Medicaid, health IT to see billions from stimulus package signed by Obama

Washington -- President Obama on Feb. 17 signed a $787 billion stimulus bill that directs about $150 billion toward speeding adoption of health information technology and maintaining health care coverage, among other provisions.

The sweeping measure -- the American Recovery and Reinvestment Act of 2009 -- provides nearly $90 billion in temporary increased federal Medicaid funding, delays four cost-cutting Medicaid regulations and spends a net of about $19 billion to encourage physicians and others to adopt health IT.

Obama said the enactment of the stimulus package and the Feb. 4 enactment of the Children's Health Insurance Program reauthorization are big steps in health care. "We have done more in 30 days to advance the cause of health care reform than this country has in a decade."

The American Medical Association applauds the investments in health IT and coverage for the poor and newly unemployed, wrote AMA Executive Vice President and Chief Executive Officer Michael D. Maves, MD, MBA, in a Feb. 11 letter to Sen. Max Baucus (D, Mont.), chair of the Senate Finance Committee.

The stimulus also provides $500 million to help train physicians through the National Health Service Corps, a provision widely supported by physician organizations. "This program is integral to rebuilding the primary care physician pipeline," said Ted Epperly, MD, president of the American Academy of Family Physicians.

But few Republicans backed the stimulus measure. The House adopted the bill Feb. 13 with no Republican support. The Senate approved it the same day with votes from only three moderate Republicans: Sens. Olympia Snowe and Susan Collins of Maine and Arlen Specter of Pennsylvania. The final bill is a compromise between earlier versions adopted by the House and Senate.

Many Republicans, including Senate Minority Leader Mitch McConnell (R, Ky.), lambasted spending in the measure that they said would not stimulate the economy quickly. McConnell also criticized Democrats for not accepting more GOP input on such a massive spending bill.

Some Republican lawmakers, such as Phil Gingrey, MD (R, Ga.), also worried that the stimulus is not offset by new revenues and therefore will increase the national debt. "I don't know how our children and grandchildren are going to pay for this," Dr. Gingrey said.

"Significant" health IT support

Under the stimulus law, physicians and other health professionals are eligible for tens of thousands in health IT incentive payments via Medicare or Medicaid through 2016. But in 2015, penalties for non-adopters begin.

Medicare-participating physicians who adopt a certified electronic health record system by 2011 or 2012 and use it in a way that the government deems "meaningful" -- a term to be defined later -- could receive up to $44,000 over a period of up to five years. The incentives will be limited to 75% of the physician's Medicare charges in any one year.

Physicians who have caseloads of at least 30% Medicaid patients and who also meet the health IT adoption standards are eligible for nearly $64,000 in support during the same time frame. Medicaid incentive payments are limited to 85% of physicians' Medicaid charges. Pediatricians can qualify if their patient mix is 20% Medicaid, but they would be eligible for only two-thirds of the incentive payments available to physicians meeting the 30% standard.

This health IT funding is "very significant," said Robert Doherty, the American College of Physicians' senior vice president for governmental affairs and public policy. "Our sense is for a lot of physician practices, that may be the tipping point where it begins to make business sense to consider plunging into that pool and buying a certified EHR."

Physicians cannot apply for incentives in both Medicare and Medicaid, but hospitals can, said Erica Drazen, ScD, managing partner for emerging practices at health IT consultant CSC's Global Healthcare Sector.

Also, while physicians must use an EHR system to qualify for the stimulus incentive payments, they need not own one. The measure provides $2 billion to the Office of the National Coordinator for Health Information Technology for health IT grants and loans, but those won't become available until 2010, Drazen said. She expected private firms to offer new financing options for the EHR systems or to offer them through leases.

But the stimulus measure will penalize physicians, beginning in 2015, if they have not become meaningful EHR users. These doctors face a 1% reduction in Medicare fees that year. The yearly cut would phase up to 3% in 2017 and beyond.

The ACP would prefer that the penalties not apply if, for example, a shortage prevents EHRs from being available to physicians or if another factor not in physicians' control prevents them from meeting the health IT standards, Doherty said.

Drazen said existing EHR vendors and consultants will be strained by the demand created by the health IT stimulus. "We're going to have a real short supply of people who know how to do this well."

Sustaining Medicaid

The $87 billion in stimulus going to state Medicaid programs should help avoid health coverage cuts to low-income people. But states still may need to trim other parts of their Medicaid programs, because many have budget shortfalls exceeding their stimulus funding, said Ann Kohler, director of the National Assn. of State Medicaid Directors.

The enactment could be significant for physicians in California. State lawmakers and Gov. Arnold Schwarzenegger have been struggling to close a roughly $42 billion budget deficit.

California's Medicaid program would receive more than $11 billion in stimulus funding over 27 months, according to the California Medical Assn. But to qualify for the additional funds, states first must maintain or restore Medicaid eligibility and renewal procedures to their status on July 1, 2008. California lawmakers would need to reverse legislation enacted late in 2008 requiring people on Medicaid to re-enroll twice a year instead of once.

"This is another great opportunity for state lawmakers to maximize federal assistance," said CMA President Dev A. GnanaDev, MD.

The stimulus offers another boost to states by extending moratoriums on three Medicaid rules through July 1, 2009. Those regulations, issued by the Centers for Medicare & Medicaid Services, would have reduced federal Medicaid spending by billions. The new law also delays until July a CMS rule that reduces some states' Medicaid rates by aligning the program's hospital outpatient services definition with that of Medicare.