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Note: This chapter contains language that was revised based on the Bipartisan Budget Act of 2018. View the revisions (PDF - 582 KB).
In this chapter:
- Program Oversight
- Progressive Action Overview
- Progressive Action Process
- Immediate Enforcement Actions
- Program Compliance and Application Review Selection
Health centers must comply with all Health Center Program requirements and other applicable Federal statutes, regulations, and the terms and conditions of their award or look-alike designation.1 In keeping with the Health Resources and Services Administration (HRSA)/Bureau of Primary Health Care’s (BPHC) oversight responsibilities, HRSA/BPHC monitors and supports health centers in complying with these requirements.
The purpose of this chapter is to:
- Set forth HRSA/BPHC’s oversight process for the purposes of monitoring compliance with Health Center Program requirements and assists health centers in maintaining compliance with these requirements.
- Describe when and how HRSA pursues remedies for non-compliance, including taking enforcement action(s) in cases where health centers fail to comply with Health Center Program requirements and other applicable Federal statutes, regulations, and the terms and conditions of the award or look-alike designation.
- Clarify when and how compliance with program requirements and past performance2 is considered in award or designation decisions.
HRSA/BPHC’s Progressive Action process is implemented through its Electronic Handbooks (EHB) system. The EHB system facilitates the tracking of compliance with program conditions placed on a health center’s award or designation.3 This system also communicates these conditions through Notices of Award (NoAs) or Notices of Look-Alike Designation (NLDs), documents the health center’s response to these conditions, and documents removal of these conditions when appropriate.4
United States (U.S.) Department of Health and Human Services (HHS) grants regulations, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Regulations)5 require HRSA to “manage and administer the Federal award in a manner so as to ensure that Federal funding is expended and associated programs are implemented in full accordance with U.S. statutory and public policy requirements, including, but not limited to, those protecting public welfare, the environment, and prohibiting discrimination.”6
Consistent with applicable laws and HRSA’s program oversight responsibilities, health centers are assessed for compliance with these requirements and are provided an opportunity to remedy areas of non-compliance whenever reasonably possible. Immediate enforcement action may be taken against health centers in limited circumstances that are further addressed below.
HRSA may impose specific award conditions7 if an applicant or recipient/designee:
- Demonstrates undue risk in such areas8 as:
- Financial stability;
- Quality of management systems and ability to meet required management standards;
- History of performance, specifically the applicant’s record in managing previous Federal awards (timeliness of compliance with applicable reporting requirements and conformance to the terms and conditions of previous Federal awards);
- Findings from reports and audits; and
- Ability to effectively implement statutory, regulatory, or other requirements imposed on non-Federal entities.
- Has a history of failure to comply with the general or specific terms and conditions of a Federal award/designation;
- Fails to meet expected performance goals [as prescribed in the terms or conditions of the Federal award or designation]; or
- Is not otherwise responsible.9
Specific award conditions may include, but are not limited to, the following:
- Requiring payments as reimbursements rather than advance payments;10
- Withholding authority to proceed to the next phase of the project until receipt of evidence of acceptable performance within a given period of performance;
- Requiring additional, more detailed financial reports;
- Requiring additional project monitoring;
- Requiring the non-Federal entity to obtain technical or management assistance; or
- Establishing additional prior approvals.11
If it is determined that noncompliance cannot be remedied by imposing such additional conditions, one or more of the following actions may be taken as appropriate in the circumstances:
- Temporarily withhold cash payments pending further action;
- Disallow all or part of the cost of the activity or action not in compliance;
- Wholly or partly suspend award activities or terminate the Federal award;12
- Initiate suspension or debarment proceedings;13
- Withhold further Federal awards for the project or program; or
- Take other remedies that may be legally available.14
Progressive Action Overview
In circumstances where HRSA has determined that a health center has failed to demonstrate compliance with one or more of the Health Center Program requirements, a condition(s) will be placed on the award/designation, which will follow the Progressive Action policy and process. Such determinations are typically based upon findings from the review of the Service Area Competition (SAC)/Renewal of Designation (RD) application, a site visit, other compliance-related activities, or through other means.15 Program conditions placed on the health center’s award or look-alike designation describe the:
- Nature of the finding and the requirement it relates to;
- Reason why the condition(s) is being imposed;
- Nature of the action(s) needed to remove the condition;
- Time allowed for completing the additional requirement (satisfying the condition(s)through submission of appropriate documentation or specific actions taken), if applicable; and
- Method for requesting reconsideration of the condition.16
HRSA is committed to providing a reasonable period of time for these organizations to take corrective actions necessary to demonstrate compliance. Progressive Action is designed to provide a time-phased approach for resolution of compliance issues with program requirements. This Progressive Action process is not intended to address or be used for the oversight and enforcement of all Federal requirements that may be applicable to the award or designation, particularly those with implications for patient safety (see Immediate Enforcement Actions).
Should a health center fail to adequately address conditions through Progressive Action, HRSA may utilize available remedies, including terminating all or part of the Federal award/designation status before the health center’s current project end date.17 Such action may be accompanied by a competition to identify another organization to carry out a service delivery program consistent with Federal requirements.18
Progressive Action Process
In circumstances where HRSA has determined that a health center has failed to demonstrate compliance with one or more Health Center Program requirements, relevant conditions are placed on the health center’s award/designation and communicated through Notices of Award (NoAs) or Notices of Look-Alike Designation (NLDs). In responding to such conditions, health centers could demonstrate their compliance to HRSA either by submitting documentation as described in the Demonstrating Compliance sections of the Manual, or by the health center proposing an alternative means of demonstrating compliance with the specified requirements, which would include submitting an explanation and documentation that explicitly demonstrates compliance. All responses to conditions are subject to review and approval by HRSA.
The Progressive Action process provides a uniform structure and a time-phased approach for notifying health centers of the failure to demonstrate compliance and for receiving health center responses to an identified condition(s) as supported within HRSA’s EHB. Through this process, health centers are able to efficiently and effectively respond to conditions, and HRSA is able to promptly review these responses and proceed to next steps, including removal of conditions, as warranted. In addition, the EHB supports the Progressive Action process by clearly noting condition response deadlines in the health center’s EHB task list and providing periodic reminders to health centers during the condition response timeframe.
The Progressive Action process includes four distinct condition phases (detailed below), structured to provide specified timeframes for health centers to provide responses that demonstrate compliance, either in the manner prescribed by this Manual or via alternative means. After initial notification of the compliance issue, a health center will be notified via a NoA/NLD at each Progressive Action phase as to the acceptability of the response and whether further action is needed. If the health center fails to respond by the specified deadline or HRSA determines that the health center’s response does not demonstrate compliance, the health center will be notified and the next Progressive Action phase will be activated.
- Phase One: An initial NoA/NLD is issued with a condition detailing the specific area(s) where compliance with a requirement has not been demonstrated. Phase One provides ninety (90) days for the health center to submit appropriate documentation that demonstrates compliance or, where applicable, that the health center has developed an adequate action plan (see Implementation Phase below) for how its organization will demonstrate compliance with the requirement.19
- Phase Two: Phase Two provides an additional sixty (60) days for the health center to submit appropriate documentation that demonstrates compliance or that the health center has developed an adequate action plan for how its organization will demonstrate compliance with the requirement (See Implementation Phase below).
- Phase Three: Phase Three provides an additional thirty (30) days for the health center to submit appropriate documentation that demonstrates compliance or that the health center has developed an adequate action plan for how its organization will demonstrate compliance with the requirement (See Implementation Phase below).
- Implementation Phase (where applicable): Implementation Phase provides one hundred twenty (120) days for the health center to implement the HRSA-approved action plan and submit appropriate documentation that demonstrates compliance with the program requirement.20
HRSA recognizes that health centers may need to make programmatic and organizational changes in response to a condition. Therefore, the Progressive Action process is designed to provide health centers with a reasonable amount of time to take appropriate action in response to a condition and for prompt HRSA review and decision-making. For example, in Phase One, a health center is given 90 days to either demonstrate compliance with the identified program requirement or develop and submit an action plan detailing the steps the health center will implement in order to demonstrate compliance with the requirement. If this plan is approved, a NoA/NLD will be issued with an “Implementation Phase” condition notifying the health center that HRSA has approved the action plan and that within 120 days it must submit documentation that compliance with the requirement has been demonstrated in accordance with the HRSA-approved plan.
Conditions in Phase Two (60-day) and Phase Three (30-day)21 state that if the health center does not adequately address the condition within the allotted timeframe (the last opportunity being Phase Three), the organization will be determined to have failed to comply with the terms and conditions of the Health Center Program award or designation. As a result, the health center’s current project end date may be shortened through the termination of all or part of the Federal award or designation status.
Immediate Enforcement Actions
HRSA may determine that certain findings related to a health center, as a consequence of their nature and/or urgency, cannot be remedied by imposing specific award conditions per the Progressive Action process described above. In such cases, based on the circumstances, HRSA may take one or more of the following immediate remedies:
- Temporarily withhold cash payments (from the Federal award) pending further action;
- Disallow all or part of the cost of the activity or action not in compliance;
- Wholly or partly suspend award activities or terminate the Federal award;
- Initiate suspension or debarment proceedings;
- Withhold further Federal awards for the project or program; or
- Take other remedies that may be legally available.22
Situations that cannot be remedied through use of the Progressive Action process and that may require HRSA to apply such immediate enforcement actions include:
- Findings that a health center, in responding to the terms or conditions of award/designation, misrepresented the actions it took to correct areas of non-compliance. For example, a site visit reveals that HRSA lifted a Progressive Action condition based on false or misrepresented information submitted by the health center.
- Documented public health or welfare concerns. Examples may include threats to health center patient safety, violations of state scope of practice regulations or guidelines, inappropriate or illegal prescribing practices, lack of appropriate infection control procedures, and occupational or environmental hazards.
- Failure of the health center organization to demonstrate operational capacity to continue or maintain its health center service delivery program. For example, a health center has ceased operations and is no longer providing primary care services or is providing only minimal services.
- A determination that continued funding would not be in the best interest of the Federal Government. For example, a health center organization’s inclusion as an excluded entity on the U.S. Department of Health and Human Services Office of Inspector General’s List of Excluded Individuals/Entities (LEIE) and/or inclusion on the System for Award Management (SAM) Excluded Parties List System (EPLS),23 or as an organization that is not qualified per the Federal Awardee Performance and Integrity Information System (FAPIIS).24
Program Compliance and Application Review Selection
Project/designation period length is based on an assessment of a health center’s compliance with program requirements. Therefore, an existing health center that fails to demonstrate compliance with all Health Center Program requirements may only be awarded Federal Service Area Competition (SAC) funding for a one-year project/designation period.25
Further, if a current Health Center Program Federal award recipient has been awarded two consecutive one-year project periods as a result of noncompliance with any Health Center Program requirements, and review of a subsequent SAC application would result in a third consecutive one-year project period due to noncompliance with Program requirements, HRSA will not fund a third consecutive one-year project period.26 In such circumstances, HRSA may announce a new competition for the service area, in order to identify an organization that can carry out a service delivery program consistent with Health Center Program requirements.
Consistent with the approach regarding Federal award recipients, HRSA will not renew a Health Center Program look-alike organization’s designation if the organization has received two consecutive one-year designation periods and the review of the subsequent RD application would result in a third consecutive one-year designation period. Look-alikes whose designation period has not been renewed may reapply for look-alike designation through the initial designation application process at any time.27
In addition, project/designation period length determinations may be impacted by a comprehensive evaluation of the risks to the Health Center Program posed by each applicant if it were to receive an award/designation for a new project or designation period, or for supplemental funding. The specific criteria for determining project period length are further detailed in the applicable Service Area Competition (SAC) Notices of Funding Opportunity (NOFOs) and Look-Alike Renewal of Designation (RD), or supplemental funding application instructions. A health center’s ability to demonstrate compliance with program requirements is critical to ensuring continued Federal award support and may, in certain cases, directly impact award decisions for supplemental funding, as outlined in the specific NOFO.
1. Section 330 of the Public Health Service (PHS) Act (42 U.S.C. 254b), as amended, 42 CFR Part 51c and 42 CFR Part 56 for Community and Migrant Health Centers, respectively, and 45 CFR Part 75.
2. 42 CFR 51c.305 and 45 CFR 75.205(c)(3).
3. Throughout this document, requirements or conditions of award are “requirements of Federal designation” for organizations designated by HRSA as look-alikes (see section 1861(aa)(4)(B) and section 1905(l)(2)(B) of the Social Security Act), which must also meet all of the requirements of the Health Center Program.
4. In the EHB, a health center’s response to a condition of award/designation is referred to as a “submission”. The removal or lifting of a condition occurs once a submission that adequately addresses the required corrective action has been reviewed, approved by HRSA, and marked as “met” within the EHB.
5. 2 CFR Part 200.
6. 45 CFR 75.300.
7. 45 CFR 75.207(a).
8. 45 CFR 75.205(c).
9. 45 CFR 75.207(a).
10. This is also known as “Restricted Drawdown.” When a Federal award recipient is placed on restricted drawdown, all drawdowns of Federal funds from the Payment Management System (PMS) must have approval of HRSA’s Office of Federal Assistance Management, Division of Grants Management Operations, and must comply with all applicable requirements before funds are drawn.
11. 45 CFR 75.207(b).
12.Termination means the ending of a Federal award, in whole or in part at any time prior to the planned end of period of performance [project period] (45 CFR 75.2). Health Center Program look-alikes will receive formal notification of de-designation as they do not receive a Federal Health Center Program award.
13.Suspension of award activities means an action by HRSA requiring the recipient to cease all activities on the award pending corrective action by the recipient, including restricting the ability to draw down any funds associated with the Federal award (45 CFR 75.375) and is a separate action from suspension under HHS regulations (2 CFR Part 376) (45 CFR 75.2).
14. 45 CFR 75.371.
15. HRSA may also assess compliance with requirements through audit data, Uniform Data System (UDS) or similar performance reports, Medicare/Medicaid reports, external accreditation, or other Federal, state, or local findings or reports as applicable, and may conduct onsite verification of compliance at any point within a project/designation period or prior to any final Health Center Program award/designation decisions.
16. Imposed conditions will include the method for submitting responses to conditions, which would include an opportunity to inform HRSA of any request to reconsider the placement of the condition.
17. 45 CFR 75.371 and 45 CFR 75.372.
18. Health Center Program look-alikes that have had their designation period terminated by HRSA under such circumstances or for which HRSA has not renewed a look-alike designation may reapply for look-alike designation through the initial designation application process at any time.
19. Conditions afford a 120-day Implementation Phase when a HRSA-approved corrective action plan would require additional time for the health center to implement related programmatic and organizational changes.
20. The implementation phase follows HRSA’s approval of an adequate action plan submitted in Phase One, Two, or Three.
21. The BPHC website includes a public Health Center Profile for each individual health center that displays data on the status of a health center’s compliance with Health Center Program requirements based on the presence of any active 60- and/or 30-day Progressive Action conditions. See Health Center Program UDS Data Overview website to view individual health center data.
22. 45 CFR 75.371.
25. Section 330(e)(1)(B) of the PHS Act (42 U.S.C. 254b(e)(1)(B)). In addition, a health center that fails to demonstrate compliance with all Health Center Program requirements, including those in Section 330(k)(3) of the PHS Act, must submit, within 120 days of grant funding, an implementation plan for compliance for HRSA approval. Additional information related to this implementation plan will be included in the applicable Notices of Funding Opportunity and Look-Alike Designation/Renewal of Designation application instructions.
26. Section 330(e)(4) of the PHS Act states that “Not more than two grants may be made under subparagraph (B) of paragraph (1) for the same entity.” While such organizations may apply for future Health Center Program funding under 45 CFR 75.205(c)(3), HRSA may consider factors, including an applicant’s history of performance if it has been a prior recipient of Federal awards or designation when making competitive awards. These factors include, but are not limited to, unsuccessful Progressive Action condition resolution and current compliance with Health Center Program requirements and regulations.