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thousand homeless users received care with community and migrant health centers out of a total of 350,000 total users. Funding for AIDS treatment in FY 1990 was approximately $12 million. of this amount, $9.1 million was awarded to community and migrant health centers.

Other additional funding for substance abuse activities in FY 1990 was $9 million. of this amount $4.5 million was awarded to community and migrant health centers. The remainder went to entities other than community and migrant health centers. As FY 1990 was the first year in which funds were awarded, we do not have utilization data to report for these two programs.

Question. How many new starts have been funded in the last five years?

Answer. The last open competitions for grantees to serve previously unserved areas were in FY's 1986 and 1987 during which 23 new grantees were funded. Since that time there have been no increases to support expansion to unserved areas and therefore no new starts to new areas.

As previously stated, there have been, over the last several years, significant funding increases for special purposes.

Funding of the CPCP program, AIDS treatment and substance abuse activities have provide significant increases in funding for some centers, but these funds have not been available to support expansions of basic community and migrant health center services to previously unserved areas.

Question. I learned just recently that HRSA has not allowed competitive bidding of community health center funds -- in spite of a Department requirement for competitive bidding. This letter to you, Dr. Harmon, from the General Accounting Office, dated March 8, 1991, notes that competitive bidding can improve services, Increase productivity and the effectiveness of the program, and lower costs. That might free up some funds for new starts.

What is your response to this letter, and what steps are you planning that will bring the CHC program into compliance with the Department's rules on competitive bidding?

Answer. The Community and Migrant Health Center (C/MHC) Programs are already in compliance with Departmental requirements for competition in assistance programs. Public Health Service (PHS) Grants Administration Manual states that program administrators have the authority to determine the extent of competition, which may be "maximum", "limited", or "single source", subject to the approval of the PHS agency head, or a designee at the agency level who reports directly to the agency head. The decision by the Director of the Bureau of Health Care Delivery and Assistance (BHCDA) to limit C/MHC competition in fiscal years 1989 and 1990 to existing grantees, and my concurrence, were reflected in the program announcements which were cleared through PHS, the Office of the Secretary, and the Office of Management and Budget (OMB).

The promotion of competition must be achieved within the context of fulfilling program goals and objectives, and both the

Congress and the OMB have enunciated this position. The Federal Grant and Cooperative Agreement Act of 1977 encourages competition in the award of grants and cooperative agreements, but only where deemed appropriate. Guidance from OMB also encourages agencies to maximize competition in the award of financial assistance, with the qualification that it be in consonance with program purposes. Thus, the foundation for Federal competition policies contains no absolute requirement for competition, acknowledging that competition would sometimes conflict with the responsible management of programs.

The justification for limiting C/MHC competition has been based on an assessment of Congressional intent coupled with an expert knowledge of the requirements for the operation of a sound health care delivery system. It is statutorily mandated that the comprehensive services provided by health centers to medically underserved populations be available in a manner which assures continuity. Factors which weighed heavily in the decision to limit competition included, but were not limited to:

the FY 1989 Senate Subcommittee report stating the expectation that all funds would be awarded to existing centers;

the continuation of all centers which were performing
satisfactorily was consistent with regional, State, and local
strategies for addressing weaknesses or failures in the health
care service delivery system;
continuity of care is critical to the success of health
service activities, and organizational stability is a crucial
factor in the recruitment an retention of health care
professionals and other center staff;

establishment and maintenance of the strong relationships and
shared responsibilities necessary for the achievement of a
healthier America requires coordination and coalition-building
at the community level, which occurs incrementally over a
period of years; and,
turnover is disruptive to the patients and is costly, given
the loss of return on the Federal investment in existing
centers and start up costs of new centers; some of the most
important benefits of technical assistance, consultation and
training provided to C/MHCs are obtained years later; and
equipment and facilities in which there is a Federal
reversionary interest are seldom readily transferable.

There is a collaborative effort now underway within the PHS, which may become Department-wide, to more accurately reflect in the PHS Grants Administration Manual the requirements of responsible grants administration relative to service delivery programs. Competition is one of the elements which is being reviewed, and guidance regarding this matter is being drafted for inclusion in the manual.


We received a report from Inspector General Kusserow last week about the Comprehensive Perinatal Care Program we've funded to combat infant mortality through community and migrant health

centers. I was very disappointed to learn that 25 percent of the funds appropriated for that initiative were awarded to health centers in areas that don't have particularly high infant mortality rates. And that cities accounting for 40 percent of infant deaths, and 60 percent of black infant deaths, were not eligible for these funds because they don't have community or migrant health centers,

Question. What steps has HRSA taken to ensure that funds for this initiative will be targeted to the areas that need them the most? Do you agree with Inspector General Kusserow that targeting infant mortality funds to other health care providers in addition to community health centers could help reduce high infant mortality in target areas?

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Answer. We agree that targeting, as has increasingly been done over the period of the operation of the Comprehensive Perinatal Care Program (CPCP), is essential in efforts to reduce infant mortality. The Healthy Start Initiative will build on the success of CPCP and will broaden the scope of the effort and the participation of providers and service agencies beyond the community and migrant health center primary care system.

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To ensure that funds are targeted to the areas of greatest need, applications must be made for a geographically defined community, either urban or rural, where problems are most severe, where resources can be concentrated, implementation managed, and progress measured.

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The existing CPCP, which was initiated in 1987, reinforced the importance of the perinatal lifecycle and the provision of essential services like outreach/case finding and referral/linkages. This initiative earmarked Section 330 funds specifically for enhanced services in already funded Community and Migrant Health Centers (C/MHCs), where efforts and resources were already focused on providing comprehensive, continuous, and coordinated primary care services to underserved populations. This care includes perinatal care as well as care throughout a child's life, including pediatric, adolescent, adult and geriatric primary care services. In order to compete for the earmarked funds, centers were required to have viable perinatal programs which they wanted to enhance.

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The populations served by C/MHCs include a high proportion of women at risk for poor pregnancy outcomes, such as minorities, migrant women, teenagers, new immigrants, and women living in poverty. Many are in two or more of these high risk groups, and early detection and management of risk factors such as alcohol and drug abuse, smoking, and poor nutrition are critical.

Infant mortality rates vary substantially among and within States and counties. Since infant mortality is generally calculated as a county rate, the overall infant mortality rate will take on the characteristic of the dominant population group.

A county with a predominantly white population will generally skew the minority infant mortality rate. An example is a county in Maryland with an overall infant mortality rate of 9.0, while the black infant mortality rate is 20.4, well over twice the infant mortality rate of 7.8 for white babies.

C/MHCs are encouraged to document their specific service area infant mortality rate. However, it is extremely difficult to measure infant mortality in geographic areas with small populations, or in a very specific area within a large community. Because of these difficulties, the HRSA is working with other Federal and private agencies to develop a sound methodology to evaluate the health status in these populations.

Current activities include studies to refine "Small Area Analysis" for use by C/MMCs to measure health status indicators, like infant mortality. We believe this analysis will provide better measures for currently funded centers to do an even better job of targeting populations within their service areas. Further, these measures will be useful in assisting newly funded programs under "Healthy Start" to target areas and populations most in need of services.


Question. Please provide the Committee with an update on the HEAL loan program, including the current funds available for loan, funds available in the SLIF for repayment of defaulted loans, and suggested alternatives to the HEAL loan available to students of health professions.

Answer. HEAL borrowing for FY 1991 is set by the FY 1991 appropriations at $260 million. The Student Loan Insurance Fund (SLIF) currently has $36.1 million available for payment of defaults, including the $25 million appropriated in FY 1990. The Department anticipates ending FY 1991 with a SLIF balance of $17.7 million. As part of credit reform, the Administration has requested appropriations of $35.5 million to pay defaults arising in FY 1992, and $21.8 million to pay future defaults on loans made in FY 1992.

With regard to alternatives to HEAL, the Administration proposes to increase scholarship and low interest loan support for disadvantaged/minority students. The FY 1992 budget requests an increase of $1.1 million for the Exceptional Financial Need scholarship program (including the Financial Assistance for Disadvantaged Students program) and $5 million for the National Health Service Corps Recruitment program. The budget also requests $15 million to recapitalize the Health Professions Student Loan program.

Further assistance to middle income/disadvantaged borrowers no longer eligible for HEAL would be provided through the Department of Education's proposed increased borrowing limits for the Supplemental Loans for Students program. The Administration has proposed that the Individual borrowing limit for this program be increased from $4,000 per year to $10,000 per year. In addition, preliminary communications with private loan sources indicate that private entities might be available to provide loans to borrowers no longer eligible for HEAL.


Question. HRSA recently proposed tripling the fee for data bank inquiries. What is the basis for this request?

Answer. The July 24, 1990 Federal Register announcement indicated that the user fee would be reviewed periodically and revised as necessary, based upon experience. A reassessment of the costs related to processing requests for disclosure of data bank information and of providing such information indicates that revenues generated through application of the $2 fee are not sufficient to cover the present transaction processing costs. This determination was based on a review of actual operating costs during the first four months of the data bank's operation. This review shows that the number of staff and the amount of staff time needed to process a transaction are significantly greater than what was originally projected. Based on revised cost estimates, the Department is increasing the user fee to $6 per request. In determining the amount of the $6 user fee, HRSA applied the criteria set forth in section 60.12(b) of the regulations. The criteria include such cost factors as electronic data processing time, equipment, materials, operators or other employees; and preparation of report materials, photocopying, postage, and personnel.

Question. If provided, would the increase provide full funding for data bank operations in FY 1992? If not, what are the estimated operating costs for the data bank?

Answer. The $6 user fee will fully fund data bank operations in FY 1992 provided that the Administration's proposed bili language is adopted which specifies that user fees cover the full cost of operating the data bank.

The FY 1992 budget proposes $5 million to operate the data bank. At $6 per query, the data bank must receive approximately 833,300 paid queries to collect $5 million. The $5 million will fully fund current operations, but does not include development costs associated with needed technology improvements or implementation of Section 5 of the Medicare and Medicaid Patient and Program Protection Act of 1987, as amended.


Question. Recent legislation mandated that Federal Qualified Health Centers be reimbursed at reasonable cost under Medicare and Medicaid. Please provide the Committee with any cost-estimates of these proposals, and how they are expected to impact health centers' finances.

Answer. The following estimates were provided by the HCFA Office of the Actuary:

$ in Millions

Cost 1992

$30 1993





The economic assumptions are those used in the FY 1992 President's Budget.

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