Understanding the American Recovery & Reinvestment Act

Understanding the American Recovery & Reinvestment Act NIH Life Sciences Grants and Funding for HIT May 14, 2009 Colin J. Zick Kalah Auchincloss Fol...
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Understanding the American Recovery & Reinvestment Act NIH Life Sciences Grants and Funding for HIT May 14, 2009 Colin J. Zick

Kalah Auchincloss

Foley Hoag LLP [email protected]

Foley Hoag LLP [email protected]

(617) 832-1275

(202) 261-7356

These materials have been prepared solely for educational purposes. The presentation of these materials does not establish any form of attorney-client relationship with the authors or Foley Hoag LLP. Specific legal issues should be addressed through consultation with your own counsel, not by reliance on this presentation or these materials. Attorney Advertising. Prior results do not guarantee a similar outcome. © Foley Hoag LLP 2009.

“The American Recovery and Reinvestment Act is an unprecedented effort to jumpstart our economy, create or save millions of jobs, and put a down payment on addressing long-neglected challenges so our country can thrive in the 21st century.” - Recovery.gov

Understanding the American Recovery & Reinvestment Act NIH Life Sciences Grants May 14, 2009

Kalah Auchincloss Foley Hoag LLP [email protected] (202) 261-7356

Big $ for Healthcare

~ $150 billion

Source: NEJM 2009

Today’s Discussion

ƒ National Institutes of Health: $10.4 B (including $400 million for Comparative Effectiveness Research)

ƒ Health Information Technology (HIT): $19.2 B

NIH: $10.4 Billion Unprecedented flow of cash for the agency; ~ 1/3 of the annual budget for FY09

Why NIH? Science Suffers in Economic Recessions “The biomedical research community is not spared from the drastic downturn in the economy. This is worrisome not only because it means fewer jobs, but also because innovation and a constant influx of young talent are crucial to the nation’s economic success and a robust biomedical research enterprise.” Raynard Kington, Acting Director of the NIH Testimony before Congress, March 26, 2009

NIH Funding Boosts the Economy

ƒ On average, every NIH grant supports 6 to 7 in-part or full scientific jobs

ƒ Every dollar spent by NIH in local communities around the U.S. is leveraged three times its original amount.

ƒ In FY07, NIH grants and contracts created and supported more than 350,000 jobs that generated wages in excess of $18 billion in the 50 states

NIH Funding Breakdown

ƒ Facilities.

$1 B for competitive awards for construction and renovation of extramural research facilities; $500 million for renovation of NIH facilities; $300 M for equipment.

ƒ Grants.

$8.2 B to the Office of the Director, of which $7.4 B is designated for transfer to the Common Fund and the Institutes for research grants; up to $400 M for the Common Fund.

ƒ CER.

$400 M transferred from AHRQ for comparative effectiveness research.

NIH Funding Breakdown: GRANTS Three “Buckets” for NIH Spending on Grants ($7.4 B) ƒ

R01 Grants. Funding for R01s that received high scores but were not funded in the FY08-09 cycle; allocated by each Institute.

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Supplemental Grants. Funding for supplements to existing R01s and other grants; allocated by each institute.

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Special Programs. Best opportunities for life sciences companies and for funding for new projects and initiatives. – NIH Challenge Grants – NIH Grand Opportunities Grants – “Signature Initiatives”

NIH Challenge Grants NIH Challenge Grants. $200 million to support 2 year grants of $500,000/year in 15 “challenge areas”; coordinated allocation. • (01) • (02) • (03) • (04) • (05) • (06) • (07) • (08) • (09) • (10) • (11) • (12) • (13) • (14) • (15)

Behavior, Behavioral Change, and Prevention Bioethics Biomarker Discovery and Validation Clinical Research Comparative Effectiveness Research (CER) Enabling Technologies Enhancing Clinical Trials Genomics Health Disparities Information Technology for Processing Health Care Data Regenerative Medicine Science, Technology, Engineering and Mathematics Education (STEM) Smart Biomaterials – Theranostics Stem Cells Translational Science

NIH Challenge Grants

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Smaller awards, but potential opportunities for industry. Applications were due April 27, but the program will likely continue in 2010 with a new application cycle next spring. Largest RFA in NIH history. http://grants.nih.gov/grants/funding/challenge_award/#topics

NIH Challenge Grants Review Cycle

NIH “GO” Grants ƒ Research and Research Infrastructure “Grand Opportunities” Grants. $200 million to support 2 year grants that “address large, specific biomedical and biobehavioral research endeavors.”

ƒ Grants listed on websites of each specific institute, links available at http://grants.nih.gov/recovery/ic_go.html.

ƒ Applications due May 29, 2009; funding awarded by Sept. 31, 2009

ƒ Similar to Challenge Grants, but fewer specific application requests.

NIH “GO” Grants ƒ

The GO Grant program is intended to support: – Large-scale research projects – Early and applied research on cutting-edge technologies; and/or – New approaches to improve multi- and inter-disciplinary research teams

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GO Grants should have: – high short-term impact, – high likelihood of enabling growth and investment in biomedical research and development, public health, and health care delivery.

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Applicants may propose to address either a specific research question or propose the creation of a unique infrastructure/resource designed to accelerate scientific progress.

NIH “GO” Grants Examples include: – – –

The Role of Mitochondria and Endoplasmic Reticulum in Alcohol-Induced Tissue Injury (NIAAA) Multidisciplinary Approaches to Craniofacial Regeneration and Preclinical Testing (NIDCR) Evaluating Image-Guided Minimally-Invasive Therapeutic Interventions (NIBIB)

APPLICATIONS DUE MAY 29, 2009

NIH “Signature Initiatives” ƒ ƒ ƒ ƒ

Developed to support “exceptionally creative and innovative projects and programs.” Each Institute will develop at least one “Signature Initiative” Others will be done in partnership across Institutes and/or the Office of the Director No opportunities announced yet, but likely to include –

nanotechnology



genome-wide association studies



health disparities



arthritis



diabetes



autism



the genetic risk for Alzheimer’s disease



regenerative medicine



oral fluids as biomarkers



HIV vaccine research

NIH Funding: CER $1.1 B to “conduct or support research to evaluate and compare the clinical outcomes, effectiveness, risk, and benefits of two or more medical treatments and services that address a particular medical condition.” – $300 M for AHRQ. – $400 M for NIH. – $400 M allocated at the discretion of the Secretary.

Challenge Grants: Category (6) is focused on CER (69 grant opportunities). GO Grants: various CER opportunities (e.g., Comparative Effectiveness Studies of NonPharmacological Treatments for Chronic Low Back Pain

NIH: Future Opportunities

ƒ Introduced by Senator Arlen Specter (D-PA) on 4/28/09. ƒ Establishes an independent Cures Acceleration Network agency, to sponsor promising translational research to bridge the gap between laboratory discoveries and life-saving therapies; $2 B in funding. ƒ Reauthorizes the NIH at $40B/year. ƒ Enormous opportunities if passed and funded.

Important Concepts ƒ NIH $ MUST be used within 2 years; no guarantee of funding after FY11.

ƒ NIH will only fund projects that are expected to have a significant scientific impact within two years AND which can reasonably be expected to create new jobs.

ƒ ARRA NIH funds are not subject to Small Business Innovation Research and Small Business Technology Transfer set-aside requirements (2.5% of agency budget).

ƒ Recipients of funding will have heightened reporting obligations to the NIH beginning on July 15, 2009.

Viewing Grant Opportunities ƒ

Grants.gov: clearinghouse for all Federal grants, including ARRA opportunities. – OMB strongly recommended that agencies use the Grants.gov website for grant application purposes. – All entities wishing to apply for a grant through Grants.gov must register on the website.

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Recovery.gov: weekly reports from each agency on ARRA activity; charts and graphs detailing ARRA spending by states; messages from the President on accountability and transparency.

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HHS.gov/recovery: HHS website on ARRA; grants.nih.gov/recovery: NIH website on ARRA.

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Fedbizopps.gov and fedconnect.net: lists all federal funding and contract opportunities, including ARRA funding notices.

Questions

QUESTIONS?

Understanding the American Recovery & Reinvestment Act Funding for HIT May 14, 2009

Colin J. Zick Foley Hoag LLP [email protected] (617) 832-1275

How HIT Funding Got There ƒ

On February 17, 2009, President Obama signed P.L. 111-05, the American Recovery and Reinvestment Act.

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Title XIII of Division A of ARRA is known as HITECH—the Health Information Technology for Economic and Clinical Health Act.

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Title IV of Division B of ARRA is also relevant – it provides Medicare and Medicaid subsidies for electronic health records—EHRs.

The Big Picture ƒ

HIT funding is just one of the elements of ARRA that impact HIT. Overall, ARRA: – Changes the role for the federal government in coordinating federal HIT policy; – Expands the federal government’s role in testing and research for HIT; – Funds states, nonprofits, and educational organizations in promoting and implementing HIT; – Changes health information privacy and security rules; and – Last but not least, provides approximately $17.2 billion of incentive payments for adoption of EHRs.

Why HIT? Without Federal Money, HIT Won’t Happen

ƒHITECH is designed to move us toward the President's goal of providing all Americans with electronic health records by 2014. ƒ Hospitals may have the money to implement their own EHR systems, but cannot afford to integrate community physicians. ƒWithout integrating community physicians, EHRs are of little or know value.

You Have to Spend Money to Save Money: ƒ Conventional wisdom says EHRs can reduce adverse events ƒ HIT may generate savings by eliminating errors and duplication ƒ EHRs can vastly accelerate and expand the pool of useful data by which to: – Conduct comparative effectiveness research – Identify provider variations and inefficiencies

Not Everyone Is On Board

HIT Funding Breakdown ƒ ƒ

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Overall, ARRA invests $19.2 billion in HIT infrastructure and Medicare and Medicaid incentives to encourage adoption of HIT. Of the $19.2 billion allocated for health information technology, $17.2 billion is set aside for financial incentives to hospitals and providers to encourage the adoption of HIT. The remaining $2 billion is earmarked for the Office of the National Coordinator for HIT for HIT affiliated grants and loans. Other ARRA funds distributed among the HHS agencies which may impact HIT infrastructure include: – $10 billion to the National Institutes of Health (NIH) for biomedical research and to improve facilities – $2.5 billion to the Health Resources and Services Administration (HRSA) – $1.1 billion to the Agency for Health Research and Quality (AHRQ) for comparative effectiveness research – $1 billion to the Public Health Service for prevention and wellness – $85 million to the Indian Health Services (IHS).

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Additionally, the Veterans Administration, the Department of Defense, and the Social Security Administration will receive funds that could involve and impact the implementation of HIT.

HIT Regional Extension Centers ƒ

Funding “Outside the Beltway” to HIT Regional Extension Centers: – Must be affiliated with any US-based nonprofit awarded assistance – Broad participation of industry, university, and State reps – Active involvement in HIEs – Integration of HIT and EHRs into initial and ongoing training of health professionals

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Prioritization of funding: – Public, not-for-profit, or critical access hospitals – FQHCs – Rural or medically underserved areas – Primary care solo or small group practices

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Funding for 4 years (biennial evaluation) and match of 50% required

Doctors and Hospitals ƒ

More Funding “Outside the Beltway” -- $17.2 billion for Medicare and Medicaid Health Information Technology, in the form of physician incentives and hospital incentives.

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These incentive payments may include investments in: – hospitals, – physician practices, – public health infrastructure for EHRs, and – telemedicine to ensure interoperability of the new technologies.

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The $17 billion in incentive payment funds directed to CMS are particularly for certified “meaningful EHR users” and are to begin in 2011.

Doctors and Hospitals (cont.) ƒ

Key to the distribution of these incentive payments will be the way in which regulations further define and clarify the “meaningful user” requirements. – Medicare payment rules for fiscal year 2011 will start being drafted in February of 2010 (for the Hospital Inpatient Prospective Payment System) and April of 2010 (for physicians). – These payments can total as much as $18,000 in the first year in the case of physicians who adopt in 2011 or 2012, with at least $15,000 for physicians who adopt in 2013 and a slightly lower amount for those who do so in 2014. – Incentives are gradually reduced and then ended in 2016. – Overall, physicians demonstrating meaningful use starting in 2011 could collect $44,000 over 5 years. Waiting until 2013 would result in a maximum bonus of $27,000 over 3 years. – Experts estimate the cost of purchasing, installing, and implementing an electronic-records system in a medical office at about $40,000.

Doctors and Hospitals (cont.) ƒ

HITECH also imposes penalties on those who do not meet the requirements by the required dates. – Physicians lacking certified HIT systems face -1% in 2015, -2% in 2016, and -3% in 2017 penalties, with Secretarial authority for beyond 2019. – The Secretary may provide a time-limited exemption from the payment reduction to professionals who demonstrate a significant hardship in meeting the meaningful use criteria. – For hospitals, the market basket update is reduced for any eligible hospital that does not “meaningfully use” EHRs by FY2015.

State Grants ƒ

Planning grants – State or State-designated entity – Planning the activities below

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Implementation grants – State or State-designated entity – Enhance participation in nationwide use and exchange of health information – Identify State or local resources – Complement other funding – Technical assistance – Strategies for use of HIT in medically underserved areas – Assist patients in HIT – Encourage clinicians to work with HIT Regional Extension Centers – Support public health agencies’ use of electronic health information – Promote EHRs for quality improvement – Other activities the Secretary may specify

Grants for EHR Adoption Loans ƒ

Eligible entities include States and Indian Tribes – Loans used by providers to: • • • •

Purchase certified EHRs Enhance utilization of certified EHRs (including upgrades to become certified) Provide training Improve security

– Maximum expenditure of 4% on administration – May accept private contributions (without specifying recipients), whose identity and contribution will become public – Matching contributions of not less than $1 to $5 of Federal funds (which may not include other Federal Funds)

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Providers must – Submit quality reports – Demonstrate EHRs satisfy standards and improves quality of care – Include plan on maintenance of EHRs over time

Grants for Clinical Education Demonstration Projects ƒ

Grants for demonstration projects to develop academic curricula integrating certified EHR into clinical education of health professionals

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Eligible entities: – Medical, osteopathic medical, dentistry, or pharmacy schools – Graduate program in behavioral or mental health – Graduate health professions school – Graduate nursing school – Physician assistant studies – Consortium of two or more of above – Institution with graduate medical education program in one of above

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Plan must seek to reduce medical errors, increase access to prevention, reduce chronic diseases, and enhance quality

HIT Future Opportunities ƒ

By February 16, 2010, the National Coordinator must submit a report to Congress on need for added funding/authority for ONC, HIT Policy or HIT Standards Committees.

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By June 30, 2010, the Secretary must report to Congress on whether incentive payments under Medicare should be made available to providers who are not receiving incentive payments.

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National health insurance reform, which may bring new and different opportunities (and funding) to integrate providers and payors.

Viewing Grant Opportunities (just like with NIH) ƒ

Grants.gov: clearinghouse for all Federal grants, including ARRA opportunities. – OMB strongly recommended that agencies use the Grants.gov website for grant application purposes. – All entities wishing to apply for a grant through Grants.gov must register on the website.

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Recovery.gov: weekly reports from each agency on ARRA activity; charts and graphs detailing ARRA spending by states; messages from the President on accountability and transparency.

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HHS.gov/recovery: HHS website on ARRA; grants.nih.gov/recovery: NIH website on ARRA.

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Fedbizopps.gov and fedconnect.net: lists all federal funding and contract opportunities, including ARRA funding notices.

Other HITECH Resources ƒ ƒ

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The ARRA (HITECH starts at p. 112): http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.pdf Foley Hoag’s eBook: Health Information Technology Provisions in the Recovery Act, http://www.foleyhoag.com/NewsCenter/Publications/eBooks/~/media/DE0 FBD9BA9894D1597919685525CF84D.ashx “Stimulating the Adoption of Health Information Technology,” David Blumenthal, M.D., M.P.P., New England Journal of Medicine, April 9, 2009, http://content.nejm.org/cgi/content/full/360/15/1477 Health Affairs blog, “Stimulating Health IT: Hold Onto Your Hats!” http://healthaffairs.org/blog/2009/03/11/stimulating-health-it-hold-ontoyour-hats/ “Obama's $80 Billion Exaggeration,” Jerome Groopman and Paula Hartzband, Wall Street Journal, March 11, 2009, http://online.wsj.com/article/SB123681586452302125.html

Questions

QUESTIONS?

Understanding the American Recovery & Reinvestment Act NIH Life Sciences Grants and Funding for HIT May 14, 2009 Colin J. Zick

Kalah Auchincloss

Foley Hoag LLP [email protected]

Foley Hoag LLP [email protected]

(617) 832-1275

(202) 261-7356

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