March 27, 2009

How stimulus spending plan could benefit VMC

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How stimulus spending plan could benefit VMC

How may the federal stimulus package benefit Vanderbilt Medical Center? Here are four potential ways:

• It should help slow the growth of uncompensated care.

• Vanderbilt scientists should receive some of the additional research funding that will be provided to the National Institutes of Health (NIH) and other federal agencies during the next two years.

• Beginning in 2011 and continuing for five years, VMC will receive higher reimbursement rates from Medicare and Medicaid due to its use of health information technology.

• Vine Hill and other community clinics affiliated with the Vanderbilt School of Nursing may get a share of the $2 billion to be provided by the federal Health Resources and Services Administration for health center renovations and technology upgrades.

Signed into law by President Obama on Feb. 17, the American Recovery and Reinvestment Act will provide $787 billion, most over the next two years, to stimulate the national economy, prevent deep cuts in state services and help those most affected by the recession.

Expenditures will include $87 billion in additional Medicaid funding to the states, $10.4 billion to the NIH, $11 billion to other research agencies including the National Science Foundation, $19 billion for adoption and use of health information technology, and $25 billion to help unemployed workers keep their group health coverage.

Uncompensated care

VMC is expected to provide as much as $290 million in charges in uncompensated care in the current fiscal year, an increase of more than $40 million compared to fiscal year 2008.

Federal stimulus funding should help ease that burden, by providing Tennessee with a temporary increase in the federal match for Medicaid payments, estimated at $1.1 billion through December 2010. The state could receive more if the unemployment rate in Tennessee reaches certain levels during that period.

On Monday, Gov. Phil Bredesen recommended cutting the state's appropriation for TennCare in the next fiscal year (2009-2010). When federal stimulus funds are included, however, the total TennCare budget proposed for next year would grow by about 3 percent to $7.6 billion.

The recovery act also blocks several Bush Administration proposals, including one that would have eliminated federal funds under Medicaid for graduate medical education. It extends unemployment benefits and provides a variety of tax credits to individuals, as well as education and job training to help the unemployed find jobs with health coverage.

Research funding

During the past decade, VMC nearly tripled the annual amount of research funding it received from all sources, to more than $400 million in 2008, despite several years of flat NIH budgets. Vanderbilt officials expect to receive a share of additional stimulus funds for research.

Up to $1 billion will be used by the NIH to expand the scope and accelerate the pace of existing grants, for example, by enabling scientists to hire more lab personnel.

An additional $400 million will fund new NIH Challenge Grants in Health and Science Research and Grand Opportunities grants for large-scale projects. The challenge grants will provide two-year “jumpstart funds” for projects ranging from biomarker discovery to stem cell research, both of which are among VMC's research strengths.

Funding also will be available to universities, including Vanderbilt, which have received Clinical and Translational Science Awards to expedite the translation of laboratory discoveries to patients in the community, and to support summer research opportunities for high school and college students, and science educators.

According to the NIH, the overarching goal of its stimulus funding “is to promote job creation and economic development along with accelerating the pace and achievement of scientific research.” More information can be found at

Effectiveness research

Another area that may benefit Vanderbilt is “comparative effectiveness research,” the use of electronic health data and other methods to evaluate different medical treatments, including surgery and drug therapy.

The $1.1 billion designated for this purpose will be doled out by the NIH, Health and Human Services and the U.S. Agency for Healthcare Research and Quality (AHRQ).

At least three AHRQ-supported projects are currently under way at VMC. Marie Griffin, M.D., MPH, is a principal investigator in the national DEcIDE (Developing Evidence to Inform Decisions about Effectiveness) Research Network, which conducts “accelerated practical studies about the outcomes, comparative clinical effectiveness, safety, and appropriateness of health care items and services.”

Wayne Ray, Ph.D., directs an AHRQ Center for Education and Research on Therapeutics, and Katherine Hartmann, M.D., Ph.D., leads an AHRQ Evidence-based Practice Center.

Health information technology

A major piece of the stimulus package is the Health Information Technology for Economic and Clinical Health (HITECH) Act. Its goal is to encourage the development of electronic health records for every American.

Under the act, $17 billion will be distributed through Medicare and Medicaid payment incentives to physicians and hospitals using electronic health information beginning in 2011 and for the next five years.

VMC has been a pioneer in the use of electronic health information through such innovations as the WizOrder computerized order entry system, the StarChart electronic medical record system, and other efforts that have significantly reduced hospital-acquired infections.

VMC also helped establish one of the first health information technology demonstration projects, the non-profit MidSouth eHealth Alliance, which links several hospitals, emergency departments and ambulatory clinics in the Memphis area. Mark Frisse, M.D., MBA, director of Regional Informatics Programs in the Vanderbilt Center for Better Health, helped develop and oversees the project, which is funded by the AHRQ and the state of Tennessee.

Bill Stead, M.D., a technical advisor to the project and director of VMC's Informatics Center, has been nominated to serve on the Health Information Technology Policy Committee, which will make recommendations for implementing the HITECH Act.

Children’s health insurance

Another measure unrelated to the stimulus package that could help Vanderbilt is reauthorization of the State Children's Health Insurance Program (CHIP). Signed into law on Feb. 4, the federal program will add more than 4 million children to the rolls over the next four-and-a-half years.

According to a news release from U.S. Sen. Lamar Alexander, R-Tenn., who supported the bill, “more of the 125,000 uninsured children (in Tennessee) will be able to take advantage of this valuable program.” Currently 32,000 children are enrolled in the Tennessee CHIP, called CoverKids.

The CHIP reauthorization will also provide about $30 million a year for the next two years in disproportionate share payments to Tennessee hospitals, including Vanderbilt, that treat large numbers of Medicaid and uninsured patients, Alexander said.

For the latest information about research stimulus funding
opportunities, go to the Grants and Contracts Management Web site at