Stimulus Dollars Go to Medicaid, Health Clinics

Les Masterson, for HealthLeaders Media , March 16, 2009

The establishment of the Office of Recovery Act Coordination last week means the $137 billion stimulus money is a step closer to healthcare professions, but don't get excited yet.

Except for stimulus money to help care for the needy, healthcare funding is on hold while officials develop a process to dole out funds.

Creating The Office of Recovery Act Coordination, which will oversee how the portion of Department of Health and Human Services money is spent, is the first step in the process.

"HHS is committed to moving quickly and carefully to distribute Recovery Act funds in an open and transparent manner," said HHS Spokeswoman Jenny Backus in announcing the new office.

President Barack Obama said that the new office must "make sure that every dollar is well spent. We've got to go above and beyond what I think is the typical ways of doing business in order to make sure that the American people get the help that they need and that our economy gets the boost that it needs," Obama told leaders during the White House Conference on American Recovery and Reinvestment Act Implementation.

Money going to Medicaid, clinics
While the feds have not spent most of the $59 billion slated for healthcare, HHS has given $3 billion of stimulus funds to states to support safety net programs, such as community health centers and Medicaid.

The U.S. Department of Health and Human Services' Health Resources and Services Administration funds more than 7,000 community-based clinics in the U.S. that provides healthcare to poor citizens. Last year, the health centers, which offer medical, pharmacy, mental health, substance abuse, and oral health treatment, treated more than 16 million people, including about 40% who did not have health insurance.

Obama released $155 million in grants that will support 126 community health centers. Over the next two years, feds will provide $2 billion in stimulus money to help community health centers renovate and repair facilities, invest in health IT, and provide healthcare services.

States are also lining up for Medicaid money. As a budget buster for states, the federal-state healthcare program for the poor eats an increasingly larger chunk out of budgets. In Florida last week, Gov. Charlie Crist said his state planned to file paperwork to increase the federal share of the state-federal program from 55.4% to 67.6%. The move would infuse $817 million into the state to help pay for Medicaid.

Obama told governors last month that he expects states to spend their new Medicaid assistance properly. The money is to help care for the needy and is "not a blank check" for states to spend in any way they want, he said.

Health IT
Fifty-nine billion dollars from the stimulus package is headed to healthcare, including $19 billion for healthcare information technology. About $17 billion of that sum is slated for incentive payments through Medicare and Medicaid for providers who adopt electronic health records.

Standards for the health IT portion of the stimulus bill are not expected until the end of this year. In the standards, the feds will have to define "certified" electronic health record (EHR) products and how physician practices can meet the legislation's "meaningful use" requirement. Practices that meet that requirement are eligible for Medicare and Medicaid incentives.

For instance, practices that use EHRs in a "meaningful" way by the end of 2010 and accept Medicare patients would receive $44,000 over the five years of the stimulus EHR incentives, which are slated to end in 2016. Doctors with Medicaid patients would receive an added bonus.

In announcing the new agency, the federal government also created a Web page that allows Americans to track how the stimulus dollars are spent in each state.

Les Masterson is senior editor of Health Plan Insider. He can be reached at

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