Health Care Stimulus Funding Process Picking Up Speed

Since the American Recovery and Reinvestment Act was signed in February, the federal government has been moving relatively rapidly to get balls rolling on multiple fronts. In health care, the process is picking up speed in several areas as a result of recent efforts, including:

  • The increase in federal matching funds to state Medicaid programs;
  • The release of the Office of the National Coordinator for Health Information Technology implementation plan for health IT;
  • The release of CMS’ implementation plan (including guidance on Medicare and Medicaid EHR incentive payments);
  • The development of a definition of “meaningful use” as it pertains to stimulus payments; and
  • Broadband access.

Medicaid Matching Funds Already Increased

Among the first ARRA provisions implemented were increases in federal matching payments to state Medicaid programs. Federal matching funds were disbursed to states less than a week after ARRA’s enactment. 

To be eligible for additional matching funds, states must meet “maintenance of eligibility” provisions intended to ensure that federal funds are directed toward increased demand for health coverage during the economic downturn and not used to supplant current state funds.  Specifically:

  • States must maintain Medicaid eligibility standards at least at their July 2008 levels and may not impose new enrollment hurdles; 
  • States may not delay payments to Medicaid providers;
  • States may not increase localities’ responsibilities for Medicaid contributions above September 2008 levels; and
  • States may not stockpile these funds in rainy day accounts.

To date, California has received $3.3 billion under this ARRA provision. Before the end of 2010, California is expected to receive a total of $11 billion. However, the state’s deepening budget crisis led Gov. Arnold Schwarzenegger (R) to propose additional Medi-Cal spending cuts, which may jeopardize the state’s continued access to these funds. The governor has indicated he is hoping for “flexibility” from the federal government for a waiver of the eligibility requirements. It is unclear if he will be successful as ARRA restricts waiver of any maintenance of eligibility conditions aside from the prompt payment requirements. 

While the California Legislature also is pursuing Medi-Cal savings that would not violate eligibility conditions, these savings are also tentative as they rely on the state to obtain federal funds owed to California. The waiver and the latest round of state budget cuts are still under discussion, and it is unclear what path the Legislature and the governor will pursue to resolve the fiscal crisis. 

ONC, CMS Implementation Plans

In May, ONC and CMS released their respective plans to carry out the directives of the federal stimulus package. ONC’s plan addresses certain activities and milestones on privacy and security, standards setting, definitions of meaningful use and opportunities for public input. It also provides an updated federal health IT strategic plan timeline.

CMS’ outline includes these guidelines for Medicaid and Medicare electronic health record incentive payments:

  • States will have the authority to define “meaningful use” for Medicaid EHR incentive payments, subject to approval by the HHS secretary, and the definition may be based on the Medicare definition;
  • Certified EHR technology must be compatible with state or federal administrative management systems; and
  • Medicaid incentive payments will begin in 2011 to assure consistency with Medicare. 

The CMS implementation plan also includes guidance on the $1.045 billion in administrative funding — $745 million for Medicare and $300 million for Medicaid for the next decade — that ARRA appropriated to CMS to develop and implement systems to support EHR incentive payments to health care providers.

Defining ‘Meaningful Use’ for EHR Incentives

Because ARRA makes incentive payments to physicians and hospitals contingent upon using a certified EHR in a meaningful manner, the definition of meaningful use has become a very hot topic. Defining a set of guidelines around the concept of meaningful use is a top priority for the federal agencies.

Last month, the Meaningful Use Workgroup of the Health IT Policy Committee, an HHS advisory group, released recommendations regarding objectives for meaningful use. However, the Committee has tabled these recommendations and is expected to issue substantially revised recommendations at its next meeting scheduled for this week.

CMS also announced that it will define meaningful use through notice-and-comment rulemaking. The committee’s draft recommendations and definition remain a moving target in the months to come and their impact, if any, on CMS’ rulemaking remains to be seen.

Broadband Technology Opportunities Program

The National Telecommunications and Information Administration provided its quarterly report in May on the status of the Broadband Technology Opportunities Program. The next report will be issued on Aug. 17. 

NTIA and the USDA’s Rural Utilities Service intend to have three rounds of grants. They published a joint Notice of Funds Availability this month, and applications will be accepted July 14 through Aug. 14.

A series of workshops to explain the application process will be held jointly by the USDA’s Rural Utilities Service and NTIA this summer. Grants are expected to be awarded beginning in the final quarter of calendar year 2009.  NTIA also intends to release a separate notice of fund availability with respect to the broadband map.

Rural Access to Broadband

ARRA charged the Federal Communications Commission with developing a national broadband plan by Feb. 17, 2010, to ensure that every American has access to broadband capability and establishing clear milestones for reaching this goal. 

In May, FCC released a report on rural broadband strategy that it described as “providing a starting point” for this effort.

Increased access to broadband is a key component in the effort to spread the use of health IT.

Helen Pfister is a partner and Karyn Bell is an associate at Manatt, Phelps & Phillips. Manatt Health Solutions, a division of the law firm, has been hired by the California HealthCare Foundation to provide periodic updates for California Healthline
readers on the federal economic stimulus funding authorized under the American Recovery and Reinvestment Act of 2009.

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