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Health Centers Push for Remedy to Avoid Funding 'Cliff'

By John Reichard, CQ HealthBeat Editor

November 3, 2014 -- A top lobbyist for community health centers said congressional Republicans are coming around to the idea of preventing a possible 70 percent drop in federal funding to the facilities set to hit next fall.

"What we've gotten in talking to both Democrats and Republicans is a complete understanding—'Yes, we know that we've got to find a way to fix this problem,'" Dan Hawkins of the National Association of Community Health Centers (NACHA) said in an interview. Supporters of the centers are trying to insert language to stabilize funding in a larger legislative package during the lame duck session or early next year, said Hawkins, the association's senior vice president.

The outcome will be influenced by broader debate and discussion about the health care law (PL 111-148, PL 111-152). The centers are part of a primary care infrastructure the White House is counting on to help make sure people can actually get health care under the overhaul.

Opponents can prevent the law's mandatory federal funding of the centers from continuing past Sept. 30, 2015, shutting off the billions of dollars in extra money the government has been paying to build new centers and expand existing ones. By doing so, they would also be able to force sharp cuts in the 8,000-strong cadre of enrollment counselors on center staffs helping to expand coverage under the health law.

But Hawkins said he sees important signs of progress in the association's campaign to keep center budgets from being slashed.

Under current law, the centers will only receive federal funding through discretionary spending starting in fiscal 2016. In fiscal 2015, they are slated to get $5.1 billion in federal grants to support some 1,300 centers serving some 23 million people. Of that, $3.6 billion is mandatory federal funding.

Losing that amount next fall—a tumble NACHC refers to as the "primary care funding cliff"—would be devastating, Hawkins says.

A letter last month from 66 senators, 17 of them Republicans, to Senate leaders warned that the fiscal 2015 falloff "could result in the closure of health center sites, layoffs of providers and staff, and most importantly, a loss of access to primary and preventive care for millions of patients who often have no other place to turn."

Centers "employ more than 150,000 people, and generate an economic impact in the billions in some of the nation's most economically deprived communities." the letter stated.

Two hundred and fifty House members, 71 of them Republicans, signed an identical letter to leaders of that chamber. An Oct. 28 letter to congressional leaders from some 100 provider, business, academic, consumer, and economic development groups similarly urged lawmakers to act during the lame duck "to address the looming shortfall."

At this point, support hasn't gelled for any specific proposal. "It's more conceptual," says Hawkins.

Negotiators searching for common ground face sobering budget constraints and, beyond their general expressions of support for centers, deep skepticism among Republicans about mandatory spending for the centers established by the health law.

"Republicans have historically supported community health centers, but we will have a hard time saving them from budget cliffs created as part of the ACA--a bill we had nothing to do with," said a Senate GOP aide. "It is difficult, though not impossible, to envision a scenario that received Republican support."

Falling back to discretionary spending of $1.5 billion would drop federal funding well below the level centers received before passage of the health law in 2010. That year, centers got $2.2 billion in discretionary spending. That sum was pared to $1.5 billion to fit under caps set by the 2011 budget control law (PL 112-5).

Getting back to $2.2 billion in discretionary spending in fiscal 2015 would require lifting budget caps or trimming $700 million from elsewhere in the budget. The changes would come at a time when the Ebola outbreak could persuade Congress to add more to the budget of the Centers for Disease Control and Prevention and find a way to hike spending for the National Institutes of Health.

The news may not be all bad for the centers. Coverage expansion under the health law means centers have more paying customers. Another piece of good news is that the $3.6 billion in mandatory funding this year is a sharp increase over fiscal 2014, when it stood at $2.2 billion.

But Hawkins says the reality is that without congressional action, centers will see a 70 percent drop in federal grants in fiscal 2016 from the loss of the $3.6 billion. That translates to about a fifth of the average health center's budget and would force closures and layoffs. "Tens of thousands" would lose their jobs, he said, and centers will be able to serve seven million fewer people.

Hawkins noted that centers not only deliver care but have staff that help people sign up for health coverage and other assistance programs. The 8,000 staff members involved in those activities comprise up to one quarter of navigators, assisters, and counselors who helped people line up coverage during last fall's first open enrollment period under the health law, he said.

The Obama administration has proposed continuing the mandatory funding mechanism of the health law for three more years. Mandatory funding would total $2.7 billion annually through fiscal 2018.

Another possible solution is to create a dedicated fund, outside of the health law, to direct mandatory spending. It could also address the expiration next fall of mandatory funding streams created by the health law for the National Health Service Corps and for primary care training in programs called Teaching Health Centers. The doctors who are part of the National Health Service Corps make up much of the staffing of community health centers, and that program does not have a separate funding stream of discretionary spending.

A third option on the table is relying purely on discretionary spending for community health centers, the National Health Service Corps and Teaching Health Centers.

It all adds up to a complex budget challenge with major political considerations—virtually every congressional district has a health center that constituents rely on for care. Hawkins says right now Hill offices aren't saying which of the approaches they prefer.

"They're interested and want to know more, but nobody is saying, 'Oh, that's the silver bullet right there,'" Hawkins said.

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