OLR Research Report

October 28, 2010




By: John Kasprak, Senior Attorney


Community health centers are major providers of health care to medically underserved communities and vulnerable populations throughout the country. Also known as “federally qualified health centers,” (FQHCs), they are nonprofit, health care practices that seek to provide high quality, primary care to anyone seeking care. These centers also provide other supportive services to promote access to health care.

The recently passed federal health care reform legislation (P.L. 111-148) recognizes the importance of community health centers in providing necessary health care services to communities and populations in need. The law provides increased funding for health centers, including some in Connecticut. It also includes provisions on insurance expansions, payment reform, and workforce training that will affect the operations and capabilities of the centers.



Community health centers (CHCs), originally called neighborhood health centers, were established in the mid -1960s by the federal Office of Economic Opportunity as a “War on Poverty” demonstration program during the Johnson administration. They were created to provide health and social service access points in poor and medically underserved communities and to promote community empowerment. The original centers were designed and administered to ensure responsiveness to community needs. The first two neighborhood health center demonstration projects were funded in 1965, one in Boston and the other in Mississippi.


CHCs provide comprehensive, culturally competent, primary health care services to medically underserved communities and vulnerable populations. They are community-based and patient-directed organizations that serve populations with limited access to health care. These populations include low income, the uninsured, those with limited English proficiency, migrant and seasonal farm workers, homeless individuals and families, and public housing residents.

CHCs serve people of all ages; in 2009, about 33% of patients were children (age 18 and younger), while approximately 7% were 65 or older. The proportion of uninsured patients of all ages was about 38% in 2009. Hispanic/Latino patients accounted for 35% of the population served by CHCs, while African-Americans made up about 27% of the patient population in 2009. Health centers also served almost 865,000 migrant and seasonal farm workers and their families, over 1 million homeless individuals, and over 165,000 public housing residents in 2009.

Health centers receive revenues from multiple payers including public and private health insurance, as well as federal, state and local grants and contracts. Medicaid payments are a significant revenue source.

In order to receive federal funding (known as “Sec. 330 grants,” see below), a health center must (1) be located in or serve a community designated as a “Medically Underserved Area” (MUA) or “Population” (MUP)); (2) be governed by a community board composed of a majority of health center patients who represent the population served by the center; (3) provide comprehensive primary health care services as well as supportive services that promote access to health care (e.g., education, translation, and transportation); (4) provide services to all with fees adjusted based on the ability to pay; and (5) meet other performance and accountability requirements concerning administrative, clinical, and financial operations.

Federally Qualified Health Centers (FQHCs)

FQHCs, often referred to as “Sec. 330 grantees,” include community health centers serving underserved populations and areas, migrant health centers serving migrant and seasonal farm workers, healthcare for the homeless programs providing health care and services to the homeless, and public housing primary care programs serving public housing residents.

An FQHC is a public or private nonprofit organization that meets certain criteria under the Medicare and Medicaid programs (Sections 1861(aa)(4) and 1905(I)(2)(B) of the Social Security Act, respectively) and receives federal funding under the Health Center Program (Section 330 of the Public Health Service Act (PHSA)).

The federal Health Centers Consolidation Act of 1996 combined separate authorities for community, migrant, homeless, and public housing center programs under Sec. 330 to create one consolidated program. But it is subdivided into separate grant competitions for community, migrant, homeless, and public housing health centers.


The federal Patient Protection and Affordable Care Act (PPACA; P.L. 111-148) includes a number of provisions that affect community health centers. These include increased funding for health centers, insurance expansions, Medicare payment reform, and workforce and training initiatives.

Increased Funding for Health Centers

Beginning in federal fiscal year 2011, the federal health care reform law includes a total of $11 billion in new funding for health centers over a five year period. Of this total, $9.5 billion will allow health centers to expand their operational capacity to serve a significant number of new patients and to improve their medical, oral, and behavioral health services. The remaining $1.5 billion will allow health centers to begin to meet their capital needs, by expanding and improving existing facilities, constructing new sites, and upgrading health information technology systems.

On October 8, 2010, the federal Department of Health and Human Services (HHS) announced the recipients of $727 million in grants. This funding is expected to help provide care for over 745,000 underserved patients at 143 centers across the country. These funds are the first in a series of awards over the five year period.

The PPACA also increases funding for the National Health Services Corps by $1.5 billion over five years. This is expected to place an estimated 15,000 primary care providers in provider-short communities.

Four Connecticut health centers were among the first recipients of the grant awards under the PPACA. Southwest Community Health Center in Bridgeport will receive $5,370,855.00. It plans to use the funding to relocate and expand its Bird Street location to nearby Albion Street. The nonprofit operates five health care centers in Bridgeport.

Community Health Center, Inc. in Middletown will receive $7 million. It expects to break ground on a new Middletown facility shortly. Fair Haven Community Health Center, Inc. in New Haven was awarded $990,000 and will use its grant to establish a dental services clinic at the center. Finally, Generations Family Health Center, Inc. in Willimantic received $5 million and will use the funding to help build a 32,000 square foot “green” community health center at 40 Mansfield St. in Willimantic to house medical, dental, and behavioral health programs in one location.

Insurance Expansions

PPACA's extension of Medicaid to all children and adults with family incomes up to 133% of the federal poverty level (FPL) in FY 2014 is a significant reform for health centers. (The FPL for a single person is $14,404.) When fully phased in, this expansion is estimated to reach about 16 million people nationwide. This is expected to have a big impact on the insurance status of health center patients.

Another insurance-related expansion affecting health centers is the creation of Health Insurance Exchanges by the states and federal government. An exchange is basically an entity that will assist with the purchase of health insurance for certain individuals and businesses by offering a choice of plans, provide consumers with information to help them better understand options available, and establish rules and procedures concerning insurance offering and pricing. The exchange will connect individuals with insurance and the premium subsidies available for lower and moderate income individuals.

Many uninsured health center patients with incomes above the new Medicaid eligibility threshold will probably qualify for subsidies in the exchanges. The availability of new coverage and the related decrease in uninsured health center patients will significantly affect health centers' operations (see “Community Health Centers: Opportunities and Challenges of Health Reform,” Issue Brief, The Kaiser Commission on Medicaid and the Uninsured, August 2010, p. 8).

Medicare Payment Reform

The PPACA revises Medicare FQHC coverage and payment policies in a number of ways. The most significant is a requirement that the HHS Secretary develop a prospective payment system for services provided by health centers. The federal health reform law also eliminates the health center Medicare payment cap and clarifies that new Medicare coverage for certain preventive benefits are to be treated as part of the Medicare core FQHC service definition. This will ensure that health centers are paid through the new prospective payment system for the preventive services they provide (see Kaiser Issue Brief, p. 9).

Workforce and Training

As noted above, the PPACA provides $1.5 billion for the National Health Services Corps. Additionally, the law authorizes a teaching health center grant program to fund newly accredited or expanded existing primary care residency training programs. These teaching centers must be community-based ambulatory patient care centers that operate primary care residency training programs. Interested health centers can establish these programs. The legislation appropriates up to $230 million from FYs 2011 to 2015 to reimburse of teaching centers for both training costs and higher patient costs associated with clinician training (See Kaiser Issue Brief, p. 10).


For more information see:

--Jessamy Taylor, “The Fundamentals of Community Health Centers,” National Health Policy Forum Background Paper, The George Washington University, August 31, 2004.

--“Community Health Centers: Opportunities and Challenges of Health Reform, Issue Brief, The Kaiser Commission on Medicaid and the Uninsured, August 2010.

--Anthony T. LoSasso and Gayle R. Byck, “Funding Growth Drives Community Health Center Services,” Health Affairs, February 2010, pp. 289-296.

--“Community Health Center Overview,” Connecticut Department of Public Health, http://www.ct.gov/dph

--National Association of Community Health Centers, www.nachc.org

--Health Resources and Services Administration, http://bphc.hrsa.gov/about/