oversight

Health Center Program: Improved Oversight Needed to Ensure Grantee Compliance with Requirements

Published by the Government Accountability Office on 2012-05-29.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States Government Accountability Office

GAO                          Report to Congressional Requesters




May 2012
                             HEALTH CENTER
                             PROGRAM
                             Improved Oversight
                             Needed to Ensure
                             Grantee Compliance
                             with Requirements




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GAO-12-546
                                               May 2012

                                               HEALTH CENTER PROGRAM
                                               Improved Oversight Needed to Ensure Grantee
                                               Compliance with Requirements
Highlights of GAO-12-546, a report to
congressional requesters




Why GAO Did This Study                         What GAO Found
Under the Health Center Program,               The Department of Health and Human Services’ (HHS) Health Resources and
HRSA provides grants to eligible health        Services Administration (HRSA) relies on three main methods to oversee
centers. HRSA is responsible for               grantees’ compliance with the 19 key program requirements.
overseeing over 1,100 health center
grantees to ensure their compliance            •   Annual compliance reviews. HRSA project officers review available
with Health Center Program                         information, including that submitted by grantees, to determine whether the
requirements. GAO was asked to                     grantee is in compliance with each of the 19 program requirements.
examine HRSA’s oversight. This report
(1) describes HRSA’s oversight                 •   Site visits. HRSA and its consultants visit grantees to review documentation,
process and (2) assesses the extent to             meet with officials, and tour the health center. Some of these visits are
which the process identifies and                   intended to assess compliance with some or all program requirements.
addresses noncompliance with what
                                               •   Routine communications. Project officers communicate with grantees via
HRSA refers to as the 19 key program
requirements. GAO reviewed and
                                                   phone and e-mail to learn about issues that may affect their compliance.
analyzed HRSA’s policies and                   When HRSA identifies noncompliance with program requirements, it uses a
procedures and available programwide           process, implemented in April 2010, to address this with a grantee. This process
data related to HRSA's oversight of
                                               provides a grantee with defined time frames for addressing any identified
health centers, interviewed HRSA
                                               noncompliance. If a grantee is unable to correct the compliance issue by the end
officials, and reviewed documentation
of HRSA’s oversight from 8 selected
                                               of the process, HRSA’s policy is to terminate the health center’s grant.
grantees that varied in their                  HRSA’s ability to identify grantees’ noncompliance with Health Center Program
compliance experience, as well as              requirements is insufficient.
other factors.
                                               •   HRSA does not require project officers to document their basis for
What GAO Recommends                                determining that a grantee is in compliance with a requirement. When project
GAO recommends that, among other                   officers are uncertain about compliance, HRSA instructs them to consider a
things, HRSA improve its                           grantee in compliance and to note the lack of certainty in a text field of their
documentation of compliance                        evaluation tool. However, HRSA has no centralized mechanism to ensure
decisions, strengthen its ability to               this occurs. Thus, it is unclear whether project officers' decisions that a
consistently identify and cite grantee             grantee is in compliance with a requirement are because there was sufficient
noncompliance, and periodically                    evidence demonstrating compliance or the project officer failed to document
assess whether its new process for                 that compliance was uncertain.
addressing grantee noncompliance is
working as intended. HHS concurred             •   The number of compliance-related visits conducted may be limited. HRSA’s
with all of GAO’s recommendations,                 available data indicates that only 11 percent of grantees had a compliance-
and stated that HRSA has already                   related site visit from January through October 2011; less than half of which
begun implementing many of them.                   had a visit that assessed compliance with all 19 program requirements.
HHS, however, did not concur with
what it characterized as certain               •   HRSA’s project officers do not consistently identify and document grantee
conclusions drawn from the findings.               noncompliance. Project officers GAO interviewed had different interpretations
HHS based its comments on only                     of what constitutes compliance with some program requirements and
some of the evidence. GAO’s analysis               therefore when they should cite a grantee for noncompliance.
of all the evidence and HRSA’s
planned implementation of the                  HRSA’s process for addressing grantee noncompliance with program
recommendations confirm the validity           requirements seems to provide both the agency and grantees with a uniform
of the findings and conclusions.               structure for addressing noncompliance. However, the extent to which this
                                               process is adequately resolving grantee noncompliance or terminating grantee
View GAO-12-546. For more information,         funding is unclear because HRSA’s experience with this process is too recent for
contact Debra A. Draper at (202) 512-7114 or
draperd@gao.gov.
                                               GAO to make an overall assessment.

                                                                                        United States Government Accountability Office
Contents


Letter                                                                                     1
               Background                                                                  6
               HRSA Uses Three Main Methods to Oversee Grantee Compliance
                 and Has a Process to Address Noncompliance                               10
               HRSA’s Process for Identifying Noncompliance Is Insufficient, and
                 It Is Too Soon to Assess the Revised Process for Addressing
                 Noncompliance                                                            20
               Conclusions                                                                29
               Recommendations for Executive Action                                       30
               Agency Comments and Our Evaluation                                         31

Appendix I     Characteristics of Selected Health Center Grantees                         35



Appendix II    Summary of Noncompliance Data for the Health Center Program                36



Appendix III   Comments from the Department of Health and Human Services                  38



Appendix IV    Contacts and Staff Acknowledgments                                         45



Tables
               Table 1: Summary of HRSA’s 19 Key Health Center Program
                        Requirements                                                       7
               Table 2: Examples of HRSA Guidance to Project Officers for
                        Assessing Compliance with Six Selected Program
                        Requirements                                                      12
               Table 3: Types of HRSA Site Visits Conducted for the Health Center
                        Program                                                           15
               Table 4: Characteristics of the Eight Selected Health Center
                        Grantees                                                          35




               Page i                                               GAO-12-546 HRSA Oversight
Figures
          Figure 1: HRSA’s Process for Addressing Health Center Grantee
                   Noncompliance                                                                    19
          Figure 2: Number of Conditions of Noncompliance HRSA Issued
                   per Grantee, from April 9, 2010, through October 7, 2011                         36
          Figure 3: Number of Conditions and Number of Grantees That Had
                   a Condition, by Requirement from April 9, 2010, through
                   October 7, 2011                                                                  37




          Abbreviations

          BPHC              Bureau of Primary Health Care
          HHS               Department of Health and Human Services
          HRSA              Health Resources and Services Administration
          PPACA             Patient Protection and Affordable Care Act
          UDS               uniform data system



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          Page ii                                                       GAO-12-546 HRSA Oversight
United States Government Accountability Office
Washington, DC 20548




                                   May 29, 2012

                                   The Honorable Michael B. Enzi
                                   Ranking Member
                                   Committee on Health, Education, Labor, and Pensions
                                   United States Senate

                                   The Honorable Richard Burr
                                   Ranking Member
                                   Subcommittee on Children and Families
                                   Committee on Health, Education, Labor, and Pensions
                                   United States Senate

                                   The Honorable Tom Coburn
                                   Ranking Member
                                   Permanent Subcommittee on Investigations
                                   Committee on Homeland Security and Governmental Affairs
                                   United States Senate

                                   The nationwide network of health centers in the federal Health Center
                                   Program is an important component of the health care safety net for
                                   vulnerable populations, including Medicaid beneficiaries, people who are
                                   uninsured, and others who may have difficulty obtaining access to health
                                   care. To fulfill the Health Center Program’s mission of providing
                                   comprehensive, quality primary health care services for the medically
                                   underserved, the Department of Health and Human Services’ (HHS)
                                   Health Resources and Services Administration (HRSA) provides grants to
                                   eligible health centers under Section 330 of the Public Health Service
                                   Act. 1 These grants are an important part of successful health center
                                   operations and viability. In 2010, Health Center Program grants helped
                                   fund more than 1,100 health center grantees that provided services at
                                   more than 8,100 health care delivery sites and served nearly 19.5 million
                                   people—72 percent of whom had income at or below the federal poverty
                                   level. These grants made up over 20 percent of all health center grantees’
                                   revenues in 2010.




                                   1
                                    42 U.S.C. § 254b.




                                   Page 1                                            GAO-12-546 HRSA Oversight
To continue receiving program funds, health center grantees must comply
with a number of requirements. For example, HRSA identified what it
refers to as the 19 key program requirements, which the agency indicated
are based on requirements outlined in the Public Health Service Act and
regulations. 2 HRSA groups these 19 program requirements into four
broad categories: patient need, the provision of services, management
and finance, and governance. For example, the provision of services
category includes requirements for health center grantees to provide
comprehensive primary health care services, including preventive,
diagnostic, treatment, and emergency services; provide professional
coverage after normal business hours; and have a system for adjusting
fees based on a patient’s ability to pay. Project officers in HRSA’s Bureau
of Primary Health Care (BPHC) are primarily responsible for overseeing
health center grantees to ensure their compliance with the Health Center
Program requirements.

Funding for the Health Center Program has increased substantially during
the past decade. The Health Center Program’s annual funding more than
doubled from approximately $1.3 billion to about $2.8 billion, from fiscal
year 2002 through fiscal year 2012. This funding includes the amount of
program funds HRSA allocated from its annual appropriations during the
period, as well as amounts the agency received through other legislation. 3
Specifically, the program’s fiscal year 2009 funding included $2 billion that
HRSA received through the American Recovery and Reinvestment Act of
2009, 4 and its fiscal years 2011 and 2012 funding included a total of
$2.2 billion HRSA received through the Patient Protection and Affordable




2
 The 19 key program requirements are among those that HRSA reviews as part of its
oversight of health center grantees. In this report, we refer to the 19 key program
requirements as either the 19 program requirements or Health Center Program
requirements. There are other requirements for health center grantees, including periodic
reporting requirements to HRSA, which are outside the scope of our work.
3
 HRSA allocates funds to the Health Center Program out of the annual appropriations
made to the agency for its programs. Annual appropriations allocated to the Health Center
Program increased between fiscal year 2002 and 2010. However, in fiscal year 2011,
Health Center Program funding was reduced by 27 percent (or $604 million) as a result of
a reduction to HRSA appropriations and a rescission of appropriations made for that year
for non-defense programs. HRSA allocated $1.6 billion of its fiscal year 2012 appropriation
to the Health Center Program.
4
Pub. L. No. 111-5, 123 Stat. 115.




Page 2                                                        GAO-12-546 HRSA Oversight
Care Act (PPACA). 5 Furthermore, for fiscal years 2013 through 2015,
PPACA appropriated an additional $7.3 billion to HRSA to provide grants
for the operation and expansion of health centers. 6 As a result, health
center capacity is expected to expand over the next several years.

Given the past and expected increases in program funding, you asked us
to examine HRSA’s oversight of health center grantees. In this report, we
(1) describe the process HRSA uses to oversee grantee compliance with
Health Center Program requirements, and (2) assess the extent to which
HRSA’s process identifies and addresses noncompliance with these
program requirements.

To describe the process HRSA uses to oversee compliance with the
Health Center Program requirements, we reviewed key documents
related to HRSA’s oversight process. These documents included
regulations governing the Health Center Program, HRSA’s standard
operating procedures for monitoring and assessing grantees’ compliance,
and guidance that HRSA provides to its project officers and grantees
regarding compliance with the 19 program requirements. We also
interviewed knowledgeable HRSA officials about the agency’s oversight
process, as well as any significant changes to this process over the past
several years.

To assess the extent to which HRSA’s process identifies and addresses
noncompliance with Health Center Program requirements, we reviewed
and analyzed HRSA’s standard operating procedures, and the tools and
guidance HRSA provides to project officers related to its oversight
process. We also discussed the oversight process with cognizant HRSA
officials. To gain a more in-depth understanding of the extent to which
HRSA’s process identifies and addresses noncompliance, we also
reviewed and analyzed HRSA’s oversight of eight selected health center
grantees. The grantees were selected to provide variation in: size, as
determined by the number of delivery sites; length of time as a Health
Center Program grantee; and the number of findings of noncompliance—


5
 Pub. L. No. 111-148, § 10503, 124 Stat. 119, 1004 (2010); Pub. L. No. 111-152, § 2303,
124 Stat. 1029, 1083. In this report, references to “PPACA” are to the Patient Protection
and Affordable Care Act, as amended by the Health Care Education and Reconciliation
Act of 2010.
6
 PPACA also appropriated $1.5 billion for the construction and renovation of health
centers for fiscal years 2011 through 2015.




Page 3                                                        GAO-12-546 HRSA Oversight
referred to as conditions—that HRSA had cited for each grantee that
were unresolved as of July 11, 2011. 7 (See app. I for additional
information about the grantees we selected.) We also selected the eight
grantees to ensure that each of the eight had a different HRSA project
officer and was located in a different state. For each of the selected
grantees, we reviewed documentation of HRSA’s oversight activities;
including documentation of the most recently completed assessment of
the grantees’ compliance with the 19 program requirements. During our
review, we identified whether HRSA staff were following the agency’s
procedures for identifying and addressing noncompliance, and whether
the process was consistent with internal control standards for the federal
government. 8 For part of our review, we focused on HRSA’s oversight of
the eight selected grantees’ compliance with 6 of the 19 program
requirements; we judgmentally selected 2 requirements from each of the
provision of services, management and finance, and governance
categories. 9 Some of the selected requirements pertain to how health
center grantees operate, such as the requirement that grantees provide
sliding discounts to patients based on their ability to pay (known as the
“sliding fee discounts” requirement), and the requirement that a health
center grantee has a governing board, the majority of whose members
are patients of the health center (board composition). 10 Other
requirements we selected are important because compliance with them
helps to ensure the financial viability of health center grantees, such as
the requirement that grantees implement systems to maximize revenue
collections to cover the costs of providing services (billing and
collections). The remaining 3 requirements we selected for review were
those requiring grantees to: provide professional coverage, such as
access to a physician, for patients after normal health center hours (after


7
 We looked at the number of documented compliance issues that grantees had as of
July 11, 2011, which were still unresolved more than 90 days after HRSA notified the
grantee about the area of noncompliance.
8
 See GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov. 1999).
9
 We did not review requirements from the fourth category—patient need. For information
on actions HRSA has recently taken to target grants to health centers in communities with
demonstrated need see GAO, Health Center Program: 2011 Grant Award Process
Highlighted Need and Special Populations and Merits Evaluation, GAO-12-504
(Washington, D.C.: May 29, 2012).
10
  HRSA may waive the board composition requirement for certain centers upon a showing
of good cause. 42 U.S.C. § 254b(k)(3)(H).




Page 4                                                       GAO-12-546 HRSA Oversight
hours coverage); possess sufficient management expertise to run the
health center (key management staff); and have a policy to prevent
conflicts of interest (conflict of interest). Additionally, we interviewed the
relevant HRSA project officers and their supervisors, known as branch
chiefs, about the criteria they used to assess whether grantees were in
compliance with the 6 selected program requirements. Collectively, these
project officers and branch chiefs were responsible for overseeing or
supervising the oversight of almost 500 grantees.

We also assessed the extent to which HRSA’s process identifies and
addresses noncompliance with the 19 program requirements by reviewing
and analyzing programwide data HRSA had available on its use of site
visits to health center grantees and the conditions issued to grantees for
noncompliance with these requirements. We obtained and analyzed
HRSA’s data on site visits—on-site assessments of grantees’
performance in providing services to patients or compliance with Health
Center Program requirements—conducted between January 1, 2011, and
October 27, 2011, and determined the frequency with which visits were
conducted over this period. 11 In addition, we analyzed programwide data
on noncompliance issues HRSA cited from April 9, 2010, through October
7, 2011, and determined, among other things, the number and types of
issues, and proportion of grantees cited for noncompliance. 12 We
discussed both the site visit and noncompliance data with knowledgeable
HRSA officials and reviewed the data for accuracy and consistency. We
found a number of anomalies with the site visit data, including that certain
data fields could not be updated for changes, and concluded that the data
were of an undetermined reliability. We determined that the
noncompliance data were sufficiently reliable for the purposes of our
review.

We conducted this performance audit from July 2011 to May 2012 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our



11
  HRSA did not have readily accessible, comprehensive data on site visits conducted prior
to 2011.
12
  At the time of our data request, this represented the most recent data available. In
addition, the time period of the data reviewed corresponded with the time that HRSA’s
current process for addressing noncompliance had been implemented.




Page 5                                                        GAO-12-546 HRSA Oversight
                       findings and conclusions based on our audit objectives. We believe that
                       the evidence obtained provides a reasonable basis for our findings and
                       conclusions based on our audit objectives.


                       Health Center Program grantees are private, nonprofit community-based
Background             organizations or, less commonly, public organizations such as public
                       health department clinics. Health centers funded through HRSA’s Health
                       Center Program are typically managed by an executive director, a
                       financial officer, and a clinical director, and provide comprehensive
                       primary care services including enabling services, such as translation and
                       transportation, that help facilitate access to health care.


HRSA’s Health Center   HRSA identified 19 program requirements, which it indicated were based
Program                on Section 330 of the Public Health Service Act and regulations, which
                       health center grantees must meet to continue receiving grant funding.
                       HRSA groups these 19 program requirements into four broad categories:
                       patient need, the provision of services, management and finance, and
                       governance. Table 1 provides a summary of the 19 requirements.




                       Page 6                                             GAO-12-546 HRSA Oversight
Table 1: Summary of HRSA’s 19 Key Health Center Program Requirements

Requirement                                           Description of requirement
Patient need
Needs assessment                                      Health center demonstrates and documents the needs of its target population.
Provision of services
Required and additional services                      Health center provides (either directly or through established referral
                                                      arrangements) all required primary, preventive, and enabling health services,
                                                      and additional health services as appropriate and necessary.
Staffing requirement                                  Health center maintains a core staff necessary to carry out all required, and
                                                      additional services, either directly or through referral arrangements; the staff
                                                      must be appropriately credentialed and licensed.
Accessible hours of operation/locations               Health center provides services at times and locations that ensure accessibility,
                                                      and meets the needs of population served.
After hours coverage                                  Health center provides professional coverage during hours when the center is
                                                      closed.
Hospital admitting privileges and continuum of care   Health center physicians have admitting privileges at one or more referral
                                                      hospitals, or other arrangements to ensure continuity of care.
Sliding fee discounts                                 Health center has a system to determine eligibility for patient discounts adjusted
                                                      on the basis of a patient’s ability to pay. The system must provide a full discount
                                                      to individuals with incomes at or below the federal poverty level, and a sliding
                                                      level of discount to those with incomes up to twice the federal poverty level. No
                                                      discounts may be provided to individuals with incomes over 200 percent of the
                                                      federal poverty level.
Quality improvement/assurance plan                    Health center has an ongoing quality improvement/assurance program that
                                                      includes clinical services and management, and that maintains the
                                                      confidentiality of patient records.
Management and finance
Key management staff                                  Health center maintains a fully staffed management team.
Contractual/affiliation agreements                    Health center exercises appropriate oversight and authority over all contracted
                                                      services, including ensuring that the entities it contracts with meet Health Center
                                                      Program requirements.
Collaborative relationships                           Health center makes effort to establish and maintain collaborative relationships
                                                      with other providers in its service area.
Financial management and control policies             Health center maintains accounting and internal controls systems. Health center
                                                      ensures that an annual independent financial audit is performed in accordance
                                                      with federal audit requirements.
Billing and collections                               Health center has systems to maximize collections and reimbursements for its
                                                      costs of providing health services.
Budget                                                Health center has developed a budget that reflects the costs of operations,
                                                      expenses, and revenues.
Program data reporting systems                        Health center has systems that accurately collect and organize data for program
                                                      reporting.
Scope of project                                      Health center is providing the scope of services covered by its grant, including
                                                      any increases in the scope based on recent grant awards.




                                            Page 7                                                           GAO-12-546 HRSA Oversight
Requirement                               Description of requirement
Governance
Board authority                           Health center governing board maintains appropriate authority to oversee the
                                          operations of the center.
Board composition                         The health center has a governing board of between 9 and 25 members. A
                                          majority of the governing board members are patients of the center and they
                                          represent the individuals served by the center in terms of demographic factors
                                          such as race, ethnicity, and sex. The non-consumer members of the board must
                                          be representative of the community, and no more than half of them may derive
                                          more than 10 percent of their annual income from the health care industry.
Conflict-of-interest policy               Health center bylaws or written governing board approved policy includes
                                          provisions prohibiting conflicts of interest by board members, employees,
                                          consultants and those who furnish goods or services to the health center. No
                                          board member shall be an employee of the health center or an immediate family
                                          member of an employee.
                              Source: GAO analysis of information from HRSA.



                              HRSA uses a competitive process to award Health Center Program
                              grants. This process applies both to health centers receiving a grant for
                              the first time—known as new starts—and to existing health center
                              grantees that must compete periodically for grants. In either case,
                              prospective or existing grantees are required to submit the applicable
                              grant application to HRSA, and if approved, receive grants to provide
                              services to individuals located in a specified area, known as their service
                              area.

                              HRSA approves funding for health centers for a specified time period,
                              known as a project period. Currently, HRSA approves new start grantees
                              funding for a 2-year project period, and existing grantees funding for
                              project periods of 1, 3, or 5 years. The length of the project period for
                              existing grantees is determined, in part, based on how well grantees are
                              complying with the 19 program requirements. Each year of a project
                              period is referred to as a budget period. After the competitive award of a
                              grant for the first year, or budget period, HRSA awards noncompetitive
                              continuation grants for each remaining budget period if funds are
                              available, and the grantee demonstrates satisfactory progress in
                              providing its services. A grantee demonstrates satisfactory progress by
                              submitting a budget period progress report for HRSA’s review. In both the
                              competitive grant application and the budget period progress report, a
                              grantee is, among other things, required to describe the services offered,
                              provide a listing of its key management staff, and include a detailed
                              narrative description of the current status and any changes in its
                              operations related to the 19 program requirements.




                              Page 8                                                          GAO-12-546 HRSA Oversight
                           In addition to maintaining compliance with the 19 program requirements
                           and submitting annual budget period progress reports, health center
                           grantees are required to periodically submit other information to HRSA.
                           For example, grantees are required to submit to HRSA an annual
                           independent financial audit in accordance with federal audit requirements.
                           In addition, in the first quarter of every year, grantees must submit a
                           variety of information to HRSA’s Uniform Data System (UDS); UDS tracks
                           a variety of information on Health Center Program grantees, including
                           information on their patient demographics (e.g., race/ethnicity, insurance
                           status, income level); revenues; expenses; quality of care measures; and
                           health center staffing and patient utilization patterns.


HRSA’s Bureau of Primary   HRSA’s BPHC has primary responsibility for overseeing health center
Health Care                grantees’ compliance with program requirements. 13 This includes
                           monitoring grantees to determine if they are in compliance with the
                           19 program requirements and addressing cases of grantee
                           noncompliance. BPHC has four operating divisions, each containing five
                           branches; the branches correspond to specified geographic locations.
                           Within each branch there are project officers who are responsible for the
                           ongoing oversight of an assigned portfolio of grantees. As of March 2012,
                           HRSA had 111 project officers, whose portfolios ranged from 4 to
                           17 health center grantees; the average portfolio size was 10 grantees per
                           project officer. Each project officer reports to a supervisor, known as a
                           branch chief. HRSA project officers use an on-line electronic system,
                           called the Electronic Handbook, to document their oversight activities, as
                           well as correspond with and exchange documents with health center
                           grantees. The system contains several different modules within which
                           project officers record such information.

                           To help them conduct their oversight, project officers have a variety of
                           internal and external resources. For example, officials from the BPHC’s
                           Office of Policy and Program Development can assist project officers in
                           interpreting program guidance and Health Center Program requirements.
                           In addition, project officers have access to consultants through an over
                           $30-million, 4-year contract with Management Solutions Consulting
                           Group, a nationwide management consulting firm that provides HRSA



                           13
                             HRSA’s Office of Federal Assistance Management is responsible for awarding and
                           administering the grant.




                           Page 9                                                    GAO-12-546 HRSA Oversight
                            access to approximately 300 to 350 consultants. The consultants are to
                            provide a range of services, including conducting site visits and helping
                            assess the results of health center grantees’ annual financial audits.


                            HRSA primarily relies on three main methods to oversee grantees’
HRSA Uses Three             compliance with Health Center Program requirements: annual compliance
Main Methods to             reviews, site visits, and routine communications. Additionally, when
                            HRSA identifies noncompliance with these requirements, the agency has
Oversee Grantee             a recently revised process to address this with its grantees.
Compliance and Has a
Process to Address
Noncompliance
HRSA Primarily Relies on    HRSA relies on three main methods to oversee grantees’ compliance with
Annual Compliance           Health Center program requirements.
Reviews, Site Visits, and
Routine Communications
to Oversee Grantees
Annual Compliance Reviews   To oversee health center grantees’ compliance with the 19 program
                            requirements, HRSA requires project officers to conduct an annual
                            compliance review for each of the grantees in their assigned portfolios.
                            During this review, project officers are responsible for determining
                            whether a health center grantee is in compliance with each of the
                            19 program requirements. The annual compliance review process begins
                            when a health center grantee submits an application for a competitive
                            grant or submits a budget period progress report to HRSA. When
                            conducting a compliance review, HRSA project officers are responsible
                            for reviewing information contained in the grantee’s submission, such as
                            information on the grantee’s policies and a narrative explaining how the
                            grantee believes it meets, or plans to meet, the 19 program requirements.
                            HRSA also expects project officers to review other available information
                            about the grantee, such as results from the grantee’s annual financial
                            audit and UDS information. Project officers generally have the option to
                            contact the grantee during their annual review if they need clarification




                            Page 10                                             GAO-12-546 HRSA Oversight
about the information in a grantee’s application or budget period progress
report. 14

HRSA provides guidance to project officers for determining whether
grantees are meeting each of the 19 program requirements. In particular,
HRSA provides project officers with a list of key factors and questions
related to the 19 program requirements to consider when making their
assessment of compliance. Table 2 includes examples of the factors and
questions provided to project officers for the 6 program requirements we
selected for more in-depth review.




14
  According to HRSA’s policy, project officers are not allowed to contact grantees for
additional information when reviewing a competitive grant application in which more than
one organization has submitted an application for the same service area.




Page 11                                                      GAO-12-546 HRSA Oversight
Table 2: Examples of HRSA Guidance to Project Officers for Assessing Compliance with Six Selected Program Requirements

                           Examples of key factors and questions project officers should consider when assessing
Requirement                compliance
After hours coverage       Key Factors:
                           •   At a minimum, the grantee should ensure telephone access to a clinician who can exercise
                               professional judgment in assessing a patient’s need for emergency medical care and who can
                               refer patients to an appropriate location for such care, including emergency rooms, when
                               warranted.
                           •   Grantee should have an established mechanism for patients needing care to be seen after hours
                               in an appropriate location and ensure that health center clinicians conduct timely follow up with
                               patients seen after hours.
Sliding fee discounts      Key Factors:
                           •   Grantee should have a fee schedule that provides varying levels of discounts on charges to
                               patients with incomes between 101 and 200 percent of the federal poverty level.
                           •   No fee or only a nominal fee that would not be a major barrier to care should be charged to
                               patients with incomes at or below the federal poverty level.
                           •   No discount should be provided to patients with incomes above 200 percent of the federal poverty
                               level.
                           •   Fee schedule must be based on the most recent federal poverty level guidelines.
Key management staff       Key Factors:
                           •   Grantee should maintain a fully staffed management team that is appropriate for the size and
                               needs of the health center.
                           Key Questions:
                           •   Does the grantee have a Chief Executive Officer, Executive Director, or Project Director?
                           •   Does the management team include other key management staff as appropriate, such as a Chief
                               Financial Officer, Chief Operating Officer, Clinical Director, or Chief Information Officer?
                           •   Is the management team fully staffed, with each of the listed positions filled as appropriate?
Billing and collections    Key Factors:
                           •   Grantee should maintain documented billing and collections policies and procedures.
                           •   Grantee must have the ability to bill Medicaid and Medicare.
Board composition          Key Questions:
                           •   Do a majority of board members (at least 51 percent) receive services (i.e. are patients) of the
                               health center?
                           •   Do the patient board members reasonably represent—in terms of race, ethnicity and sex—the
                               individuals who are served by the health center?
                           •   Does the board have between 9 and 25 members?
                           •   Is the size of the board appropriate for the complexity of the health center and diversity of the
                               community served?
                           •   Does the board include at least one member with expertise in a variety of fields, such as finance
                               and banking or legal affairs?
                           •   Do less than half of the non-consumer board members receive over 10 percent of their annual
                               income from the health care industry?




                                        Page 12                                                       GAO-12-546 HRSA Oversight
                              Examples of key factors and questions project officers should consider when assessing
Requirement                   compliance
Conflict-of-interest policy   Key Questions:
                              •   Do the grantee’s bylaws or other policy documents include a conflict-of-interest provision(s)?
                              •   Does the grantee’s conflict-of-interest policy address issues such as:
                                  •   Disclosure of relationships that create actual or potential conflict of interests;
                                  •   Extent to which board members can participate in decisions where the member has a
                                      personal or financial interest;
                                  •   Using board members to provide services to the health center;
                                  •   Board member expense reimbursement policies;
                                  •   Acceptance of gifts and gratuity;
                                  •   Personal political activities of members; and
                                  •   Statement of consequences for violating the conflict-of-interest policy?
                                           Source: GAO analysis of Information from HRSA.



                                           To conduct and document their compliance review, project officers use an
                                           electronic evaluation tool that is contained in the Electronic Handbook.
                                           The evaluation tool lists each of the 19 program requirements, and,
                                           among other things, asks project officers to indicate whether the grantee
                                           is in or out of compliance. 15 If after reviewing available information, the
                                           project officer remains uncertain whether or not the grantee has
                                           demonstrated compliance with a requirement, then, according to HRSA’s
                                           guidance, the project officer should indicate that the grantee is in
                                           compliance until noncompliance is clearly determined. In such cases,
                                           HRSA’s guidance instructs project officers to document their concerns
                                           about compliance by writing a comment in a text field of the evaluation
                                           tool. In addition, as part of the review, a project officer may decide to
                                           designate a performance improvement area. 16 According to HRSA,
                                           performance improvement areas are actions or other measures that
                                           project officers recommend to help grantees improve their delivery of
                                           services and, ultimately, patient outcomes. Performance improvement
                                           areas are intended to promote continuous improvement for grantees
                                           above and beyond compliance with the 19 program requirements; they
                                           are not intended to address findings of noncompliance with these
                                           requirements. Once project officers complete their review, branch chiefs
                                           are responsible for reviewing and approving project officers’


                                           15
                                             HRSA refers to this evaluation tool as the Program Analysis and Recommendations.
                                           16
                                             During annual reviews, project officers must identify at least one clinical measure and
                                           one financial performance measure as a performance improvement area for each grantee.
                                           Performance improvement areas are optional for all other aspects of the program.




                                           Page 13                                                        GAO-12-546 HRSA Oversight
              assessments, including their determinations regarding compliance and
              the identification of performance improvement areas. According to HRSA
              officials, branch chiefs are responsible for providing leadership and
              guidance in areas such as program evaluation and monitoring, which
              establishes an important quality control for the annual compliance
              reviews.

              While HRSA has conducted annual reviews of grantees’ compliance for
              several years, the process for conducting these reviews has changed. To
              improve their oversight process, in 2008 HRSA officials revised the
              annual compliance evaluation tool to link the annual compliance reviews
              to each of the Health Center Program requirements. As a result of this
              change, project officers now make an assessment of whether grantees
              are in compliance with each requirement, rather than just an overall
              assessment of compliance. In addition, HRSA officials indicated that they
              continually assess the annual review process, and have recently made
              changes such as requiring grantees to submit more detailed narrative
              descriptions and an updated sliding fee discount schedule for the fiscal
              year 2012 reviews.

Site Visits   HRSA also relies on site visits, which it refers to as onsite technical
              assistance, as a method to oversee health center grantees’ compliance
              with the Health Center Program requirements. According to HRSA, there
              are seven types of site visits, some of which are designed specifically to
              assess compliance and others which are focused on providing a grantee
              with technical assistance or training to improve its performance. Two of
              the seven types of site visits—new start initial and operational
              assessment visits—are intended to review compliance with all
              19 program requirements. In addition, three other types of visits—new
              start follow-up, operational follow-up, and diagnostic assessment visits—
              may involve an assessment of compliance with some, but not all, of the
              19 program requirements. The remaining two types of visits—targeted
              technical assistance and routine project officer visits—are not intended to
              assess compliance. 17 (See table 3 for information on the seven types of
              site visits.)




              17
                HRSA officials indicated that although not intended to assess compliance, it is possible
              that information obtained during a targeted technical assistance or routine project officer
              visit could raise questions about grantees’ compliance.




              Page 14                                                        GAO-12-546 HRSA Oversight
Table 3: Types of HRSA Site Visits Conducted for the Health Center Program

Type of visit              Purpose                                                Frequency of visit                 Duration of visit
Site visit types intended to assess compliance with all 19 program requirements
New start initial          To assess new start grantees’                          Generally occurs 90 to 120         3 days
                           compliance with the 19 program                         days after initial funding is
                           requirements and provide technical                     awarded
                           assistance
Operational assessment     To assess existing health center                       Occurs as needed                   3 days
                           grantees’ compliance with the
                           19 program requirements
Site visit types that may include an assessment of compliance with some of the 19 program requirements
New start follow-up        To monitor new start grantees’ progress                Generally occurs 120 to 180        Varies based on grantee
                           in addressing prior site visit findings and            days after the new start initial   needs
                           provide additional technical assistance                visit
Operational follow-up      To monitor existing health center                      Occurs as needed                   Varies based on grantee
                           grantees’ progress in addressing prior                                                    needs
                           site visit findings and provide additional
                           technical assistance
Diagnostic assessment      To perform an in-depth assessment of an Occurs as needed                                  2 to 3 days
                           aspect of health center grantees’
                           operation or compliance
Site visit types not intended to assess compliance with the 19 program requirements
Targeted technical         To provide technical assistance in                     Occurs as needed                   Varies based on grantee
assistance                 specified area(s) to help health center                                                   needs
                           grantees improve performance
Routine project officer    To provide a general overview of health                Occurs as needed, with a goal 1 day
                           center grantees’ operations and                        of once per project period
                           performance
                                           Source: GAO analysis of HRSA’s standard operating procedures.



                                           According to HRSA’s procedures, project officers attend new start initial
                                           and routine project officer site visits; however, they are not required to
                                           participate in the other types of visits. Rather, HRSA primarily relies on its
                                           consultants—who have financial, management, and clinical expertise—to
                                           conduct many of the site visits, including those that involve assessing
                                           whether a grantee is in compliance with Health Center Program
                                           requirements. As part of compliance-related site visits, consultants are
                                           responsible for reviewing documentation, meeting with health center
                                           officials, and touring some or all of the grantee’s health care delivery
                                           sites. For example, HRSA officials indicated that consultants may review
                                           key operating policies and procedures, and review a sample of billing
                                           records to test the grantee’s system for providing sliding fee discounts to
                                           patients. Additionally, according to HRSA officials, the consultants may
                                           check to see whether the grantee has posted signage in the patient



                                           Page 15                                                                    GAO-12-546 HRSA Oversight
                         waiting areas regarding its provision of after hours coverage, and may call
                         the health center when it is closed to test its provisions for providing this
                         coverage. HRSA officials indicated that compliance-related site visits,
                         such as an operational assessment, are critical tools for assessing a
                         health center grantee’s compliance with Health Center Program
                         requirements and verifying that the policies and documentation submitted
                         by health center grantees are appropriately implemented.

                         After a site visit is completed, the consultant and project officer—if one
                         attends—are responsible for preparing separate reports documenting
                         their findings. The consultant’s report—which is first provided to HRSA for
                         review and then transmitted to the grantee for comment—is used to
                         document, among other things, any areas of noncompliance that the
                         consultant identified during the site visit and, if necessary, information on
                         steps the grantee can take to come into compliance with requirements or
                         improve its performance. When project officers participate in any type of
                         site visit, HRSA requires them to prepare a separate, brief internal report
                         to document their observations from the visit and inform the branch chiefs
                         and other HRSA officials about any major findings, recommendations, or
                         concerns.

                         HRSA’s current approach for conducting site visits has been in place
                         since 2010. Prior to that time, many of the site visits were performed by a
                         different HRSA office, the Office of Performance Review, which focused
                         on assessing the overall performance of HRSA grantees. According to
                         HRSA officials, the transition of site visit responsibility to BPHC has
                         resulted in placing a greater emphasis on assessing compliance with
                         Health Center Program requirements during site visits.

Routine Communications   HRSA project officers also use routine communications to oversee health
                         center grantees’ compliance with the 19 program requirements. Routine
                         communications consist of regular e-mail correspondence and, according
                         to HRSA policy, at a minimum, quarterly phone calls between project
                         officers and health center grantees. During these communications, project
                         officers may learn about significant changes that might affect a grantee’s
                         compliance with the 19 program requirements. For example, HRSA
                         officials indicated that during a quarterly phone call a grantee may inform
                         the project officer that its CEO position is vacant, which would place the
                         grantee out of compliance with the key management staff requirement
                         that it maintain a fully staffed management team appropriate for the size
                         and needs of the health center. Project officers are required to document
                         their communications with grantees in HRSA’s Electronic Handbook.



                         Page 16                                              GAO-12-546 HRSA Oversight
HRSA’s Process to Address   In April 2010, HRSA implemented a uniform process intended to
Grantee Noncompliance       standardize how the agency works with grantees to address
Recently Changed            noncompliance with Health Center Program requirements. This process,
                            referred to as the progressive action process, begins when HRSA
                            documents an area of noncompliance by placing what it refers to as a
                            “condition” on the health center’s grant. 18 Through this process a grantee
                            is provided with a “progressive” series of time frames within which it must
                            address the noncompliance. 19

                            When HRSA places a condition(s) of noncompliance on a grant, it alerts
                            the health center grantee by sending a notice specifying for which of the
                            19 program requirement(s) the grantee is noncompliant, the nature of
                            corrective action required, time frames for achieving compliance, and the
                            consequences if the grantee fails to achieve and document compliance.
                            HRSA then provides grantees a series of sequential phases to resolve
                            the condition(s) by demonstrating compliance, with each phase providing
                            the grantee with less time than the prior phase. Specifically, the
                            progressive action process consists of the following three phases.
                            Phase 1 provides the grantee with 90 days to submit documentation
                            demonstrating that it has complied with, or developed an action plan to
                            comply with, the specified program requirement(s). Phase 2 provides an
                            additional 60 days, and phase 3 another 30 days, for grantees to submit
                            the appropriate documentation. If the nature of the condition of
                            noncompliance requires the grantee to develop and implement a plan for
                            achieving compliance, then the grantee is provided additional
                            implementation phases—the first of which is 120 days in length—to
                            implement its plan and document compliance with the specified program




                            18
                              HRSA uses conditions to address specific findings of noncompliance; these are different
                            than performance improvement areas, which are intended to help promote continuous
                            improvement for grantees above and beyond compliance with the 19 program
                            requirements.
                            19
                             Prior to April 2010, HRSA did not have a uniform series of time frames in which grantees
                            were required to address noncompliance.




                            Page 17                                                      GAO-12-546 HRSA Oversight
requirement(s). 20 In between each phase, HRSA provides itself with
30 days to review the grantee’s response and determine whether or not
the response is acceptable. (See fig. 1 for an illustration of the
progressive action process.)




20
  HRSA has a list of conditions that it utilizes for issues of noncompliance with the
19 program requirements; some of the program requirements have multiple associated
conditions each of which is related to a different component of the requirement. Over half
of these conditions—approximately 60 percent—provide the grantee with additional
implementation phases.




Page 18                                                       GAO-12-546 HRSA Oversight
Figure 1: HRSA’s Process for Addressing Health Center Grantee Noncompliance




Page 19                                              GAO-12-546 HRSA Oversight
                          Note: Once HRSA places a condition of noncompliance on a grant, it provides health center grantees
                          a series of sequential phases to resolve the condition by demonstrating compliance. Depending on
                          the issue of noncompliance, the initial phases of the process will either require the grantee to submit
                          documentation demonstrating compliance with the program requirement or submit an action plan
                          demonstrating how the grantee plans to come into compliance. For the latter, the grantee is provided
                          additional time to implement its action plan, i.e., implementation phases. Between each phase, HRSA
                          provides itself with 30 days to review the grantee’s response to determine if the response is
                          adequate—that is, whether the grantee demonstrated compliance or, if applicable, provided an
                          adequate plan for achieving compliance.


                          During the different phases of the progressive action process, HRSA
                          recommends that project officers contact grantees to advise them on
                          specific actions needed to address deficiencies, and provide technical
                          assistance as needed to help the grantee achieve compliance. Overall,
                          the number of phases a particular grantee goes through depends on the
                          nature of the corrective action required and how quickly the grantee
                          addresses the noncompliance issue. If a grantee is unable to correct the
                          compliance issue by the end of the progressive action process, HRSA’s
                          policies require it terminate the health center’s grant.


                          HRSA’s process for identifying noncompliance is insufficient as annual
HRSA’s Process for        compliance reviews do not identify all instances of noncompliance and
Identifying               the extent to which HRSA uses site visits to assess compliance is
                          unclear, but appears to be limited. Moreover, HRSA’s project officers do
Noncompliance Is          not consistently identify and document grantee noncompliance. Finally,
Insufficient, and It Is   HRSA’s ability to address noncompliance is unclear as the agency’s
Too Soon to Assess        process for doing so has recently changed.

the Revised Process
for Addressing
Noncompliance
Annual Compliance         HRSA’s annual compliance reviews do not identify all instances of health
Reviews Do Not Identify   center grantee noncompliance that other methods, such as site visits,
All Instances of          have identified. Among the eight grantees included in our review, we
                          identified 10 instances where the project officer determined that a grantee
Noncompliance             was in compliance with a program requirement during the annual
                          compliance review, but a site visit a short time later found the grantee to
                          be noncompliant with the same requirement. For example, in April 2010,
                          a project officer completed an annual compliance review and found that a
                          grantee was in compliance with 16 of the 19 program requirements.
                          However, in July 2010, just 3 months later, a HRSA consultant completed
                          an operational assessment site visit and found that the grantee was not in



                          Page 20                                                                GAO-12-546 HRSA Oversight
compliance with 10 of the 19 requirements; this included 7 requirements
for which the project officer had previously concluded the grantee was in
compliance. During the annual compliance review, for instance, the
project officer determined that the grantee was in compliance with both
the board composition and board authority program requirements.
However, the site visit found, among other things, that the board had less
than the minimum number of required members, did not meet monthly as
required, and was not fulfilling its required duties and responsibilities to
oversee the operations of the center—key aspects of these 2 program
requirements. 21 HRSA officials could not definitively explain why the site
visit identified these issues of noncompliance, when the annual
compliance review had failed to do so. HRSA officials speculated that
because this grantee was having management problems, its performance
may have rapidly deteriorated since the annual review was completed.
Although the grantee may have been experiencing management
problems, the consultant’s site visit report indicates that the grantee did
not fall out of compliance with all 7 of these requirements in the
intervening 3 months. Rather, the report indicated that several of these
noncompliance issues were ongoing, including one that had existed for
several years. Additionally, none of the 10 annual compliance review
decisions included an indication that the project officer was uncertain
about whether or not the grantee demonstrated compliance. Thus, it does
not appear that the affirmative compliance decisions were due to project
officers indicating that a grantee is in compliance until noncompliance is
clearly determined.

In addition to finding instances where the annual compliance review failed
to identify grantee noncompliance, our review of HRSA’s oversight
documentation of selected grantees revealed that project officers
frequently determined a grantee was in compliance with selected program
requirements without having sufficient information to make such
decisions. Our analysis of 48 compliance decisions that project officers
made during their fiscal year 2011 annual compliance reviews for our
eight selected grantees found that in 43 cases (90 percent) project




21
  The other five program requirements for which the site visit found the grantee
noncompliant were the needs assessment, required and additional services, hospital
admitting privileges and continuum of care, contractual/affiliation agreements, and budget
requirements.




Page 21                                                       GAO-12-546 HRSA Oversight
officers determined grantees were in compliance with requirements. 22
However, in 23 of these 43 cases (53 percent), we were unable to find
sufficient information to support the project officer’s compliance decision
and the project officers did not indicate that they were unable to clearly
determine compliance, which is what HRSA guidance instructs them to do
if they are uncertain about whether or not the grantee demonstrated
compliance, for example:

•    Project officers determined that all eight selected health center
     grantees were in compliance with the after hours coverage
     requirement. However, it appears that six of the eight project officers
     had insufficient information when making their assessments. Our
     review of HRSA’s oversight documentation found that information
     grantees provided ranged from a sentence or two in their budget
     period progress report narrative stating they had a 24-hour answering
     service that will arrange for contact with an on-call clinician, to no
     mention of how they were meeting the after hours coverage
     requirement. In contrast, we found the other two project officers had
     information from recent site visits to assess compliance with this
     requirement.

•    Project officers determined that six of the eight selected health center
     grantees were in compliance with the sliding fee discounts
     requirement. However, we found that four of six project officers who
     made this determination did not, at the time, have a current, updated
     version of their grantees’ sliding fee discount schedule to review.
     These project officers made their compliance decisions based on
     limited information, including grantee assertions that they had a
     current and up-to-date schedule. According to HRSA officials,
     beginning with the fiscal year 2012 annual compliance reviews,
     grantees will be required to submit an updated sliding fee discount
     schedule.

While HRSA requires project officers to document their basis for finding a
grantee out of compliance with a requirement, it does not require project
officers to document their basis for finding a grantee in compliance.
Therefore, there were often no records documenting how or why a project


22
   For each of the eight selected grantees, we reviewed the compliance decisions that the
project officers made for the following six program requirements—after hours coverage,
sliding fee discounts, key management staff, billing and collections, board composition,
and conflict-of-interest policy; a total of 48 compliance decisions.




Page 22                                                       GAO-12-546 HRSA Oversight
officer determined a health center grantee was in compliance with the
requirements. In 26 of the 43 compliance decisions (60 percent) we
reviewed in which project officers determined grantees were in
compliance with selected program requirements, the project officers had
not documented the basis for their decisions. The lack of documentation
is not consistent with internal control standards for the federal
government, which indicate “that all transactions and other significant
events need to be clearly documented” and stress the importance of “the
creation and maintenance of related records which provide evidence of
execution of these activities as well as appropriate documentation.” 23

The absence of such documentation may limit HRSA’s ability to ensure
that project officers have identified all cases of grantee noncompliance
during the annual compliance review and make it more difficult for HRSA
to keep track of issues affecting grantee compliance especially when
oversight responsibilities transfer among staff. For example, without such
documentation, it is difficult for supervisors to appropriately assess the
basis for project officers’ decisions. Further, according to HRSA, about
40 percent of grantees have had a change in their assigned project officer
and branch chief over the past few years due in part to HRSA’s hiring of a
significant number of new project officers to meet the expected increase
in the number of health center grantees. While HRSA officials indicated
they have a process to ensure a smooth transition between oversight
staff, we found the absence of documentation can present challenges.
For example, each of the eight project officers we interviewed had been
assigned to their grantee for 2 years or less, and some of the project
officers were unable to answer questions about why previous project
officers determined their grantees were in compliance with specific
requirements.

Additionally, when project officers are uncertain about compliance, HRSA
instructs project officers to consider grantees in compliance. As noted
earlier, HRSA’s guidance indicates that project officers are to document
these instances when compliance is unclear by writing a comment in a
text field of the evaluation tool, but HRSA has no centralized or
automated mechanism to ensure this occurs. The lack of such a
mechanism, coupled with the lack of documentation of project officers’
basis for finding a grantee in compliance, limits HRSA’s ability to



23
 See GAO/AIMD-00-21.3.1.




Page 23                                            GAO-12-546 HRSA Oversight
                               determine whether a project officer decided a grantee was in compliance
                               with a requirement because the file contained evidence demonstrating
                               compliance, or because the project officer was unsure about compliance
                               and simply defaulted to an affirmative compliance decision without
                               including documentation of his or her concerns.


HRSA’s Use of Site Visits to   Data limitations make it difficult to determine the extent to which HRSA
Assess Compliance Is           uses site visits to assess compliance; however, our analysis of these data
Unclear, but Appears to Be     suggest that the number of compliance-related site visits is limited. HRSA
                               does not have aggregate, readily available data on site visits conducted
Limited                        prior to January 2011. Consequently, to determine which health center
                               grantees had compliance-related site visits prior to January 2011, HRSA
                               officials would have to manually compile a list by accessing each site visit
                               report located in each individual grantee’s file.

                               To help the agency in planning site visits, HRSA began requiring that all
                               site visits be recorded in its on-line Electronic Handbook in January 2011.
                               However, the reliability of at least some of the data elements, including
                               the type of site visit, is uncertain. After a site visit record is created in the
                               Electronic Handbook, which is the first step for documenting a planned a
                               site visit, the system prevents project officers from editing certain fields,
                               including the field for the type of site visit conducted. 24 As a result, if the
                               site visit type changes after project officers create the site visit record, the
                               record will be inaccurate. Further, project officers are not required to
                               update certain other fields, such as the site visit start and end dates,
                               which increases the potential for data inaccuracies. While HRSA officials
                               indicated that the type of site visit does not frequently change, when we
                               compared the site visit data to information contained in site visit reports,
                               we found that the type of site visit had changed for one of the five visits
                               that took place at our selected grantees since January 2011. After
                               discussing this with HRSA officials, the officials indicated that they would
                               alter their electronic system to allow project officers to revise the site visit
                               type; however, they have yet to do so. In addition, HRSA officials
                               indicated the electronic system does not have a mechanism to ensure
                               that a cancelled site visit is properly recorded. Therefore, when a planned
                               site visit is cancelled, the record is removed only if a project officer


                               24
                                 According to HRSA officials, the on-line Electronic Handbook contains certain business
                               rules to help safeguard site visit data. One of these rules was that the type of site visit
                               could not be modified after a site visit record was created.




                               Page 24                                                        GAO-12-546 HRSA Oversight
proactively takes action to remove it. If the project officer fails to remove
the record, the database will contain inaccurate information. From the
programwide site visit data we received, we determined that the data
included at least one site visit that had been cancelled, but not removed
from the database. However, there may be other instances that we were
unable to identify based on the available data.

As noted earlier, HRSA considers site visits an important tool for
assessing and assuring grantee compliance with Health Center Program
requirements. According to our analysis, site visits were conducted at 417
(37 percent) of the 1,128 health center grantees between January 1, 2011
and October 27, 2011. 25 A total of 472 site visits were conducted during
this period because some grantees had multiple visits. Although HRSA’s
data on the type of site visit conducted has inaccuracies, these data
suggest that only a small portion of grantees had compliance-related
visits. HRSA’s data indicate that 58 grantees, or 5 percent of all health
center grantees, had site visits to review compliance with all 19 program
requirements during this time period. 26 An additional 70 grantees
(6 percent) had a site visit that may have assessed compliance with some
of the 19 program requirements. The remaining grantees either did not
have a site visit during the period or had a site visit which was not
intended to assess compliance with the 19 program requirements.

Although HRSA’s standard operating procedures do not currently specify
how frequently compliance-related site visits should be conducted, HRSA
officials indicated that, beginning in 2012, the agency is requiring that
project officers schedule an operational assessment—a site visit intended
to assess compliance with all 19 program requirements—for each grantee
at least every 5 years. At their current rate and assuming the number of
grantees remains the same, it would take HRSA over 15 years to conduct
an operational assessment visit at each of the over 1,100 health center
grantees. HRSA officials recognized that in order to meet this goal, they
will have to increase the number of operational assessment site visits
which are conducted annually. Along those lines, officials indicated that



25
  According to HRSA, the number of grantees in the Health Center Program was 1,127 in
July 2010 and 1,129 as of November 1, 2011—we used the average of the two figures,
which is 1,128.
26
  All of these visits were operational assessment visits, as HRSA did not conduct any new
start site visits during the time period for which data were available.




Page 25                                                      GAO-12-546 HRSA Oversight
                             HRSA increased the amount of funding and planned number of
                             operational assessment site visits to be provided through their current
                             nationwide contract for conducting site visits.


HRSA’s Project Officers Do   HRSA’s project officers do not consistently identify noncompliance and
Not Consistently Identify    document it through the placement of conditions. For three of the six
and Document Grantee         program requirements we reviewed, the HRSA project officers we
                             interviewed did not have consistent interpretations of what constitutes
Noncompliance                compliance and what should therefore result in the placement of a
                             condition on a health center’s grant, raising concerns about the adequacy
                             of HRSA’s guidance and training for project officers. The project officers
                             we spoke with had different interpretations regarding the board
                             composition, after hours coverage, and key management requirements.

                             •   Health center grantees are required, by statute and regulations, to
                                 have a governing board, the majority of whose members are patients
                                 of the center and who demographically represent the population
                                 served by the grantee. However, some project officers we spoke with
                                 indicated that the lack of an appropriately representative board would
                                 not result in a condition; these project officers did not consider the
                                 lack of an appropriately representative board an issue of
                                 noncompliance.

                             •   While HRSA’s guidance for project officers indicates that, at a
                                 minimum, a grantee’s after hours coverage system should ensure that
                                 patients have telephone access to a clinician who can assess whether
                                 they need emergency medical care, some of the project officers we
                                 spoke with indicated that they would consider using a performance
                                 improvement area, not a condition, if a health center had only an
                                 answering machine directing patients to the emergency room. Other
                                 project officers stated that if a grantee had only an answering machine
                                 directing patients to the emergency room they would not be in
                                 compliance with this requirement.

                             •   HRSA guidance instructs project officers to assess whether a health
                                 center grantee maintains a fully staffed management team as
                                 appropriate for the size and need of their health center. When asked
                                 about the criteria they use for determining whether grantees are in or
                                 out of compliance with the key management staff requirement, two
                                 project officers told us that they base their compliance decision on
                                 whether the grantee’s management staff includes a Chief Executive,
                                 Financial, and Medical Officer. In contrast, the other six project



                             Page 26                                             GAO-12-546 HRSA Oversight
    officers said that a grantee did not necessarily need to have all of
    these positions staffed.

We also found one instance where HRSA’s guidance on what constitutes
compliance is inconsistent with Health Center Program requirements, and
thus project officers may not be making correct decisions regarding
grantee compliance and appropriately addressing noncompliance. In this
particular instance, HRSA guidance instructs project officers to use a
performance improvement area, not a condition, if a grantee has not used
the most recent federal poverty guidelines for developing their sliding fee
discounts; the guidance therefore indicates that grantees are to be
considered in compliance with the requirement even if their sliding fee
discount schedule is outdated. Health Center Program regulations,
however, require a grantee’s sliding fee discounts to be based on the
most recent guidelines. As a result, a grantee that has not used the
correct federal poverty guidelines should be deemed noncompliant with
this program requirement and a condition should be placed on its grant.
When we raised this issue with HRSA officials, they acknowledged that
the guidance was not consistent with requirements, and that it would be
revised. They also confirmed that if a grantee has not used the correct
federal poverty guidelines in its sliding fee discount schedule, a project
officer should deem the grantee noncompliant and that a condition should
be issued. HRSA officials further indicated they are developing a policy
notice on the sliding fee discounts program requirement, and the
guidance will specify that a grantee’s sliding fee discounts must be
revised annually to reflect updates to the most recent federal poverty
guidelines.

Finally, we found instances where grantee noncompliance was identified
through site visits, but HRSA failed to place conditions on the grant.
According to HRSA’s standard operating procedures, when a site visit
determines that a grantee is noncompliant with at least one of the
19 program requirements, a project officer must place a condition on the
health center’s grant. However, as part of our review of the eight selected
grantees, we identified five site visits from 2009 through August 2011 that
clearly identified findings of noncompliance with some of the 19 program
requirements, but HRSA did not issue conditions to grantees for the
majority of these findings. For example, one site visit found that a grantee
was not in compliance with 16 of the 19 requirements, but HRSA did not
issue any conditions to the grantee. At the time of the site visit, this
grantee had been receiving HRSA funding for about 15 months, and had
been experiencing compliance issues for at least 12 months. Despite this,
HRSA officials told us that because it was a new grantee that was


Page 27                                              GAO-12-546 HRSA Oversight
                            receptive to technical assistance, HRSA wanted to give the grantee more
                            time to address their compliance issues before placing numerous
                            conditions on it. Another site visit found that a grantee was not in
                            compliance with the board authority and conflict-of-interest policy
                            requirements, but HRSA did not issue any conditions to the grantee as a
                            result of this site visit. Instead, HRSA arranged for a consultant to provide
                            the grantee with technical assistance to revise and update its bylaws to
                            address these issues.


HRSA’s Ability to Address   The extent to which HRSA’s revised process—the progressive action
Noncompliance Is Unclear    process—is adequately resolving conditions or terminating grantee
As the Agency’s Process     funding is unclear because HRSA’s experience with this revised process
                            is too recent to make any overall assessment. The progressive action
Has Recently Changed        process, which was implemented in April 2010, can potentially take over a
                            year to move through all of the phases. Completing the first three phases
                            of the progressive action process can take up to 9 months, while grantees
                            with conditions that allow for a 120-day implementation phase can take
                            up to 19 months to fully complete the process. 27 Thus, HRSA has limited
                            experience with the process to date, and does not have sufficient data to
                            assess the extent to which the process is effective in bringing grantees
                            into compliance or in addressing those grantees that have failed to
                            achieve compliance by the end of the final phase.

                            During the first 18 months that the progressive action process has been in
                            place—from April 9, 2010, through October 7, 2011—HRSA issued
                            1,017 conditions for grantee noncompliance to a total of 417 different
                            grantees (approximately 37 percent of all grantees), with some grantees
                            having multiple conditions. Over half of the conditions were for grantee
                            noncompliance with requirements related to the management and finance
                            category. (See app. II for additional information about the conditions



                            27
                              The maximum allotted time available to a grantee depends on the nature of the issue of
                            noncompliance and the corrective action the grantee needs to take to establish
                            compliance. Specifically, when an issue of noncompliance can be directly addressed by
                            providing specific documentation (e.g., updated service map), the progressive action
                            process consists of three phases and, when including time for HRSA to review grantees’
                            submission, can take up to 9 months. However, when a grantee has a condition that
                            requires it to both develop and implement a plan for achieving compliance (e.g., develop
                            and implement a financial recovery plan), the process may include up to three additional
                            implementation phases, and can take up to 19 months to complete when including time for
                            HRSA to review grantees’ submissions between each phase.




                            Page 28                                                     GAO-12-546 HRSA Oversight
              placed during this time period.) As of November 10, 2011, 775 conditions
              (76 percent) were resolved and 240 conditions (24 percent) were still in
              process. The remaining 2 conditions, which belonged to the same
              grantee, were not resolved in the allotted time; thus, HRSA officials
              indicated that the agency was is in the process of terminating the
              grantee’s funding. 28


              HRSA’s Health Center Program provides access to health care for people
Conclusions   who are uninsured or who face other barriers to receiving needed care.
              Over the past decade the program has expanded and, given the
              additional funding appropriated by PPACA, will likely continue to do so
              over the next few years. As such, it will play an increasingly greater role
              as a health care safety net for vulnerable populations. Particularly in light
              of the growing federal investment in health centers, it is important for
              HRSA to ensure that health centers are operating effectively and in
              compliance with Health Center Program requirements. HRSA has taken
              steps to improve its oversight of health center grantees over the past few
              years, such as by standardizing its process for addressing grantee
              noncompliance. Despite these efforts, however, HRSA’s oversight is
              insufficient to ensure that it consistently identifies all instances of grantee
              noncompliance with Health Center Program requirements.

              Although HRSA has devoted substantial resources to overseeing
              grantees—including having over 100 project officers to perform annual
              compliance reviews and having a more than $30-million contract for
              consultants who conduct site visits and provide other assistance—
              limitations in HRSA’s oversight methods have affected the agency’s
              performance in identifying issues of noncompliance. The annual
              compliance reviews place too little emphasis on documenting project
              officers’ basis for making their compliance decisions, while HRSA’s
              guidance instructs project officers to indicate that a grantee is in
              compliance with Health Center Program requirements, even if the project
              officer is uncertain about the grantee’s compliance. Further, HRSA does
              not have a systematic process for tracking and following-up on instances
              when project officers are uncertain about a grantee’s compliance to
              ensure that compliance is ultimately demonstrated. The lack of such a


              28
                For the 5 years prior to implementation of the progressive action process, HRSA
              indicated that it discontinued funding for 37 grantees. Of these, HRSA categorized 12 as
              involuntary terminations.




              Page 29                                                       GAO-12-546 HRSA Oversight
                      process, coupled with the lack of documentation of project officers’ basis
                      for finding a grantee in compliance, limits HRSA’s ability to assess
                      whether project officers accurately determined that grantees were actually
                      in compliance with a requirement, or whether they were simply unsure
                      about compliance. This is especially problematic because project officers
                      we interviewed had different interpretations of what constitutes
                      compliance with certain requirements and therefore, when they should
                      place a condition on a health center’s grant.

                      Additionally, while HRSA officials indicated, and we found, that site visits
                      are an important tool for overseeing grantees and verifying compliance
                      with Health Center Program requirements, the agency’s use of
                      compliance-related site visits appears to be limited. HRSA has a goal of
                      having an operational assessment visit to each grantee at least once
                      every 5 years. The agency’s ability to effectively meet this goal, however,
                      is challenged by a lack of comprehensive and reliable data on which
                      grantees have had various types of site visits. To the extent HRSA is able
                      to develop and analyze accurate data on site visits, it will be in a better
                      position to target its resources to those grantees that may be in greater
                      need of such visits. Furthermore, HRSA needs to ensure that when site
                      visits are conducted, the information obtained is appropriately used, for
                      example, by ensuring that instances of noncompliance identified during a
                      site visit result in the placement of a condition on a health center’s grant.

                      Finally, HRSA’s recently revised process for addressing grantee
                      noncompliance with the 19 program requirements seems to provide both
                      the agency and grantees with a uniform structure for addressing
                      compliance deficiencies. However, given the length of time the
                      progressive action process provides grantees to address noncompliance,
                      HRSA has had limited experience with the process, and thus it is too
                      early to tell whether this revised process is effective. As HRSA gains
                      more experience with the process, it will be important for the agency to
                      assess whether the process is functioning as intended and whether any
                      changes are needed to make the process more effective.


                      To improve HRSA’s ability to identify and address noncompliance with
Recommendations for   Health Center Program requirements, the Administrator of HRSA should
Executive Action      take the following six actions:

                      •   Develop and implement a mechanism for recording, tracking, and
                          following-up on instances when project officers are unable to
                          determine compliance during the annual compliance review process.


                      Page 30                                              GAO-12-546 HRSA Oversight
                     •   Require that when completing annual compliance reviews, project
                         officers clearly document their basis for determining that grantees are
                         in compliance with program requirements.

                     •   Clarify agency guidance and provide training, as needed, to better
                         ensure that project officers are accurately and consistently assessing
                         grantees’ compliance with program requirements.

                     •   Ensure that site visit data contained in HRSA’s electronic system are
                         complete, reliable, and accurate to better target the use of available
                         resources and to help ensure that all grantees have compliance-
                         related site visits at regular and timely intervals.

                     •   Develop and implement procedures to ensure that instances of
                         noncompliance with program requirements consistently result in the
                         placement of a condition on a health center’s grant.

                     •   Periodically assess whether its new progressive action process for
                         addressing grantee noncompliance, including the time frames allotted
                         for grantees to respond, is working as intended and make any needed
                         improvements to the process.

                     We provided a draft of this report to HHS for its review, and HHS provided
Agency Comments      written comments (see app. III). HHS concurred with all six of our
and Our Evaluation   recommendations and indicated that while resource availability may
                     impact the extent of certain actions, HRSA is already in the process of
                     planning and implementing many of the recommendations. For example,
                     HHS indicated that HRSA is in the process of enhancing the electronic
                     evaluation tool, known as the Program Analysis and Recommendations
                     tool, which project officers use to conduct and document annual
                     compliance reviews. HRSA is also working on issuing additional policies,
                     procedures, and guidance documents to better ensure that project
                     officers are consistently assessing grantee compliance and documenting
                     noncompliance.

                     While HHS concurred with our recommendations and indicated that the
                     report’s findings were helpful in informing ongoing efforts to improve
                     oversight of the Health Center Program, it did not concur with what it
                     characterized as some of the central conclusions drawn from the report’s
                     findings. First, HHS indicated that it did not concur with what it
                     characterized as our conclusion that HRSA’s process for identifying
                     noncompliance is insufficient because annual compliance reviews do not
                     identify all instances of noncompliance. HHS indicated that HRSA’s active


                     Page 31                                             GAO-12-546 HRSA Oversight
monitoring of grantees is not limited to the project officer’s annual
compliance review, but is accomplished through a variety of available
resources including, but not limited to, the review of grantee data reports,
independent annual audit reports, quarterly conference calls, site visits,
and correspondence from the grant recipient. We agree with HHS’s
statement, and our report reflects that HRSA uses multiple methods to
oversee grantees. However, we believe that HHS mischaracterized the
nature of our conclusion. Our conclusion that HRSA’s oversight of health
center grantees is insufficient was not based solely on our assessment of
HRSA’s annual compliance reviews, but rather was based on our
assessment of several key oversight methods described throughout our
report including HRSA’s use of site visits, the consistency of project
officers’ oversight, and the use of programwide data to aid oversight
across grantees.

HHS also did not concur with what it characterized as our conclusion that
HRSA’s process for identifying noncompliance is insufficient because
HRSA’s project officers do not consistently identify and document grantee
noncompliance. In explaining its concerns, HHS focused on instances
where project officers cannot definitively determine whether or not
grantees are complying with program requirements. For example, HHS
noted that when project officers are uncertain about compliance, HRSA’s
standard operating procedures require project officers to record these
areas of uncertainty for follow-up action. However, our findings about the
lack of consistency in the identification and documentation of grantee
noncompliance are not limited to instances when project officers are
uncertain about compliance. Rather, as the report indicates, we found
that project officers we interviewed did not have consistent interpretations
of the criteria for assessing compliance and what should therefore result
in the placement of a condition on a health center’s grant. Furthermore,
we found one instance where HRSA’s guidance on what constitutes
compliance is inconsistent with Health Center Program requirements and
found several instances where identified noncompliance did not result in
the placement of a condition on a health center’s grant. As the report
notes, in cases when project officers may be uncertain about compliance,
we found that HRSA did not have a centralized mechanism to ensure that
project officers are recording such instances. Additionally, despite HHS’s
comment stating that HRSA’s procedures provide for such follow-up, it
agreed with our recommendation that HRSA should develop a
mechanism for ensuring that recording, tracking, and following up on such
instances occurs.




Page 32                                             GAO-12-546 HRSA Oversight
Finally, HHS did not concur with our finding that the lack of
documentation in the annual compliance review is not consistent with
internal control standards for the federal government. HHS indicated that
HRSA established its annual compliance review tool to record
documented findings of noncompliance and utilizes a standard
progressive action process to resolve these areas consistent with its
overall internal control procedures. While we agree that HRSA’s process
provides for both documenting areas of identified noncompliance and a
standard process for resolving these issues, our findings were not limited
to an assessment of what HRSA has included in its oversight process, but
also takes into account what HRSA did not include in this process. Thus,
our findings take into account the fact that HRSA does not require project
officers to document their basis for finding a grantee in compliance.
Therefore, as stated in the report, we found there were often no records
documenting how or why a project officer determined a health center
grantee was in compliance with the requirements. The lack of such
documentation makes it difficult for managers to assess the accuracy of
project officers’ decisions and assure that grantees are in compliance with
applicable laws and regulations, which is a key purpose to having
effective internal controls. Thus, we continue to believe that this lack of
documentation is not consistent with internal control standards for the
federal government, which indicate “that all transactions and other
significant events need to be clearly documented” and stress the
importance of the creation and maintenance of related records which
provide evidence of execution of these activities as well as appropriate
documentation.

As noted above, our conclusion that HRSA’s oversight of health center
grantees is insufficient was based on our overall assessment of HRSA’s
key oversight methods. In addition to finding limitations with HRSA’s
annual compliance reviews and a lack of consistency among HRSA
project officers, we also found that HRSA’s use of site visits to assess
compliance has been limited. Thus, we stand by our conclusion that
HRSA’s process for identifying noncompliance is insufficient. We are
pleased that HRSA is already taking steps to implement our
recommendations and encourage the agency to continue to take actions
to help to improve its oversight of health center grantees.

HHS also provided technical comments, which we incorporated as
appropriate.




Page 33                                            GAO-12-546 HRSA Oversight
As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from the
report date. At that time, we will send copies of this report to the
Administrator of HRSA. In addition, the report is available at no charge on
the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact
me at (202) 512-7114 or draperd@gao.gov. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made key contributions to this report
are listed in appendix IV.




Debra A. Draper
Director, Health Care




Page 34                                            GAO-12-546 HRSA Oversight
Appendix I: Characteristics of Selected
               Appendix I: Characteristics of Selected Health
               Center Grantees



Health Center Grantees

               As part of our assessment of the extent to which the Health Resources
               and Services Administration’s (HRSA) process identifies and addresses
               noncompliance with Health Center Program requirements, we reviewed
               HRSA’s oversight of eight selected health center grantees. The grantees
               were selected to provide variation in: size, as determined by the number
               of delivery sites; length of time as a Health Center Program grantee; and
               compliance experience, as determined by the number of the number of
               findings of noncompliance—referred to as conditions—that HRSA had
               cited for each grantee that were unresolved as of July 11, 2011. (See
               table 4.)

               Table 4: Characteristics of the Eight Selected Health Center Grantees

                   Health center                     Number of          Year became a     Documented
                                                                                                           a
                   grantee       State            delivery sites health center grantee    compliance issues
                   A                   AL                       8                1983     No
                   B                   CA                       7                1968     Yes
                   C                   IL                       10               1983     No
                   D                   NC                       1                1980     Yes
                   E                   NY                       1                1984     No
                   F                   OK                       4                2004     No
                   G                   PA                       2                2009     Yes
                   H                   WY                       2                2004     No
               Source: GAO analysis of information from HRSA.
               a
                Indicates whether the grantee had at least one documented compliance issue as of July 11, 2011,
               which was still unresolved more than 90 days after HRSA notified the grantee about the area of
               noncompliance.




               Page 35                                                             GAO-12-546 HRSA Oversight
Appendix II: Summary of Noncompliance
                                        Appendix II: Summary of Noncompliance Data
                                        for the Health Center Program



Data for the Health Center Program

                                        During the first 18 months of HRSA’s progressive action process, from
                                        April 9, 2010, through October 7, 2011, HRSA issued 1,017 conditions to
                                        417 health center grantees, with some grantees having multiple
                                        conditions during this time period. Specifically, the number of conditions
                                        HRSA issued to the 417 grantees ranged between 1 and 17 conditions
                                        per grantee, with HRSA issuing between 1 and 3 conditions to most of
                                        these grantees. (See fig. 2.) HRSA issued conditions for each of the
                                        19 program requirements, with the greatest numbers issued for the
                                        financial management and control policies, program and data system
                                        reporting, and board composition requirements. (See fig. 3.) Grantees
                                        can have multiple and simultaneous conditions associated with the same
                                        program requirements, with each condition being related to a different
                                        component of the requirement. For example, in fiscal year 2011, there
                                        were 3 possible conditions related to the financial management and
                                        control policy requirement.

Figure 2: Number of Conditions of Noncompliance HRSA Issued per Grantee, from April 9, 2010, through October 7, 2011




                                        Page 36                                                GAO-12-546 HRSA Oversight
                                        Appendix II: Summary of Noncompliance Data
                                        for the Health Center Program




Figure 3: Number of Conditions and Number of Grantees That Had a Condition, by Requirement from April 9, 2010, through
October 7, 2011




                                        Note: Grantees can have multiple and simultaneous conditions associated with the same program
                                        requirements, with each condition being related to a different component of the requirement.



                                        Page 37                                                           GAO-12-546 HRSA Oversight
Appendix III: Comments from the
             Appendix III: Comments from the Department
             of Health and Human Services



Department of Health and Human Services




             Page 38                                      GAO-12-546 HRSA Oversight
Appendix III: Comments from the Department
of Health and Human Services




Page 39                                      GAO-12-546 HRSA Oversight
Appendix III: Comments from the Department
of Health and Human Services




Page 40                                      GAO-12-546 HRSA Oversight
Appendix III: Comments from the Department
of Health and Human Services




Page 41                                      GAO-12-546 HRSA Oversight
                Appendix III: Comments from the Department
                of Health and Human Services




 Now page 20.




Now page 23.




                Page 42                                      GAO-12-546 HRSA Oversight
               Appendix III: Comments from the Department
               of Health and Human Services




Now page 26.




               Page 43                                      GAO-12-546 HRSA Oversight
Appendix III: Comments from the Department
of Health and Human Services




Page 44                                      GAO-12-546 HRSA Oversight
Appendix IV: Contacts and Staff
                  Appendix IV: Contacts and Staff
                  Acknowledgments



Acknowledgments

                  Debra A. Draper, (202) 512-7114 or draperd@gao.gov
GAO Contact
                  In addition to the contact named above, key contributors to this report
Staff             were Michelle B. Rosenberg, Assistant Director; Krister P. Friday; David
Acknowledgments   Lichtenfeld; Lillian Shields; and Jennifer M. Whitworth.




(290952)
                  Page 45                                            GAO-12-546 HRSA Oversight
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