Health Centers and the Deficit Reduction Act: An Overview for State Policy Makers

Federally qualified health centers (FQHCs), which provided care to 5 million Medicaid enrollees in 2005, have a special relationship with Medicaid programs. The complex package of measures in the Deficit Reduction Act of 2005 (DRA) raises particular considerations for these health centers. While their role in the safety net is recognized in the DRA, important aspects of their relationship to their state Medicaid programs, especially regarding the availability of Medicaid reimbursement, may change.

The National Academy for State Health Policy (NASHP), under a National Cooperative Agreement with the Health Resources and Services Administration (HRSA), Bureau of Primary Health Care, is working to better inform state policy makers about the DRA, as it affects the health care safety net, and particularly federally funded community health centers. This State Health Policy Briefing, subsequent Briefings, and other project activities are intended to stimulate dialogue and promote collaboration between state government and safety net providers in addressing shared missions and goals for assuring access to care for vulnerable populations.

This Briefing gives special attention to the “benchmark” plans authorized under the DRA. The plans allow states to enroll Medicaid recipients in alternative benefit packages that are more similar to private insurance products than to traditional Medicaid, and which can have benefits that vary between groups of enrollees. It also touches briefly on a variety of other DRA provisions that could affect health centers.