Health Care Reform Law Provides Boost for NHSC, Teaching Health Centers

December 22, 2010 12:20 am Barbara Bein

A key goal of the new health care reform legislation is to remedy physician shortage and maldistribution problems by growing the nation's primary care physician workforce and placing those physicians in medically underserved regions of the country. The means to these ends include dramatic increases in funding for the National Health Service Corps, or NHSC, and new funding for teaching health center, or THC, residency programs that are included in the health care reform law.

There remain some questions, however, regarding how much of the funding authorized under provisions of the Patient Protection and Affordable Care Act( will survive the congressional appropriations process.

For example, funding for the NHSC -- the HHS program that allows physicians to exchange medical education debt for service in health professional shortage areas -- involves both discretionary (i.e., subject to congressional approval) and mandatory components.

Funding for THCs -- described as community-based, ambulatory patient care centers that operate a primary care residency program -- also has two components. Development grants to start new THCs, or expand existing ones, are authorized under the Affordable Care Act, but Congress has not appropriated the money for fiscal year 2011 and it is unlikely to do so, according to Teresa Baker, AAFP government relations representative.

However, mandatory funding totaling $230 million for FY 2011 to FY 2015 is available for existing THCs' direct and indirect graduate medical education, or GME, expenses.

NHSC Funding Provisions

Under Section 5207 of the Affordable Care Act, Congress can provide funding for the NHSC in the amount of more than $414 million in FY 2011, $535 million in FY 2012, $691 million in FY 2013, $893 million in FY 2014 and $1.15 billion in FY 2015.

In subsequent years, the appropriation will be adjusted for increases in the cost of health professions education and for changes in the number of people living in health professional shortage areas.

The Accountable Care Act also provides new funding for the NHSC. According to Section 10503 of the law, mandatory funding for the NHSC will total $290 million for fiscal year 2011 and will increase by $5 million each year through fiscal year 2015.

That increased funding -- a total of $1.5 billion during a five-year period -- aims to expand the NHSC's scholarship and educational loan repayment programs for primary care physicians and other health care professionals. These programs allow physicians to receive financial aid in exchange for service at practice sites in the nation's rural and urban health professional shortage areas.

"The additional money for the National Health Service Corps basically provides more positions for primary care physicians," said physician workforce expert Perry Pugno, M.D., M.P.H., director of the AAFP Division of Medical Education and a former NHSC physician who served a year in the Mojave Desert community of Barstow, Calif.

"What this means for our community is many more practice sites where our graduates can do full-scope family medicine and get significant debt relief without the new expenses of setting up a practice," Pugno added.

The Academy and 37 other stakeholder groups made clear their support for the NHSC in October, when they signed on to a letter to HHS Secretary Kathleen Sebelius(2 page PDF) that lauded the NHSC as a means to improve access to health care, provide incentives for clinicians to enter primary care, reduce new physicians' financial burdens and ensure access to health professional education for students from all socioeconomic backgrounds.

The groups noted that in FY 2009, the American Recovery and Reinvestment Act provided a temporary boost in NHSC awards, but they emphasized that the increase in field strength must be sustained and called for utilization of the mandatory NHSC funds in the Affordable Care Act "to address manpower deficiencies by increasing new NHSC awards, opportunities, benefits and, ultimately, the total NHSC field strength."

Academy, CMS in Talks About Teaching Health Center Points

The Academy and CMS currently are negotiating language regarding teaching health center, or THC, residency programs, which are singled out to receive funding in the Patient Protection and Affordable Care Act.

HHS announced Nov. 20 that applications are open for the THC Graduate Medical Education payment program and issued its accompanying guidance on Nov. 29. The deadline for receipt of applications is Dec. 30.

According to Teresa Baker, AAFP government relations representative, HHS currently does not permit hospitals to exceed their resident caps to allow for THC residents. Unless HHS specifically states in its guidance that THC residents will not be counted against the hospitals' caps, hospitals will have little incentive to allow these residents to rotate through them, she said.

Baker noted that when a THC resident is in training in a hospital, that hospital can claim Medicare direct and indirect medical education payments for the time the resident is in training, provided that the hospital does not exceed its limit on the number of residents for which the GME program will pay.

However, said Baker, the Affordable Care Act "clearly allows for an exception for THC residents. But unless the guidance states that THC residents will not count against the cap, hospitals will not claim GME payments for the residents that take them over their limit."

The groups also voiced their support for report language accompanying the Senate Appropriations Committee's FY 2011 Labor-HHS-Education spending bill, which anticipates that the discretionary funding amount of $141 million appropriated for the NHSC will be combined with the full $290 million appropriated under the Affordable Care Act.

"Use of the NHSC fund to the greatest extent possible will help recruit the health professionals necessary to care for our nation's underserved," they said.

Pugno agreed. "The NHSC is the point of the spear in this nation to cope with the maldistribution of primary care physicians and health care access. And it's a great way to do rural practice."

THC Development Grants and GME Payment Program

Another workforce-related provision of the health care reform legislation seeks to increase teaching capacity at THCs, with the ultimate aim of training more family medicine and other primary care physicians.

Section 5508 of the Accountable Care Act authorizes THC development grants totaling $50 million in both FY 2011 and FY 2012 to help THCs establish new, or expand existing, primary care residency programs, with the THCs acting as institutional sponsors.

The grants, which can range up to as much as $500,000 a year for as many as three years, were designated for curriculum development; recruitment, training and retention of residents and faculty; accreditation by the Accreditation Council for Graduate Medical Education and other accrediting bodies; faculty salaries; and technical assistance. THCs with an affiliation with an area health education center would be given preference.

The grants will be subject to Congress' annual appropriations process, however, which raises questions about whether the funds actually will be appropriated. Other, mandatory appropriations contained in the Affordable Care Act for THCs' direct and indirect GME expenses are more certain.

Massachusetts Residency Applying For New GME Funding

Given its location in a state with a critical shortage of primary care physicians, the Lawrence Family Medicine Residency in Lawrence, Mass., plans to expand if it is accepted into the Teaching Health Center Graduate Medical Education, or GME, payment program.

The residency, which presently has 24 residents, is located in the Greater Lawrence Family Health Center, a federally qualified health center. According to the program's director, Joseph Gravel, M.D., the residency would add six new positions if it is awarded funds for direct and indirect GME expenses.

The availability of the funding -- which would go directly to the residency -- hastened the program's existing plans for expansion, Gravel said.

"We have a primary care workforce crisis in Massachusetts, so we've been thinking about expansion," he said. "This money encouraged us to expand."

In 2006, Massachusetts became the first state in the nation to require its citizens to carry health insurance. The new law brought more than 300,000 previously uninsured people into the health care system, but there have not been enough primary care physicians to provide care for them.

"Small Step in the Right Direction"

In a study published last year(, Frederick Chen, M.D., M.P.H., chief of family medicine at Harborview Medical Center, Seattle, and senior adviser in HRSA's Bureau of Health Professions, described the many benefits of locating family medicine residencies in community health centers. Now, he's overseeing the THC GME payment program.

"Teaching health centers are a new federal program aimed at encouraging community-based primary care residency training," Chen told AAFP News Now. "With a particular focus on underserved settings, we know that if we can support high-quality training in these environments, the residents who train there tend to stay there or work in similar communities

According to Chen, the tight timeline for applications to be submitted to the GME payment program will permit eligible THCs to be identified by January. THCs then can rank new residents in time for the National Resident Matching Program in March 2011, and the new residents can start in July.

Chen described the THC program as "a small step in the right direction" toward easing the maldistribution of primary care physicians.

"The amount of funding is small compared to Medicare's GME program. But it is the first program where funding goes directly to the residency training program for the training that they provide," he noted.