President Obama Signs Stimulus Bill Into Law

President Obama has signed into law the “American Recovery and Reinvestment Act of 2009” (ARRA). The massive legislation contains several provisions impacting ASA and its members.

Health Information Technology (HIT)

The bill allocates approximately $19 billion to Medicare and Medicaid for the funding of Health Information Technology (HIT) incentives over five years. This funding is the first significant financial contribution towards advancing the use of electronic health records (EHR). Of particular importance to ASA, the HIT provisions of ARRA include $2 billion in grants to promote interoperability of clinical data repositories or registries, such as ASA’s new Anesthesia Quality Institute, Inc.

ARRA provides up to $44,000 in financial incentives to encourage physicians and hospitals to fully adopt the use of electronic records by 2015. Physicians who adopt HIT initiatives by 2011 will receive a higher bonus ($18,000 in 2011), which will gradually decrease yearly until 2015. Further, Physicians practicing in rural professional shortage areas are eligible for a 10 percent increase in incentive payments.

Conversely, hospitals and physicians generally will be penalized for not implementing HIT by 2015. The penalties will initially be a 1 percent reduction in Medicare payments, and increase by a 1 percent payment reduction per year, with up to 5 percent reduced payments in 2018. The legislation does allow exceptions for significant hardship cases, such as insufficient internet access in rural areas.

Please note that hospital-based providers (including most anesthesiologists) are not eligible for bonus payments or subject to penalties. However, anesthesiologists practicing outside of the hospital (e.g., pain physicians) are eligible for the bonus payments and will be held responsible for implementation deadlines.

The government estimates that the advancement of HIT will ultimately save $12 billion through improved quality of care and care coordination as well as reductions in medical errors and duplicate care.

Federal Medical Assistance Percentage (FMAP)

ARRA includes nearly $87 billion to fund a temporary increase to the Federal Medical Assistance Percentage (FMAP). FMAP is used to determine the federal government’s share of a state’s expenditures for Medicaid.

The bill increases FMAP by 6.2 percent for all states effective during the 27-month period between Oct. 1, 2008, and Dec. 31, 2010. States with high increases in unemployment will receive an additional FMAP bonus.

It is anticipated that these funds will help states avoid significant changes to their Medicaid program.

Comparative Effectiveness Research (CER)

The legislation provides a total of $1.1 billion in funding for projects related to comparative effectiveness research (CER). It establishes the Federal Coordinating Council for Comparative Effectiveness Research (FCC-CER), to be comprised of up to 15 representatives of federal agencies. At least half of the representatives must be physicians or other experts with clinical expertise.

The newly-created FCC-CER is tasked with a number of priorities: reducing duplication of efforts, encouraging coordinated and complementary uses of resources, coordinating related health services research, and making recommendations to Congress and the Administration on CER infrastructure requirements.

ARRA specifies that the FCC-CER will not mandate coverage, reimbursement or other policies of public or private payers.

COBRA subsidies

The stimulus package includes premium subsidies for individuals using COBRA. The subsidies will pay sixty-five percent of the COBRA premiums for up to 9 months for employees who have been involuntarily laid off between September 1, 2008 and December 31, 2009. An individual income of less than $145,000 ($290,000 for joint filers) is required to qualify for the subsidy. The Joint Committee on Taxation estimates that this provision would help 7 million people maintain their health insurance after losing their jobs.

Indirect Medical Education (IME) payments

The legislation also allows for the continuation of full Medicare payments to teaching hospitals for indirect medical education (IME) for fiscal year 2009. IME payments were slated for reduction in 2009. The subsidy included in ARRA will help maintain our academic centers and their financial viability.

Although far from a perfect bill, the stimulus does include important provisions that will ultimately help patients and their physicians. The ASA will continue to monitor the implementation of ARRA and will provide updates to its members.