Contents

• Introduction
• Report Roadmap
• PHS Program Evaluation Set-Aside
• PPACA Funding
• Agency for Healthcare Research and Quality (AHRQ)
• Agency Overview
• FY2011 Funding
• FY2012 Budget Highlights
• Centers for Disease Control and Prevention (CDC)
• Agency Overview
• FY2011 Funding
• FY2012 Budget Highlights
• Food and Drug Administration (FDA)
• Agency Overview
• FY2011 Funding
• FY2012 Budget Highlights
• President's Request
• House-passed Bill (H.R. 2112)
• Health Resources and Services Administration (HRSA)
• Agency Overview
• FY2011 Funding
• FY2012 Budget Highlights
• Indian Health Service (IHS)
• Agency Overview
• FY2011 Funding
• FY2012 Budget Highlights
• National Institutes of Health (NIH)
• Agency Overview
• FY2011 Funding
• FY2012 Budget Highlights
• Substance Abuse and Mental Health Services Administration (SAMHSA)
• Agency Overview
• FY2011 Funding
• FY2012 Budget Highlights

Summary

Within the Department of Health and Human Services (HHS), eight agencies are designated components of the U.S. Public Health Service (PHS): (1) the Agency for Healthcare Research and Quality (AHRQ), (2) the Agency for Toxic Substances and Disease Registry (ATSDR), (3) the Centers for Disease Control and Prevention (CDC), (4) the Food and Drug Administration (FDA), (5) the Health Resources and Services Administration (HRSA), (6) the Indian Health Service (IHS), (7) the National Institutes of Health (NIH), and (8) the Substance Abuse and Mental Health Services Administration (SAMHSA). This report gives a brief overview of each agency and summarizes its funding for FY2010 and FY2011, as well as its FY2012 budget request.

The total amount of funding available to the agency (i.e., total program level) includes discretionary budget authority provided in annual appropriations acts, plus additional funding from other sources. These include mandatory funding provided in laws other than annual appropriations acts, notably the Patient Protection and Affordable Care Act (PPACA).

AHRQ and NIH are primarily research agencies. AHRQ conducts and supports health services research to improve the quality of health care. For FY2011, AHRQ's total program level is $392 million, which is $11 million (2.7%) below the FY2010 amount. NIH conducts and supports basic, clinical, and translational biomedical and behavioral research. For FY2011, NIH's total program level is $30.926 billion, which is $317 million (1.0%) lower than FY2010.

Three PHS agencies—IHS, HRSA, and SAMHSA—provide health care services or help fund systems that do so. IHS supports a health care delivery system for American Indians and Alaska Natives. For FY2011, IHS's total program level is $5.134 billion, which is $34 million (0.7%) above the FY2010 amount. HRSA funds programs and systems to improve access to health care among the uninsured and medically underserved. For FY2011, HRSA's discretionary budget authority is $6.272 billion, and its total program level is $9.665 billion. Budget authority decreased by $1.221 billion (16.3%) from FY2010 to FY2011, but this drop was more than offset by an increase in mandatory funding from PPACA and funds from other sources. Overall, HRSA's total program level increased by $1.598 billion (19.8%) from FY2010 to FY2011. SAMHSA funds mental health and substance abuse prevention and treatment services. For FY2011, SAMHSA's discretionary budget authority is $3.380 billion, which is $52 million (1.5%) below the FY2010 level. With the slight increase in PPACA funds, however, SAMHSA's FY2011 total program level of $3.599 billion is $16 million (0.4%) above the FY2010 amount.

CDC, the federal government's lead public health agency, coordinates and supports a variety of population-based programs to prevent and control disease, injury, and disability. For FY2011, CDC's discretionary budget authority (including ATSDR) is $5.726 billion, and its total program level is $10.870 billion. Budget authority decreased by $741 million (11.5%) from FY2010 to FY2011. However, that cut was largely offset by PPACA funds and funding from other sources. Overall, CDC's program level decreased by only $6 million. FDA, which regulates drugs, medical devices, food, and tobacco products, receives a significant portion of its funding from industry user fees. For FY2011, FDA has a total program level of $3.690 billion, which includes $2.457 billion in direct appropriations and $1.233 billion in user fees. Relative to FY2010, these amounts represent a 4.0% increase in direct appropriations and a 33.7% increase in user fees, which now account for one-third of FDA's funding.

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Public Health Service (PHS) Agencies: Overview and Funding, FY2010-FY2012

Introduction

The Department of Health and Human Services (HHS) has designated eight of its 11 operating divisions (agencies) as components of the U.S. Public Health Service (PHS). The PHS agencies are (1) the Agency for Healthcare Research and Quality (AHRQ), (2) the Agency for Toxic Substances and Disease Registry (ATSDR), (3) the Centers for Disease Control and Prevention (CDC), (4) the Food and Drug Administration (FDA), (5) the Health Resources and Services Administration (HRSA), (6) the Indian Health Service (IHS), (7) the National Institutes of Health (NIH), and (8) the Substance Abuse and Mental Health Services Administration (SAMHSA).¹ ATSDR is administered by the Director of the CDC and is included in the discussion of CDC in this report.

The programs and activities of five of the PHS agencies—AHRQ, CDC, HRSA, NIH, and SAMHSA—are mostly authorized under the Public Health Service Act (PHSA).² While some of FDA's regulatory activities are also authorized under the PHSA, the agency and its programs largely derive their statutory authority from the Federal Food, Drug, and Cosmetic Act (FFDCA).³ Many of the IHS programs and services are authorized by the Indian Health Care Improvement Act,⁴ while ATSDR was created by the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, the "Superfund" law).⁵

The missions and key functions of the PHS agencies vary. Two of them are primarily research agencies. NIH conducts and supports basic, clinical, and translational medical research, and AHRQ conducts and supports research on the quality and effectiveness of health care services and systems. Three agencies—IHS, HRSA, and SAMHSA—provide health care services or support systems that do so. IHS supports a health care delivery system for American Indians and Alaska Natives. Health services are provided through tribally contracted and operated health programs, and through services purchased from private providers. HRSA funds programs and systems to improve access to health care among low-income populations, pregnant women and children, persons living with HIV/AIDS, rural and frontier populations, and others who are medically underserved. SAMHSA funds community-based mental health and substance abuse prevention and treatment services.

CDC and ATSDR are public health agencies that develop and support public health prevention programs and systems, such as disease surveillance and provider education programs, for a full spectrum of acute and chronic diseases and injuries, including public health emergencies and bioterrorism. The PHS agencies have limited, if any, regulatory responsibilities with the exception of FDA; its mission is largely regulatory, ensuring the safety of foods and the safety and effectiveness of drugs, vaccines, medical devices, and other health products.

AHRQ, CDC, HRSA, NIH, and SAMHSA receive most of their funding through the annual appropriations act for the Departments of Labor, Health and Human Services, Education, and Related Agencies (Labor-HHS-ED). Funding for ATSDR and IHS is provided through the Interior, Environment, and Related Agencies (Interior/Environment) appropriations act. FDA receives its funding through the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies (Agriculture) appropriations act.

Report Roadmap

For each PHS agency, this report provides a brief overview of the agency's statutory authority and principal activities and includes a table summarizing its funding for FY2010 and FY2011, as well as the FY2012 budget request. The FY2010 amounts reflect the funding provided in the agency's FY2010 appropriations act, with subsequent minor adjustments.⁶ The FY2011 amounts are based on the funding provided by the full-year continuing resolution (CR)—the Department of Defense and Full-Year Continuing Appropriations Act, 2011—that was enacted on April 15, 2011, marking the completion of the FY2011 regular appropriations cycle more than six months after the start of the fiscal year.⁷ Both the FY2010 and FY2011 amounts in the funding tables in this report are taken from each agency's FY2011 operating plan.⁸ Also included in each table is a column showing the change in funding between FY2011 and FY2010. The FY2012 amounts represent the funding levels requested in the President's FY2012 budget,⁹ which are summarized in the HHS FY2012 Budget in Brief.¹⁰

The funding tables show the agencies' discretionary budget authority and program level for each fiscal year. Discretionary budget authority represents the funding provided in the annual Labor-HHS-ED or other applicable appropriations acts.¹¹ Program level indicates the total amount of funding available to the agency, which includes discretionary budget authority plus additional funding from other sources. These include (1) user fees; (2) PHS evaluation set-side funds (see discussion below under "PHS Program Evaluation Set-Aside"); and (3) funding provided in laws other than annual appropriations acts, notably the health reform law (see discussion below under "PPACA Funding").¹²

Each funding table shows the amounts for all the major budget items, which are summed to give the agency's total program level. At the bottom of the table, any user fees, set-aside funds, PPACA funds, and other non-discretionary funds are then subtracted from the program level to show the agency's discretionary budget authority. Most tables include one or more non-add entries either to highlight the funding for specific programs within a larger budget line or, in some instances, to indicate the allocation of user fees or PPACA funds. Each table is also accompanied by a brief discussion of the changes (mostly reductions) in the agency's budget for FY2011, followed by an overview of the President's FY2012 budget request for the agency. For a summary of PHS agency funding for FY2011, see the text box below ("PHS Agency FY2011 Funding At-a-Glance").

On June 16, 2011, the House passed the FY2012 Agriculture appropriations act (H.R. 2112), which includes funding for FDA. Details of the agency's funding for FY2012, as recommended by the House, are included in the FDA section below. This report will be updated once the House Appropriations Committee completes its work on the FY2012 Labor-HHS-ED and Interior/Environment appropriations acts, which fund the other PHS agencies.

PHS Program Evaluation Set-Aside

Four PHS agencies—CDC, HRSA, NIH, and SAMHSA—are subject to a budget tap called the PHS Program Evaluation Set-Aside (set-aside). PHSA Section 241 authorizes the Secretary to use a portion of eligible appropriations to assess the effectiveness of federal health programs and to identify ways to improve them.¹³ The set-aside has the effect of redistributing appropriated funds for specific purposes among the HHS agencies. Although the PHSA limits the set-aside to no more than 1% of program appropriations, in recent years the annual Labor-HHS-ED appropriations act has specified a higher maximum amount of funds that may be set aside for evaluation and other uses. The FY2010 Labor-HHS-ED appropriations act capped the set-aside at 2.5%.¹⁴ The FY2011 full-year CR act for FY2011 adopted the same value by reference. For FY2012, the President's budget proposes to increase the set-aside to 3.2%.

Following passage of the annual appropriations act, the HHS Budget Office calculates the amount of set-aside funds to be tapped from donor appropriations. It then makes allocations to recipient agencies and programs, including several offices within the Office of the Secretary, first taking into account the amounts that have been specified in the appropriations act.¹⁵ The set-aside funds that an agency receives are not included in its discretionary budget authority but are counted towards the overall program level. AHRQ is almost entirely funded by evaluation set-aside funds (see Table 1). By convention, PHS agency budget tables show only the amount of set-aside funds received. They do not subtract the amount of the evaluation tap from donor agencies' appropriations.

PPACA Funding

The Patient Protection and Affordable Care Act (PPACA), as amended, includes numerous mandatory appropriations that together provide billions of dollars to support new and existing grant programs and other activities within HHS.¹⁶ Multiple PPACA provisions appropriated funds for specified programs and activities within the PHS agencies. These amounts are itemized and included as part of each agency's program level in the funding tables below. Each provision is identified by its PPACA section number.

In addition, PPACA established three multi-billion dollar trust funds to support programs and activities within the PHS agencies.

• The Community Health Center Fund (CHCF) will provide a total of $11 billion in supplemental funds over the five-year period FY2011 through FY2015 for HRSA's health centers program and the National Health Service Corps.¹⁷ Note that PPACA also included a separate $1.5 billion appropriation for health center construction and renovation.¹⁸
• The Patient-Centered Outcomes Research Trust Fund (PCORTF) will support comparative effectiveness research over the 10-year period FY2010 through FY2019 with a mixture of appropriations and transfers from the Medicare Part A and Part B trust funds.¹⁹ A portion of the PCORTF funding is allocated for AHRQ.
• The Prevention and Public Health Fund (PPHF), for which PPACA provides an annual appropriation in perpetuity, is intended to support prevention, wellness, and other public health programs and activities authorized under the PHSA.²⁰

Transfers from all three PPACA trust funds are also itemized and included as part of each agency's program level in the funding tables below. Two separate tables summarizing the allocation of CHCF and PPHF funds for FY2010, FY2011, and FY2012 and additional information about the funds are provided in Appendix A and Appendix B, respectively.²¹

Agency for Healthcare Research and Quality (AHRQ)

Agency Overview

AHRQ is the federal agency charged with supporting research designed to improve the quality of health care, increase the efficiency of its delivery, and broaden access to the most essential health services. To accomplish these goals, the agency supports research aimed at reducing the costs of care, promoting patient safety, and increasing the effectiveness of health care services.

AHRQ has evolved from a succession of agencies concerned with fostering health services research and health care technology assessment. The Omnibus Budget Reconciliation Act of 1989 (P.L. 101-239) added a new PHSA Title IX and established the Agency for Health Care Policy and Research (AHCPR), a successor agency to the former National Center for Health Services Research and Health Care Technology Assessment (NCHSR). AHCPR was reauthorized in 1992 (P.L. 102-410). On December 6, 1999, President Clinton signed the Healthcare Research and Quality Act of 1999 (P.L. 106-129), which renamed AHCPR as the Agency for Healthcare Research and Quality (AHRQ) and reauthorized it through FY2005.²²

Table 1 presents funding levels for AHRQ programs for FY2010 through the FY2012 request. The AHRQ budget is organized according to program areas, including (1) Healthcare Costs, Quality and Outcomes (HCQO) Research; (2) the Medical Expenditure Panel Surveys (MEPS); and (3) program support. HCQO research focuses on six priority areas, which are summarized in the text box below. Generally, AHRQ gets its entire budget from the PHS evaluation set-aside. The set-aside funds are included in the agency's overall program level amount but are not counted as appropriated funds; thus, the agency's discretionary budget authority shows up as zero in the table. Additional funds are provided from the Patient-Centered Outcomes Research Trust Fund (PCORTF) and the Prevention and Public Health Fund (PPHF), both established by PPACA and described earlier in the introduction to this report.

FY2011 Funding

The FY2011 full-year CR (P.L. 112-10) reduces PHS evaluation set-aside funding for AHRQ by $25 million, from $397 million as provided in FY2010 to $372 million, a 6% reduction. The agency's operating plan specifies that the General Patient Safety Research program is to absorb the entire reduction (see Table 1). However, this cut in the agency's funding is partially offset by a $6 million increase in PPHF funds for Prevention/Care Management research, and a transfer of $8 million in PCORTF funds to boost funding for Patient-Centered Health Research. Overall, AHRQ's FY2011 program level is $11 million (3%) below the FY2010 level. The across-the-board 0.2% rescission established under P.L. 112-10 does not affect funding for AHRQ because the agency receives no discretionary appropriation.

FY2012 Budget Highlights

The President's FY2012 budget request would reduce AHRQ's total program level by $13 million (3%) from the FY2010 enacted level of $403 million to $390 million (see Table 1). The total proposed FY2012 program level includes $366 million in evaluation set-aside funding and $24 million from PCORTF. Notable changes in program area funding levels include those for Patient-Centered Health Research and General Patient Safety Research. Funding for Patient-Centered Health Research would increase by $25 million from FY2010 levels, with an additional $24 million from the PCORTF. Funding for General Patient Safety Research would decrease by $26 million from the FY2010 level. HHS notes that $25 million of this reduction may be attributed to a one-time investment in medical malpractice liability reform projects.

Centers for Disease Control and Prevention (CDC)

Agency Overview

According to the Centers for Disease Control and Prevention (CDC), its mission is "to promote health and quality of life by preventing and controlling disease, injury, and disability."²³ CDC is the nation's principal public health agency, coordinating and supporting a variety of population-based disease and injury control activities. It is organized into a number of centers, institutes, and offices (CIOs), some focused on specific public health challenges (such as injury prevention), others on general public health capabilities (such as surveillance and laboratory services).²⁴ As noted earlier, the Agency for Toxic Substances and Disease Registry (ATSDR) is administered by the CDC Director.

Often CDC's activities are not specifically authorized but are based in broad, permanent authorities in the PHSA.²⁵ Four CDC operating divisions are explicitly authorized. The National Institute for Occupational Safety and Health (NIOSH) was established in permanent authority in the Occupational Safety and Health Act of 1970.²⁶ The National Center on Birth Defects and Developmental Disabilities (NCBDDD) was established in PHSA Section 317C by the Children's Health Act of 2000. The National Center for Health Statistics (NCHS) was established in PHSA Section 306 by the Health Services Research, Health Statistics, and Medical Libraries Act of 1974. ATSDR was established in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA, the "Superfund" law).²⁷

CDC provides financial and technical assistance to state, local, municipal, tribal, and foreign governments, and to academic and non-profit entities. About 75% of the agency's funding is used for these extramural purposes. CDC has few regulatory responsibilities.

Most CDC programs are funded through the annual Labor-HHS-ED appropriations act, while ATSDR is funded separately through the Interior/Environment annual appropriations. Table 2 presents funding levels for CDC programs for FY2010 through the FY2012 request. In addition to the annual discretionary appropriations, amounts for each year include three mandatory appropriations: (1) for the Vaccines for Children (VFC) program; (2) for activities to support the Energy Employees Occupational Illness Compensation Program (EEOICPA); and (3) appropriations provided under PPACA.²⁸ CDC also receives annual funds through the PHS evaluation set-aside and through authorized user fees, and may also receive funding through supplemental appropriations and other transfers.

FY2011 Funding

The FY2011 full-year CR provided $5.649 billion in discretionary budget authority for CDC, $740 million (12%) less than the FY2010 amount. However, the CDC/ATSDR program level for FY2011 decreased by only $6 million (less than 1%) from the FY2010 amount. Increases in several mandatory funds and transfers largely offset the decrease in budget authority. Notably, CDC received $611 million in transfers from the PPHF for FY2011, $419 million more than for FY2010. Annual growth in transfers for the Vaccine for Children (VFC) program, as well as a $225 million transfer from the Public Health and Social Services Emergency Fund, also contributed to minimizing the decrease in the FY2011 program level. These components of the CDC budget are displayed in Figure 1.

Figure 1. Components of the CDC Budget, FY2010–FY2012

Sources: Adapted by CRS from the Department of Health and Human Services, FY2012 Budget in Brief, available at http://www.hhs.gov/about/hhsbudget.html; and CDC's FY2012 congressional budget justification, available at http://www.cdc.gov/fmo/topic/Budget%20Information/index.html. Additional sources as per Table 2. Notes: "Other" includes ATSDR, EEOICPA, and user fees. In addition, the amount for FY2011 includes a transfer from the Public Health and Social Services Emergency Fund, and the amount for FY2012 includes a requested transfer of supplemental appropriations from P.L. 111-32.

A number of CDC programs that received funding for FY2010 were not funded for FY2011. Many of these are earmarks that were eliminated pursuant to the FY2011 full-year CR (P.L. 112-10). In addition, CDC did not request funding for buildings and facilities for FY2011, saying that it had sufficient carryover funds from FY2010 to meet its needs for the current fiscal year.²⁹ CDC did request buildings and facilities funds for FY2012. Finally, the Communities Putting Prevention to Work program, originally funded through the FY2009 stimulus package, was slated for elimination in the agency's FY2012 request.³⁰ CDC plans to use $145 million in FY2011 funds from the PPHF for Community Transformation Grants (CTG), authorized in PPACA Section 4201, which support objectives similar to those of the Communities Putting Prevention to Work program.³¹ CTG awards competitive grants to state, local and tribal governments and non-profit entities to implement evidence-based community preventive health activities.³²

FY2012 Budget Highlights

The Administration requested $5.818 billion in CDC budget authority through Labor-HHS-ED appropriations, and $76 million for ATSDR through Interior/Environment appropriations. In addition, the Administration requested $490 million in PHS evaluation set-aside funds, and proposes to transfer $753 million in FY2012 PPHF funds for various CDC activities.

The Administration proposed to eliminate the Preventive Health and Health Services block grant, saying that state health departments receive substantial CDC funding through other existing activities.³³ It also proposed to use $705 million of its requested chronic disease funds (including $158 million from the PPHF) to establish a new grant program, the Coordinated Chronic Disease Prevention and Health Promotion Grant Program (CCDPP), by combining the following existing programs: Nutrition, Physical Activity and Obesity; Health Promotion; Heart Disease and Stroke; Diabetes; Cancer Prevention and Control; Prevention Centers; Arthritis and Other Chronic Diseases; and non-HIV/AIDS School Health.³⁴ The CCDPP would address risk factors for the five chronic diseases (i.e., heart disease, cancer, stroke, diabetes, and arthritis) that have the most impact on death and disability. Tobacco programs would continue to be funded separately.

The Administration proposed using $221 million from the PPHF for Community Transformation Grants, discussed earlier.

The Administration did not request FY2012 budget authority for NIOSH, recommending instead that the full amount requested—$260 million, which is exclusive of the mandatory EEOICPA funds—be provided through evaluation set-aside funds.

Food and Drug Administration (FDA)

Agency Overview

FDA regulates the safety of foods; the safety and effectiveness of human drugs, biological products (e.g., vaccines), medical devices, and radiation-emitting products; and the manufacture, marketing, and distribution of tobacco products. The agency also regulates animal drugs and feeds.³⁵

Seven centers within FDA represent the broad program areas for which the agency has responsibility: the Center for Biologics Evaluation and Research (CBER), the Center for Devices and Radiological Health (CDRH), the Center for Drug Evaluation and Research (CDER), the Center for Food Safety and Applied Nutrition (CFSAN), the Center for Veterinary Medicine (CVM), the National Center for Toxicological Research (NCTR), and the Center for Tobacco Products (CTP). Other offices have agency-wide responsibilities.

The Federal Food, Drug, and Cosmetic Act (FFDCA) is the principal source of FDA's statutory authority.³⁶ FDA is also responsible for administering certain provisions in other laws, most notably the PHSA.³⁷ Although the FDA's authorizing committees in Congress are the committees with jurisdiction over public health issues—the Senate Committee on Health, Education, Labor, and Pensions, and the House Committee on Energy and Commerce—FDA's assignment within the appropriations committees reflects its origin as part of the Department of Agriculture. The appropriations subcommittees on Agriculture, Rural Development, FDA, and Related Agencies have jurisdiction over FDA's budget, even though the agency has been part of various federal health agencies (HHS and its predecessors) since 1940.

FDA's budget has two funding streams: direct appropriations (i.e., discretionary budget authority) and industry user fees.³⁸ In FDA's annual appropriation, Congress sets both the total amount of appropriated funds and the level of user fees to be collected that year. Appropriated funds are largely for salaries and expenses, with a much smaller amount for buildings and facilities. User fees, which account for 33% of FDA's total FY2011 program level, come from several programs. Major user fee programs provide support for FDA's prescription drug, medical device, and animal drug regulatory activities, whereas smaller amounts come from mammography quality and standards, and export and color certification fees. The agency's tobacco regulatory activities are entirely supported through user fees paid by tobacco product manufacturers and importers.

Combining direct appropriations and user fees, FDA had a total FY2010 program level of $3.284 billion and a total FY2011program level of $3.690 billion. Table 3 displays FDA funding levels for FY2010 through the FY2012 request.

FY2011 Funding

The FY2011 full-year CR provides FDA with a total program level of $3.690 billion, which includes $2.457 billion in direct appropriations (discretionary budget authority) and $1.233 billion in user fees. Relative to FY2010 funding, these amounts represent a 4% increase in budget authority and a 34% increase in user fees, for an overall 12% increase in total program level.

FY2012 Budget Highlights

President's Request

The President requested a total program level of $4.360 billion for FDA. This is 33% more than FY2010, and 18% more than FY2011. The FY2012 request has two components: $2.744 billion in budget authority and $1.616 in user fees. The budget authority is 16% more than FY2010 and 12% more than FY2011. The requested user fees are 75% more than FY2010 and 31% more than FY2011. The requested user fee total for FY2012 includes $1.457 billion for ongoing user fee programs (prescription drugs, medical devices, animal drugs, animal generic drugs, tobacco, mammography screening, and drug export and certification); $99 million for new fee categories authorized in the Food Safety Modernization Act (food export certification, voluntary qualified importer program, food reinspection, and recall);³⁹ and $60 million for proposed, as yet unauthorized, fees (generic drugs, medical products reinspection, and international couriers).

FDA's FY2012 budget requested an increase in funding in the following four key areas: (1) an additional $218 million for the Transforming Food Safety and Nutrition Initiative to implement the Food Safety Modernization Act; (2) an additional $70 million for the Advancing Medical Countermeasures Initiative to develop products to respond to terrorist threats and naturally emerging diseases; (3) an additional $56 million for the Protecting Patients Initiative to work on developing a biosimilar approval pathway, improving the foreign and domestic supply chain of medical products, and other safety activities; and (4) an additional $49 million for the FDA Regulatory Science and Facilities Initiative both to strengthen its core regulatory scientific capacities to foster review of new and emergency technologies, and to ready the CBER-CDER Life Sciences-Biodefense Laboratory complex for FY2014 occupancy.⁴⁰

House-passed Bill (H.R. 2112)

On June 16, 2011, the House passed H.R. 2112, the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012. For FY2012, the bill would provide FDA with a total program level of $3.693 billion, comprised of $2.172 billion (59%) in direct appropriations (discretionary budget authority) and $1.520 billion (41%) in user fees. The budget authority would be 12% below FY2011 and 21% below the President's FY2012 request. User fees would be 23% above FY2011 and 6% below the President's request. Overall, the total program level would be a fraction (less than 0.1%) above FY2011 and 15% below the President's FY2012 request.

Health Resources and Services Administration (HRSA)

Agency Overview

HRSA is the federal agency charged with increasing access to health care for those who are uninsured, underserved, vulnerable, or have special needs. The agency currently funds more than 3,000 grantees, including community-based organizations, colleges and universities, hospitals, state, local and tribal governments, and private entities to support health services projects. In addition, HRSA administers the health centers program, which provides grants to non-profit entities that provide primary care services to people who experience financial, geographic, cultural, or other barriers to health care. More information on HRSA's organization and functions is provided in the text box below.⁴¹

The majority of HRSA's programs are authorized in the PHSA. Title III authorizes the Health Centers Program, National Health Service Corps, Children's Hospitals Graduate Medical Education Program, Organ Transplant and Bone Marrow Programs, Telehealth Program, and State Offices of Rural Health; Title VII authorizes programs for health workforce development; Title VIII authorizes programs for nursing workforce development; and Title XXVI consolidates all Ryan White HIV/AIDS programs. Several of the agency's programs are authorized under the Social Security Act, including the Maternal and Child Health Block Grant; the Maternal, Infant, and Early Childhood Home Visiting Program; and the Rural Health Policy Development programs. Finally, Section 427(e) of the Federal Mine Safety and Health Amendments Act (P.L. 95-164) authorizes the Black Lung Program, which supports clinics that provide services to retired coal miners and others.

Table 4 shows funding levels for HRSA's programs and activities for FY2010 through the FY2012 request, including transfers from the CHCF and the PPHF. The table also includes programs that received direct appropriations from PPACA.⁴² Program level funding for the agency's major program areas is shown.

FY2011 Funding

The FY2011 full-year CR provided HRSA with a total discretionary budget authority of $6.272 billion, a decrease of $1.221 billion (16%) from FY2010. However, this reduction was more than offset by a substantial increase in PPACA funds. Total funding from PPACA and other sources (i.e., user fees, set-aside funds) increased from $575 million in FY2010 to $3.394 billion in FY2011. As a result, HRSA's total program level increased by $1.598 billion (20%), from $8.067 billion in FY2010 to $9.665 billion in FY2011 (see Table 4).

Discretionary funding for the heath centers program was reduced by $660 million in FY2011. However, the program received a $1 billion transfer from the CHCF, resulting in an overall funding increase of $340 million over FY2010. Similarly, discretionary funding for the NHSC was reduced by $117 million, but the program received a CHCF transfer of $290 million, resulting in a net increase of $174 million over the FY2010 program level.

Aside from the NHSC, funding for most of the other health workforce program areas either remained flat or decreased significantly. The Children's Hospital Graduate Medical Education (GME) program had its appropriation reduced by $48 million, while both the Primary Care Training and Enhancement and the Nursing Workforce Development programs saw their supplemental FY2010 PPHF funding eliminated in FY2011. However, GME Payments for Teaching Health Centers, a new program authorized under PPACA, received a $230 million mandatory appropriation for FY2011.

Maternal and Child Health programs increased by $144 million overall, due almost entirely to the increase in mandatory funding for the new Maternal, Infant, and Early Childhood Home Visiting Program, which was authorized under PPACA. The Congenital Disabilities program, which received $0.5 million in FY2010, received no funding for FY2011.

The $47 million reduction in funding for rural health programs is largely attributable to a ban on earmark spending, which eliminated $45 million in funding for the Denali Project and the Delta Health Initiative. In addition, funding for Rural and Community Access to Emergency Devices (i.e., defibrillators) was reduced by $2 million, or 91%. Funding was not provided for the State Health Access Program (SHAP), as it is anticipated that programs authorized under PPACA will be sufficient to cover the populations formerly served by SHAP.

A total of $2.337 billion will be spent on the Ryan White HIV/AIDS program in FY2011, which represents a $21 million (1%) increase over FY2010. The HRSA operating plan includes a total of $885 million for the AIDS Drug Assistance Program (ADAP), which represents a $25 million (3%) increase in funding over FY2010.

Finally, as part of the ban on earmarks, funding is eliminated for Congressional Projects (i.e., congressionally directed spending on specified health facilities, including for construction and renovation).

FY2012 Budget Highlights

The President's FY2012 budget request would provide budget authority of $6.808 billion for HRSA, which represents a decrease of $684 million (9%) from FY2010 and an increase of $537 (9%) million over FY2011 funding. The Administration proposes to eliminate funding for a number of HRSA programs.⁴³ Several of these cuts are consistent with the final FY2011 budget. They include funding for Congressional Projects, the Denali Commission, and the Delta Health Initiative. The President's budget also would eliminate funding for certain rural health projects,⁴⁴ and for the Children's Hospital GME program.⁴⁵

The President's budget requests $1.252 billion for health workforce programs. The budget seeks to expand the primary care workforce capacity, team-based health care services, and geriatric education. It would increase funding for certain other health workforce programs and would fund grants to develop Teaching Health Centers and provide GME payments for these centers.⁴⁶

The FY2012 budget request proposes a $107 million increase in funding for Maternal and Child Health programs over the FY2011 level, which largely reflects a further increase in PPACA funding for the Maternal, Infant, and Early Childhood Home Visiting Program.

The FY2012 request would provide a total of $2.401 billion for the Ryan White HIV/AIDS program, an increase of $65 million over FY2011, including an additional $80 million for ADAP, bringing its total to $940 million, and an additional $5 million for Early Intervention programs.⁴⁷

Indian Health Service (IHS)

Agency Overview

IHS provides health care for approximately 1.9 million eligible American Indians/Alaska Natives through a system of programs and facilities located on or near Indian reservations, and through contractors in certain urban areas.⁴⁸ IHS provides services in 35 states either directly or through facilities and programs operated by Indian tribes or tribal organizations through self-determination contracts and self-governance compacts negotiated with IHS.⁴⁹

The Snyder Act of 1921⁵⁰ provides general statutory authority for IHS.⁵¹ In addition, specific IHS programs are authorized by two acts: the Indian Sanitation Facilities Act of 1959⁵² and the Indian Health Care Improvement Act (IHCIA).⁵³ The Indian Sanitation Facilities Act authorizes the PHS to construct sanitation facilities for Indian communities and homes, and IHCIA authorizes programs such as urban health, health professions recruitment, and substance abuse and mental health treatment, and permits IHS to receive reimbursements from the Medicare, Medicaid, and the State Children's Health Insurance Program (CHIP), and from third-party insurers.

Unlike most other PHS agencies, the IHS receives its appropriations through the Interior/ Environment appropriations act, not the Labor-HHS-ED appropriations act.

Table 5 shows IHS funding for FY2010 through the FY2012 request. The table includes funding under IHS's discretionary budget authority, as well as mandatory appropriations from the Special Diabetes Program for Indians⁵⁴ and funding that IHS receives from renting staff quarters and from collections from Medicare, Medicaid, CHIP, and other third-party insurers for services provided at IHS-funded facilities.

FY2011 Funding

For FY2011 IHS received an appropriation of $4.069 billion, an increase of $17 million (0.4%) from FY2010. This increase will provide additional funding for hospitals and health clinic services and construction. In general, FY2011 funding for the majority of IHS programs remained constant or was reduced a small amount as required by the 0.2% across-the-board rescission included in P.L. 112-10. IHS also projects that it will receive $17 million more in collections than the agency received in FY2010, a 2% increase. Overall, therefore, the IHS program level will be $34 million (0.7%) higher than FY2010.

FY2012 Budget Highlights

The President's FY2012 budget proposes to increase IHS's discretionary budget authority by 12% from the FY2010 level. PPACA requires the FY2012 budget request to include amounts that reflect changes in the costs of health care and in the size of IHS's service population. HHS notes that the increased funding for IHS reflects those requirements.⁵⁵ In general, the President's FY2012 budget requests additional funding for IHS's programs. One notable exception is sanitation facility construction, which would receive $16 million (17%) less than in FY2010. HHS notes that this program has funding carried over from the prior fiscal year, which would allow IHS to maintain current activities with the funding level included in the budget request.⁵⁶

National Institutes of Health (NIH)

Agency Overview

NIH is the primary agency of the federal government charged with the conduct and support of biomedical and behavioral research. It also has major roles in research training and health information dissemination. The NIH mission is "to seek fundamental knowledge about the nature and behavior of living systems and the application of that knowledge to enhance health, lengthen life, and reduce the burdens of illness and disability."⁵⁷ NIH derives its statutory authority from the PHSA. Section 301 grants the Secretary of HHS broad permanent authority to conduct and sponsor research. In addition, Title IV, "National Research Institutes", authorizes in greater detail various activities, functions, and responsibilities of the NIH Director and the 27 institutes and centers (ICs). The annual Labor-HHS-ED appropriations act provides separate appropriations to 24 of the ICs, the Office of the Director (OD), and the Buildings and Facilities (B&F) account. NIH receives additional funds from the Interior/Environment appropriations act and from a mandatory appropriation for diabetes research.⁵⁸

Table 6 shows funding for NIH for FY2010 through the FY2012 request.

FY2011 Funding

Compared to the funding level originally enacted for FY2010, the FY2011 full-year CR (P.L. 112-10) reduced NIH funding by $50 million in the Buildings and Facilities account, by $210 million taken as a pro rata reduction in all other NIH accounts for ICs and the Office of the Director, and by the 0.2% across-the-board rescission. Overall, total NIH funding in FY2011, at $30.926 billion, is $317 million (1%) lower than FY2010. Most institutes and centers are down by about 1% compared with their FY2010 program levels; the B&F account is 50% lower.

FY2012 Budget Highlights

For FY2012, the Obama Administration has requested $31.987 billion for NIH, an increase of $745 million (2.4%) over the FY2010 program level and $1.062 billion (3.4%) over FY2011. In FY2012, the agency will focus on implementing a new translational medicine program. NIH is proposing to establish a new center, the National Center for Advancing Translational Sciences (NCATS), to catalyze the development of new diagnostics and therapeutics. NIH plans to abolish the existing National Center for Research Resources (NCRR) and transfer its programs to either NCATS or other ICs. Another component of NCATS will be the Therapeutics for Rare and Neglected Diseases (TRND) program.

NCATS may also incorporate the new Cures Acceleration Network (CAN), authorized under PPACA, for which $100 million is requested in FY2012. PPACA did not fund CAN and specified that other funds appropriated under the PHSA may not be allocated to CAN. The purpose of CAN is to support the development of high-need cures (i.e., drugs, biologics, and devices to diagnose or treat rare diseases, and for which market incentives are inadequate) and facilitate their FDA review. If CAN receives funding, NIH would determine which medical products are high-need cures, and then make awards to research entities or companies in order to accelerate the development of such high-need cures.

In addition to the new translational medicine program, NIH will emphasize three other broad scientific areas in FY2012 including advanced technologies, comparative effectiveness research, and support of young investigators.

Substance Abuse and Mental Health Services Administration (SAMHSA)

Agency Overview

SAMHSA is the lead federal agency for increasing access to behavioral health services.⁵⁹ It supports community-based mental health and substance abuse treatment and prevention services through formula grants to the states and U.S. territories and through numerous competitive grant programs to states, territories, tribal organizations, local communities, and private entities. Under SAMHSA' s charitable choice provisions, religious organizations are eligible to receive funding in order to provide substance abuse services without altering their religious character. The agency also collects information on the incidence and prevalence of mental illness and substance abuse at the national and state levels.

SAMHSA and most of its programs and activities are authorized under PHSA Title V. However, the agency's two largest programs, the Substance Abuse Prevention and Treatment (SAPT) block grant and the Community Mental Health Services (CMHS) block grant, which together accounted for more than 60% of the agency's budget in FY2010, are separately authorized under PHSA Title XIX Part B.

Under PHSA Title V, SAMHSA is organized into three centers: the Center for Mental Health Services (CMHS), the Center for Substance Abuse Treatment (CSAT), and the Center for Substance Abuse Prevention (CSAP). Each center has general statutory authority, called Programs of Regional and National Significance (PRNS), under which it has established grant programs for states and communities to address their important substance abuse and mental health needs. PRNS authorizes each center to fund projects that (1) translate promising new research findings to community-based prevention and treatment services; (2) provide training and technical assistance; and (3) target resources to increase service capacity where it is most needed. In addition, PHSA Title V authorizes a number of specific grant programs, referred to as categorical grants. The PHSA also directs SAMHSA to conduct data collection and analysis activities related to mental health and substance abuse.

Most SAMHSA programs are administered by one of the three centers and focus on mental health, substance abuse prevention, or substance abuse treatment. Several cross-cutting programs receive support separately from all three centers, including the National Registry of Evidence-based Programs and Practices, the SAMHSA Health Information Network, the Minority AIDS Program, and the Minority Fellowship Program. To better address cross-cutting issues, SAMHSA has also created connections between centers for programs with both mental health and substance abuse components. For instance, the co-occurring state incentive grant, which supports improvements to infrastructure and capacity for treating individuals with both mental health and substance abuse conditions, is administered by both CMHS and CSAT.

SAMHSA and its programs were last reauthorized in 2000, as part of the Children's Health Act.⁶⁰ Funding authority for most of SAMHSA's grant programs expired at the end of FY2003, though many of them continue to receive annual appropriations. Congress has not taken up comprehensive reauthorization legislation since 2000, though it has added some new authorities to Title V and otherwise expanded the agency's programs and activities in the past decade.

Table 7 shows SAMHSA's funding for FY2010 and FY2011, the change between those years, and the FY2012 budget request. Several non-add programs have been included in the table as examples; these do not represent a complete list. While PHS evaluation set-aside funds are incorporated in the funding amounts for certain programs and activities, the PPHF transfers are included as their own separate row. Both the set-aside funds and the PPHF transfers are subtracted from the SAMHSA program level at the bottom of the table to give the agency's total discretionary budget authority. As discussed in more detail below, SAMHSA's FY2012 budget request proposes a restructuring of its programs and activities. To the extent possible, the table reflects the existing structure, consistent with FY2010 and FY2011 appropriations. The new SAMHSA-wide programs in the FY2012 request are listed separately with the FY2010 and FY2011 columns left blank (see discussion below under "FY2012 Budget Highlights").

FY2011 Funding

The FY2011 full-year CR (P.L. 112-10) slightly reduced SAMHSA's funding below the FY2010 level. With the 0.2% across-the-board rescission, the agency's discretionary budget authority for FY2011 is $3.380 billion, which is $52 million (1.5%) less than the FY2010 amount. However, that reduction was more than offset by a $68 million increase in PPHF transfers. SAMHSA's total program level for FY2011 is $3.599 billion, which is $16 million (0.4%) above the FY2010 program level of $3.583 billion. P.L. 112-10 prohibited the funding of grants for prescription drug monitoring programs originally authorized under the National All Schedules Prescription Electronic Reporting Act of 2005 (NASPER).⁶¹ In FY2010, $2 million was appropriated for the NASPER grants.

FY2012 Budget Highlights

The President's FY2012 budget request includes a total program level of $3.649 billion for SAMHSA, which represents an increase of $66 million (2%) over the FY2010 program level (see Table 7). The FY2012 program level includes budget authority of $3.387 billion, down about 1% from the FY2010 budget authority of $3.431 billion, plus $263 million in PHS evaluation set-aside funds and PPHF transfers. Importantly, the FY2012 budget reflects a restructuring of SAMHSA's programs in an effort to focus more resources on prevention of substance abuse and mental illness, assist Indian tribes in addressing substance abuse and suicide, and support emerging issues such as primary/behavioral health care integration and health information technology.

To accomplish these goals SAMHSA's FY2012 budget request includes funding for three new prevention programs. First, it proposes a new substance abuse prevention state grant program focused on high-risk communities and youth, which will be funded using the SAPT block grant's 20% prevention set-aside. Second, it proposes expanding an existing discretionary mental health prevention program aimed at young children (Project LAUNCH) to create a new state grant program to support comprehensive mental health prevention strategies for children, youth and young adults. Finally, the FY2012 budget proposes a new grant program using PPHF funds to promote behavioral health in Indian tribes by reducing alcohol and substance abuse and preventing suicide.

Among other programmatic changes reflected in its FY2012 budget, SAMHSA has combined most of the existing PRNS grant programs in the three centers into a single account for Innovation and Emerging Issues; consolidated funding for three different data collection systems and the agency's evidence-based practice registry into one Performance and Quality Information Systems budget line; and grouped the seclusion and restraint program, the protection and advocacy and the prescription drug monitoring formula grant programs, and two other regulatory and oversight programs into a single budget line.

Appendix A. Community Health Center Fund

PPACA Section 10503 established a Community Health Center Fund (CHCF) to provide supplemental funding for health center operations and the National Health Service Corps (NHSC). The law provided annual appropriations to the CHCF totaling $11 billion over the five-year period FY2011 through FY2015.

PPACA also included a provision the intent of which is that in order for the CHCF funds to be used, regular appropriations for the health centers program and the NHSC must be maintained at least at the FY2008 funding level. P.L. 112-10 eliminated this requirement for FY2011, thus allowing CHCF funds to be used in FY2011 even though the regular appropriations for health centers and the NHSC for the current fiscal year have been cut well below the FY2008 level. Table A-1 summarizes the amounts appropriated to the CHCF and the allocation of funds for each of the five fiscal years.

PPACA Section 10503 also included an appropriation of $1.5 billion, available for the period FY2011 through FY2015, for health center construction and renovation. These funds are separate from the CHCF and are not included in Table A-1.

Appendix B. Prevention and Public Health Fund

PPACA Section 4002 established a Prevention and Public Health Fund (PPHF), appropriated in perpetuity, to be used to support prevention, wellness, and other public health-related programs and activities authorized under the Public Health Service Act (PHSA). PPACA appropriates to the PPHF: $500 million for FY2010; $750 million for FY2011; $1 billion for FY2012; $1.25 billion for FY2013; $1.5 billion for FY2014; and $2 billion for FY2015 and each fiscal year thereafter. Transfers from the PPHF to specific HHS activities for FY2010 and FY2011 have been carried out by the HHS Secretary and are summarized, along with the Administration's proposed transfers for FY2012, in Table B-1. PPHF transfers to PHS agencies are also itemized in the funding tables presented earlier in this report. PPACA requires the Secretary, when using PPHF funds to augment existing programs and activities, to maintain at least the FY2008 funding level.

FY2011 appropriations for the PPHF became available on October 1, 2010, at the beginning of the fiscal year. FY2011 operating plans for the recipient agencies show how these funds have been and will continue to be used for this fiscal year. In some cases, PPHF funds appear to be used to replace funds from regular appropriations.⁶²

Under current law, PPHF funds are appropriated in perpetuity. As a result, the FY2012 amounts in the table reflect not the Administration's request for the funds, but rather the Administration's intended allocation and use of the funds. Congress may by law (including an appropriations law) direct the Secretary to expend the funds in a manner other than what is proposed, or take any other actions with respect to these funds.