1. www.bakerdaniels.com American Recovery & Reinvestment Act of 2009 February 27, 2009 2-3 p.m. Eastern Please dial 1-866-642-1665 Passcode 342441 to listen to the audio portion of the webinar Key Provisions Health and Life Sciences

2. 2 Agenda  Introductions  Overview of ARRA: the “Economic Stimulus”  Key provisions  Impact and engagement –Hospitals and healthcare providers –Academic health centers and research institutions –Insurers –Med Tech manufacturers –Patient groups and voluntary health associations –State and local governments

3. 3 B&D Consulting  Washington, DC-based health and life sciences consultancy –Consulting division of Baker & Daniels, LLP –50+ professionals with deep sector concentration  Substantive expertise at federal and state levels  Focus on the technical and political aspects of the U.S. healthcare system

4. 4 Stimulus overview  ARRA signed into law February 17, 2009 –$787 billion to support infrastructure, schools, state budgets, tax cuts, biomedical research, renewable energy and healthcare for the unemployed. –Funding driven through direct grant making and RFP process  Federal agencies and states involved

5. 5 Other funding vehicles  FY 2009 omnibus bill  FY 2010 budget and reconciliation  FY 2010 appropriations  Potential for technical corrections to ARRA  Health reform  Sustainable growth rate (SGR) formula fix and Medicare reform

6. 6 Other factors  Delayed appointment of Secretary of HHS  Requirement to develop plans for disbursing funds –Increased oversight and reporting burdens  Challenges of spending large $$$ quickly  Focus on shorter term, “stimulative” investments –2 year horizon

7. 7 Health provisions present opportunities and challenges  Early engagement is key  Stages of involvement –Agency planning process –Agency development of new regulations and requirements –Potentially 2 rounds of agency funding –Other funding or rule-making entities (states) –Congressional education or intervention

8. 8 Providers (Hospitals & Physicians) Academic Health Centers Biotech – MedTech Patients and VHAs Insurance Companies States HIT standards xxxx HIT grants xxxxxx HIT incentives xx HIT privacy rules xxxxx Comparative Effectiveness xxxxxx Research Funding xxx Research Infrastructure xxx New Construction xx Prevention and Wellness xxxx BARDA/Pandemic Flu x COBRA Expansion x Physician Training xxxx Medicaid Funding and Rules xxx ARRA health provisions at a glance

9. 9 Health information technology -- Agency funding  Office of the Nat’l Coordinator of HIT (ONC) total $2 billion –ONC regional health $300 million  NIST standards  CHC (portion of $1.5 billion)  IHS $85 million

10. 10 HIT standards  ONC governance mechanism for nationwide health information network  ONC chief privacy officer to coordinate with states, regions, others  HIT policy committee to recommend and prioritize areas for standards, implementation specifications and certification criteria  HIT standards committee to recommend standards, implementation specs and certification criteria  Secretary of HHS adopts standards by rulemaking

11. 11 HIT grants  Immediate funding program to strengthen infrastructure and for other HIT activities –Funded through ONC and administered by agencies with relevant expertise (such as HRSA, AHRQ, CMS, CDC and Indian Health Service), grants will be made available for certain health information exchanges (HIEs), federal HHS agencies, providers, community health centers, 340B entities, telemedicine providers, holders of health information and public health departments. Specifically, the Secretary is required to invest $300 million to "support regional or sub-national efforts toward health information exchange."  HIT implementation assistance –The ONC, and in consultation with NIST and other agencies with experience in IT services, will establish an HIT extension program to assist providers in adopting and using certified EHR technology. In addition, the ONC will support HIT Regional Extension Centers (affiliated with nonprofits) to provide assistance to providers, hospitals, CHCs, entities serving the underserved and small group practices.

12. 12 HIT grants  State grants to promote HIT –Funded through ONC, these grants will be made available to states or "state-designated nonprofits" for planning or implementation and other uses to expand electronic health information exchange  Competitive grants to states and Indian tribes for loan programs –Funded through ONC, these grants will be made available to states or Indian tribes to establish loans for health care providers to acquire and effectively utilize EHR technology  Demonstration program to integrate HIT into clinical education –Competitive awards to health professions or medical schools for curricula development and assistance to other universities for similar purposes

13. 13 HIT Medicare and Medicaid incentives  Medicare incentives for providers –Up to $18k if in 2011, then, 12k, 8k, 4k, 2k in subsequent years –Payment reduction begins in 2015-- 1%, 2%, 3% –Must meet standards  Medicare incentives for hospitals –Up to $16 million over 4 years if using HIT in 2011 –Additional penalties if not adopted –Must meet standards  Medicaid incentives –Pays states incentive payments to support costs incurred for adoption

14. 14 HIT privacy provisions  Accounting for disclosures  Inadvertent disclosures redefined  Patient authority to withhold out of pocket info  Minimum necessary disclosure  Business associates and CEs  CMPs  AG enforcement  PHRs and Googles now HIPAA covered  Fundraising limits  Marketing limits

15. 15 Comparative effectiveness  Total of $1.1 billion –$300 million administered by AHRQ to “carry out” research –$400 million administered by NIH to “conduct or support” research –$400 million administered by Secretary of HHS to “accelerate development and dissemination”  “Clinical” removed, implying openness to cost assessments  Intended for “clinical decision support” not coverage and payment determinations Note: CE is top priority in Congressional healthcare reform plans

16. 16 Comparative effectiveness (cont’d)  Amounts unambiguous, but specific purposes not yet defined –Details will be determined quickly  IOM report due to Congress June 30, 2009 on national priorities  Secretary of HHS will submit operating plan by July 30, 2009

17. 17 Research funding and infrastructure  $14 billion for health and life science research and infrastructure  Funds must be obligated by September 2010 –$3 billion for National Science Foundation $300 million for major research instrumentation $200 million to modernize academic facilities $400 million for equipment and facilities –$600 million for Nat’l Institute of Standards and Technology $220 million for scientific and technical research $20 million to create and test HIT security and interoperability standards

18. 18 Research funding and infrastructure  $10.4 billion to NIH for scientific challenges; new research activity on current projects and research on public and international health priorities –$8.2 billion to support biomedical research –$500 million for buildings and facilities –$1.3 billion for the Nat’l Center for Research Resources $1 billion for construction/renovation of research facilities $300 million for acquisition of capital research equipment

19. 19 Research funding and infrastructure  NIH funds to be distributed in 3 ways: –Pending R 01 awards Focus on “stimulative” activity; geographic distribution –Supplement existing grants Administrative or competitive process; could include training or equipment –NIH Challenge Grants RFA expected shortly; ~$500,000 for 2 years

20. 20 Prevention and wellness  $1 billion total funding –$50 million to states to reduce health care-associated infections –$650 million for evidence-based clinical and community-based prevention and wellness strategies that deliver specific, measurable health outcomes that address chronic disease rates –$300 million to CDC for immunization

21. 21 Training of medical professionals  $500 million total for health professions training programs –$300 million for National Health Service Corps –$200 million for primary care medicine, dentistry, public health, and preventive medicine program programs

22. 22 Medical product development  No direct funding through BARDA or pandemic flu appropriations  Continued Hill interest in these programs

23. 23 Next steps  ARRA provisions direct funding at high level –Specific details, including funding targets and processes for disbursement still under development  How does this fit into your strategic plan? –Health provisions, but others that impact your business (construction, energy, etc.)  Are you communicating with Agency officials and congressional representatives about your interests/needs?  Are you monitoring implementation?

24. 24 Additional ARRA details available  www.recovery.gov www.recovery.gov  www.bakerdconsulting.com www.bakerdconsulting.com

25. 25 Vince Ventimiglia Senior Vice President vincent.ventimiglia@bakerd.com 202-312-7463 Ed Dougherty Senior Vice President edward.dougherty@bakerd.com 202-312-7425 Questions?