Congress likely to revive earmarks, signaling a boon for hospitals

A Democratic House leader on Tuesday predicted Congress will bring back earmarks early next year, raising the prospect of a windfall in targeted funding for hospitals with not-for-profit tax designation as well as university medical centers.

The policy change could be especially significant for hospitals in states that did not expand Medicaid as they look for to fill in the revenue gaps stemming from uncompensated care. HHS has traditionally scored the second-highest amount of earmarks after the Defense Department, according to a former Senate appropriations staffer who worked on Capitol Hill when earmarks were the modus operandi.

Washington lobbyists said reviving the funding stream could mean hospitals can ramp up construction projects or make expensive equipment purchases. Earmarks could also funnel into specific programs through rural health outreach grants or similar funding streams.

Incoming House Majority Leader Steny Hoyer (D-Md.) made the earmark forecast at a reporter briefing. He said they are a key part of Congress' constitutional authority to tell the executive branch exactly where federal money should go.

"I am for what the Constitution says Congress has the authority and responsibility to do: to raise and spend money," he said.

Hoyer also listed the specific reforms Congress put into place before then-House Speaker John Boehner (R-Ohio) halted earmarks after the GOP takeover of the House in 2010. He said only not-for-profit or public sector entities can receive earmarks, and that the lawmaker who puts in the request has to put his name on the request and also affirm that neither he or she or any family member will benefit financially.

Hoyer also indicated Republican Senate leadership is open to the change.

Sen. Roy Blunt (R-Mo.), who chairs the health appropriations subcommittee in the upper chamber, told Modern Healthcare that ultimately it's up to the House to revise its position since that's where the formal prohibition was put in place. He also said there's "great interest" in the Senate in bringing earmarks back.

"I think it's the job of the Congress to decide how to spend the money," Blunt said. "It's the job of the executive branch to make sure it's spending it wisely."

Like Hoyer, Blunt said the guardrails now in place would prevent lawmakers from getting reckless with the money.

"There were guidelines put in place in what the overall boundaries were, what the notification period was, and how transparent that all had to be," he said.

A former appropriations staffer said part of the renewed interest comes because lawmakers from both sides of the aisle have seen what happens when an administration of the opposite party is in control: They can't get the funding they want for their districts and their priorities.

Earmarked money for HHS largely comes from the Health Resources and Services Administration, the Substance Abuse and Mental Health Services Administration and the Centers for Disease Control and Prevention.

The HRSA oversees Ryan White/AIDS clinics, health workforce training programs and the rural health policy program among others. SAMHSA oversees opioid treatment programs as well as behavioral, mental health and addiction-treatment programs.

The move also boosts the profile of the appropriations committees in the House and Senate while shrinking other committees' discretionary funding authority, according to the former staffer.

One hospital lobbyist said these direct appropriations mean big business for Washington firms. Before Boehner's moratorium, firms lobbied lawmakers through the appropriations process to secure funding allocations for new cancer wings for hospitals, prevention and outreach programs and more.

"When it dried up, members had a much tougher time proving their worth to their constituents, especially in the House," the lobbyist said.

The news comes as not-for-profit hospitals may face greater scrutiny from incoming Senate Finance Committee Chair Chuck Grassley (R-Iowa), who remains keenly interested in whether these hospitals are meeting the requirements for tax exemption.