Community health centers face trouble after public health emergency ends

A perfect storm looms for federally qualified health centers whenever the federal government decides the COVID-19 public health emergency is over.

When that declaration ends, which isn’t likely to happen until at least October, many community health center patients are expected to lose Medicaid coverage, which will leave clinics without reimbursement for services they provide. Planning for the future is further complicated by a pending funding cliff in fiscal 2023 and numerous other policy challenges.

“It’s very stressful looking for money rather than taking care of people,” said Mary Elizabeth Marr, CEO of community health center chain Thrive Alabama. “We are the ones that take care of people that nobody else wants to take care of, and yet we’re having to do all kinds of heroic things to try to raise funds.”

The financial uncertainty comes amid rising operational costs and a pandemic that is disproportionately harming the low-income communities that federally qualified health centers serve. Enhanced federal funding during the public health emergency is supporting COVID-19 testing and treatment services, and changes to telehealth and reimbursement regulations is boosting access. But that could all go away before the virus does.

“There’s sort of fires in every direction,” said Amanda Pears Kelly, CEO of Advocates for Community Health, a coalition of large community health centers.

Medicaid redeterminations

The healthcare sector is planning for and worrying about the eventual end of the public health emergency, during which states have have to maintain their Medicaid rolls to receive extra federal money.

But as many as 16 million people could lose Medicaid coverage when the designation expires and states resume checking enrollees’ eligibility. Medicaid is the primary payer for community health centers in most states, and a majority centers reported an up to 25% increase in Medicaid patients during the pandemic, according to the National Association of Community Health Centers.

Federally qualified health centers must care for people regardless of their ability to pay. But patients losing coverage could wreak havoc on these clinics’ finances.

HealthSource of Ohio, a community health center based in Loveland, estimates it will lose approximately $500 in reimbursement for each patient removed from Medicaid when redeterminations restart, said Becky McMullen, the provider’s director of outreach success and enrollment. If every patient newly enrolled in Medicaid last year lost coverage, the clinic would lose more than $1.25 million, she said.

Huntsville-based Thrive Alabama is expecting an influx of patients who no longer have insurance, which would negatively affect its bottom line, Marr said. This makes expanding Medicaid in states such as Alabama that haven’t even more urgent, she said.

“There is a desperate need,” Marr said. “We just don’t get the funding that we really need to take care of the underinsured, uninsured and low-income folks.”

Community health centers also play a crucial role helping people to obtain and keep health benefits. In 2020, federally qualified health centers hosted more than 3.6 million insurance assistance sessions, said Jeremy Crandall, director of state and federal policy at the National Association of Community Health Centers.

Partnership Community Health Center in Appleton, Wisconsin, is gearing up for a massive campaign to assist patients who need to renew Medicaid coverage or to enroll in other insurance once redeterminations begin again. The provider plans a public education push that will include flyers, postcards and social media advertisements. The center also plans to text patients about coverage options and to include messages about enrollment in after-visit summaries and billing statements, said Julia Garvey, who works as policy advisor and a navigator at Partnership Community Health Center.

Community health centers can help states prepare for Medicaid renewals, Crandall said. But these providers’ relationships with state agencies and redeterminations planning vary widely.

For example, Partnership Community Health Center participates in a statewide Medicaid redeterminations task force, plans to use some educational materials created by the state and has a productive relationship with the Wisconsin Department of Health Services, Garvey said.

By contrast, HealthSource of Ohio hasn’t heard anything about its home state’s redetermination plans, McMullen said. “If we had that information—Ohio’s plan—we could incorporate their verbiage into our presentation to our consumers,” she said.

COVID-19 funding

Community health centers have also received enhanced grant funding to support COVID-19 testing and vaccinations, said Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation. These clinics will continue testing and vaccinating patients, but extra money may not be available in the future, she said. A federal fund to finance uninsured patients’ COVID-19 care has already closed.

When the COVID-19 funding runs dry, Thrive Alabama’s clinics will likely have to fold pandemic-related operations into their general operations budget, Marr said. The organization hired extra nurses and administrative staff to provide testing and to comply with federally mandated data reporting in response to COVID-19. Those will be needed long-term, she said.

Community health centers are also working to resume services they suspended because of COVID-19 and to catch up on delayed care, especially childhood immunizations. Other programs initiated using telehealth may shut down without adequate reimbursement or policy changes, center leaders said. Medicaid telehealth policies vary among states, and the federal government extended many Medicare flexibilities for 151 days after the public health emergency ends.

“All of this takes resources. They arguably need to maintain the enhanced funding that they have been getting,” said Sara Rosenbaum, a health law and policy professor at George Washington University’s Milken Institute School of Public Health. “Just because the federal government decides for various reasons that we’re not in a technical emergency anymore, doesn’t mean that these communities don’t face heightened needs from the pandemic.”

340B restrictions

Limits on the 340B drug discounting program that pharmaceutical companies imposed also stand as a threat to safety-net clinics, Rosenbaum said. Drugmakers have restricted discounts, saying the program has grown too large and doesn’t adequately serve patients. But the federal government has told manufacturers their restrictions may lead to fines.

“All of these things together are like a tsunami of problems happening at a time when the virus is still very much a presence, particularly in the poorest communities where health centers work, and their costs are huge,” Rosenbaum said.

Federal funding cliff

Adding to community health centers’ challenges, their largest funding source is set to expire in fiscal 2023. The majority of federal grants for these providers come from the Community Health Center Fund, which Congress established in 2010 and reauthorized several times.

Congress is likely to extend the funding again. But not knowing how much money centers will be allocated for the next couple years makes planning difficult, Pears Kelly said. “That kind of uncertainty is tragic, and ripples across everything,” she said.

Advocates for Community Health began a campaign Wednesday calling on Congress to appropriate $30 billion to federally qualified health centers by 2030, starting with $13 billion in 2023. These clinics are due to receive $5.7 billion in mandatory and discretionary funding during fiscal 2022.