As Congress worked to complete the FY 2011 appropriations process, President Obama released his $3.73 trillion budget for FY 2012 on February 14.

While President’s annual budget traditionally serves as a blueprint as Congress moves forward with its own budget and corresponding appropriations bills, it is a non-binding document and often quite different from what Congress agrees upon. This is particularly true for FY 2012, given that Republicans now control the House of Representatives.

The budget request for HHS is $79.9 billion for FY 2012 – less than the $81.3 billion that the President requested for FY 2011, though slightly higher than HHS’ current FY 2010 funding level under the aforementioned CR.

Within the HHS/CMS budget, the President put forth a two-year fix to the current Medicare physician payment system – a proposal that would stave off reimbursement reductions and cost approximately $62 billion for two years. To offset that price tag, the budget advocates a variety of steps, such as eliminating graduate medical education (GME) payments for children’s hospitals and implementing new Medicare program integrity initiatives.

In addition, the President’s budget includes a proposed expansion of the influence of the Medicare durable medical equipment (DME) competitive bidding program to Medicaid – an effort that the Administration believes will increase efficiency and save money, but that is opposed by the homecare industry on the grounds that its beneficiaries have experienced disruptive service and equipment problems.

Other notable provisions in the FY 2012 budget include: $3.3 billion in funding for community health centers, including $1.2 billion in mandatory funding authorized by the PPACA; $78 million to accelerate health IT and promote electronic health records (EHRs); $333 million for nursing workforce development efforts; and $10 million for the 340B drug pricing program, including expansion efforts authorized by the PPACA.