ARRA Opportunities and Risks

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More is unknown than known about how the $19.2 billion allocated to health IT by the American Recovery and Reinvestment Act of 2009 (ARRA) will be awarded and who will be eligible to receive funds. Anyone interested in participating in the reinvention of health care through IT—including radiology private practices and hospital radiology departments—should begin planning a strategy immediately and take an active role in defining the terms contained in the legislation.

That was the message of Charles Christian and Howard Burde, JD, who copresented A Strategic Approach to Managing Opportunities and Risks for Health IT in Economic Stimulus at the Healthcare Information and Management Systems Society (HIMSS) meeting in Chicago on April 6, 2009. Christian is CIO and health systems manager of Good Samaritan Hospital, Vincennes, Ind, and chair of the HIMSS board of directors. Burde is a partner and health law practice group leader at Blank Rome, LLP, Philadelphia, and a HIMSS board member.

“The act not only authorizes the funds, but it also appropriates the funds: The money is there,” Christian says. “We don’t have to go through another appropriations process because this was classified as a piece of emergency legislation. The questions that are going to be answered for us in the next weeks and months are who has the money, where is it, how do I get on the list, and how do I line up my organization to get access to it?”

Burde, representing the voice of caution, adds, “The ARRA is, if nothing else, an extraordinarily ambitious law. It fundamentally changes health IT. Health IT has gone from an essential component, a supporting backbone to our health care system, indirectly regulated, not funded—but there and important—to a directly and heavily regulated, heavily subsidized industry of its own, and it happened in minutes.”

While regulators grapple with the many puzzles contained in the act (including definitions of the meaningful use of health IT; of the qualified, certified electronic medical record [EMR]; of the minimum necessary information transmitted for payment; and of the eligible professionals who are qualified to participate), Christian tells providers to begin preparing now to participate in the program. Burde offers a more skeptical assessment of the situation. “They could make meaningful use so burdensome and so difficult that providers will have a tough time complying and, therefore, a tough time drawing down Medicare and Medicaid funds,” he says.

The Opportunities

In addition to the $19.2 billion allocated for health care IT in the ARRA, Christian identifies a number of additional sources of funding contained in the act:

  • $87 billion to help shore up state Medicare programs;
  • $10 billion to be awarded by the National Institutes of Health for research in cancer, heart disease, and other diseases, including $1 billion to study comparative effectiveness of medical procedures, pharmacological treatments, and medical devices;
  • $85 billion for Indian Health Services;
  • $1.5 billion for community health centers to be administered through the Health Resources and Services Administration;
  • $500 million for the Social Security Administration;
  • $50 million for the Veterans Benefits Administration;
  • $2.5 billion to be administered through the Department of Agriculture’s distance learning and telemedicine broadband program; and
  • $4.7 billion for the National Telecommunications and Information Administration for broadband technologies and opportunities.

“There is a significant amount of money that’s been set aside that is not necessarily contained just in the $19.2 billion directly related to health care IT—other significant funding that we are looking at, as a community hospital and a state,” Christian notes.

The Medicare and Medicaid health IT incentives alone—which will be distributed through the states—could add up significantly for both hospitals and physicians. Using a tool on the HIMSS Web site, Christian calculated potential awards over the four-year period of the program. He says, “A 75-bed hospital, for 2011 through 2014, stands to reap $3.5 million: That’s probably twice what its annual bottom line is.” A 250-bed hospital has the potential to earn almost $6 million over four years, and a 750-bed hospital could qualify for nearly $12 million, he reports.

“Keep in mind that the calculations depend on two variables,” Christian explains. “One is how many Medicare days you have, because this is a Medicare incentive.