On September 3, 2014, the weekly HRSA Primary Health Care Digest included two clarifications regarding HRSA’s role in financial and programmatic monitoring. With respect to the former, HRSA will no longer require submission of Financial Recovery Plans as the formal monitoring of financial performance. HRSA stressed that while it will continue to assess health center compliance with financial management requirements (including submission of an annual audit), it believes that financial viability is an individual health center responsibility. As for the latter, HRSA also addressed the reduction of health center grants for projects that fail to meet the proposed patient projections upon which the grant amounts were based. The reduction of funds was first addressed in the FY 2015 Service Area Competition (SAC) applications, as summarized in this Policy Shop blog from earlier this year. In this regard, HRSA will no longer impose grant conditions when health centers do not meet patient projections – going forward, a reduction in funds through the SAC process will be the remedy for failure to meet projections.
Effectively, these changes to internal policies indicate a shift by HRSA to hold health centers to a greater level of individual health center accountability by eliminating certain interim steps for non-compliance findings. Previously, both financial recovery plans and conditions for not meeting patient projections would have been considered interim measures that could be taken in lieu of and prior to more severe sanctions (potential de-funding / re-competition of existing grants and reduction of grant amounts, respectively). These actions appear to align with the approach taken by HRSA in Policy Information Notice (PIN) 2013-01: Health Center Budgeting and Accounting Requirements, in which HRSA indicated that use of non-grant funds was an individual health center responsibility (rather than subject to HRSA control), provided that expenditures comply with the statutory limitations set forth in Section 330. Further, these actions are consistent with an overall “hands-off” approach discussed by HRSA management during the recent NACHC Community Health Institute – shifting responsibility for individual projects from HRSA to the programs themselves.
To assist with best practices in financial planning and in establishing patient projections, HRSA suggests that health centers contact their State and Regional Primary Care Associations and National Cooperative Agreement organizations. Please do not hesitate to contact NACHC or your PCA is you have any questions regarding these issues.