Community health centers—once a small dot on a giant health care landscape—have become essential to the functioning of the U.S. health system in medically underserved urban and rural communities. In 2018, health centers served over 28 million patients – a 31 percent increase in only 5 years. This expansion is the result of two major investments that, in combination, enabled health centers to scale up care: the Medicaid expansion, which dramatically expanded patient coverage as a result, and the Community Health Center Fund, which provided direct investment in health center growth in terms of grantees, sites, and patients served.

Even as they continue to serve over one in five uninsured people, community health centers also have emerged as a health care backbone for state Medicaid programs. Nationally nearly one in five Medicaid patients obtains care at a community health center; in 10 states and the District of Columbia, this figure stands at one in four.

But now, like hospitals and other providers enduring the financial consequences of disappearing care for any condition other than COVID-19, community health centers are struggling to survive. To be sure, Congress has paid attention to health centers’ key community role during the COVID-19 pandemic, providing $1.32 billion for coronavirus response under the CARES Act in addition to $100 million already appropriated under the Coronavirus Preparedness and Response Supplemental Appropriations Act. The CARES Act also extends the Community Health Centers Fund, which was set to expire in mid-May, through the end of November.

Yet at the same time, community health centers are experiencing the same fate that has befallen other health care providers: the disappearance of patients in need of virtually every other type of health care. Entire categories of health centers’ essential suite of comprehensive primary health care services have been shuttered. Unity Health Care in Washington D.C., for example, one of the nation’s largest health centers, has been forced to shutter its vision and dental care programs. With the loss of care comes the loss of the revenue needed to keep staff going and the doors of more than 12,000 sites open. This is particularly concerning in communities and neighborhoods where it is so vital that community health centers maintain basic services while also adding to first responder strength.

What help is available to health centers now and what sort of aid must come in the near future?

Additional Help For Community Health Centers Under The CARES Act

Beyond the $1.32 billion coronavirus fund, which translates into less than $50 per patient nationwide, community health centers may benefit from other provisions under the CARES Act. But most of these other sources of assistance have significant limits or simply may be financially unfeasible given the magnitude of the disaster.

Community health centers are nonprofit corporations. As a result, CARES Act provisions applicable to businesses, including nonprofits, may prove of critical importance in helping health centers maintain care in their communities. Of great important is the Act’s program for small employers with fewer than 500 employees (counting both full-time and part-time), which describes most community health centers, to borrow up to $10 million to cover payroll expenses, rent, and overhead costs.

However, many health centers are too large to be helped, and they are located in some of the hardest hit communities. Among 1432 community health center grantees nationwide, we have identified 93 that employ over 500 workers and thus are likely ineligible for the program. These largest health centers account for 31 percent of health center staff and 28 percent of health center patients nationwide. In Colorado, New York, Washington State, and the District of Columbia these large centers serve more than half their state’s health center patient population.

Assistance to Mid-Sized Nonprofits to Retain Workforce:

Beyond the small employer loan program, other CARES Act programs may offer important assistance. Larger community health centers may be eligible for the CARES Act’s assistance to mid-sized nonprofits. The Act provides for direct loans to nonprofit organizations with between 500 to 10,000 employees, provided that the funds are used to retain at least 90 percent of the recipient’s workforce until September 30, 2020, and the recipient intends to restore not less than 90 percent of its workforce that existed as of February 1, 2020.

Disaster Assistance Loans For Nonprofits

The Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) program provides loans of up to $2 million to small businesses and non-profit organizations that suffer significant economic injury from a declared disaster. This program is enhanced under the CARES Act, which establishes an Emergency Grant under the EIDL program to allow an eligible entity who has applied for an EIDL loan due to COVID-19 to request an advance on that loan, of not more than $10,000, to be distributed within 3 days. Applicants will not be required to repay these advance payments, even if they are subsequently denied an EIDL loan.

Emergency Unemployment Relief for Nonprofit Organizations

The Act also reduces by 50 percent the amount self-funded nonprofits are required to reimburse states for benefits paid to their workers who claim unemployment insurance through December 31, 2020. This presumably will be of assistance to health centers.

Public Health Fund For Providers

The CARES Act provides $100 billion to “eligible healthcare providers” for health care-related, non-reimbursable expenses or lost revenues associated with COVID-19. Potential recipients of these funds include Medicaid-enrolled providers who “provide diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.” These funds can be used for otherwise unreimbursed costs, including construction of temporary structures, leasing of properties, medical supplies and equipment including personal protective equipment and testing supplies, increased workforce and trainings, emergency operation centers, retrofitting facilities, and surge capacity.

The demand on this fund for hospital care will be immense, however. Furthermore, demand will grow exponentially if the Administration follows through on its hastily announced plan to divert a portion of this fund to cover hospitals’ immense COVID-related uncompensated care costs. (It appears that the administration has rejected a more sensible approach:

• a marketplace special enrollment period for the millions affected by the crisis, coupled with
• a fast track 1115 Medicaid waiver program, under which states opting into the Families First Coronavirus Recovery Act Medicaid expansion, which applies to testing only, could also cover COVID-19 treatment without the normal budget neutrality principles that apply to 1115. Such use of 1115 for past emergencies has happened on multiple previous occasions.

Funds Appropriated For State, Local And Tribal Governments

Community health centers also might be able to turn to state, local and tribal governments under the $150 billion Coronavirus Relief Fund, which gives localities and tribal authorities broad discretion to make emergency-related investments. But the demand on this fund likewise will be immense, and health centers may find it difficult to obtain help given the sheer magnitude of the hospital crisis now rolling across the country.

Emergency Assistance Through Medicaid Policy Changes

Like other health care providers during the pandemic, community health centers have seen non-COVID revenue plummet. Health centers may be especially vulnerable because they are located in very poor communities and serve vulnerable populations, which together cause them to operate under serious economic constraints. These constraints show up in narrow operating margins (a concept that reflects a comparison of costs against revenue available). Experts recommend a margin of 2.5 percent for hospitals.

Between 2008 and 2011, reported a median operating margin of 2 percent for health centers, but one in four reported negative operating margins. According to our calculations using the 2018 Uniform Data Set, 56 percent of health centers had operating margins of less than 2.5 percent and 43 percent had negative margins. Approximately 16 million (or one in two) health center patients are at immediate risk of losing access to care.

The stories are beginning to pile up. For example, our discussion with New Jersey’s community health center primary care association reports that health centers in that state have, like other health care providers, experienced a precipitous drop in revenue as a result of a decrease of 60-78 percent in patient volume. By March 26, 60 percent of New Jersey health centers were already reporting a negative operating margin of 29 percent. New Jersey health centers were already furloughing staff or terminating employment, eliminating services such as routine dental and vision care and reducing hours of operation. Nearly half of health centers in New Jersey had fewer than 20 days of cash on hand prior to the outbreak and the outbreak had forced a number of health centers to close sites or operate with skeleton staff.

More than 40 states also are operating under approved Section 1135 Waivers that give the HHS Secretary the power, during a public health emergency such as the current one, to allow states to relax Medicaid and Medicare payment restrictions so these programs can cover costs associated with alternative care settings and professionals. These payment enhancements can help in those states that have waived licensure restrictions to expand the settings in which health care can be furnished, boost the use of telehealth, and expand the types of health care professionals authorized to provide a broad array of care.

Especially key for health centers and their communities is this: States that receive the enhanced 6.2 percent payment boost that applies to most federal Medicaid expenditures under the Families First Coronavirus Response Act during the emergency period must provide critical protections. Participating states are barred from restricting eligibility, standards, methodologies, and procedures beyond their January 1, 2020 levels and must cover all COVID-19 testing, services and treatments without cost sharing. Most importantly perhaps, states may not terminate any Medicaid eligible individuals “enrolled in the program as of the date of the beginning of the emergency period or [who become] enrolled during the emergency period” with the exception of those who voluntarily disenroll or are no longer state residents.

There are other steps that states and the federal government could take, where Medicaid is concerned. State Medicaid programs can enhance their federally qualified health center (FQHC) payment policies to recognize extraordinary costs arising from the emergency that are not covered under the federal grant supplement. States also could relax normal efficiency standards that govern the FQHC payment methodology, which is prospective and tied to visit rates during for normal times, when patients move through at a brisk pace and office waiting rooms are packed. Now, if only for safety reasons, these efficiency standards must be set aside.

Furthermore, community health centers would benefit enormously from the relief sought by the National Association of Medicaid Directors from the federal Office of Management and Budget, namely, the ability to make retainer, i.e., advance, payments to critical Medicaid providers similar to the Medicare advance payment program contained in the CARES Act. This policy would help not only health centers but also other critical community-based health care safety net providers, such as women’s health clinics and rural health clinics. These essential providers much keep their doors open and must be highly operational during this unprecedented emergency.

Emerging New Legislation Should Provide Additional Help For Community Health Centers

The CARES Act provides important financial relief for health centers but falls short of fully supporting the important role these institutions play in addressing the COVID-19 outbreak. Health centers provide critical access for nearly 29 million Americans who live in urban and rural medically underserved communities—the most exposed areas in this crisis. Already, discussions are underway for the inclusion of additional health center grant funding in an emerging fourth piece of COVID-19 legislation. A new round of grants is absolutely crucial, but equally important is what HHS and states collectively do together to preserve Medicaid’s unmatched role in health center financing.

Health Centers are very much at frontline of severe illness They serve the poor, those with underlying health issues, and the uninsured. Expanding eligibility for financial protections, increasing funding amounts, and expediting health center payments are key to ensuring health centers and other essential providers survive and recover from the outbreak.