The Good, the Bad, and the Unknown: Federal Research and Healthcare Funding in 2012

After considerable party posturing and uncertainty, Congress passed a last-minute temporary 2-month physician payment patch on December 17, 2011. The patch averted a 27.4 percent cut on January 1 to Medicare reimbursements, triggered by the Sustainable Growth Rate, through February 2012. Lawmakers agreed to meet after their holiday recess to consider a longer-term patch, but concerns remain that they will scour Medicare for possible savings to pay for it. Meanwhile, hope remains that Congress will find a permanent solution for replacing the Sustainable Growth Rate.


Congress also passed an omnibus budget bill in December for fiscal year (FY) 2012. Thirteen appropriations bills fund the government. When lawmakers do not or cannot produce separate bills by the beginning of the new fiscal year on October 1, they usually roll many of the separate appropriations bills into an omnibus. The good news for 2012 is that Congress spared many health agencies from expected cuts. The bad news is that because the Joint Select Committee on Deficit Reduction failed to develop a plan to cut the federal deficit by $1.2 trillion last fall (as required by an agreement to raise the federal debt limit), deep cuts will automatically take effect (a process called sequestration) for most discretionary federal spending programs in 2013—unless lawmakers come to an alternative agreement to cut $1.2 trillion from the deficit in the interim.

At least for the moment, the nephrology care community can celebrate; although we are still waiting for final numbers, it appears that on average, federal health programs will receive a 0.3 percent increase in FY 2012 compared with a 3.84 percent reduction in FY 2011. The Indian Health Service and the Food and Drug Administration look like the biggest winners. They received overall budget increases of 6.21 percent and 2 percent, respectively. On the other side of the coin, the budgets of the Substance Abuse and Mental Health Services Administration and the Health Resources and Services Administration were reduced by 0.93 percent and 0.82 percent, respectively.

Congress also slightly reduced the National Institutes of Health (NIH) budget by 0.18 percent, although NIH is still analyzing the final numbers. However, this minor reduction was relatively small compared with early predictions. It is unclear what the National Institute of Diabetes and Digestive and Kidney (NIDDK) Division of Kidney, Urologic, and Hematologic Diseases (KUH) budget for grant allocation will look like until that number is finalized. The KUH must wait to decide on specific targets for cuts until the NIH leadership and NIDDK Council make recommendations.

As part of the omnibus bill, NIH is implementing its biggest reorganization in a decade. It is dismantling the National Center for Research Resources (NCRR) and launching a new $575 million National Center for Advancing Translational Sciences (NCATS) included in the FY 2012 budget. NCATS was designed to expedite drug development and speed the translation of basic discoveries into new therapies. The Clinical and Translational Science Awards (CTSAs), which support translational research at some 60 academic medical centers and were part of NCRR, will now be awarded through NCATS.

It is difficult to predict what effect that merger will have on the number of CTSAs awarded. The word in Washington is that most of NCATS’s budget comes from the reallocation of the $487 million CTSA program. As yet, it is unclear which Institute centers will receive the remainder of NCRR’s budget. Some NCATS programs also receive funding from NIH’s common fund, a pot of money that the NIH director’s office has to allocate. The NIH created a division of clinical innovation to oversee CTSAs in the new center. A division of preclinical innovation will house a $44-million set of mostly intramural programs, including small-molecule screening and drug development for rare diseases. These programs were previously managed by the National Human Genome Research Institute. The only new money Congress approved for NCATS was $10 million to support the center’s Cures Acceleration Network.

Like NIH, the Agency for Healthcare Research and Quality (AHRQ) saw a slight budget reduction of 0.81 percent. The AHRQ announced in January 2012 that because of budget constraints, it is suspending three individual career development grants (K01, K02, and K08): the Mentored Clinical Scientist Research Career Development Award, the Independent Scientist Award, and the Mentored Research Scientist Research Career Development Award.

Despite the overall cut to AHRQ’s budget, the agency did receive an increase for the Patient-Centered Outcomes Research Institute (PCORI) budget from $8 million to $24 million for FY 2012. Established by the 2010 Patient Protection and Affordable Care Act to conduct research to help patients and their health care providers make more informed health care decisions, PCORI is by law an independent, nonprofit organization. PCORI’s research is intended to give patients a better understanding of the prevention, treatment, and care options available by comparing the effectiveness of drugs, medical devices, tests, surgical procedures, or ways to deliver health care.

The American Society of Nephrology (ASN) is currently accepting applications for two award opportunities: the ASN Scherbenske Grant and the ASN Student Scholar Grant. The ASN Scherbenske Grant provides bridge funding for investigators from RO1 to RO1 whose applications were not funded by the NIH. The Student Scholar Grant helps enable medical students with an interest in either basic or clinical research to spend 10–52 weeks engaged in continuous full-time research in a nephrology laboratory. For more information, visit the ASN website at

The ASN is currently undergoing a review of its website. In a few months we hope to roll out a new public policy page that will provide up-to-date information on implementation of the Affordable Care Act and the FY 2013 budget. Although the fiscal climate is grim, ASN is committed to preserving the investigator pipeline to support innovative kidney disease research that will improve patient care and outcomes and cut costs. Stay tuned for more information in the months ahead.