On March 25, the White House and U.S. Department of Health and Human Services (HHS) announced that HHS’s Health Resources and Services Administration (HRSA) would be awarding $6.1 billion in supplemental funding grants to the nation’s 1,376 federally qualified community health centers (FQHCs). The funds were allocated from the $7.6 billion for FQHCs that was included in the recent $1.9 trillion American Rescue Plan Act law.
Putting $6.1 Billion into Context
As supplemental funding, it is important to understand that this $6.1 billion is in addition to the $5.6 billion of Section 330 federal grant funding that health centers were already scheduled to receive this year. Last year, health centers received a $1.3 billion supplemental grant award from the CARES Act. This award is nearly five times larger.
For each individual center, the award sizes vary based on size as determined by the following HRSA formula: a base value of $500,000, plus $125 per patient reported in the 2019 Uniform Data System (UDS), plus $250 per uninsured patient reported in the 2019 UDS. With $6.1 billion spread across 1,376 health centers, the average award size is $4.4 million per center with larger centers receiving awards of over $20-30 million dollars.
To put those numbers into context, the average annual revenue for a health a center from all sources (including payer reimbursements and grants) is approximately $20 million per year. Thus, on average these grants represent about twenty percent of a health center’s annual budget.
Allowable Uses for Funds
As described in the American Rescue Plan Act and detailed by HRSA in its award release, the funds are intended to be used “to respond to and mitigate the spread of COVID-19 and enhance health care services and infrastructure.” It is important to note that the funds do not have to be used solely on activities related to the pandemic. To the contrary, funds may be used to support a range of activities during the two-year performance period running from April 2021 through March 2023, as well as pre-award costs dating back to January 31, 2020.
HRSA has issued a detailed list of allowable uses for the funds, which is extremely broad by HRSA’s usual standards for grants and includes activities:
- To plan, prepare for, promote, distribute, administer, and track COVID-19 vaccines
- To detect, diagnose, trace, monitor, and treat COVID–19 infections and related activities necessary to mitigate the spread of COVID–19
- To establish, modify, enhance, expand, and sustain the accessibility and availability of comprehensive primary care services to meet the ongoing and evolving needs of the service area and its vulnerable patient populations
- For ongoing recovery and stabilization, including enhancing and expanding the health care workforce and services to meet pent up demand due to delays in patients seeking preventive and routine care; address the behavioral health, chronic conditions, and other needs of those who have been out of care; and support the well-being of personnel who have been on the front lines of the pandemic
- To modify and improve physical infrastructure
Within these categories, HRSA included the following as examples of allowable uses of the funds: certified EHR software purchase or upgrades, telehealth technology, digital tools, staffing, an expansion of clinical or social services, an expansion of access to behavioral health, and strategic planning services. HRSA also noted that the list of activities it provided is not exhaustive, stating “there may be other allowable uses of funds consistent with the above purposes, and as further described in the terms and conditions of your award.”
While the funds can be used to support activities or expenses through March 2023, program applications and all required documentation and materials must be submitted via the HRSA Electronic Handbooks (EHBs) by May 31, 2021. Like other HRSA grants, awardees will be required to submit quarterly progress reports and satisfy other terms and conditions during the award’s two-year performance period.
Investing in the Future
From a historical perspective, this $6.1 billion is the largest ever single award of federal funds to community health centers. Given the flexibility HRSA has provided awardees in determining how to allocate their funds, this truly is a once-in-a-decade opportunity for community health centers to invest in their futures beyond the pandemic and for the next decade.
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