Contributed photo
Fair Haven Community Health Center at 50 Grand Avenue in New Haven (Contributed photo)

Connecticut’s hospitals weren’t the only organizations to receive news last week that the state was cutting their funding. The state’s federally qualified health centers also were told their funding was being suspended.

“Please be advised that I have asked the Department of Social Services to hold on making any supplemental payments until we have identified the steps needed to address this fiscal year’s budget deficit,” Malloy administration Budget Director Ben Barnes said in a four-sentence letter to the centers.

A spokesman for Malloy’s office said the centers receive a higher Medicaid reimbursement rate than other healthcare providers.

“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.

There are 14 centers that were scheduled to receive $3.89 million. Approximately 63 percent, or about $2.34 million of that, would come from the federal government. The state’s savings, if it doesn’t release the money, is only $1.55 million.

For Dr. Suzanne Lagarde, CEO of the Fair Haven Community Health Center in New Haven, said the cut amounts to 4 percent of her budget for the year.

“I worry about the human impact that’s going to have,” Lagarde said.

Lagarde said the money helped cover the cost of the uninsured patients her center sees on an annual basis.

At her center in Fair Haven in 2015, Lagarde said they served 16,000 unique individuals and 27 percent of them were uninsured. The rates they receive for patients that do have Medicaid don’t cover the costs of those services, which means she will have to look at limiting services or laying off staff if the cut is finalized.

She said it’s too soon to say exactly what will happen or how she will close the gap, but she’s eager to have a conversation with lawmakers and the administration about why they would withhold these funds.

“I’m worried about the impact on patient care,” Lagarde said. “Do we really want to lose the federal match?”

None of the 14 centers have received any state funding this year, according to Deb Polun, director of government affairs and media relations at the Community Health Center Association of Connecticut.

“I am not optimistic that we will be able to move forward with any state payments this fiscal year,” Barnes said.

But Polun objected to the administration’s characterization of the profit margins of these health centers.

She said the centers lose about 10 to 13 cents on each Medicaid visit, which is better than the hospitals receive, but ignores the fact that the centers can’t cost-shift to patients with private insurance. That’s because the clients using the centers are mostly on Medicaid or uninsured. A federal report based on 2014 numbers showed that about 63 percent of the patients are on Medicaid and about 18 percent are uninsured.

“These extra funds help fill in the gaps left by Medicaid underpayments to ensure that FQHCs are financially stable (a federal requirement) and can continue to provide services to low-income people,” Polun said.

The profit margin for the centers is between 0 and 3 percent each year.

“When they begin to lose money, they cut services or hours or providers, so they can stay in business,” she added.

So what happens when this population can’t get care?

“They can still go to the emergency rooms, of course — a much more expensive way to receive care that is often not emergency and not the appropriate care,” Polun said.

This was the first year the funding stream was going to be administered by the Department of Social Services. In the past, the funds went through the Department of Public Health and there was no federal matching grant.

Lagarde said they agreed to move the money to the new agency in order to boost the amount of money they would receive.

“It’s shortsighted,” Lagarde said.

Several lawmakers with influence over the budget process did not return requests for comment.