On Monday the President released his $3.73 trillion Fiscal Year 2012 budget offering more than $1 trillion in deficit reductions over a 10-year period.  Three-quarters of the reductions come from proposed spending cuts while the balance comes from tax increases or the elimination of existing tax breaks. The cuts come from a 12% portion of total national spending made up of non-security discretionary allocations.

Approximately $62 billion in health savings has been created within the budget to offset the cost of a 24-month sustainable growth rate formula extension.  The health savings offset is derived from a list of changes to discretionary items including some key areas on the oncology space:

-   Changes beginning in 2015 to the threshold for Medicaid eligibility
-   Track and trace of high prescribers of prescription drugs in Medicaid
-   Recovery of erroneous payments made under Medicare Advantage plans
-   Dedication of electronic health record penalties to improve Medicare program financing
-   Modification of the length of biologic drug exclusivity from 12 years to 7 years to facilitate faster
    development of generic biologics
-   Prohibition of brand and generic drug companies from entering into agreements to delay the availability of
    generic drug

The budget touches on key health care provisions, including:

Building on Health Information Technology (HIT)  

The Budget includes $110 million for continuing efforts to strengthen HIT policy, coordination, and research activities. Combined with the ARRA Federal grant and incentives programs designed to assist providers with adoption and meaningful use of electronic health records, these efforts will positively affect and improve the quality of health care while protecting privacy and security of personal health information.  

Increased Investment in Comparative Effectiveness Research  

The Budget includes $286 million in the Agency for Healthcare Research and Quality for research that compares the effectiveness of different medical options. The dissemination of this research is expected to lead to higher quality, evidence-based medicine, arming patients and physicians with the best available information to allow them to choose the medical option that will work the best for them.  

Support for Biomedical Research at the National Institutes of Health (NIH)  

To accelerate progress in biomedical research, NIH investments will focus on priority areas including genomics, translational research, science to support health care reform, global health, and reinvigorating the biomedical research community.   The Budget includes $6,036 million to support a range of bold and innovative cancer efforts, including the initiation of 30 new drug trials in 2011, and a doubling of the number of novel compounds in Phase 1–3 clinical trials by 2016. In addition, the Budget will support the completion of a comprehensive catalog of cancer mutations for the 20 most common malignancies, setting the stage for complete genomic characterization of every cancer as part of medical care within 10 years.  

Fighting Waste and Abuse in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP)

In November 2009, the President signed an Executive Order to reduce improper payments by boosting transparency, holding agencies accountable, and creating incentives for compliance. This Budget puts forward an addition $250 million to implement a robust set of proposals to strengthen Medicare, Medicaid and CHIP program integrity actions, including proposals aimed at preventing fraud and abuse before they occur, detecting it as early as possible when it does occur, and vigorously enforcing all penalties and recourses available when fraud is identified.  

While this budget request offers a look into the President’s priorities following a shift in House control, it remains to be seen how influential this plan will be within the context of the overall budget debate. Republicans plan to offer their own spending proposal and will attempt to push through steep cuts to spending in the next week as they introduce the continuing resolution needed to fund the federal government through 2011.

To review the President's 2012 budget plan click here

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Health Policy Report - December 10, 2014

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