section 330 -- which only permits the issuance of loan guarantees for managed care-related purposes -- to include loan guarantees for facility construction, modernization, and expansion, and for acquisition of facilities and equipment. In 1997 and 1998, Congress earmarked, out of appropriations made for Section 330, a total of $14 million for loan guarantees to 330-funded health centers, both for managed care purposes authorized under Section 330 and for capital purposes as authorized under Title XVI of the PHS Act (although Title XVI continues to exist in the PHS Act, Congress has not directly appropriated funding for Title XVI programs in years). Enhancing the current Loan Guarantee authority to cover facility loans would be consistent with Congressional intent to provide capital loan guarantees for health centers without having to appropriate funds against an otherwise dormant legislative authority, and would also permit other improvements to address shortcomings in current loan guarantee policy, including:

Allowing the guarantee to cover more than 80% (and up to 100%) of the outstanding principal amount would allow lenders to price the loans at significantly lower interest rates by reducing the risk to them. Currently, OMB has determined that the federal loan guarantee for facilities can cover only 80% of the outstanding loan amount provided by a lender. Financial experts have stated clearly that partial guarantees are not sufficient to leverage capital at below-market interest rates, because lenders still perceive significant risk in these loans and fear that, in the event of default, they may not be able to collect even a small amount of the unsecured debt they financed.

Refinancing of existing loans is currently not an eligible use for loan guarantee funds. If the refinancing results in significantly lower interest rates, the savings would benefit both the health center and the government. In addition, some health centers that have experienced financial difficulties are not able to obtain loan renewals from lenders without guarantees, severely limiting their use where they are most needed.

Permitting federal loan guarantees to be used with tax-exempt debt financing mechanisms would allow health centers to access the lowest cost capital available to nonprofit institutions, benefiting both health centers and the government. Because the interest income from tax-exempt bonds is exempt from federal (and sometimes state) taxation, investors require lower returns on their investments than would otherwise be the case for taxable investments. That tax-savings would translate into lower interest rates, allowing health centers to invest more of their operating resources into programs and services for vulnerable populations.

In combination with the restored capital grant authority discussed above, a revised loan guarantee program would be more effective in meeting the pressing capital needs of health centers.

Health centers currently collaborate with each other, and with other community providers, in many different forms of networks and partnerships designed to improve access to and quality of care for their patients, especially uninsured patients. These include practice management networks, designed to improve quality through shared expertise (such as centralized pharmaceutical or laboratory services, clinical outcomes management, or joint management/ administrative services), to lower costs through shared services (such as unified financial or Management Information systems, or joint purchasing of services or supplies), or to improve access and availability of health care services provided by the health centers participating in the network. Most of these networks, once developed, need ongoing operational support to continue and further enhance their benefits. However, current law only authorizes support for the planning and development of managed care networks and plans. Expanding the types of health center-directed networks that can receive planning and development support, and allowing limited operational support for networks that are owned and/or controlled by Section 330-funded health centers, would substantially aid in achieving the health centers' mission and objectives.

When four separate health center programs (Community, Migrant, Homeless, and Public Housing) were consolidated under a single Section 330 authority in 1996, the law included a requirement for allocating funds appropriated under Section 330 for each of the consolidated programs in accordance with the proportion of total funding they each had received in FY 1996. Despite the fact that this statutory funding allocation requirement expired in 1998, BPHC has continued to adhere to the methodology in distributing overall Health Centers funding among the Community, Migrant, Homeless, and Public Housing health centers. Vulnerable populations have benefited from BPHC's actions, and would be best served by restoring the original funding allocation methodology to the overall statute, thus ensuring the continued distribution of Section 330 funds to key underserved populations such as farmworkers, homeless persons, and public housing residents.

During consolidation of the health center authorities in 1996, coverage for formerly homeless individuals during the first 12 months following their transition to permanent housing was inadvertently dropped. Also, current authority fails to specify homeless youth as eligible for services, even though they remain a key homeless population. In addition, current law fails to recognize as eligible for services many farmworkers who, due to changes in agricultural employment, migrate for employment purposes but remain in farm work all year. Clarifying the eligibility of farmworkers employed on a year-round basis, as well as homeless youth and formerly homeless persons following their transition to permanent housing would ensure that the program remains appropriately targeted to the most vulnerable populations.

Under Section 330, all federally-supported health centers are required to provide or arrange for certain key health and related services, including medical, diagnostic lab and radiology, pharmaceutical, preventive dental, and patient case management services. Centers may also furnish additional services if needed by their patient populations, if resources are available.

Despite the statutory requirement, many health centers (especially newer centers and those serving rural communities) have not been adequately funded to support the provision of all required services. While this disparity has been reduced somewhat in recent years and may eventually be eliminated, and while the statutory requirement to provide comprehensive services remains a vital part of the health center model, clarification is needed to ensure that federally-supported health centers are expected "to the maximum extent practicable" to provide all required services, subject to available resources (both federal grant and other resources).

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