FQHC Grants and Programs: What You Need to Know

FQHC Grants and Programs: What You Need to Know

As a federally qualified health center, (FQHC), chances are you’re a participant in federal funding or grant programs. While these programs are crucial tools when helping the underserved, they also introduce important compliance requirements. And if you’re not aware of them, it could jeopardize your center’s funding.

The unique challenges you face

As an FQHC, you deliver comprehensive healthcare services and providing a safety net for residents in rural areas. This makes programs like the 340B Drug Program, the Ryan White HIV/Aids Program, and the Section 330 Grant essential to your mission.

However, these programs are also highly scrutinized, with various requirements on how they’re used and audits that must be performed. So you need to be a responsible steward of the funds you receive. This means spending the money as instructed and having sound accounting records and reporting practices.

Let’s take a look at these three common FQHC programs—and how you can avoid jeopardizing your ability to participate.

The 340B Drug Program

The 340B Drug Program allows FQHCs and other entities that treat uninsured/low income patients to buy outpatient drugs at discounted prices. (Establishments that use this program must meet certain qualifications.) You can then use the savings toward day-to-day healthcare operations or higher-level endeavors such as establishing community health programs.

To receive this program’s funds each year, your organization must recertify its eligibility and verify it meets all program requirements. You must also ensure records are available when an audit is conducted by Health Resources and Services Administration (HRSA) Office of Pharmacy Affairs (OPA) and the drug manufacturer. Finally, you’ll need to keep thorough records and accurate inventories of all prescription drugs, regardless of whether they’re obtained through 340B.

A 340B Drug Program audit differs from standard audits. Instead of being conducted annually, this audit is requested by a manufacturer. This request is sent to HRSA and cites your FQHC to conduct an audit. HRSA then determines whether the manufacturer or the government should conduct the audit. (Note that 340B doesn’t require HRSA to use Generally Accepted Government Auditing Standards (GAGAS) for these audits.)

You’ll first receive an engagement letter explaining what to expect in a 340B audit and how your FQHC should prepare. The audit will include the following (at a minimum):

• Review of relevant policies and procedures and how they are operationalized
• Verification of eligibility, including the Government Publishing Office (GPO) prohibition, maintaining auditable records, and outpatient clinic eligibility
• Verification of internal controls to prevent diversion and duplicate discounts
• Review of 340 Drug Program compliance at your entity, outpatient or associated facilities and contract pharmacies
• Testing of 340B drug transaction records on a sample or judgmental basis

Once your audit is complete, the auditor will submit a preliminary report to OPA. (Auditors are not allowed to provide findings to the entity.) OPA will review the report before drafting a final report and sending it to you. A corrective action plan, or CAP, could be requested depending on the audit’s findings.

The finalized report’s findings, along with any associated sanctions, will be summarized on the OPA public website. The most common audit findings in recent years have been incorrect entries on the Medicare Cost Report, followed by inaccuracies on the Medicaid Exclusion File. Should an entity have the same findings on a re-audit, they may be subject to additional audits.

Multiple findings of non-compliance could result in your removal from the 340 Drug Program—a significant threat to your operations. Maintaining complete and accurate records at your FQHC is key to preventing this from happening.

One way to ensure you remain in compliance is by self-auditing. You should scrutinize the following general areas:

• Your FQHC’s eligibility for the program
• The accuracy of information listed in OPA records.
• Misuse via diversion (providing 340B drugs to ineligible patients).
• Misuse via duplicate discounts (manufacturer providing both 340B and Medicaid incentives for the same drug)

The Ryan White HIV/AIDS Program

In December 1984, 13-year-old hemophiliac Ryan White was diagnosed with AIDS after receiving a blood transfusion. His doctors gave him six months to live, but he outlasted that prediction before dying in April of 1990.

Ryan’s legacy lives on with the Ryan White HIV/AIDS Program (RWHAP), a program that helps low-income people with HIV/AIDS. The program helps them receive medical care, medications, and essential support services. There are five parts of the RWHAP, each with a different funding purpose.

More than half of the people diagnosed with HIV receive services from RWHAP each year. The grants help cities, states, counties and community-based groups to:

• Provide care, medication, and essential support services to people with HIV;
• Improve HIV-related health outcomes; and,
• Reduce HIV transmission

Some requirements for the RWHAP are unique to the specific grant, while others apply to all federal grant programs. In addition, each part of the RWHAP has different compliance requirements. For instance, purchases of alcoholic beverages are never allowable costs, whereas fundraising is an allowable expense in some parts.

Every two years, FQHCs receiving RWHAP funds must submit audit reports consistent with 45 CFR Part 75 Subpart F. One of the audit requirements is a single audit, which is required when a nonfederal entity expends $750,000 or more of federal awards (direct or indirect) during their fiscal year.

Single audits are far more detailed than traditional audits and focus on programmatic compliance. They require strict compliance and must be conducted in accordance with Generally Accepted Government Auditing Standards. The audit concludes with reports on internal control over financial reporting, compliance, and internal control over compliance and Schedule of Federal Awards (SEFA).

If your FQHC is a larger organization, you might be familiar with single audit requirements. If not, taking the right steps to prepare for the process is a key to a smooth and successful audit.

The Section 330 Grant

Section 330 of the Public Health Service Act established The Health Center Program to establish community health centers. Since this provision is under Section 330 of the legislation, funds received under the program are commonly known as Section 330 grants.

Community health centers deliver comprehensive, high-quality basic health care services to underserved populations. In addition to traditional health care, they also provide pharmacy, substance use disorder, and mental and oral health services. The goal is to reduce health disparities by operating where affordable care is limited due to economic, geographic or cultural barriers.

Funding for the 330 Grant comes from a combination of discretionary and mandatory funding. As with the RWHAP, 330 Grant funds have requirements that are both particular to the program and universal for federal funding. They also mean your FQHC is subject to a single audit if you receive more than $750,000 per year (since the 330 Grant comes from the federal government). So as stated above, prepare yourself for this more rigorous audit if you meet the qualifications.

With all of these programs, compliance is crucial to maintaining funding. Maintaining solid financial statements and accounting records and staying current on audit and single audit requirements is extremely important.

That’s where a CPA experienced with FQHCs makes a difference. By understanding both the financial and assurance aspects of these programs and your FQHC’s unique operations, they’ll give you peace of mind regarding and contribute to the overall success of your program.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.