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Government News
Stimulus Law Directs Funds to Health Care Improvement
Psychiatric News
Volume 44 Number 6 page 7-30

A massive spending and tax-relief stimulus law designed to cut unemployment, aid struggling families, and boost a sliding economy includes numerous provisions urged by APA and other mental health advocates.

The American Recovery and Reinvestment Act of 2009 (ARRA, PL 111-5), signed by President Barack Obama on February 17, includes a large funding increase for state Medicaid plans and further delays implementation of Medicaid regulations that are opposed by APA.

These provisions are extremely timely because "states are desperate for more money because revenues are down and their Medicaid costs are constant or rising," said Lizbet Boroughs, associate director of APA's Department of Government Relations.

The law includes a temporary $87 billion increase in the Federal Medical Assistance Percentage, which means that the federal share of Medicaid costs will rise, helping states avoid program cuts. Medicaid is dually funded by states and the federal government. The law provides a 6.2 percent across-the-board increase to each state's Medicaid program and extra funding for states with the highest unemployment rates.

The lack of a specific line item for mental health care in the new Medicaid funding concerns mental health advocates, including David Shern, president and CEO of Mental Health America. His organization—and APA—lobbied for such an addition so people with psychiatric conditions would not lose out to other programs as states tinker with Medicaid programs.

Also on the Medicaid front, a moratorium set to expire next month on regulations promulgated by the Bush administration and related to Medicaid targeted case management (TCM) was extended until the end of June. APA opposed the tightening of TCM regulations—intended as a money-saving measure—because it could sever a critical coordinating service that benefits many mentally ill people who receive Medicaid benefits (Psychiatric News, August 1, 2008).

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Another measure aimed primarily at the public-health sector is the creation of the $1 billion Prevention and Wellness Fund to support evidence-based clinical and community-based prevention and wellness strategies. Among the largest provisions in the fund is $500 million designated for bolstering the general- and public-health workforces.

Mental health advocates said the funding measure could save or create 20,000 public-health jobs, including some of those of the 11,000 such workers already terminated in the recession. Retaining and rehiring public health workers is an important step to ensuring the availability of health care services for the unemployed, uninsured, and underinsured during the recession, according to mental health advocates.

Health workers also could benefit from $500 million that the law allocates to the Health Resources and Services Administration for health profession development through scholarships, loan-repayment help, and training grants. The funds can also be used to coordinate cross-state telemedicine services.

Psychiatrists are among those designated in ARRA as eligible for scholarships, loan-repayment help, and grants through the National Health Service Corps. The corps aims to boost the number of clinicians in rural and other "medically underserved" areas of the country.

Another significant aspect of ARRA for physicians is the inclusion of $19 billion to invest in health information technology, including efforts to ensure patient-privacy protections (see Incentive Payment Will Go to M.D.s Who Adopt Electronic Records).

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Additional funding is directed to the National Institutes of Health, whose Fiscal 2009 budget was increased by 34 percent over 2008, from $29 billion to $39 billion. The allocation of ARRA funds will direct about $1 billion in total to the National Institute on Drug Abuse, National Institute on Alcohol Abuse and Alcoholism, and National Institute on Mental Health.

The 34 percent boost dwarfs NIH's 1.5 percent increase in the last budget cycle.

"Hundreds of grant applications scored high enough to be funded last year, but [NIH] ran out of money before they could be funded," Boroughs said. The hope is that the additional funding will lead to more psychiatric research receiving support.

In addition, the law includes $1.1 billion for "comparative effectiveness research" through NIH and the Agency for Healthcare Research and Quality that compares two or more therapies for a given medical condition. The funds also may be used to analyze existing studies, including NIMH-sponsored trials of treatments for schizophrenia, bipolar disorder, and major depression.

Other provisions of the law aim to ensure that comparative effectiveness research is conducted and findings disseminated in a way that ensures that clinical effectiveness and quality outcomes are promoted. This approach aims to counter the use of research designed only to promote least-expensive treatment options. Mental health advocates, including the National Alliance on Mental Illness, opposed language in early versions of the measure that emphasized cost savings over clinical effectiveness and federal government restrictions on funding for treatments based on studies with limited efficacy comparisons.

Privately insured people also could benefit from a 65 percent premium subsidy for nine months of coverage under the COBRA law—the federal law that allows many workers to continue in their employer's group health insurance plan for a defined period after they leave a job. The measure, aimed at people terminated between September 1, 2008, and December 31, 2009, will help provide continuity of health care, especially for psychiatric conditions that are sensitive to disruptions in prescribed medications.

The impact of the COBRA change could be significant because fewer than 1 in 10 eligible workers opted for continuing insurance coverage under the law in 2007, due to high cost. COBRA requires workers to pay the entire premium—including the share typically paid for by employers—plus a 2 percent administrative fee. The average cost of COBRA coverage for a family of four is $13,000 a year, according to government statistics.

Numerous aspects of ARRA remain unclear, including how many of the provisions will be implemented. While, for example, the Prevention and Wellness Fund will invest in evidence-backed, community-based prevention programs that directly improve the health of Americans, the law tasks officials at the Department of Health and Human Services (HHS) with determining which programs meet the goals of this huge investment, and many senior positions at HHS have yet to be filled.

Even when the HHS positions are fully staffed, the wide latitude given to administrators to implement the law's provisions will require careful scrutiny and feedback by mental health and other advocates.

"You can bet we are going to be in there every day trying to influence how these provisions are being implemented," Boroughs said.

Information on the mental health—related provisions of ARRA is posted at<www.nami.org/Template.cfm?Section=February14&Template=/ContentManagement/ContentDisplay.cfm&ContentID=73996>.

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