Following are key provisions of the proposed economic stimulus likely to affect manufacturers of innovative medical technology:

  • Comparative Effectiveness Research
  • Research and Infrastructure
  • Prevention and Wellness
  • Medical Product Development and Procurement
  • Training for Health Professionals
  • Health Information Technology

Comparative Effectiveness Research

House: H.R. 1 provides $1.1 billion for Comparative Effectiveness (CE) Research.

Senate: The Senate appropriations bill provides $1.1 billion for Comparative Effectiveness in the same agency allocations as the House. This funding is for similar purposes as the House provision (i.e., to "support research that evaluates and compares the clinical effectiveness, risk and benefits of two or more medical treatments and services that address a particular medical condition," including section 1013 research under the Medicare Modernization Act). However, where the House funding could be used by the agency to "conduct" research, here it is potentially limited to "supporting" research. Stakeholders may have a preference as to whether NIH or AHRQ conducts this CE research and should become engaged with lawmakers to identify the most appropriate agency to oversee this research. An operating plan for the funding is required, and stakeholders should consider working to develop the content and priorities of that plan, as well as the allocation of resources under the plan.

Stakeholders should also note that comparative effectiveness research is a top priority of Chairman Baucus. Although his proposed CE legislation is not included in the Finance stimulus package, he is expected to move those provisions later this year. Stakeholders should assess the implications of enacting multiple laws in this space and consider strategies for ensuring their priorities are included in all CE legislation moving forward.

Research and Infrastructure

  • National Science Foundation (NSF): H.R. 1 provides $3 billion. The Senate bill provides $1.4 billion, including $1.2 billion for research and $150 million for facilities.
  • National Institute of Standards and Technology (NIST): H.R. 1 provides $400 million, including $100 million for research and $300 million for facilities. The Senate bill provides $575 million, including $218 million for research and $357 million for facilities, and an additional $20 million for HIT work.
  • National Institutes of Health: H.R. 1 provides $1.5 billion to the Director and Institutes for research, while the Senate bill provides $2.7 billion for these activities. (An amendment proposed by Sen. Arlen Specter (R-PA) to raise this amount to $10 billion was not accepted in Committee, but it may be offered again during full Senate's consideration of the bill.) Senate Report language recommends that funds target research priorities such as “short-term new grants that focus on specific challenges; new research that expands on current projects; research on public health priorities such as influenza, tuberculosis and malaria; and stem cell research.” The specific funding mechanisms are not identified. Stakeholders should consider identifying these priority projects and seeking funding; or identifying other projects that should be considered by NIH as important projects, even if not priorities.

Prevention and Wellness

House: H.R. 1 provides $3 billion fund to fight preventable chronic and infectious diseases, including: $954 million for the Centers for Disease Control and Prevention (CDC) discretionary immunization program in public health departments; $500 million for evidence-based clinical and community-based prevention and wellness strategies (to include Healthy Communities program); $335 million for domestic HIV/AIDS, viral hepatitis, STDs, and TB prevention and $1.5 million to the Institute of Medicine (IOM) for a report on prevention and wellness priorities; $150 million for hospital infection prevention; and $60 million for injury prevention.

Senate: The Senate bill establishes a $5.8 billion fund in the Office of the Secretary to fight preventable chronic and infectious diseases, including: $750 million for the CDC's discretionary immunization program in public health departments; $400 million for Healthy Communities program at CDC; $400 million for HIV/AIDS and STD prevention; $15 million for newborn screening grants to states. The Senate Appropriations Committee report language additionally expresses support for research investigating environmental triggers of autoimmune diseases and exploring potential prevention strategies; and, for public service announcements and media-based education campaigns promoting healthy behaviors and increasing health literacy. There are significant differences between amounts appropriated and acceptable uses of funds in the two versions of the bill. Stakeholders are advised to assess their eligibility for funding under each proposal and consider engaging with Congressional offices and the Department to ensure their interests are appropriately available as eligible uses of the funds. 

Medical Product Development and Procurement

House: H.R. 1 provides $430 million for medical product research and development under the Biomedical Advance Rapid Development Authority (BARDA) and $420 million for medical products and activities related to pandemic flu preparedness and response.

Senate: The Senate proposal provides $870 million for pandemic flu funding only. The Senate proposed funding is generally targeted to funding the third and final installment of the department's pandemic flu plan. The Senate bill also encourages HHS to "invest in process, adjuvants, contingency plans, and/or vaccine strategies" that could address the potential circumstance where vaccine is not available for all persons until six months after production begins and calls on the Department (and implicitly stakeholders) to identify ways to increase demand for annual flu vaccine to meet the increase in vaccine supply. 

Stakeholders should assess their eligibility for funding under HHS’s pandemic flu plan: Stakeholders should also assess their ability to respond to the Department’s interest in addressing a delay in vaccines during critical need periods and increasing the annual flu vaccine supply. Stakeholders should prepare to work with HHS to ensure eligibility for funding even where it may not be specified in the current plan.

Note that there is no funding for BARDA in the Senate bill. As you know, BARDA manages Project BioShield, which includes the procurement and advanced development of medical countermeasures for chemical, biological, radiological and nuclear agents, as well as the advanced development and procurement of medical countermeasures for pandemic influenza and other emerging infectious diseases that fall outside the auspices of Project BioShield. In addition, BARDA manages the Public Health Emergency Medical Countermeasures Enterprise (PHEMCE). Stakeholders may wish to work with Congress to reconcile the Senate and House funding numbers favorably. Stakeholders should also be aware that various biodefense authorities related to these provisions are due to be renewed this year, and there will be an additional opportunity to affect the authorities and budgets of these programs at that time.

Training for Health Professionals

House: H.R. 1 provides $600 million for health professions training for primary health care providers – family medicine, internal medicine, pediatricians, dentists and nurses.

Senate: The Senate bill also provides $600 million for health professions training.

Both the Senate and House proposals make these amounts available to HRSA to address health professions workforce shortages through such activities as scholarships, loan repayment and grants to institutions for training programs. (The Senate Appropriations Committee makes Prevention & Wellness funds available to HRSA for this purpose, while H.R. 1 appropriates directly to HRSA). Given the bicameral agreement on funding amounts, this provision is likely to survive Conference. However, stakeholders should continue advocating for the inclusion of health professions training support, in the amounts provided, to ensure the provisions are retained in the final bill.

Health Information Technology

Federal Leadership for the Nationwide Exchange of Health Information

The Senate Finance provisions, at least in this conceptual mark, appear substantially similar to the House provisions that codify the Office of the National Coordinator (ONC) for Health IT for the first time. The provisions set up a Health Policy Committee and a Health Standards Committee that are subject to FACA and leave the fate of AHIC 2.0 and its work in some doubt. Stakeholders should consider engaging as recommended in the BDC House summary to ensure appropriate planning, beneficial use of authorities, stakeholder participation in the Committees, and an appropriate role for AHIC 2.0 and its standards bodies.

Privacy and Security of Personal Health Information

The Senate Finance Committee did not include any provisions related to privacy or security of personal health information in its description of the Chairman’s Mark. We anticipate that privacy and security may be addressed by the full Senate and certainly will be discussed and negotiated by the Conference Committee.

Funding for Infrastructure and Incentives for Adoption of HIT:

House: H.R. 1 provides $2 billion in appropriations and $18 billion in Medicare and Medicaid incentives.

Senate: The Senate bills provide $5 billion in appropriations and $21 billion in Medicare and Medicaid incentives. The appropriations bill gives some direction for the expenditure of the $5 billion in appropriated funds, including that it "support the activities of" ONC, including providing planning and implementation grants to facilitate the exchange of information among organizations and to States to establish loan programs for provider purchase of HIT, enhanced utilization of HIT, personnel training and improving HIT security. Stakeholders should consider engaging with ONC and the Secretary to determine the nature of the funding mechanisms to be used and the purposes of the funding, as these are not rigidly specified in the statute.

Medicare and Medicaid Incentives:

In general, the Senate Finance Committee Mark closely tracks the House-proposed legislation. Across the board, the Senate proposes faster timelines for implementing incentive payment programs and imposes penalties sooner on providers who are not meaningful electronic health record users. The Senate also proposes increased incentives for providers serving rural areas, whereas the House does not. Specific details are provided below.

  • Medicare

    In general, these sections appear to be virtually identical in both the House and Senate bills, but with incentive payments and penalties implemented sooner

    Providers: Incentive payments to providers for the adoption of Health IT are capped, and the amount of the annual cap decreases over time. Both bills propose an annual limit of $15,000 in the first year of participation and decreases over the next four calendar years to $12,000, then to $8,000, then $4,000, then $2,000. For early adopters (those adopting in 2011 or 2012 in the Senate bill and 2012 or 2013 in the House bill), the limit in those years is increased to $18,000. The Senate bill also increases incentive payments by 25 percent for professionals predominantly furnishing services in a rural health professional shortage area. In terms of penalties imposed on providers who are not meaningful EHR users, both the House and Senate bills propose reducing to 99 percent the fee schedule amount paid to such providers in 2015 (2016 in the House), 98 percent in 2016 (2017 in the House) and 97 percent in 2017 (2018 in the House) and in each subsequent year. Both bills would permit the Secretary on a case-by-case basis to exempt a professional from the penalty if compliance would present in a significant hardship, such as in the case of a rural provider without sufficient Internet access.

    Hospitals: Incentive payments for qualified hospitals are calculated as the sum of a base amount ($2 million) added to its discharge related payment, multiplied by its Medicare share. A hospital’s discharge related payment amount would change depending on the number of its total discharges (regardless of payer) up to its 23,000th discharge: a qualified hospital would receive $200 for each discharge starting with its 1,150th through 9,200th discharge; an additional $100 for each discharge from its 9,201th through 13,800th discharge; and an additional $60 for each discharge from its 13,801th through 23,000th discharge. This total amount would be further adjusted by the Medicare share, which would be calculated according to a specified formula that takes into consideration inpatient hospital bed days attributed to Part A payments and inpatient hospital bed days attributed to charity care.

    In terms of penalties, current law imposes a 2 percent reduction in market basket (MB) updates for IPPS hospitals that do not submit quality data (beginning in 2007, as required by the Reporting Hospital Quality Data for Annual Payment Update Program). Beginning in 2015, noncompliance will result in a 25 percent reduction in their annual MB update. Beginning in 2015 (2016 in the House), hospitals that are not meaningful EHR users would be subjected to an additional reduction of the annual MB update: 33.33 percent in 2015, 66.66 percent in 2016, and 75 percent in 2017. Acute care hospitals being paid under a state’s Medicare waiver would be subject to similar reductions beginning in 2015 (2016 in House).

  • Medicaid

    In general, both proposals authorize $40 million for each of fiscal years 2009 through 2015 and $20 million for each succeeding fiscal year through 2019 for incentive payments to eligible providers (non-hospital based physicians, nurse midwives and nurse practitioners), acute care hospitals, children’s hospitals, rural health clinics and federally-qualified health centers. The proposals also authorize a 100 percent Federal match for a portion of payments attributable for certified EHR technology (including support services and maintenance) to eligible Medicaid providers and a 90 percent Federal match for payment to the states for administrative expenses related to EHR technology payments.

    Providers: Both the Senate and House proposals make providers eligible for a payment equal to 85 percent of their net allowable technology costs. The allowable costs for the purchase and initial implementation of EHR technology may not exceed $25,000 or include costs over a period of more than five years. Annual allowable costs not associated with initial implementation or purchase of the EHR technology may not exceed $10,000 per year or be made over a period of more than five years. Aggregate allowable costs for these eligible professionals may not exceed $75,000. 

    Acute Care and Children’s Hospitals: The House bill leaves to the determination of the Secretary incentive payments for acute care hospitals and children’s hospitals. The Senate proposal bases payments on the Medicare incentive payment formula (described above), with some modifications, including calculating the Medicaid share (in lieu of the Medicare share), and taking into account Medicaid inpatient days. Incentive payments will be available for four years and will be made available to the state in year one to distribute to eligible professionals as the state deems appropriate. After the first payment year, the Secretary will assume that Medicaid discharges increase at an annual rate of growth reflective of the most recent three years for which discharge data are available. The calculations will also take into account Medicaid managed care beneficiaries, as well as other Medicaid beneficiaries. 

    Rural Health Clinics and Federally-Qualified Health Clinics: The House bill leaves to the determination of the Secretary incentive payments for rural health clinics and FQHCs. The Senate proposal makes these entities eligible for a payment equal to not less than 85 percent of their net allowable technology costs and subject to aggregate or annual limitations established by the Secretary.


Both the Senate and House proposals require the Secretary of HHS, by June 30, 2010, to conduct and complete a study determining whether payment incentives should be made available to health care providers who are receiving minimal or no payment incentives or other funding under this Act. Stakeholders should consider engaging the Secretary to ensure appropriate information is considered for the report and that the report reaches the right conclusion.