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Vital Signs Blog

ONC's structure gets flatter as its $2B stimulus appropriation ends

It should have come as little surprise that Dr. Karen DeSalvo, in announcing last week a reorganization of the Office of the National Coordinator for Health Information Technology, said she was aiming for a “flatter” reporting structure.

One reason for the reorg is obvious. A massive bulge in ONC funding is deflating because most of the $2 billion that was directly appropriated to the ONC by Congress in 2009 for health IT programs under the American Recovery and Reinvestment Act has been spent over the past four years. The appropriation was part of the economic stimulus during the Great Recession.


DeSalvo, in a recent memo to her staff, noted that the ARRA's “health IT infrastructure and program investments are ending and it is our responsibility to take this opportunity to reshape our agency to be as efficient and effective as possible, never losing sight of our primary accountability—the people of America.” There were no layoffs with the reorganization; the ONC head count remains at 191 full-time equivalents.

Back in February, in an on-camera interview soon after her appointment to head the ONC, DeSalvo talked about operating with less money than her two immediate predecessors, Drs. David Blumenthal and Farzad Mostashari, both beneficiaries of ARRA funds.

“Sometimes you can get quite a bit of work done using your opportunity as a convener, using the existing authorities you have in the regulatory space” to drive the market “to work together to get patient information moving in useful ways,” DeSalvo said. “That requires a collective impact approach which I'm comfortable with. I've done it in public health.”

Most of that stimulus law money went to health IT workforce development programs, the Beacon Community program, state health information exchanges, higher education in health IT and the regional health IT extension center program.

Fifty-five of the 60 extension centers in the first two rounds of grants have applied for and received permission from the ONC to keep spending remnants of their funds, according to the ONC. Two other RECs in the third round of grants have requests pending for similar spending extensions. But in no case will spending continue after five years from their original grant date, the ONC maintains.

Grants for the REC program totaled $688 million or a little more than one-third of the ONC's appropriation under the stimulus law.

DeSalvo, a professed fan of the RECs, has said she'd like to see their work continue.

The original plan called for the popular RECs to be financially self-sustaining after four years, but a program to extend federal financial support to them has not materialized.

In March, Mat Kendall, who headed the ONC's REC program since its inception in 2010, stepped down as director of the Office of Provider Adoption Support.

That office did not make the cut as DeSalvo's reorganization plan pared the ONC structure from 17 offices and suboffices to 10. Those duties now fall under the new Office of Programs.

According to a survey of executives of 37 RECs published in April and conducted by the Healthcare Information and Management Systems Society, leaders were optimistic they'd achieve sustainability, but only “a handful” indicated their organizations “have already been generating revenue streams to sustain operations going forward.”

Aside from the anomalous 2009 appropriations bubble, the ONC's budget over the rest of its history has been repeatedly flattened by Congress. In fact, for the agency's first year, fiscal 2005, its budget was zeroed out by legislators.

Since then, ONC budgets have been remarkably flat, averaging slightly less than $61 million a year, according to the ONC's latest report to Congress.

For fiscal 2015, HHS' budget request to Congress is $74.7 million, well below the average request over the years at $81.6 million, with the average cut to an ONC budget request running at 22.3%. For the current year, ONC asked for $77.9 million and—after a 22% whacking by Congress—was given $60.4 million.

The great bulk of the spending on health IT under the ARRA was actually controlled by the CMS, not the ONC, coming from the electronic health-record incentive payment programs under Medicare, Medicaid and Medicare Advantage.

“I agree with Karen that it is a new chapter in the ONC as the emphasis pivots from the programs whose funding is winding down to a bigger emphasis on supporting the new models of care that the industry is moving towards,” said Dr. Paul Tang, the chief innovation and technology officer at the Palo Alto (Calif.) Medical Foundation. Tang has served as an ONC adviser since 2010 as vice chairman of the federally chartered Health IT Policy Committee. It “seems an appropriate time to refocus and realign ONC's structure,” he said.

Follow Joseph Conn on Twitter: @MHJConn






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