• The American Recovery and Reinvestment Act: Funding Opportunities and New Privacy Rules
  • June 26, 2009
  • Law Firm: Ropes & Gray LLP - Office
  • The federal government has been busy implementing the American Recovery and Reinvestment Act (ARRA), and has begun to dispense the nearly $100 billion allocated for health care investment. To assist clients in tapping into these opportunities, Ropes & Gray has prepared a user-friendly chart summarizing the available funding sources and providing links to applicable federal guidance and other information. Although the government has not yet released details on how to access all of the funding, look to the Economic Recovery Legislation and Implementation section within our Health Reform Resource Center for continual updates to this chart as those details become available.

    In addition to ARRA's major investments in health care infrastructure, ARRA also enacted sweeping new changes to the privacy protections under the Heath Insurance Portability and Accountability Act of 1996 (HIPAA). These changes will affect all health care organizations that possess protected health information (PHI) and, in particular, impose broad new notification requirements in the case of a breach of unsecured PHI. While interim final regulations on the breach notification requirements are not due until August 16, 2009, HHS issued guidance on April 17 regarding the types of technologies and methodologies that may be used to secure PHI in order that it not be subject to the breach notification requirements.

    Highlights of the implementation of health-related funding opportunities to date include:

    • Health Information Technology (HIT). ARRA provides an estimated $17 billion in Medicare and Medicaid incentive payments and $2 billion in funding to the Office of the National Coordinator for Health Information Technology to invest in HIT architecture through various grant programs. The Medicare and Medicaid payments will not be available until 2011, and the extent to which they can be drawn upon will depend on HHS's definition of a “meaningful user” of electronic health records, which it must issue by December 31, 2009. Likewise, the National Coordinator has started releasing preliminary details on how the $2 billion in HIT grant funding will be awarded.
    • Medicaid Support. HHS has made $15.2 billion in Medicaid funding available to states for the first two quarters for which ARRA’s enhanced Medicaid matching rates apply (i.e., October 2008 – March 2009). This funding has proved critical to states as they struggle to balance budgets in a year of sharply shrinking revenues and rising deficits.  More will be released in future quarters, and HHS has provided guidance on state eligibility for, and certification of, those funds. HHS also announced increased Medicaid Disproportionate Share Hospital (DSH) allotments for FY2009. Links to state-by-state grant amounts for these enhanced Medicaid funds are available in the Ropes & Gray chart.
    • Community Health Centers (CHCs). HHS took quick action to release $155 million for 126 new CHCs, $338 million for programs to expand CHC services, and $850 million for capital improvements. Additional funds are available for facility investments and HIT systems.
    • Comparative Effectiveness. ARRA provides $1.1 billion to study the comparative effectiveness of different health care treatments and strategies. NIH has released several grant opportunities related to comparative effectiveness research, and additional HHS agencies should announce funding opportunities in the near future.
    • Research and Capital Grants available through the National Institutes of Health (NIH). ARRA provides $10.4 billion to NIH for research and capital funding. NIH has begun distributing these funds, and has announced grants for the purchase of instruments, to support and expand the scope of existing research, to support new research focusing on areas such as health disparities, bioethics, genomics and stem cells, and specifically to support autism research and hiring of faculty at research centers. New grants continue to become available and deadlines are passing quickly.
    • Prevention and Wellness. The Centers for Disease Control and Prevention (CDC) has distributed $200 million to states to support purchasing of vaccines, and will be awarding additional funds for innovative programs to improve vaccination rates, to reduce rates of chronic disease, and to support local efforts to reduce health care acquired infections. ARRA provided a total of $1 billion for a prevention and wellness fund.
    • Other Funding Opportunities. ARRA also provides significant opportunities for capital funding and broadband technology outside of HHS that could be available to health care organizations. For example:
      • State stabilization funds have been distributed to states for use in capital projects in educational facilities,
      • The Department of Energy is allocating $2.7 billion in funding to states to support energy efficiency infrastructure projects,
      • Enhanced Community Development Block Grant funding is supporting a variety of development projects,
      • Funding is available for the expansion of broadband technology including telemedicine and distance learning,
      • New roads are being financed with highway infrastructure funding, and
      • The Build America Bond program is providing financing assistance for projects funded through state or local government bonds.