Funding Mechanisms

The legislation provides for more than $2 billion in immediate funding to strengthen the nation’s Health Information Technology infrastructure, and the Health and Human Services Secretary is required to invest, consistent with the National Coordinator’s strategic plan, in Health Information Technology “so as to promote the use and exchange of electronic health information.”  Funds for this investment will likely be distributed through different federal agencies with relevant expertise, such as: ONCHIT, AHRQ, CDC, CMS, and the Indian Health Service. However, it is important to note that nothing in the law explicitly prevents the Secretary from issuing direct grants and funding awards to certain providers, hospitals, health information exchanges, universities, and other entities involved in EHR pilot programs, demonstrations, and other efforts designed to successfully implement the Health IT and EHR provisions of the law. However, the law does state that the $2 billion in “jump-start” funds should support the following: 

• HIT architecture
• EHRs for providers not eligible under incentive payments program
• Training
• Telemedicine
• Interoperable clinical data repositories
• Technology and best practices development
• HIT use by public health departments

An additional $300 million must be invested to support regional health information exchanges.

In addition to the creation of an HIT Research Center, the law includes a provision for states to distribute grants in order to promote Health IT and EHR implementation. In order to qualify for state grants, entities must be non-profit with broad stakeholder representation on their governing boards and adopt nondiscrimination and conflict of interest policies. The grants would require the state to match the funding at a ratio of one dollar for every 10 federal dollars.

Other initiatives include a Competitive Grants Program for states and Indian Tribes. This program is designed to establish loan programs for healthcare providers to purchase certified EHR technology, train personnel, and improve the secure exchange of information. Grantees would be required to establish a qualified HIT loan fund, submit a strategic plan and contribute provider matching funds. 

In order to facilitate the training of the workforce that will implement and maintain health IT systems, the ARRA requires the creation of a demonstration program to integrate information technology into clinical education. The HHS Secretary is able to create a program awarding competitive grants to medical, dental, and nursing schools to integrate HIT into clinical education. This also requires the Secretary to provide, in consultation with the National Science Foundation, funding to universities to establish informatics programs.

The funding for the implementation of EHRs will be administered through incentive payments via Medicare and Medicaid for hospitals and healthcare professionals that implement compliant EHRs.