In this section:
Primary Reviewer: Fiscal Expert
Secondary Reviewer: N/A
Authority: Section 330(e)(5)(A) and Section 330(k)(3)(I)(i) of the Public Health Service (PHS) Act; and 45 CFR 75.308(a) and 45 CFR 75 Subpart E
Health Center Program Compliance Manual Related Considerations
Documents the Health Center Provides
- Updated annual budget for the health center project (if updated since last application submission to HRSA).
- Budget to actual comparison report for the current fiscal year.
- Budget to actual comparison report for the prior fiscal year.
- For context and background on budget development process: Financial management procedures.
- As a reference for any other lines of business: Most recent annual audit and management letter or audited financial statements.
- If the health center has an organizational budget that is separate from the health center project budget: All separate organizational budgets for the current fiscal year.
Compliance Assessment
Select each element below for the corresponding text of the element, site visit team methodology, and site visit finding questions.
The health center develops and submits to HRSA (for new or continued funding or designation from HRSA) an annual budget, also referred to as a “total budget,”1,2 that reflects projected costs and revenues necessary to support the health center’s proposed or HRSA-approved scope of project.
Site Visit Team Methodology
- Review the health center’s current annual budget for the health center project.
- Review the budget to actual comparison report for the current fiscal year.
- Review the budget to actual comparison report for the prior fiscal year.
- Review the financial management procedures.
- Review the health center’s approved scope of project (Form 5A and Form 5B), including any special populations funding or designation.
- Determine if there has been any change in the scope of project that impacts the current budget since the last Health Center Program application.
- Interview health center Project Director/CEO, CFO, and financial staff to understand:
- The budget formulation process (for example, budget assumptions such as clinician productivity, payer mix); and
- Any variances or questions raised by the review of budget to actual comparison reports.
Site Visit Findings
- Does the health center have an annual operating budget that reflects the projected costs and revenues necessary to support the health center’s HRSA-approved scope of project; specifically, does the budget reflect revenue and expenses for all sites, services, and activities within the scope of project?
Response is either: Yes or No
If No, an explanation is required.
In addition to the Health Center Program award, the health center’s annual budget includes all other projected revenue sources that will support the Health Center Program project, specifically:
- Fees, premiums, and third-party reimbursements and payments that are generated from the delivery of services;
- Revenues from state, local, or other federal grants (for example, Ryan White, Healthy Start) or contracts;
- Private support or income generated from contributions; and
- Any other funding expected to be received for purposes of supporting the Health Center Program project.
Site Visit Team Methodology
N/A – HRSA does not review health center compliance with this element during the site visit. HRSA assesses compliance with this element during its review of the health center’s competing continuation application (SAC or RD).
Site Visit Findings
N/A – HRSA does not review health center compliance with this element during the site visit. HRSA assesses compliance with this element during its review of the health center’s competing continuation application (SAC or RD).
The health center’s annual budget identifies the portion of projected costs to be supported by the federal Health Center Program award. Any proposed costs supported by the federal award are consistent with the federal cost principles3 and the terms and conditions4 of the award.
Site Visit Team Methodology
N/A – HRSA does not review health center compliance with this element during the site visit. HRSA assesses compliance with this element during its review of the health center’s competing continuation application (SAC or RD).
Site Visit Findings
N/A – HRSA does not review health center compliance with this element during the site visit. HRSA assesses compliance with this element during its review of the health center’s competing continuation application (SAC or RD).
If the health center organization conducts other lines of business (i.e., activities that are not part of the HRSA-approved scope of project), the costs of these other activities are not included in the annual budget for the Health Center Program project.5
Site Visit Team Methodology
- Review the health center’s approved scope of project (Form 5A and Form 5B).
- To determine whether the health center operates other lines of business:
- Review the most recent audit or audited financial statements; and
- Interview health center Project Director/CEO, CFO, and financial staff.
- If the health center has an organizational budget that is separate from the health center project budget, review all separate organizational budgets for the current fiscal year.
Note: Net revenue from other lines of business may be included in the health center project’s operating budget.
Site Visit Findings
- Does the health center engage in any other lines of business; specifically, does the health center serve other populations or operate sites, services, or activities that are NOT within the HRSA-approved scope of project?
Response is either: Yes or No
- IF YES:
- 3.1 Can the health center document that these other lines of business are fully supported by non-health center project revenues?
Response is: Yes, No, or Not Applicable
- 3.2 Can the health center document that all expenses from such other lines of business are excluded from the annual operating budget for the health center project?
Response is: Yes, No, or Not Applicable
If No was selected for any of the above, an explanation is required.
- 3.1 Can the health center document that these other lines of business are fully supported by non-health center project revenues?
Footnotes
1. A health center’s “total budget” includes the Health Center Program federal award funds and all other sources of revenue in support of the health center scope of project.
2. Any aspects of the requirement that relate to the use of Health Center Program federal award funds are not applicable to look-alikes.
3. See 45 CFR Part 75 Subpart E: Cost Principles.
4. For example, health centers may not use HHS federal award funds to support salary levels above the salary limitations on federal awards.
5. As these other lines of business are not included in the health center’s total budget, they are not subject to Health Center Program requirements and not eligible for related Health Center Program benefits (for example, payment as a Federally Qualified Health Center (FQHC) under Medicare/Medicaid/CHIP, 340B Drug Pricing Program eligibility, Federal Tort Claims Act (FTCA) coverage).