Letter from Jack Egan (Chief, Community Health Services Branch, Department of Health and Human Services) to Richard L. Urey (Chief of Staff, Shelley Berkley's Office, Washington, D.C.), April 11, 2000, regarding Community Health Centers of Southern Nevada funding (3 pages); Policy Information Notice "Health Center Program Expectations," August 17, 1998 (21 pages)

DEPARTMENT OF HEALTH & HUMAN SERVICES BUREAU OF PRIMARY HEALTH CARE Public Health Service Health Resources and Services Administration APR 1 1 2000 Bethesda MD 20814 Richard L. Urey Chief of Staff The Honorable Shelley Berkley's Office 1505 Longworth House Office Building Washington, D.C. 20515 Dear Mr. Urey: Thank you for participating with Representative Shelley Berkley, Joanne Jee, Department of Health and Human Services, and Larry Poole, Bureau of Primary Health Care (BPHC), and me at the April 4 meeting at Representative Shelley Berkley's office. The meeting was to provide Representative Berkley the background on the BPHC's decision to disapprove the application from Community Health Centers of Southern Nevada (CHCSN), Las Vegas, Nevada, for continued support in fiscal year (FY) 2000. As you requested, I am providing you with the history of the CHCSN project and issues which led to the decision to provide no further funding In coming to this decision, the BPHC conducted a review of CHCSN's continuation application, the performance of CHCSN since the start of the project in April 1989, and other relevant materials including the findings from the site visits in January and August 1999. According to the Bureau's Program Expectations (Policy Information Notice 98-23), which I have included, health center grantees must have appropriate management to meet the challenge of efficient and effective operations. Specifically, center management must allocate resources, operate within available resources as periodically adjusted by budget variance procedures, identify and resolve problems, respond to opportunities, and plan for future events. The CHCSN management staff and governing board failed to provide sufficiently qualified and experienced staff to effectively and efficiently carry out the center activities. In November 1999, the time of the disapproval, CHCSN had been without a CEO for 9 months and since January 1999 they had 4 CFOs. In addition, financial systems were not in place to provide adequate internal controls, safeguard center assets, ensure stewardship of Federal funds, and maintain adequate cash flow to meet daily operations. A detailed, chronological history of CHCSN follows: 1. In 1993, the health center was burned down during the Rodney King riots and CHCSN had to operate in a mobile clinic. This lead to CHCSN suffering a total financial collapse in early 1994 when they were unable to pay staff or payroll taxes to the IRS. The debt at that time was $2.7million. to CHCSN. Page 2 - Richard L. Urey 2. For a 60 days period he Sierra Health Systems (Las Vegas HMO) and the Sunrise Hospital assisted with management staff. As a result of Senator Reid and the Governor's influence a Blue Ribbon board was appointed. Further assistance was provided by the University Medical Center and the county hospital. CHCSN hired a new CEO in 1995. 3. Financial and administrative stability continued to be a problem, but progress was made and by early 1998 the debt was reduced to $500,000. Later in 1998 CHCSN struggled with Medicaid managed care and, with poor internal fiscal controls, found itself once again in financial jeopardy. The CEO and CFO left. In September 1998, the Health Resources and Services Administration's (HRSA) San Francisco Field Office Division Director and project officer attended a board meeting in which the auditor presented his findings regarding the serious fiscal problems of the organization. The auditor recommended the Board focus on a financial recovery plan. 4. In January 1999 the BPHC sent in a fiscal consultant to conduct a diagnostic site visit. The consultant confirmed the absence of accurate and appropriate financial information, no fiscal systems in place, was unable to determine liability figures, found no cost based fee schedule, a lack of financial policies and procedures, a lack of appropriate internal controls, inadequate financial reporting and a lack of physician productivity monitoring. 5. A new replacement CEO hired in December 1998 was fired in July 1999. Since then the organization has instituted an unacceptable "management by committee" approach. Since January 1999 CHCSN has had 4 CFOs. 6. The financial position of the organization continued to worsen throughout late 1999. In March, at the San Francisco Field Office's request, the Executive Committee of the Board, the CEO at that time, and the CFO came to San Francisco to present a fiscal recovery plan. This recovery plan contained no means for acquiring funds to eliminate the debt. In March, a follow-up letter to the Board Chair setting forth the agreements and actions from this meeting received no response. 7. In July 1999 the San Francisco Field Office sent CHCSN a pre-application guidance letter citing the organization's failure to appropriately respond to grant conditions and the March letter. This letter furthered advised CHCSN that a team of consultants would perform another site visit. 8. The site visit took place in August 1999. The consultant team confirmed the continuing fiscal problems of the organization, a debt in excess of $1.5m, the lack of appropriate internal fiscal controls; the need for a permanent CEO; the need for a permanent Medical Director; the interim management team "by committee" was very inexperienced; there were serious problems with the patient accounting system; continuity of care was a problem since the providers did not have hospital privileges and there was no after hours coverage; and the clinical reviewer questioned the clinical competence of one of the providers. Page 3 - Richard L. Urey 9. In October 1999, the San Francisco Field Office reviewed the CHCSN project period renewal application which pointed out the continuing problems with the organization including a significant debt in excess of $ 1.5m. In addition there were also problems with appropriate board representation for homeless users and Hispanic users, the budget submitted was unacceptable and the management team was still not in place. 10. On November 30, 1999, Louis Conner, Chair, Board of Directors, CHCSN, sent a letter informing him of the disapproval for continued support in fiscal year (FY) 2000. The disapproval was based on the center's inability and failure to meet the Bureau's Program Expectations around governance, fiscal and management expectations. The decision to disapprove the renewal application is a pre-award decision and not appealable under 42 CFR, Part 50, Subpart D. Grant support was provided to CHCSN until March 31, 2000. 11. On December 16-17, 1999 a team comprised of two experience Bureau consultants was sent to Las Vegas to conduct an assessment of the impact of the Bureau's decision on the community and to determine if there was need for continued support. After extensive telephone interviews and on-site interviews with county government, Congressional representatives, other community leaders and health providers, the team concluded that need in the area was significant. The team also concluded the most feasible interim grantee was Nevada Rural Health Services (NRHC) based in Carson City, NV. This was largely based on their considerable experience and knowledge of our requirements and expectations managing a community health center funded by the Bureau. 12. On January 7, 2000, a letter was sent to NRHC approving them to establish a primary care capacity in Las Vegas as the interim grantee for the period beginning April 1, 2000 through May 31, 2001. Applications for a permanent grantee will be solicited during Fiscal Year 2001 from organizations interested in providing services to this community with the anticipated budget start date of June 1, 2001. CHCSN was provided with 90 days phase out grant support for closeout of the grant. A Notice of Grant Award in the amount of $296,769 was issued to provide prorated support for 90 days of phaseout of service delivery and administrative activities for the CHC program through March 31, 2000. I hope this history of the CHCSN grant project gives you the details you requested. If you have any further questions, please contact me at 301-594-4339. Sincerely yours, }&ck Egan (y Chief, Community Health Services Branch Enclosure BPHC BUREAU OF PRIMARY HEALTH CARE POLICY INFORMATION 98-23 DATE: August 17, 199 8 Document: Title: Health Center Program Expectations TO: Community Heaith Centers Migrant Heaich Centers Health Care for the Homeless Grantees Healthy Schools, Healthy Communities Grantees Heaith Services for Residents of Public Housi Primary Care Associations Primary Care Offices ncr Grantees The attached Policy Information Notice (PIN) describes the Bureau of Primary Health Care'3 expectations for all heaith center programs covered under section 330 of the Public Heaith Service Actas amended by the Health Centers Consolidation Act of 1996 (P.L. 104-299). In addition to requirements for health centers that are specified in law and regulation, Health Cpnrpr Program Expectations also reflects Bureau priorities and preferences for program funding or aspects of heaith care programs associated with success. The enclosed Heaith Center Program Expectations supercedes all previous program expectations issued for Community Heaith Centers, Migrant Heaith Centers, Heaith Care for the Homeless Programs, and Public Housing Health Centers. If you have any questions regarding the Health Center Program Expectations, ple'ase do not hesitate to contact your project officer in your HRSA Field Office. Marilyn H. jfiasfon, M.D. Assistant Surgeon General Associate Administrator Director Attachment U.l OmreiMnr or HeaM I Human otnch 'ufek Ham Senwt HmM Immtcm 4 Stomas UaWstrittM BPHC POLICY INFORMATION NOTICE: 98-23 DATE: August 17, 19 98 HEALTH CENTER PROGRAM EXPECTATIONS Department of Health and Human Service Health Resources and Services Administration Bureau of Primary Health Care BPHC Policy Information Notice 98-23 OVERVIEW This document describes expectations of entities funded by the Bureau of Primary Health Care (BPHC) under section 33 0 of the Public Health Service Act as amended by the Health Centers Consolidation Act of 1996. All health centers authorized to receive grants under section 33 0 are covered by these expectations including community health centers providing care to diverse underserved populations - section 33 0 (e); those serving migratory and seasonal farm workers and their families - section 33 0 (g); those serving homeless people including homeless children - section 330 (h); and those serving residents of public housing - section 330 (i). The expectations also apply to school-based health centers funded through the Healthy Schools, Healthy Communities program. Federally Qualified Health Center (FQHC) look-alikes, by definition must meet the requirements for health centers under section 330. Thus, they are governed by these expectations to the same extent as health centers, subject to any waivers. Migrant Voucher Programs are not covered by the expectations. The term "health center" is used throughout the Program Expectations to refer to all the diverse types of organizations and programs covered by the various subsections of section 33 0, including organizations funded to serve migrant and seasonal agricultural workers, the homeless, and residents of public housing. The expectations emphasize the similarities but recognize the differences among health centers. There is no "model" health center, yet all health centers share many attributes including: their mission to provide primary and preventive health services to underserved populations, while working with constrained resources; the imperative to maintain strong leadership, finances and infrastructure in order to adapt and survive the challenges of a transforming health care environment; and the delivery of high quality clinical services which have a demonstrated impact on health outcomes. Health centers have been a critical component of our country's health care safety net for more than 3 0 years and will continue to be essential for the foreseeable future. The Program Expectations are intended to ensure that health centers not only survive but thrive as they move into the twenty-first century. Page 6 BPHC Policy Information Notice 98-23 including the Primary Care Effectiveness Review (PCER). Policy Information Notices (PIN) and Program Assistance Letters (PAL), which are issued periodically by the Bureau, provide additional detail and guidance on selected topics addressed in the expectations. In addition, these expectations may be supplemented for classes of health centers whose unique organizational/operational style demand that the expectations be adapted to their way of doing business (i.e., school-based health centers). The Program Expectations are comprised of four sections. Section I., "Mission and Strategy" addresses the importance of adapting to health care trends and remaining financially viable, while fulfilling the essential health center mission of providing preventive and primary care services which improve the health Section II., "Clinical Program" highlights the services, staffing and systems which contribute to the provision of high quality health care. Section III., "Governance" summarizes the structure, composition and responsibilities of health center governing bodies. Section IV., "Management and Finance" describes the management team, systems and infrastructure which lead and support the health center in the pursuance of its mission. Because all components work together to make a health center successful, the Program Expectations should be reviewed in their entirety. However, a table of contents is provided to assist with reference to a particular section. Page 7 IV. MANAGEMENT AND FINANCE 31 A. EXPECTATION B. EXPLANATION 1. Management and Staff Structure 31 2. Management Role in Planning and Strategic Positioning 33 3. Managed Care Contracting 33 4 . Management Systems 34 5. Financial System 36 6. Facilities 39 Page 6 BPHC Policy Information Notice 98-23 For many health centers, the need for services far exceeds available resources. Health centers are faced with extremely difficult choices regarding which underserved population groups to serve and/or which needed services to provide. An inclusive and informed planning process frames the decisions every health center must make. 2. Cultural Competency Health centers serve culturally and linguistically diverse communities and many serve multiple cultures within one center. Although race and ethnicity are often thought to be dominant elements of culture, health centers should embrace a broader definition to include language, gender, socio-economic status, sexual orientation, physical and mental capacity, age, religion, housing status, and regional differences. Organizational behaviors, practices, attitudes, and policies across all health center functions must respect and respond to the cultural diversity of communities and clients served. Health centers should develop systems that ensure participation of the diverse cultures in their community, including participation of persons with limited English-speaking ability, in programs offered by the health center. Health centers should also hire culturally and linguistically appropriate staff. 3. Strategic Positioning Significant changes are occurring throughout the country in the way in which health care is being financed and delivered. Health centers need to understand their health care marketplace and be willing and able to adapt and reposition themselves to survive. Understanding the health care marketplace requires looking beyond the health center's service area to what is occurring with key players in the larger marketplace and identifying opportunities and challenges for health centers. a. Planning In order to succeed, health centers must engage in active, ongoing planning processes. Planning should include both long term strategic planning and annual operational planning. Strategic planning should establish long term strategic goals. Operational planning focuses on short-term objectives within the context of the strategic plan. Page 9 BPHC Policy Information Notice 98-23 to the desired outcomes of availability, accessibility, quality, comprehensiveness, and coordination. c. Cost-effeetiveness/cost-competitiveness Many decisions in the health care arena are being driven by economic considerations, and it is imperative that health centers strive to be cost-competitive. All health centers must be as efficient as possible, understand the costs of the services they provide, and bring costs in line with other providers in the marketplace providing comparable services. Health centers should be able to document the value^ i.e., cost and quality, of the services they provide and demonstrate the impact of their services on the health and well-being of the communities they serve. As part of becoming cost effective, health centers are expected to evaluate their management and delivery systems in order to be able to increase efficiency and to maintain operations in the competitive, cost conscious marketplace. Health centers will need to manage the care of their patients in accordance with their managed care risk arrangements and be able to monitor their financial risk related to managed care contracting requirements. 4. Needs Assessment a. Understanding Community Needs and Resources Crafting strategy demands a thorough knowledge of the community and population groups a health center intends to serve. In order to use limited resources effectively, this requires both an understanding of the health care needs of the target community, as well as resources available to meet those needs. Needs and available resources should be monitored on an ongoing basis and comprehensively assessed on a periodic basis, or when environmental changes dictate reassessment. Although there is no prescribed way to conduct a needs assessment, each program should be able to describe: 1) the geographic area and/or population groups which constitute their principal target population; 2) the characteristics of this population in terms of age, sex, socioeconomic status, health insurance status, ethnicity/culture, language, health status, housing status and health care utilization patterns; 3) perceptions of the target population about their own health care Page 10 BPHC Policy Information Notice 98-23 Performance measurement and quality improvement are critical elements for excellence in the health care industry. The environment is driving the use of data to increase accountability, support quality improvement, facilitate and support clinical decisions, monitor the population's health status, empower patients and families to make informed health care decisions, and provide evidence to eliminate wasteful practices. Similarly, both federal and state governments are requiring programs to document performance and improvement as a condition of continued support. All health centers must have a quality improvement system that includes both clinical services and management. Quality depends upon the health center's commitment to its community and its dedication to quality improvement. Quality of health center services also requires effective clinical and administrative leadership and functioning clinical and administrative systems. The organization should support and establish a locus of responsibility, such as an interdisciplinary quality improvement committee, for the quality improvement program. Quality improvement activities and results should be reported to the clinical and management staff as well as the governing board. Health center quality improvement systems should have the capacity to examine topics such as patient satisfaction and access; quality of clinical care; quality of the work force and work environment; cost and productivity; and health status outcomes. In addition, quality improvement systems should have the capacity to measure performance using standard performance measures and accepted scientific approaches. Centers are encouraged to establish performance standards in concert with other health centers serving similar populations. In analyzing performance data, health centers should compare their results with other comparable providers at the state and national level, and set realistic goals for improvement. Periodic reassessment enables health centers to measure progress toward these improvement goals and respond to advances or changes in clinical care. Since successful utilization management is an effective means of delivering appropriate services and maximizing value, quality improvement studies addressing utilization management of appropriate specialty, pharmacy, hospital and other services is key. Page 11 BPHC Policy Information Notice 98-23 other providers of medical and health-related services including substance abuse and mental health services; services that enable patients to access health center services such as outreach, transportation and interpretive services; and education of patients and the community regarding the availability and appropriate use of health services. Programs receiving funding to serve homeless individuals and families also must provide substance abuse services. Substance abuse services include treatment for alcohol and/or drug abuse and may use a variety of treatment modalities such as: non-hospital and social detoxification, non-hospital residential treatment and case management and counseling support in the community. While these service requirements are specific to programs receiving funding for this special population, all health centers are encouraged to ensure access to these services for all their patients. Required services may be provided by health center staff or through defined arrangements with other individuals or organizations. When a required service is not provided directly by health center staff, written agreements should be developed specifying how the service is provided. b. Additional Services Additional services may be critical to improve the health status of a specific community or population group. For example, health centers serving migratory and seasonal farmworkers should provide programs which reduce environmental and occupational risks for farm workers. Migrant health centers should be knowledgeable of the Environmental Protection Agency's Worker Protection Standard and other pesticide safety regulations. A program serving homeless people may decide that the provision of mental health services is critical to the effective provision of primary care. Services beyond the required health center services should be provided based on the needs and priorities of the community, the availability of other resources to meet those needs and the resources of the health center. c. Hospitalization and Continuum of Care The focus of health center services is primary and preventive care. However, all health centers are expected to assess the full health care needs of their target populations, form a comprehensive system of care incorporating appropriate health and social services, and manage the care of their patients Page 12 BPHC Policy Information Notice 98-23 served. Health center governing boards are responsible for deciding on the locations and times services are available. Many health centers operate primarily fixed-site locations. Others offer services in locations ranging from homeless shelters to migrant farmworker camps to public housing communities to schools. Some use vans to bring specific services to a broad audience or reach a highly mobile population. Many operate from several locations, including off-site locations. Programs serving people who are homeless or mobile engage in extensive outreach to provide services wherever the patients are. Hours: A health center's hours of operation should facilitate access to services and should include some early morning, evening and/or weekend hours. Health centers should also provide for access to needed care when the health center is closed. Mix of services: The specific mix of services offered by health centers is influenced by demographic, epidemiological, resource and marketplace factors. For example, health centers serving a population that is primarily women of child-bearing age and young children will offer services appropriate to those populations. In contrast, health centers serving primarily adult men will focus their services on the needs of that population. Communities with high prevalence of certain health problems (e.g., tuberculosis, HIV, diabetes, hypertension, mental illness, substance abuse) should design their mix of services to best address those issues. Type of service provider: The types of service providers utilized by health centers will depend on the mix of services the health center offers. Many health centers benefit from an inter-disciplinary team of providers. As appropriate, health centers should utilize various disciplines and levels of providers. Physicians, physician assistants, nurse practitioners and nurse midwives, as well as staff skilled in providing mental health, social work and substance abuse services may all be part of the provider team. Programs may also select staff members who are members of the community to provide education and outreach services. 3. Contracting for Health Services Health centers may have contracts or other types of agreements to secure services for health center patients that it Page 16 BPHC Policy Information Notice 98-23 closely with other members of the health center's management team. Typically, the Clinical Director is a physician, although other types of clinicians may fulfill the role, particularly in very small programs which may be staffed by non-physicians. In some marketplaces, a physician Clinical Director may be essential to effectively position the health center. Clinical Directors are expected to: 1) provide leadership and management for all health center clinicians whether employees, contractors or volunteers; 2) work as an integral part of the management team; and 3) establish, strengthen and negotiate relationships between the health center and other clinicians, provider organizations and payers in its marketplace. Because it is critical that the Clinical Director always represent the interests of the health center, its patients and the community it serves, it is preferred that a health center directly employ its Clinical Director. If this individual is not directly employed, the Chief Executive should retain authority to select and dismiss the individual. b. Staffing Clinical staffing patterns vary among health centers. All staffing arrangements must lead to the desired outcomes of availability, accessibility, quality, comprehensiveness and coordination of services for health center patients. Physician staff should be board certified or residency trained. Other clinicians should be licensed and certified as appropriate under state law. It is preferred that the health center directly employ its core clinical staff (at least the majority of the health center's providers). If the core staff are not directly employed, then the Chief Executive Officer should retain the authority to select and dismiss individual providers. Also, except in very small health centers or certain special population programs, it is expected that the employed core staff work only for the health center. Staff who work for the health center on a contract or volunteer basis may augment the employed core staff as appropriate. The recruitment and retention of high quality health professionals are the foundation of a successful health center and require a multi-faceted approach. Health center systems and policies should support clinicians with the tools and systems appropriate for quality care, including high patient satisfaction. Management based collaboration, work structured to be meaningful and challenging, as well as a commitment to share Page 14 BPHC Policy Information Notice 98-23 d. Continuing Professional Education Continuing professional education (CPE) is critical to the provision of quality care. Health centers are expected to ensure access to CPE that maintains licensure of the provider and is appropriate to the needs of each health center, its staff and the community served. e. Affiliation with Teaching Programs When appropriate, health centers are encouraged to develop affiliations with clinical training programs. The purpose of successful affiliations should be to contribute to the mission and objectives of the health center, to meet the educational objectives of health professionals in training and to increase understanding of the health care needs of underserved populations. Health centers making the decision to develop teaching affiliations are encouraged to seek compensation for the costs of training provided. 6. Consumer Bill of Rights and Responsibilities With the health system in a state of continual change, the rights and responsibilities of people using the health services, especially underserved and minority populations, need to be reaffirmed. Therefore, health centers should implement a Consumer Bill of Rights and Responsibilities: 1) to strengthen consumer confidence in health centers and a health care system that is fair, responsive and accountable to consumer concerns; 2) to encourage consumers to take an active role in improving their health; 3) to strengthen the strong relationship between patients and health care professionals; and 4) to reinforce the critical role consumers play in safeguarding their own health. Health centers should review the Consumer Bill of Rights and Responsibilities established by the Advisory Commission on Consumer Protection and Quality in the Health Care Industry and adopt and implement the precepts applicable to their operations. 7. Clinical Systems and Procedures a. Policies and Procedures Health centers must have written policies and procedures which address at least the following elements: hours of Page 15 BPHC Policy Information Notice 98-23 III. GOVERNANCE A. EXPECTATION Governance by and for the people served is an essential and distinguishing element of the health center program. Except as noted below, health centers must have a governing body which assumes full authority and oversight responsibility for the health center. The governing, board must maintain an acceptable size, composition and meeting schedule. Strategic thinking and planning are essential functions for the board within the context of the environment in which the health center operates, as well as pursuing its mission, goals and operating plan. The board carries out its legal and fiduciary responsibility by providing policy level leadership and by monitoring and evaluating the health center's performance. B. EXPLANATION 1. Overview of Requirements Governance requirements for health centers are addressed in law, regulation and policies. Requirements in the law apply to all health centers. The regulations set forth in 42 CFR Part 51c and 42 CFR Part 56 apply only to community health centers and migrant health centers respectively, though they provide useful guidance for other types of health centers. Section 330 requires that the health center has a governing body which: is composed of individuals, a majority of whom are being served by the center and who, as a group, represent the individuals being served by the center; meets at least once a month; schedules the services to be provided by the center; schedules the hours during which services will be provided; approves the center's grant application and annual budget; approves the selection of the director for the center; and except in the case of public entities, establishes general policy for the center. 2. Board Composition a. Consumer Board Members Health center governing boards are comprised of individuals who volunteer their time and energy to create a fiscally and Page 16 BPHC Policy Information Notice 98-23 relations and government are some examples of the areas of expertise needed by the board to fulfill its responsibilities. Regulations for co