Funding The Future Of Healthcare

Funding The Future Of Healthcare

Advocate for historic investments in community health centers

Community Health Centers (CHCs) are vital providers of healthcare in the United States, providing care to around 31 million people annually. CHCs provide affordable, high-quality, comprehensive primary care to medically underserved populations regardless of insurance status or ability to pay. Most CHC patients are people of color, and the vast majority are low-income: 80% of CHC patients nationally are uninsured and around 48% utilize Medicaid. CHC patients are also more diverse as 63% of CHC patients identify as a racial and/or ethnic minority. During the height of the COVID-19 pandemic, CHCs delivered more than 22 million vaccine doses, with 69% of those shots going to people of color.  CHCs play a critical role in the U.S. health care system but funding for these CHCs has not kept up with demand for services. Since 2012, CHCs have seen a 45% increase in the number of people seeking care, but inflation-adjusted federal funding for CHCs has decreased over time, stretching limited funds even further. Learn more about CHC funding issues and how you can help support the critical work of CHCs, especially in an election year!

Challenges in CHC funding

In recent years, CHCs have faced challenges in funding that make it difficult to sustain and expand our services and maintain our workforce. The federal government funds CHCs nationwide through two main funding streams: the Community Health Center Fund (CHCF) and federal health care discretionary appropriation funding. The CHCF was established in the mid-1960s to fill the gap between what it costs to operate a health center and the amount of revenue a health center receives. CHCs rely on this money to cover the cost of uncompensated care, which was around $42 billion per year between 2015-2017, and to increase the services they provide. The CHCF provides about 70% of federal funding for health centers and is the primary funding source for services provided to uninsured and underinsured patients. The CHCF is allocated in multi-year chunks meaning that if funding allocated in the CHCF is too low, CHCs will be underfunded for multiple years. In conjunction with the CHCF, additional funding for CHCs is also included in Congress’s annual discretionary appropriations. This is funding that needs to be re-authorized every year. In the past few years, this funding has stagnated or been reduced. The past three authorizations have not significantly increased the level of funding. With inflation, this has amounted to a nearly 10 percent decrease in funding. The CHCF and federal discretionary appropriations are usually met with bipartisan support, but funding is still falling short of being authorized at the level CHCs need. Advocates for Community Health, a coalition of CHCs across the country, asked for a $13 billion increase in annual CHC funding in 2023. That would have allowed for expanded access to CHC programs necessary growth of the CHC workforce to help manage the increasing number of patients, much-needed CHC infrastructure updates, and investments in innovations such as telehealth to address patients’ unique needs and underlying health-related social needs. Unfortunately, Congress approved just $4.4 billion for 2023.

Funding for CHCs also comes from the federal 340B Drug Pricing Program, which requires pharmaceutical manufacturers who participate in Medicaid to provide discounted drug pricing to FQHCs and other 340B-covered entities. It allows CHCs to provide discounted medications to our uninsured patients while generating 340B savings from filling prescriptions for insured patients. We reinvest 100% of our 340B savings into maintaining and expanding critical programs that our patients rely on. In recent years this program has been hindered by inconsistent oversight, contrasting court rulings, and attacks on the program from pharmaceutical companies. This has resulted in a decrease in 340B revenue and uncertainty about the availability of future 340B revenue to continue supporting vital services at CHCs. Since 2020, 30 pharmaceutical companies have imposed restrictions on the contract pharmacies of 340B covered entities, essentially clawing back 340B savings that should be going to serve our patients for themselves. There have also been legal challenges from drug companies attempting to limit the amount of contract pharmacies CHCs can use to provide medications to their patients, and burdensome and inconsistent data collection requirements imposed on 340B covered entities using contract pharmacies. Altogether, these attacks and restrictions reduce important 340B revenue used to enhance and create more necessary services for patients. For example, Howard Brown utilizes our 340B savings to fund services like HIV case management, our Broadway Youth Center, the Trans and Non-Binary health team, and dental clinics.

One large issue CHCs face as they try to stretch their funding to serve as many patients as possible is Medicaid reimbursement rates. CHCs face stagnant and low Medicaid reimbursement rates that fail to cover the costs of providing care to Medicaid patients. Medicaid reimbursements are the a major source of federal financing for CHCs. Unfortunately, Illinois Medicaid reimbursement rates are among the lowest in the nation and fall in the lowest quartile of all state Medicaid Fee-For-Service (FFS) rates. One CHC in Illinois stated Medicaid reimbursement rates only cover about one-third of their actual costs to deliver services. For example, one dose of a COVID-19 vaccine costs about $115 for the Pfizer vaccine and about $128 for the Moderna vaccine. The Medicaid reimbursement rate for COVID-19 vaccines in Illinois is on average just $42. The rates to see a mental health professional run an average of $100-$200 an hour. In Illinois, the Medicaid reimbursement rate to see a mental health professional such as a psychologist, alcohol and drug abuse counselor, or clinical social worker for that hour is on average $75. At Howard Brown, around 30% of our patients participate in Medicaid. These low reimbursement rates mean we provide many services at a financial loss and must find ways to stretch already strained funding so we can continue to provide necessary services to the community.

Ways we can support CHC funding

These unstable funding streams and increasing attacks against essential programs have put CHCs at a crossroads. There are several things we can do to ensure the future of CHCs and continue to provide healthcare for everyone.

  • Increase Medicaid Reimbursement Rates and Continue to Expand Medicaid
    • Medicaid expansion can ensure more patients have access to health care while generating revenue for health centers and bolstering their workforce. Increasing reimbursement would offer centers greater opportunities to invest in their workforce and care delivery.
  • Commitment to increasing funding for the CHCF and discretionary appropriations and to meet the needs of CHCs
    • Find out your elected officials voting records/support for CHC funding.
    • Ensure legislators account for inflation when determining funding. One estimate states funding needs to increase by $2 billion to account for inflation.
  • Reach out to your Congressional representatives and tell them there needs to be continued bipartisan support for reauthorizing the CHCF and the yearly Federal discretional appropriations for CHCs
    • Congress recently passed The Lower Costs, More Transparency Act increasing funding for the CHCF 10% for the next two and a half.
  • Enact state and federal legislation to protect the 340B program to ensure centers continue to maintain revenue streams and can pass on these savings to patients.
    • Show support for this important program by reaching out to your State Senators and asking them to support The Illinois Patient Access to 340B Pharmacy Protection Act (SB3727).
    • Contact Congress and tell them to pass legislation similar to the PROTECT 340B introduced in the House of Representatives in 2023 or the SUSTAIN 340B Act introduced in the Senate in 2024.


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