Gov. Dannel P. Malloy’s administration is withholding $3.89 million in payments for community health centers, a response to projections that show a ballooning budget deficit.
The move is similar to one the administration made in suspending $140 million in payments to hospitals, and led health center officials to warn that it could cost jobs and set back services for poor patients.
“What it could mean is layoffs,” said Deb Polun, director of government affairs and media relations at the Community Health Center Association of Connecticut. One health center has warned that it could have to lay off 10 people, she said. “And it is guaranteed to impact health care access for the lowest-income people in our state.”
A Malloy spokesman said Friday that community health centers – known officially as federally qualified health centers, or FQHCs – receive higher Medicaid payment rates than most other health care providers, and he pointed to the health centers' recent financial performance.
"The Medicaid program is not designed to pad profits, especially at a time when we are staring down excruciating budget cuts to achieve balance, and, in 2014, FQHCs reported almost $23 million in revenue over expenses," Chris McClure, a spokesman for the governor, said.
In a letter to health center leaders Wednesday, state budget director Benjamin Barnes said he had asked the Department of Social Services to hold off on the payments until the administration identifies steps to address the current fiscal year’s budget deficit.
“While I hope to have this task completed later this month, due to the significant drop in revenues, I am not optimistic that we will be able to move forward with any state payments this fiscal year,” Barnes wrote.
The funding at issue is known as supplemental payments, which Polun said have in past years supported health center operations and helped to cover costs related to treating the uninsured or Medicaid shortfalls. The vast majority of patients at Connecticut's 16 community health centers are either covered by Medicaid or uninsured.
The supplemental payments budgeted for this fiscal year include approximately $1.55 million in state funding and $2.34 million in federal matching funds, according to the legislature's nonpartisan Office of Fiscal Analysis.
Until this fiscal year, community health centers received grant money through the state Department of Public Health. But the funding was transferred to the Department of Social Services as part of the current year’s budget as a way to generate federal Medicaid matching funds to cover some of the costs. That match required the state to get federal approval, and the health centers had been waiting for that to happen so they could get the money budgeted for them this fiscal year.
The Malloy administration’s move to hold back the funding, and possibly not pay it at all this fiscal year, follows projections by nonpartisan fiscal analysts that state income tax receipts would fall nearly $200 million below expectations this fiscal year. The legislature’s Office of Fiscal Analysis projected a $266 million budget deficit for this fiscal year, significantly higher than had previously been forecasted.
"A new economic reality means that we need to budget and act based on the dollars we actually have – not the dollars we want to have," McClure said. "As with the hospitals, a hold of the supplemental payments is not a change to the reimbursement rate."
Community health centers provide primary care, dental services and behavioral health treatment. In 2014, Connecticut's federally qualified health centers – there were 13 at the time – treated 331,371 patients, 95 percent of whom had incomes less than 200 percent of the poverty level, according to federal data. That year, 18.5 percent of health center patients were uninsured, while 62.5 percent were covered by Medicaid. (Since then, three other providers have received federal designation as community health centers.)
At Southwest Community Health Center in Bridgeport, losing the supplemental funding could mean having to reduce evening hours or stop recruitment efforts for two positions, President and CEO Katherine Yacavone said.
“It’s just a total erosion of support for the safety net providers and for the Medicaid clients,” Yacavone said. “People will not get these services unless we’re there to provide them.”
Yacavone’s health center received about $221,000 from the funding pool last year, and used it to pay portions of the salaries of four to five physicians.
“We have to make that up, or we are faced with letting a provider go, which we don’t want to do, or not hiring a provider because I don’t have the money,” Yacavone said. “That’s really a direct impact on access to care.”