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DATE:
April 20, 1999
DOCUMENT
NAME: Implementation of the
Balanced Budget Act Amendment
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Section 4712(d)
of the Balanced Budget Act (BBA) of
1997 modifies the definition contained
in the Social Security Act for a Federally
Qualified Health Center (FQHC) Look-Alike
entity. The Social Security Act, as
amended by the BBA, defines an FQHC
Look-Alike as an entity which Abased
on the recommendations of the Health
Resources and Services Administration
(HRSA) within the Public Health Service
(PHS), is determined by the Secretary
to meet the requirements for receiving
[a section 329, 330 or 340] grant including
requirements of the Secretary that an
entity may not be owned, controlled
or operated by another entity. (emphasis
denotes BBA language). The effective
date of this amendment was August 5,
1997, the date the Act was signed. At
that time, HRSA and the Health Care
Financing Administration agreed to place
a moratorium on the processing of applications
for FQHC Look-Alike designation.
This Policy Information Notice (PIN) establishes the Bureau of Primary Health
Care's (BPHC) interpretation of the
statutory limits on the involvement
of another entity in the ownership,
control and/or operation of a public
FQHC Look-Alike entity. It also formally
ends the moratorium on HRSA processing
of applications from public entities
for FQHC Look-Alike designation and
recertification. A separate PIN provides
the interpretation of the revised
language for private non-profit FQHC
Look-Alike entities.
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A public
center must be either: a) a public entity
that isstructured so as to meet all
section 330 requirements,including those
applicable to the governing board; or
b) apublic entity and a co-applicant
entity which together meetthe section
330 requirements. All public centers
must fitinto one category or the other
in order to be in compliance.
Under option (b), the public agency must have a co-applicant board which meets
the section 330 composition and responsibility
requirements except for the requirement
that the board establish general policies
for the health center. Section 330
allows the public agency to retain
general policy setting functions and
authorities. The BPHC expects, however,
that the community- based governing
board will be vested with the authority
to manage the health center to the
extent allowed by the public entity's
charter, with shared responsibility
in the exercise of some authorities.
The delegation of authority to the
board and shared roles and responsibilities
must be fully described in an agreement
that is to be submitted with the public
entity's application for FQHC Look-Alike
designation or recertification.
We have determined that public entities are not owned, controlled or operated
by another entity when the following
guidelines are met:
A. Public Center With No Co-Applicant
In one form of public center, a
public entity qualifies as a grantee
or FQHC Look-Alike without needing
a co-applicant. In this case, the
public entity receives theFQHC Look-Alike
designation and its board meets
section 330 requirements.
Thus, the public entity that receives
the FQHC Look-Alike designation
is the Aentity that cannot be owned,
controlled or operated by another
entity as stated in the BBA. In
this context, the restrictions on
the powers that Aanother entity
may exercise vis-a-vis the public
center refer to powers exercised
by any separately incorporated entity,
or entities, that are otherwise
legally distinct from the public
entity. This does not include departments
or divisions of a single entity
(e.g., a city, county, or other
single governmental body) that are
not legally distinct. Accordingly,
no separate entity or entities may
own, control or operate the public
entity.
B. Public Center with Co-Applicant
Arrangements
In the other form of public center,
there is a public entity applicant
with a co-applicant entity which,
when combined, meet the section
330 governance requirements. In
co-applicant arrangements, the public
entity receives the FQHC Look-Alike
designation, and the co-applicant
entity serves as the Ahealth center
board, with the two collectively
referred to as the Ahealth center.
The preferred model is to have the
co-applicant incorporated as a separate
entity, with adopted bylaws which
specify its authorities and methods
of operation vis-a-vis the public
entity. Experience has shown that
this method assures maximum accountability
for the user majority board and
best achieves the purposes of the
section 330 programs. It is recognized,
however, that incorporation of the
co-applicant may not be appropriate
or feasible for all public entities
and, therefore, is not a requirement.
1. Required Authorities of the Co-Applicant
The governing board selection,
composition and responsibility requirements
apply to the coapplicant since it
functions as the community-based board
of the health center. The BPHC has
established standards in the context
of health center affiliations which
pertain also to the relationship between
a public entity and its coapplicant.
These standards are stipulated in
BPHC PIN 97-27, Affiliation Agreements
of Community and Migrant Health Centers,
dated July 22, 1997. This PIN addresses
compliance with the selection and
composition requirements to ensure
the board's independence and the limitations
on a third party (e.g., to select
and remove board members) which apply
to the public entity applicant as
well as other third parties.
Section 330 permits the public entity to retaingeneral policy-making authority.
(See thediscussion following the list
of activities and item2, below.) The
purpose of this provision is to recognize
that public entities are constrained
by law, in some cases, not to delegate
certain governmental functions to
private entities. At the same time,
we recognize the statutory objective
of section 330 that the health center's
policy setting process be carried
out, to the extent possible, by a
community-based governing board. This
guidance is designed to accommodate,
to the extent feasible, both of these
objectives.
As provided by statute and regulation, governing boards of health centers are
responsible for the following activities:
- Selection of the services to be provided by the health center;
- Approval of the health center's annual budget, with the overall plan and budget
prepared under its direction by
a committee consisting of representatives
of the health center board, administrative
staff, and the medical staff of
the health center;
- Approval of the selection and dismissal of the Executive Director for the center;
- Approval of the application for a second or subsequent grant or FQHC recertification;
- Adopt health care policies, including scope and availability of services, location
and hours of services and quality
of care audit procedures;
- Assure that the health center is operated in compliance with applicable Federal,
State and local laws and regulations;
and
- Evaluate center activities including services utilization patterns, productivity
of the center, patient satisfaction,
achievement of project objectives,
and development of a process for
hearing and resolving patient grievances.
Relative to the governance authorities required of the health center board as
described in (a) through (g) above,
we do not require that all authorities
be exercised solely by the co-applicant
board. It is acceptable for the public
entity to share in the exercise of
authorities. For example, section
330 requires that the governing board
retain the authority for approval
of the annual budget but does not
preclude arrangements in which active,
joint decision-making precedes that
approval or in which the public entity
also approves the budget. The same
approach can apply to the selection
of the Executive Director. Other decisions
regarding how the authorities may
be shared are a matter of choice.
On the other hand, a pure Aconsensus
approach, without the subsequent required
approval by the health center board,
would not be acceptable. It also would
not be acceptable for the public entity
to require an Executive Director to
be retained whom the health center
board voted to dismiss.
2. Optional Policy Setting Authorities of the Public Entity
Section 330 established that the
public entity may retain general policy
setting authority.
The BPHC recognizes that many public
entities are required by law to retain
final authority for certain types
of activities. No justification is
required for arrangements in which
the public entity retains authority
for the following:
a. To establish personnel policies
and procedures, including selection
and dismissal procedures, salary
and benefit scales, employee grievance
procedures, and equal employment
opportunity practices; and
2. To develop management and control
systems that are in accordance with
sound financial management procedures,
including: the provision for an
audit on an annual basis to determine,
at a minimum, the fiscal integrity
of financial transactions and reports
and compliance with the terms and
conditions of FQHC Look-Alike designation;
approval of the annual center budget;
establishment of systems for eligibility
determination, billing and collection,
including partial payment schedules;
making other reasonable efforts
to collect for costs in providing
health services to persons eligible
for Federal, State or local public
assistance; and, long range financial
planning.
For other decision-making which is to be exercised by the public entity to the
exclusion of the co-applicant's governing
board, BPHC requires the submission
of explanatory documentation as to
the legal basis for the exclusion
of the governing board.
3. Agreement Between Public Entity and Co-Applicant
The BPHC requires public entities
and their co-applicants to execute,
and present for BPHC review and approval,
an agreement which describes the delegation
of authority and defines each party's
role, responsibilities, and authorities.
Such agreements must assure that the
relationship is structured in compliance
with section 330 of the Public Health
Service Act, implementing regulations,
and PIN 97-27, Affiliation Agreements
of Community and Migrant Health Centers,
and subsequent clarifications.
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The HRSA process for
reviewing applications for public FQHC
Look-Alike designations will continue
to be overseen by Headquarters staff
in the BPHC, Division of Community and
Migrant Health.
Public entities that are currently designated as FQHC Look-Alikes and are determined
not to meet the requirements of this
PIN will have up to 1 year from date
of notification of noncompliance to
satisfactorily address areas of concern.
Guidance is available to currently designated
public FQHCs, or public entities seeking
designation, through the appropriate
HRSA Field Office (see attached list
to this PIN). Questions concerning PIN
98-12, Implementation of the Section
330 Governance Requirements, dated April
28, 1998, should be directed to Dr.
Regan Crump, at (301) 594-4421. Questions
concerning this PIN should be directed
to Ms. Tonya Rousmaniere at (301) 594-4329.
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HRSA FIELD OFFICES
HRSA NORTHEAST CLUSTER
Boston Field Office |
Bruce Riegel, Director
Division of Health Services
DHHS - Field Office I
JFK Federal Building, Rm. 1826
Boston, MA 02203
(617) 565-1482
ATTN: Kenneth Brown |
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HRSA NORTHEAST CLUSTER
New York Field Office |
Bruce Riegel, Director
Division of Health Services
DHHS - Field Office II
26 Federal Plaza, Rm. 3337
New York, NY 10278
(212) 264-2664
ATTN: Ronald Moss |
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HRSA NORTHEAST CLUSTER
Philadelphia Field Office
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Bruce Riegel, Director
Division of Health Services
DHHS - Field Office III
Public Ledger Building
2150 S. Independence Mall West,
Suite 1172
Philadelphia, PA 19106-3499
(215) 861-4419 |
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HRSA SOUTHEAST CLUSTER
Atlanta Field Office
3M60 |
Robert Jackson, Acting Director
Division of Health Services
HRSA Southeast Field Office
Atlanta Federal Center
61 Forsyth Street, S.W., Suite
Atlanta, GA 30303-8909
(404) 562-2996 |
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HRSA MIDWEST CLUSTER
Chicago Field Office |
Stephen Enders, DDS, Director
Division of Health Services
DHHS - Field Office V
105 West Avenue Street, 17th Floor
Chicago, IL 60603
(312) 353-1658 |
HRSA WEST CENTRAL CLUSTER
Dallas Field Office |
Jay McGath, Acting Director
Division of Health Services
DHHS - Field Office VI
1301 Young Street, 10th Floor,
HRSA-1
Dallas. TX 75202
(214) 676-3872 |
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HRSA MIDWEST CLUSTER
Director
Kansas City Field Office
FOB |
Stephen Enders, DDS,
Division of Health Services
DHHS - Field Office VII
Federal Office Building
601 East 12th Street, Rm. 501,
Kansas City, MO 64106
(816) 426-5226
ATTN: Hollis Hensley |
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HRSA WEST CENTRAL CLUSTER
Denver Field Office |
Jerry Wheeler, Acting Director
Division of Health Services
DHHS - Field Office VIII
Federal Office Building
1906 Stout Street, Rm 498, FOB
Denver, CO 80294
(303) 844-3204, ext. 205 |
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HRSA PACIFIC WEST CLUSTER
San Francisco Field Office
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Division of Health Services
DHHS - Field Office IX
50 United Nations Plaza
San Francisco, CA 94102
(415) 437-8090 |
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HRSA PACIFIC WEST CLUSTER
Seattle Field Office
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Antonio Duran, Director
Seattle Field Office Division
of Health Services
DHHS - Field Office X
Blanchard Plaza
2201 Sixth Avenue, Rm. 700,
MS RX-23
Seattle, WA 98121
(206) 615-2491
ATTN: Dr. Richard Rysdam
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