LA Community Health Centers: HRSA Section 330 Compliance Software

Los Angeles is one of the largest concentrations of HRSA-funded community health centers in the country. Federally Qualified Health Centers and FQHC-Look-Alikes operate across the LA County footprint with a grants stack that typically includes the HRSA Section 330 base operational award, one or more Section 330 supplements (Health Care for the Homeless under 330(h), Migrant Health Center under 330(g), or School-Based Service Expansion), SAMHSA awards co-located with the medical home, county Department of Mental Health and Substance Abuse Prevention and Control contracts, state Primary Care Association pass-through funding, and capital grants from HRSA, the state, or private foundations.

For the finance and grants team running this stack, the central challenge is that Section 330 is not just a grant. It is a program designation. The Health Center Program statute, the program requirements at 42 CFR Part 51c, and HRSA’s compliance manual define what the organization can do, where it can do it, who can govern it, and how it must report on it. The Uniform Guidance at 2 CFR 200 sits underneath that as the standard federal grant management framework, and the annual UDS submission ties operational and clinical data to financial reality. None of that fits cleanly inside a generic nonprofit accounting setup or a generic donor CRM.

The Section 330 program rules sit on top of the cost rules

A common mistake for new HRSA grantees is to treat Section 330 like a typical federal grant - apply 2 CFR 200, manage the budget, file the SF-425, and call it done. Section 330 is more constrained. The Health Center Program statute restricts grant funds to operating costs of the health center within an approved scope of project, at approved service sites, for the approved patient population. Activities outside the scope of project cannot be charged to Section 330, even if they are consistent with the broader nonprofit mission.

The scope of project is documented in HRSA’s Electronic Handbooks (EHB) system as Form 5A (services), Form 5B (sites), and Form 5C (other activities). Changes to scope require formal change in scope requests. From a finance standpoint, this means cost allocation has to respect scope - Section 330 cannot fund a clinical service that is not on Form 5A, even if the service is provided in the same building.

The Uniform Guidance, particularly Subpart E cost principles, governs allowability, allocability, and reasonableness across all federal awards. For HRSA grantees, Subpart E specifies that costs charged to a federal award must be allowable under the cost principles, allocable to the award benefited, reasonable in nature and amount, and adequately documented. Cost allocation methodologies - the formulas used to apportion shared costs across multiple awards and funding sources - must be written, applied consistently, and grounded in the underlying drivers of the cost.

UDS: where finance and clinical data meet, annually

The Uniform Data System annual submission is, in practical terms, the single largest reporting event of the year for a Section 330 grantee. UDS combines patient demographic data, service utilization, clinical quality measures, staffing, financials, and operational data into one calendar-year report due in mid-February of the following year.

Financial UDS tables require: expenditures by category (medical, dental, mental health, substance use, vision, pharmacy, enabling, other), revenue by source (Medicaid, Medicare, CHIP, private insurance, self-pay, sliding fee, grants), and reconciliation to the audited financial statements. The expenditure categorization must align with the service categories - meaning the chart of accounts and the practice management system must be designed so that costs and revenues can roll up the same way without manual rework.

Health centers that prepare UDS by exporting the trial balance, hand-mapping accounts to UDS lines, and then reconciling clinical encounter data manually are doing months of work that a properly structured chart of accounts and grant subledger could compress to days.

Cost allocation and the OSV financial review

HRSA conducts Operational Site Visits on a roughly three-year cycle. The financial portion of the OSV reviews documented cost allocation methodologies, board-approved budgets, audited financial statements, billing and collections processes, sliding fee discount program implementation, and key management staff. OSV findings are categorized as conditions of compliance (areas requiring corrective action) or progressive action requirements.

The cost allocation review is consistently among the most challenging areas. The OSV team will request the written methodology, sample transactions across multiple awards, and ask the finance lead to walk the application of the methodology to specific costs. Centers that allocate by static percentages set years ago without documentation of how the percentages were derived face findings. Centers that allocate by current-period drivers - actual FTE time, actual square footage by service area, actual encounters by service - and document the calculation each period are well-positioned.

The same documentation supports the annual Single Audit under 2 CFR 200 Subpart F, which most LA-based Section 330 grantees will trigger by virtue of Section 330 expenditures alone exceeding the $1,000,000 threshold for fiscal years ending on or after October 1, 2024.

SAMHSA and county contracts: the layered awards

Most LA FQHCs co-locate behavioral health services and operate one or more SAMHSA awards in addition to Section 330. State Opioid Response (SOR) funds, Certified Community Behavioral Health Clinic (CCBHC) demonstration funds where applicable, and various block grant pass-through funds layer on top of the Section 330 base.

SAMHSA awards introduce additional cost principle nuances and reporting cadences. SOR awards have specific allowable cost rules around medications for opioid use disorder, harm reduction supplies, and certain types of recovery support services. CCBHC funding (where the health center participates as a CCBHC or affiliate) carries its own performance and cost reporting standards under the SAMHSA program guidance. The financial system must keep these awards distinct from Section 330 base, must allocate shared costs in a methodology consistent across awards, and must maintain documentation suitable for either HRSA OSV review or SAMHSA monitoring.

LA County DMH and SAPC contracts add a county-level layer with its own cost reporting forms, contract maximum limits, and reconciliation requirements. These are not federal awards directly, but DMH and SAPC funding includes federal pass-through dollars (Medicaid, SAMHSA Block Grant) that re-trigger federal compliance for the relevant portions.

Sliding fee discount program documentation

The sliding fee discount program (SFDP) is a Section 330 program requirement, not a financial nicety. Section 330 grantees must operate an SFDP that adjusts charges based on patient income relative to the federal poverty guidelines, with a nominal fee for patients at or below 100% of FPL. The policy must be documented, consistently applied, and the discounts must be tracked.

Findings on the SFDP commonly arise where the front desk practice does not match the policy on paper, where eligibility documentation in patient files is incomplete (no income verification, no household size verification, no recertification within the policy window), or where the practice management system does not separately capture sliding fee adjustments in a way that supports UDS reporting. The SFDP is one of the few areas where the data path runs from front-desk eligibility through clinical encounter to billing to UDS - and a break in that chain shows up as an OSV finding.

Capital grants and the project file

HRSA capital grants - for facility construction, expansion, or equipment - operate on a project file model. Each capital award has a budget, a scope of work, a milestone schedule, environmental review requirements where applicable, and procurement standards under 2 CFR 200 Subpart D. The project file must contain procurement documentation supporting competitive bidding (or sole-source justification where used), contractor agreements, change orders, draw documentation, and final closeout records.

Capital project compliance is straightforward when the project file is maintained contemporaneously and difficult when the team rebuilds the file from email at closeout. The cost principles and documentation expectations for capital are the same as for operating funds, but the document set is denser and the procurement process is more visible.

What an LA FQHC’s grants management system needs

Pulling this together, an LA community health center’s grants management practice needs to support: separate fund tracking for Section 330 base, each Section 330 supplement, each SAMHSA award, each county contract, and each capital award; a documented cost allocation methodology applied consistently and tied to underlying drivers; a chart of accounts and reporting structure that maps directly to UDS without retroactive reclassification; SFDP tracking that ties patient eligibility to billing to UDS; capital project files maintained from procurement through closeout; and a reporting layer that supports SF-425, UDS, OSV preparation, and Single Audit.

The federal awards software shortlist is a reasonable starting point for centers evaluating tools. The 2 CFR 200 audit prep checklist is useful for finance teams stress-testing their current state before an OSV or Single Audit. For LA-specific funder relationships, the LA foundation grants guide covers the local philanthropic environment that often supplements Section 330 base operations.