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Conference Agreement Includes Health Concessions to the House

By John Reichard, CQ HealthBeat Editor

February 12, 2009 -- Medicaid enrollees and their advocates, medical research lobbyists and jobless Americans at risk of losing their health benefits may be among those cheering the loudest for economic stimulus provisions hammered out by Hill negotiators in anticipation of House and Senate action to quickly send the measure to the White House for President Obama’s signature.

The agreement also meets the long-held goals of many health policy analysts who want to make the health system more efficient through big investments in health information technology and “comparative effectiveness” research assessing which treatments work best for a particular medical condition.

Senate negotiators prevailed in deleting House language allowing the newly unemployed to hold on to health coverage through buying into the Medicaid program, a provision derided by critics as permitting outgoing Bush cabinet members to sign up for the low-income health insurance program. But House negotiators won out on premium subsidies for Consolidated Omnibus Budget Reconciliation Act (COBRA) health insurance benefits for hundreds of thousands of low-and-middle-income workers losing their health benefits who do not qualify for Medicaid.

And the House managed to hold onto some increases in funding for preventive care and “wellness” programs, after it appeared that the Senate might succeed in zeroing out any such increases.

The biggest spending increase among the health provisions — $86.6 billion over 27 months — goes to help states maintain and expand Medicaid enrollment as the deepening recession produces big shortfalls in state budgets and the newly unemployed crowd onto the Medicaid rolls. The federal government during that period would increase its percentage of the Medicaid spending — known as the “Federal Medical Assistance Percentage” (FMAP) — by 6.2 percent for all states, with an added decrease in state outlays based on increases in a state’s unemployment rate, according to a summary prepared by the Senate Finance and House Ways and Means Committees. States would have to maintain current eligibility criteria.

The summary said $24.7 billion will be spent to pay 65 percent of the premium costs for 9 months for laid-off workers who want to continue their job-based coverage under COBRA. That’s another House victory; the Senate approved only a 50 percent subsidy. “With COBRA premiums averaging more than $1,000 a month, this assistance is vitally important,” the summary said. To qualify, workers must have been “involuntarily terminated” between September 1, 2008 and December 31, 2009. To qualify, workers must attest that their annual income doesn’t exceed $125,000 for individuals or $250,000 for families.

The agreement allots $19 billion to speed adoption of health information technology by doctors and hospitals. The $19 billion includes $17 billion for investments and incentives through Medicare and Medicaid and $2 billion for grants and loans available through discretionary funding. If the agreement is enacted, “approximately 90 percent of doctors and 70 percent of hospitals would adopt and use certified electronic health records within the next decade, which in turn would save more than $12 billion through reduce spending on Medicare, Medicaid, and other programs,” the summary said.

After years of flat funding, the National Institutes of Health (NIH) gets a dramatic $10 billion increase, according to a House Appropriations Committee summary. That’s a victory for the Senate; it pushed for that sum while the House was willing to settle for a $3.5 billion hike. According to a preliminary overview of the conference agreement released late Wednesday by House Speaker Nancy Pelosi, D-Calif., the $10 billion breaks down into $8.5 billion for research grants and programs and $1.5 billion to NIH grant recipients to upgrade laboratories.

NIH also gets a chunk of the $1.1 billion in funding allotted for comparative effectiveness research aiming to identify which medical treatments work best for given conditions. The Agency for Healthcare Research and Quality is expected to get most of the money. Some of it will also go to the HHS Office of the Secretary, according to the House Appropriations document.

The big fiscal shot in the arm for NIH will reduce a backlog of research projects that have been on hold because of lack of funding. Elias Zerhouni, director of NIH through much of the Bush administration, said a big increase in the NIH budget was critical to turning an enormous increase in information on the genetic basis of disease into medical breakthroughs. The advocacy organization Research!America said the investment could create 70,000 jobs and stimulate the economy of every state, adding that most NIH funding is distributed to colleges, universities, and research institutions across the country.

The agreement also provides $1 billion for a new “Prevention and Wellness Fund,” much less than the $3 billion the House approved but considerably more than in Senate-approved stimulus language, which did not provide for such a fund. Possible uses include flu vaccinations and added funding for programs to reduce obesity, smoking and other health risks.

The agreement provides $1.2 billion for the Veterans Administration to build or improve medical facilities, long-term care facilities, and to improve VA cemeteries. About $6.5 billion goes for sustaining, modernizing or building a variety of Department of Defense facilities, including those involved in health care.

The agreement includes a variety of other Medicare and Medicaid provisions. A cut in Medicare payments to teaching hospitals for their capital costs would be dropped at a cost of $191 million. A Medicare cut in payments to hospice providers relating to changes in a wage index for hospice workers would be blocked, costing $134 million. Adjustments in payments to long-term care hospitals, which treat medically complex cases such as patients who depend on respirators, would cost $13 million.

The agreement provides $1.3 billion to extend the “Transitional Medical Assistance” program from June 30, 2009 to Dec. 31, 2010. The program provides Medicaid benefits to those making the transition from welfare to work. Language requiring prompt Medicaid payment to nursing facilities and hospitals would cost $680 million. Extension through Dec. 31, 2010 of the “Qualified Individual Program,” which helps low-income people pay their monthly Medicare Part B premiums for doctor care and other forms of care outside the hospital, would cost $550 million. Temporary increases in Medicaid payments to hospitals that treat an unusually large number of uninsured or underinsured patients entail outlays of $460 million.

Provisions including eliminating certain out-of-pocket costs for American Indians and Alaska Natives enrolled in Medicaid and maintaining access to Indian health facilities carry a price tag of $134 million.

And the stimulus agreement would extend or add moratoria on certain Medicaid regulations at a cost of $105 million. These include regulations for case management, provider taxes and school-based administration and transportation services; current moratoria for these rules would be extended through June 30, 2009. A moratorium on a regulation for hospital outpatient services would last until July 1, 2009.

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