The legislative history of the BBA does not
illuminate congressional intent as to how the
statutory change is to be interpreted and applied
to public and private nonprofit entities, and
the Secretary is mandated to establish the requirements
under the BBA. The attached Policy Information
Notice (PIN) presents HRSA's interpretation
and implementation of the revised language with
respect to private nonprofit entities. A separate
PIN provides the interpretation and implementation
of the revised language for public entities.
Both PINs are the products of extensive discussions
between Federal staff representing HRSA and
HCFA and with representatives of both public
and private nonprofit health centers.
We have identified PIN 97-27, Affiliation Agreements
of Community and Migrant Health Centers, dated
July 22, 1997, and the amendment PIN 98-24,
dated August 17, 1998, as statements of the
requirements the Department was mandated to
establish under the BBA. The Department's use
of the policy set forth in PIN 97-27 and PIN
98-24 to implement the amended statutory definition
of FQHC Look-Alike entities assures consistency
in the Bureau of Primary Health Care's (BPHC)
determinations concerning section 330 grantees
and FQHC Look-Alike entities.
Private nonprofit entities seeking FQHC Look-Alike
designation or recertification are encouraged
to consult with Field Office and Headquarters
staff if there are questions about the application
of this policy to their particular case. Additionally,
the BPHC's Program Assistance Letter 98-05,
issued April 3, 1998, requested currently designated
FQHC Look-Alike entities and organizations now
seeking FQHC Look- Alike designation to submit
additional documents to enable HRSA to complete
its assessments. These documents will assist
in the review for compliance with this policy.
Recertifications and requests for designation
that are now in a pending status will be released
if determined to be unaffected by the amendment.
Entities with recertification requests found
to be affected by the amendment will be so advised,
and the entities will have 1 year or until their
next recertification date to become compliant
or risk loss of designation.
Section 4712(d) of the Balanced Budget Act (BBA)
of 1997 modifies the definition contained in
section 1905 of 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 "based on the recommendations
of the Health Resources and Services Administration
within the Public Health Service, 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, the Health Resources and Services Administration
(HRSA) and the Health Care Financing Administration
agreed to place a moratorium on the processing
of applications for FQHC Look-Alike designation
and/or recertification.
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 private nonprofit FQHC Look-Alike entity. It also formally ends the moratorium
on HRSA processing of applications from private
nonprofit entities for FQHC Look-Alike designation
and recertification.
A separate PIN provides the interpretation of
the statutory limits for public FQHC Look-Alike
entities.
II.
COMPLIANCE ASSESSMENTS |
This
PIN identifies PIN 97-27, Affiliation
Agreements of Community and Migrant Health Centers,
issued July 22, 1997, and clarified by PIN 98-24,
dated August 17, 1998, as the statements of
the requirements the Department was mandated
to establish under the BBA. Use of the policy
set forth in PIN 97-27, to implement the amended
statutory definition of FQHC Look-Alike entities
assures consistency in the BPHC's determinations
relative to section 330 grantees and FQHC Look-
Alike entities. Private nonprofit entities submitting
applications for FQHC Look-Alike designation
under PIN 97-22, Federally Qualified Health
Center Look-Alike Guidelines and Application,
dated May 21, 1997, or for annual recertification,
will be subject to an assessment against the
standards and principles in these two policy
documents.
As stated in PIN 97-27, the review of affiliation
relationships will include an evaluation of
the health center's
corporate structure, with particular attention
to corporate integration. Of particular concern
are corporate structures that give another entity
overriding approval authority, prohibit or restrict
through dual majority or super-majority vote
requirements, action on any authority or responsibility
that is vested in the health center board through
legislation or regulation. Sole corporate member
and other parentsubsidiary approaches to corporate
integration are permitted under PIN 97-27, if
deemed to meet all statutory and regulatory
requirements by demonstrating there is no violation
of any aspect of the affiliation policy standards.
Applicants for FQHC Look-Alike designation,
or recertification, proposing a corporate integration
model may be subject to review by the Department's
Office of the General Counsel against State
law reserved authorities.
In addition to corporate structure, we also
are concerned about health centers that delegate
a substantial portion of the scope of the project
to another entity or entities. These delegations
are usually carried out through administrative
or management services contracts. Contracts
or agreements for specific services such as
ancillary and allied health services generally
are acceptable since they do not pose risk to
the health center's integrity or autonomy. A
primary concern is health centers that contract
all or a substantial portion of their administrative,
financial management and/or clinical operations
to one or more other entities. This diminishes
the health center's role in carrying out the
center's activities and may be perceived as
the health center serving as a conduit to another
party for financial benefit. The BPHC review
will assess the level of dependence of the FQHC
Look-Alike on another entity or entities, and
the health center's maintenance of accountability
over the operation of the project.Employment
arrangements for key management staff will be
evaluated. Key management staff include the
Chief Executive Officer (CEO), the Chief Medical
Officer (CMO) and the Chief Financial Officer
(CFO). The CEO must be selected by the governing
board and directly employed by the health center.
It is not acceptable for any other entity to
have the authority to select or dismiss the
CEO.
It is recognized that there are situations in
which exceptions to the BPHC's preference that
health centers directly employ personnel to
fill the positions of CFO and CMO and/or the
majority of its primary care clinicians may
be necessary and appropriate in order to maximize
patient access to comprehensive, effective,
cost-effective and quality health care. The
BPHC is committed to allowing exceptions to
the preference model upon a health center's
assurance that full accountability is maintained.
Programmatic accountability will be monitored
once an exception is approved and implemented
to assure that the health center continues to
meet its mission and FQHC requirements. The
PIN 98-24 sets forth criteria for reviewing
requests for exceptions to the BPHC's preference
that a health center directly employ its CFO,
CMO and its core staff of full-time primary
care providers, and explains the process for
determining whether affiliation arrangements
are in compliance
with program policy requirements.
The HRSA process for reviewing applications
for FQHC Look-Alike designations will continue
to be overseen by Headquarters staff in the
BPHC, Division of Community and Migrant Health.
The BPHC review will include the health center's
bylaws, articles of incorporation, full audit,
and any and all affiliation documents, including
substantial contracts that have been executed,
or are being proposed, between the health center
and any other entity or entities. A completed
copy of the checklist attached to PIN 98-24
must accompany each application. Organizational
entities that are currently designated as FQHC
Look-Alikes and do not meet the requirements
of PIN 97-27 and PIN 98-24 will have 1 year
from date of notification or until their next
recertification date, whichever is longer, to
satisfactorily address non-compliant areas.
If compliance is not achieved, FQHC Look-Alike
designation is at risk and may be withdrawn.
Guidance is available through the appropriate
HRSA Field Office (see attached list). Headquarters
staff are available to assist with questions
concerning affiliation issues. Questions should
be directed to Ms. Tonya Bowers at (301)
594-4329.
HRSA FIELD OFFICES
HRSA NORTHEAST CLUSTER
Bruce
Riegel, Director
Boston Field Office Division of Health Services
DHHS - Field Office 1
JFK Federal Building, Rm. 1826
Boston, MA 02203
(617) 565-1482
ATTN: Kenneth Brown
HRSA NORTHEAST CLUSTER
Bruce
Riegel, Director
New York Field Office Division of Health Services
DHHS - Field Office II
26 Federal Plaza, Rm 3337
New York, NY 10278
(212) 264-2664
ATTN: Ronald Moss
HRSA NORTHEAST CLUSTER
Bruce
Riegel, Director
Philadelphia Field Office Division of Health
Services
DHHS - Field Office III
Public Ledger Building
150 S. Independence Mall West, Suite 1172
Philadelphia, PA 19106-3499
(215) 861-4419
HRSA
SOUTHEAST CLUSTER
Robert Jackson, Acting Director
Atlanta Field Office Division of Health Services
HRSA Southeast Field Office
Atlanta Federal Center
61 Forsyth Street, S.W., Suite 3M60
Atlanta, GA 30303-8909
(404) 562-2996
HRSA MIDWEST CLUSTER
Stephen Enders, DDS, Director
Chicago Field Office Division of Health Services
DHHS - Field Office V
105 West Adams Street, 17th Floor
Chicago, IL 60603
(312) 353-1658
HRSA WEST CENTRAL CLUSTER
Jay
McGath, Acting Director
Dallas Field Office Division of Health Services
DHHS - Field Office VI
1301 Young Street, 10th Floor, HRSA-1
Dallas, TX 75202
(214) 767-3872
HRSA MIDWEST CLUSTER
Stephen Enders, DDS, Director
Kansas City Field Office Division of Health
Services
DHHS - Field Office VII
Federal Office Building
601 East 12th Street, Rm 501, FOB
Kansas City, MO 64106
(816) 426-5226
ATTN: Hollis Hensley
HRSA WEST CENTRAL CLUSTER
Jerry
Wheeler, Acting Director
Denver Field Office Division of Health Services
DHHS - Field Office VIII
Federal Office Building
1961 Stout Street, Rm. 498, FOB
Denver, CO 80294
(303) 844-3204 x 205
HRSA PACIFIC WEST CLUSTER
Antonio
Duran, Director
San Francisco Field Office Division of Health
Services
DHHS - Field Office IX
50 United Nations Plaza
San Francisco, CA 94102
(415) 437-8090
HRSA PACIFIC WEST CLUSTER
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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