Published 3/1/2011
Jamie Gregorian

Some bright spots in FY2012 budget

While AAOS members were attending the Annual Meeting, President Obama released his budget for the 2012 fiscal year (FY). Although the final budget will look very different after the House Republican leadership has its say, some of the most relevant proposals are good news.

30,000-foot view
The $3.7 trillion budget blueprint for FY2012 would impose a 5-year freeze on domestic discretionary programs and trim or terminate $33 billion from more than 200 federal programs. However, it also includes significant national investments in agencies and programs critical to the healthcare community. For example, the budget for the National Institutes of Health (NIH) would increase 3.4 percent over FY 2010 to $32 billion, while the budget for the National Science Foundation would increase 13 percent over FY 2010 to $7.8 billion.

View a table that shows the impact on specific NIH institutes and centers of interest to orthopaedic surgeons

The President’s budget request would provide a total of $76.7 billion for research, development, test, and evaluation programs across the Department of Defense. Basic research, applied research, and early-stage technological development would receive $12.2 billion, which is 11 percent below the FY2010 levels.

Lengthening the “Doc fix”
The budget request would pay for a 2-year patch to the Medicare physicians’ payment formula by cutting $62 billion elsewhere. More than half the price tag for the fix—$32.3 billion over 10 years—is expected to come from tracking fraud and waste. Another $12.8 billion would come from increasing the use of generic drugs.

AHRQ funding
The budget request includes $390 million for the Agency for Healthcare Research and Quality (AHRQ), $12 million below the FY2010 level. A total of $46 million is allocated for Patient-Centered Health Research, which supports research comparing the effectiveness of different treatment options. The budget proposal also includes $28 million for health information technology research.

HRSA funding
The Health Resources and Services Administration (HRSA) would get $6.8 billion in discretionary budget authority in FY2012, a decrease of $684 million or 9.1 percent below the FY 2010 level. In addition to supporting a record-high National Health Service Corps field strength of 10,680, the budget will expand the nation’s capacity to train more than 4,000 new primary care providers—including physicians, physician assistants, and nurse practitioners—over 5 years. This primary care focus is part of a total investment of $1 billion, including $310 million made available through the Affordable Care Act, to continue the President’s initiative to increase the number and improve the distribution of primary care, dental, public health, and behavioral health providers.

CMS funding
The Centers for Medicare and Medicaid Services (CMS) would receive $777 billion in mandatory and discretionary outlays, a net decrease of $10.2 billion below FY2011 levels. This request finances Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), new health insurance programs and protections, program integrity efforts, and operating costs.

The budget also includes a $270 million increase in discretionary program integrity resources as part of a multiyear investment to enable the Department of Health and Human Services and its partners to take groundbreaking steps to detect, prevent, and prosecute healthcare fraud and save $10.3 billion over 10 years. The Budget also proposes a series of new authorities that will strengthen existing program integrity oversight in Medicare and Medicaid. The White House estimates that these investments will save $32.3 billion over 10 years.

FDA funding
The President’s request would provide the Food and Drug Administration (FDA) with $2.74 billion in discretionary budget authority, which is a 16 percent increase over FY2010 levels. Priorities for the agency include programs such as the Food Safety Modernization Act. The budget includes an increase of $70 million for advancing Medical Countermeasures, which continues to be a priority.

CDC funding
The Centers for Disease Control & Prevention (CDC) would get$5.9 billion in discretionary budget authority, a 9 percent decrease from FY2010 levels. The decrease in funding partially reflects the elimination of the Preventive Health and Health Services Block Grant program. The Administration continues to make prevention and wellness a priority, and the budget includes $753 million of the $1 billion available from the Prevention and Public Health Fund.

Jamie Gregorian is senior manager, specialty society affairs and research advocacy, in the office of government affairs. He can be reached at gregorian@aaos.org