Health Centers, Hospitals to See Changes Under Law

While the health-care overhaul will affect many nonprofit groups, one type of institution will see especially big changes: community health centers, which will gain a large influx of funds and a higher profile.

Nonprofit hospitals will also be significantly affected by the law, which requires them to assess the health-care needs of the regions where they work and develop a strategy to help.

The new health-care law will allow community health centers eventually to double the number of Americans they assist each year, from 20 million to an expected 40 million.

Community health centers provide medical help to low-income people, most of whom are uninsured or depend on Medicaid.

The law will bring the centers more patients, in part by broadening eligibility requirements for Medicaid, and will give them $11-billion in new money over five years (starting in the 2011 fiscal year).

Of the new money, $1.5-billion will be used “to meet the extraordinary capital needs that we have in expanding and improving our existing facilities,” says Amy Simmons, a spokeswoman for the National Association of Community Health Centers, in Bethesda, Md.

“You’ve got health centers that are working out of old buildings and, in some cases, church basements,” she says. “They need to construct more examining rooms, for instance, to see these patients.”

High Demand

The law’s help for community health centers is timely because from June 2008 to June 2009, visits to centers by uninsured patients increased by 21 percent, largely because of the bad economy, Ms. Simmons says.

If Massachusetts’s experience is any indication, the federal law will bring much-needed relief for community health centers.

The state made major changes to its health-care law in 2006 that were similar to the new federal approach.

According to a report last year on the Massachusetts law published by the Kaiser Commission on Medicaid and the Uninsured, the caseload of community health centers surged after the state expanded insurance coverage.

Community health centers found that many of their new patients “were middle-aged or near-elderly adults who had previously been unable to secure care because they were uninsured,” said the report sponsored by the commission, which is a program of the Henry J. Kaiser Family Foundation. “Many of these older adults were at higher risk for chronic illness and disability and had a pent-up demand for care,” it said.

The financial situation of community health centers did not improve from 2006 to 2007, the report found, as expenses increased at the same pace as revenue. More money came from insurance, however, and less from the state.

New Requirements

For nonprofit hospitals, the health-care overhaul produced a mixed result.

They dodged any new requirement to provide a minimum annual level of free patient care, an idea that had been floated last year by the two top members of the Senate Finance Committee.

Instead, nonprofit hospitals will be required to conduct a “community health-needs assessment” at least once every three years. In the assessments, hospitals must outline steps they will take to meet the identified needs.

Melinda Hatton, general counsel of the American Hospital Association, said this and other new requirements “are mostly things that hospitals have already been doing in one form or another. None of these new policies should be a burden and are supported by the tax-exempt hospital field.”

The law also requires the Internal Revenue Service to make a review every three years of each nonprofit hospital’s “community benefit” work, such as offering full-time emergency care to all patients regardless of ability to pay, to see if the hospital is meeting the requirements for a tax exemption.

Ms. Hatton says hospitals hope the IRS will carry this out in a way that is not burdensome.