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The United States Department of Health & Human Services
200 Independence Avenue, SW
Washington, DC 20008
http://www.hhs.gov
This document can be found on the World Wide Web at www.hhs.gov/budget/docbudget.htm.

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TABLE OF CONTENTS
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Food and Drug Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Health Resources and Services Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Indian Health Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Centers for Disease Control and Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
National Institutes of Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Substance Abuse and Mental Health Services Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Agency for Healthcare Research and Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Centers for Medicare & Medicaid Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Administration for Children and Families . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88
Administration on Aging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104
Departmental Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
Office for Civil Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114
Office of Inspector General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116
Program Support Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118
Retirement Pay and Medical Benefits for Commissioned Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120

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ADVANCING THE HEALTH, SAFETY, AND WELL-BBEING
OF OUR PEOPLE
President's Budget for HHS
FY 2006
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Budget Authority......................................................
$554,393
$581,038
$660,406 +$79,368
Outlays....................................................................
$542,006
$583,957
$642,188 +$58,231
Ful -Time Equivalents................................................
64,244
67,444
67,284
-160
Composition of the Budget
Discretionary
Programs
10.7%
Children's
Entitlement
Programs
3.1%
Medicare
53.0%
TANF
2.8%
Other
Mandatory
Programs
0.4%
Medicaid
30.0%
1
Advancing the Health, Safety, and Well-Being of our People

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ADVANCING THE HEALTH, SAFETY, AND WELL-BBEING
OF OUR PEOPLE
The Department of Health and Human Services enhances the health and well-being of Americans by providing for
effective health and human services, and by fostering sound, sustained advances in the sciences underlying medicine,
public health, and social services.
TheDepartmentofHealthand ThisbudgetwillenabletheNational benefit,whichwillbeginon
Human Services (HHS) Fiscal
Institutes of Health to increase
January 1, 2006, and the enhanced
Year (FY) 2006 budget enables the
research efforts in developing bioter-
health plan choices in Medicare
Department to provide for the health,
rorism countermeasures and to fund
Advantage. As a result of these new
safety, and well-being of Americans.
biomedical research at current levels,
benefits, beneficiaries will be able to
FY 2006 outlays will total
will allow the Centers for Disease
receive voluntary drug coverage as
$642 billion, an increase of
Control to expand the Strategic
well as new support for their existing
$58 billion over FY 2005 spending.
National Stockpile, and will support
drug coverage through Medicare, and
The discretionary portion of the HHS
the Food and Drug Administration's
access to preferred provider organi-
budget totals $67 billion in budget
efforts to defend the nation's food
zations (PPOs), which are the most
authority and $71 billion in program
supply; it will further secure our
popular health plan choices for non-
level.
nation against the threat of bioterror-
Medicare beneficiaries. Beginning in
ism.
2006, PPOs will begin to serve
The Department's budget fosters
beneficiaries on a regional basis
strong sustained advances in the
The Department considered a number
thereby promoting competition with
sciences underlying medicine, in
of factors in constructing the
other health care programs.
public health, and in social services,
FY 2006 budget, including the need
and provides effective heath and
for spending discipline and program
All beneficiaries will continue to
human services. This budget request
effectiveness to support the
have access to affordable care, while
builds on the Department's Strategic
Administration's initiative to cut the
those with the lowest incomes and
Plan goals and enables HHS to meet
deficit in half over four years.
the highest levels of spending on
present and future challenges. In
Specifically, the budget decreases
drugs will receive additional
FY 2006, resources and efforts will
funding for lower-priority programs
assistance. As with current MMA
be directed toward:
and one-time projects, consolidates
implementation, as new options
or eliminates programs with duplica-
become available, Medicare will
Providing access to quality health
tive missions, reduces administrative
ensure that beneficiaries understand
care, including continued
costs, and makes government more
their choices and benefits.
implementation of the Medicare
efficient.
Prescription Drug, Improvement,
Implementation of the Prescription
and Modernization Act;
For example, the budget requests no
funding for the Community Services
Drug Benefit Program: Until 2006,
Enhancing public health and
Block Grant and a number of smaller
the interim Medicare-endorsed
protecting America;
community services programs that
prescription drug discount cards and
were unable to demonstrate results in
transitional assistance programs will
Supporting a compassionate
PART evaluation assessments.
help beneficiaries pay the cost of
society; and
prescription drugs. Beginning on
January 1, 2006, Medicare will help
Improving HHS management,
PROVIDING ACCESS TO QUALITY
pay for outpatient prescription drugs
including implementing the
HEALTH CARE
through private plans. Beneficiaries
President's Management Agenda
Improving Medicare Through the
will have the option of remaining in
The HHS FY 2006 budget will
Medicare Modernization Act:
the traditional fee-for-service
enable the Department to improve
Funding for Medicare benefits,
program, enrolling separately in
the quantity and quality of health
which assist 42.7 million elderly and
private prescription drug plans, or
care available to Americans by
disabled Americans, is estimated to
enrolling in integrated Medicare
implementing Medicare's prescrip-
be $394 billion in 2006.
Advantage plans for all Medicare-
tion drug benefit, completing the
covered benefits, including drugs.
Two of the most important provisions
President's current Health Center
The prescription drug benefit
of the Medicare Modernization Act
initiative, and launching a new health
program will be financed through
(MMA) are the new voluntary drug
center effort in the poorest counties.
beneficiary premiums (25.5 percent)
Advancing the Health, Safety, and Well-Being of our People
2

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and general revenue (74.5 percent)
the Federal Government. States
SCHIP will spend approximately
and is projected to cost $58.9 billion
largely agree that current Medicaid
$5.4 billion in FY 2006.
in 2006.
rules and regulations are barriers to
Authorization for the program
effective and efficient management.
expires at the end of FY 2007. Due
Promoting Affordable Health Care:
The proposal builds on the success of
to its success at enrolling millions of
The Administration is strongly
the State Childrens' Health Insurance
low-income uninsured children, the
committed to meeting the needs of
Program (SCHIP) in providing acute
President's Budget seeks to re-
the approximately 45 million
care for children and families, as
authorize the program early, and
Americans who are uninsured. For
well as current efforts to reduce the
better target the fund in a more
this reason, the Administration
number of uninsured individuals.
timely manner. Under the proposal,
proposes a multi-pronged approach
the time States have to spend their
to promoting economic opportunity
A modernized Medicaid system will
SCHIP allotments would change
and ownership, including:
give States greater flexibility without
from three years to two years. In
the need for burdensome waiver
Health insurance tax credits to
total, budget proposals that enhance
applications. Principles that are
facilitate the private purchase of
the SCHIP program will cost
employed in SCHIP and emphasize
health insurance and Health
$992 million over five years.
innovation will be expanded to
Savings Accounts (HSAs);
Medicaid beneficiaries, while long-
Health Information Technology: In
Grants to States for purchasing
term care reforms will build on
April 2004, the President expressed
pools to help low-income individu-
successful programs that use
his vision for improving the safety,
als purchase coverage with the
consumer direction and home-based
quality, and cost-effectiveness of
health insurance tax credit;
care and community-based care to
health care through rapid implemen-
improve satisfaction and lower costs.
tation of secure and interoperable
Tax deductions for individuals with
A modernized Medicaid system will
electronic health records. The
a high-deductible health plan and
continue to grow at a robust rate to
FY 2006 budget seeks a total of
an HSA;
accommodate increases in health
$125 million to make this vision a
care spending.
reality. The Office of the National
Tax rebates to small employers
Coordinator for Health Information
contributing to employees' HSAs;
The President's Budget includes
Technology (ONCHIT) will provide
proposals to extend Medicaid
strategic direction for development
Association Health Plans for
benefits to cover uninsured individu-
of a national interoperable health
groups of small businesses, civic
als and to expand benefits to those
care system, and encourage
groups, and community
already on Medicaid, an investment
clinicians to connect and collaborate
organizations;
of $7 billion over five years. These
within a national Health IT network.
proposals include demonstration
Medical liability law reforms that
The Agency for Health Care Quality
projects to expand access to
increase access to high quality and
and Research (AHRQ) will continue
community-based care for the
affordable health care; and
to accelerate the development,
disabled and elderly, an extension of
adoption, and diffusion of interopera-
A competitive marketplace for
transitional medical assistance, and
ble information technology in a
health insurance that crosses state
an extension of Medicare premium
range of health care settings.
lines while maintaining strong
assistance.
consumer protections.
Increasing the Capacity and
The FY 2006 budget also includes
Number of Health Centers: The
Increasing Coverage through
program integrity and cost efficiency
budget completes the President's
Medicaid and the State Childrens'
proposals that will save an estimated
five-year commitment to create
Health Insurance Program: The
$20 billion over five years in
1,200 new or expanded health center
Department currently projects that
Medicaid fraud, waste, and abuse.
sites and serve an additional
Medicaid will cover over 46 million
Representative proposals include a
6.1 million people by 2006. In
individuals in FY 2006 at a cost to
reduction in allowable provider
FY 2006 alone, more than
the Federal Government of
related taxes, an elimination of inter-
2.4 million individuals will receive
$193 billion.
governmental transfers that unfairly
health care through 578 new or
augment a State's share of Federal
expanded sites in rural areas and
HHS proposes to provide States with
Medicaid matching funds, and
underserved urban communities. In
additional flexibility in Medicaid to
reform the transfer of assets policy
addition, the President is establishing
further increase coverage among
for medically needy eligibles
a new goal to help every poor county
low-income individuals and families
applying for Medicaid long-term
in America in need that lacks a
without creating additional costs for
care.
3
Advancing the Health, Safety, and Well-Being of our People

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health center and the FY 2006
ENHANCING PUBLIC HEALTH AND
against late-season surges in demand.
request funds 40 new health center
PROTECTING AMERICA
The discretionary Section 317
sites in high-poverty counties.
program will use $30 million to get
Medical Research: Federal invest-
manufacturers to make additional
Increasing Care Available to Native
ments in biomedical research have
bulk monovalent vaccine that can be
Americans: The budget increases
fueled major advances in knowledge
turned into finished vaccine if other
support to 1.8 million members of
about life sciences. The FY 2006
producers experience problems, or
federally recognized Tribes by
budget requests $28.8 billion for the
unusually high demand is anticipat-
$72 million, for a total of
National Institutes of Health (NIH), a
ed. Finally, CDC will expand
$3.8 billion. With these funds, the
net increase of $196 million. The
routine use vaccine procurements to
Indian Health Service will provide
request seeks to capitalize on the
$104 million, including an increase
high quality health care through
resulting opportunities this invest-
of $20 million targeted to children
49 hospitals, over 240 outpatient
ment has opened for significant
not eligible for VFC.
centers, and over 300 health stations
progress in improving the health of
and Alaska village clinics. Increases
the nation by preventing, treating,
A draft Pandemic Influenza
will serve a growing eligible popula-
and curing disease and disability.
Response and Preparedness Plan was
tion and meet the rising costs of
The budget request enables NIH to
issued in August 2004, which lays
delivering health care. Resources are
continue to implement the Roadmap
out action steps in several areas. In
included to expand access to care
for Medical Research; enhance
support of this plan, NIH has
through staffing six newly built
collaborations for multidisciplinary
expanded its research investment to
health care facilities.
neuroscience research; and accelerate
approximately $119 million. The
efforts to develop and evaluate
budget also increases to $120 million
Access to Recovery Drug Treatment
vaccines against HIV/AIDS.
the Department's investment to
Program: Through the Access to
Withing this total, NIH will also
develop the year-round domestic
Recovery program, HHS will assist
increase funding to address critical
surge vaccine production capacity
States in expanding access to clinical
requirements in biodefense, includ-
that will be needed in a pandemic,
treatment and recovery support
ing a new targeted $50 million
including new cell culture vaccine
services and allow individuals to
research effort to expand the current
manufacturing processes.
exercise choice among qualified
range of chemical countermeasures.
Global Disease Detection
community provider organizations,
Preventing Disease: The FY 2006
CDC supports a range of efforts to
including those that are faith-based.
budget includes targeted efforts to
both track and prevent the interna-
The toll of drug abuse on the individ-
ensure a stable supply of annual
tional spread of infectious diseases.
ual, family, and community is both
influenza vaccine, develop the surge
Although modern advances in
significant and cumulative. It may
capacity that would be needed in a
vaccinations and technology have
lead to lost productivity and
pandemic, improve low-income
conquered some diseases, recent
educational opportunity, lost lives
children's access to routine
outbreaks of infectious diseases such
and to costly social and public health
immunizations, and improve the
as severe acute respiratory syndrome
problems including HIV/AIDS,
response to emerging infectious
(SARS) and avian influenza, are
domestic violence, child abuse, and
diseases before they reach the United
reminders of the ability of microbes
crime. The budget increases support
States.
to adapt and to move across borders.
for this initiative by 50 percent for a
In FY 2006, CDC will invest an
total of $150 million.
Influenza
additional $12 million to strengthen
HHS will invest $439 million in
Ryan White: The FY 2006 request
Global Disease Detection.
targeted influenza activities in
provides a total of $2.1 billion for
FY 2006, in addition to insurance
Responding to Major Disasters and
Ryan White programs to ensure a
reimbursement payments through
Emergencies: The National
comprehensive approach to provide
Medicare. The request for the
Response Plan calls on HHS to lead
treatment services to persons living
Centers for Disease Control (CDC)
public health and medical services
with HIV/AIDS, consistent with the
will fund a three-pronged approach
during major disasters and emergen-
President's reauthorization princi-
to ensure an adequate supply of
cies. In support of this
ples­prioritization, flexibility, and
annual vaccine. Within the Vaccines
responsibility, the FY 2006 budget
accountability. Over 570,000 people
for Children (VFC) program, CDC
includes $70 million in targeted
will receive treatment services
will allocate $40 million in new
investments for the new Federal
through Ryan White grant funding in
budget authority to buy a stockpile of
Mass Casualty Initiative to improve
FY 2006.
pediatric influenza vaccine to guard
our medical surge capacity. This
includes procurement of portable
Advancing the Health, Safety, and Well-Being of our People
4

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treatment units through the Strategic
communicating drug safety risks to
With matching state funds, a total of
National Stockpile, and the tools and
the public and applying scientific
$1.7 billion over five years will help
infrastructure necessary to mobilize
expertise to explore the risks of
advance this central goal of the
and coordinate medical personnel
medical products already on the
TANF program.
and volunteers in the event of a
market. The FY 2006 budget also
major medical emergency. HHS will
funds the medical devices program at
Faith Based and Community
also invest $1.3 billion in support of
a level consistent with the intent of
Initiatives: As part of the larger
on-going work at the Centers for
the Medical Devices User Fee and
Faith-Based and Community
Disease Control and the Health
Modernization Act of 2002.
Initiative, the budget maintains a
Resources and Services
commitment to strengthen the
Administration to improve state and
SUPPORTING A COMPASSIONATE
capacity of faith-based and
local public health and hospital
SOCIETY
community organizations.
preparedness.
Marriage and Healthy Family
Compassion Capital Fund
Strategic National Stockpile: HHS
Development:
The Compassion Capital Fund
has the primary responsibility for
advances the efforts of community
ensuring the Nation's citizens have
Abstinence Education
and charitable organizations, includ-
almost immediate access to an
Abstinence education programs are
ing faith-based organizations, to
adequate supply of the medicines
part of a comprehensive and continu-
increase their effectiveness and
needed to protect them in the event
ing effort of the Administration to
enhance their ability to provide
of an attack with weapons of mass
help adolescents avoid behaviors that
social services where they are
destruction, or other major public
could jeopardize their futures. Last
needed. The budget includes
health emergencies. The Strategic
year, HHS integrated abstinence
$100 million, an increase of
National Stockpile (SNS) includes
education activities with the youth
$45 million. Among the priorities
enough smallpox vaccine to protect
development efforts at the
within the 2006 proposal is an
every American, and by the end of
Administration for Children and
emphasis on supporting anti-gang
FY 2006, will have sufficient antibi-
Families (ACF), by transferring the
efforts through community and faith-
otics to protect 60 million people
Community-Based Abstinence
based organizations.
from anthrax exposure. The
Education program and the
$600 million request includes
Abstinence Education Grants to
Mentoring Children of Prisoners
$50 million to procure portable mass
States to ACF. The FY 2006 budget
The Mentoring Children of Prisoners
casualty treatment units and
expands activities to educate adoles-
program, funded at $50 million, will
$550 million to buy additional
cents and parents about the health
establish approximately 33,000 new
medicines, replace those that are
risks associated with early sexual
mentoring relationships for children
losing potency, provide specialized
activity and provide them with the
of incarcerated parents or those
storage, and ensure that medicines
tools needed to help adolescents
recently released from prison.
and supplies can be made available
make healthy choice. A total of $206
Nearly two million children have a
for use anywhere in the United States
million, an increase of $39 million, is
parent in a federal or state correc-
within 12 hours.
requested for these activities.
tional facility, and research indicates
that children with incarcerated
Safe Food and Safe Drugs: The
Healthy Marriage / TANF
parents are more likely than the
FY 2006 budget seeks $1.9 billion
Reauthorization
general population to display a
for the Food and Drug
A high priority in the President's
variety of behavioral, emotional,
Administration (FDA), a net increase
Budget is TANF reauthorization. A
health, and educational problems.
of $81 million above FY 2005.
key element of the President's plan is
Within the requested increase for
its support of healthy marriage and
Maternity Group Homes
FDA, $30 million will be directed to
responsible fatherhood. The
The budget includes $10 million for
enhancing the agency's national
FY 2006 budget includes $1 billion
Maternity Group Homes, to support
network of food contamination
over five years in federal funds to
community-based, adult-supervised
analysis laboratories and support
promote healthy marriage through
group homes for young mothers and
vital research on technologies able to
demonstrations, research, and a
their children. Grantees will provide
prevent threats to our food supply.
matching state program. The budget
a range of coordinated services such
Drug safety is also a primary focus,
also proposes $200 million in
as child care, education, job training,
with a $6.5 million (24%) increase
mandatory funding over five years to
and counseling and advice on parent-
dedicated to evaluating and
support responsible fatherhood.
ing and life skills.
5
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Increasing Care for Children and
most vulnerable elderly Americans,
improve the quality of performance
the Elderly:
who otherwise lack access to healthy
information. Sixty five HHS
meals, preventive care, and other
programs were reviewed in the PART
Child Support Enforcement
supports that enable them to remain
process between FY 2004 and 2006.
The FY 2006 President's Budget
in their home communities and out
These programs account for more
eagerly anticipates congressional
of nursing facilities. It also continues
than 74 percent of HHS budgetary
action on previously proposed child
investments in program innovations
resources. Forty-seven of the
support enforcement legislation. The
to test new models of home and
65 programs reviewed received a
President's legislative proposals
community-based care.
narrative rating of Adequate,
continue to support healthy,
Moderately Effective, or Effective.
financially strong families by
Additional information on PART
strengthening enforcement tools,
IMPLEMENTING THE PRESIDENT'S
results for HHS programs is provided
enhancing child support automation,
MANAGEMENT AGENDA &
in the individual Operating Division
and improving collection of medical
IMPROVING MANAGEMENT
sections as well as in the FY 2006
child support. These proposals offer
The President's Management Agenda
PART table on page 10.
an impressive $3.4 billion in
(PMA) provides a framework to
increased child support collections to
improve the management and
Strategic Management of Human
families at a total federal cost of
performance of HHS. HHS has
Capital: HHS has successfully
$52 million over five years.
taken significant steps to institution-
achieved a green status and green
alize its focus on results and achieve
progress rating for Strategic
Management of Human Capital.
Child Welfare Program Option
improved program performance that
This high rating recognizes several
It is a high priority of HHS to pursue
is important to the HHS mission and
HHS accomplishments, such as the
with Congress passage of the Child
the American taxpayer.
consolidation of 40 personnel offices
Welfare Program Option. The Child
Budget and Performance
dispersed throughout HHS into four
Welfare Program Option would give
Integration: Budget and
Human Resources Centers, which
States the option to receive their
Performance Integration (BPI) aims
became operational in January 2004.
foster care funding as a flexible grant
to improve program performance and
HHS is planning several upcoming
over five years. The flexible option
results by ensuring that performance
projects to support Human Capital
would support a continuum of servic-
information is used to inform
and maintain this high rating.
es to families in crisis and children at
funding and management decisions.
risk. This proposal costs $36 million
For FY 2006, HHS operating
Competitive Sourcing: HHS has
in FY 2006 and it is budget neutral
divisions produced their first
successfully achieved a green status
over five years.
"performance budgets" which
and green progress rating for
Competitive Sourcing. To date, HHS
Head Start
combine budget and performance
has conducted competitive sourcing
The budget requests $6.9 billion for
information in a single document.
studies for almost 25 percent of its
Head Start, which will provide
With this new format the Department
commercial activities. For studies
comprehensive child development
moves from the traditional approach
completed in FY 2004 HHS antici-
services to 919,000 children of
of presenting separate budget justifi-
pates gross savings of $55 million
primarily low-income families. The
cations and performance plans to the
for the benefit of HHS programs and
request includes $45 million to
use of one integrated document to
the American taxpayer. HHS plans
support the President's initiative to
present both budget and performance
to maintain high performance results
improve Head Start by funding nine
information. This enhances the
that support Competitive Sourcing,
state pilot projects to coordinate state
availability and use of program and
which include structuring competi-
preschool, child care, and Head Start
performance information to inform
tions to maximize efficiencies and
in a comprehensive system of early
the budget process. The new budget
savings and implementing a savings
childhood programs. Head Start
format along with other successes
validation plan.
programs help ensure that children
enabled HHS to improve its BPI
are ready to succeed at school by
status rating from red to yellow
Improving Financial Management:
supporting their social and cognitive
while maintaining a green progress
HHS implemented several processes
development.
rating on the PMA scorecard.
to improve the financial performance
of the Department, such as streamlin-
Services for the Elderly
The Program Assessment Rating
ing and accelerating the annual
The budget requests a total of
Tool (PART) is an important
financial reporting process and
$1.4 billion in the Administration on
component of BPI and is used to
combining annual audited financial
Aging for programs that serve the
assess program performance and
statements with program perform-
Advancing the Health, Safety, and Well-Being of our People
6

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ance information in the Department's
Management Initiatives: In addition
Performance and Accountability
to the five government-wide manage-
Report. It also continues to
ment initiatives, HHS is also
implement the Unified Financial
responsible for managing the follow-
Management System within several
ing PMA Program Initiatives:
HHS agencies.
Broadening health insurance
E-Government / IT Management:
coverage through state initiatives
HHS has achieved a yellow status
and progress rating for Expanded
Eliminating improper payments
Electronic Government. More than
95 percent of HHS' information
Real property asset management
systems have certified and accredited
Faith-based and community initiatives
security plans. HHS has been working
to achieve a more mature Enterprise
Research and development invest
Architecture (EA) that links perform-
ment criteria
ance to strategic and capital planning
and budget processes.
7
Advancing the Health, Safety, and Well-Being of our People

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HHS BUDGET BY OPERATING DIVISION
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Food & Drug Administration:
Program Level.............................................
$1,695
$1,801
$1,881
+$80
Budget Authority..........................................
1,386
1,450
1,500
+50
Outlays........................................................
1,379
1,317
1,475
+158
Health Resources & Services Administration:
Budget Authority..........................................
6,682
6,890
6,047
-843
Outlays........................................................
6,634
6,637
6,529
-108
Indian Health Service:
Budget Authority..........................................
3,072
3,135
3,198
+63
Outlays........................................................
3,057
3,009
3,324
+315
Centers for Disease Control & Prevention:
Budget Authority..........................................
4,440
4,572
4,017
-555
Outlays........................................................
4,259
4,490
4,436
-54
National Institutes of Health:
Budget Authority..........................................
28,028
28,594
28,740
+146
Outlays........................................................
25,759
27,467
28,563
+1,096
Substance Abuse & Mental Health Services:
Budget Authority..........................................
3,234
3,268
3,215
-53
Outlays........................................................
3,112
3,191
3,239
+48
Agency for Healthcare Research & Quality:
Program Level.............................................
304
319
319
0
Budget Authority..........................................
0
0
0
0
Outlays........................................................
69
0
0
0
Centers for Medicare & Medicaid Services:
Budget Authority..........................................
455,511
480,444
565,060
+84,616
Outlays........................................................
448,631
487,603
543,719
+56,116
Administration for Children & Families:
Budget Authority*........................................
48,594
49,198
44,947
-4,251
Outlays........................................................
46,125
47,086
47,024
-62
*
In FY 2004 Temporary Assistance to Needy Families includes $2 billion for the Contingency Fund to
remain available for five years; and $500 million for employment achievement bonuses providing
$100 million peryear to the States.
Advancing the Health, Safety, and Well-Being of our People
8

---

HHS BUDGET BY OPERATING DIVISION
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Administration on Aging:
Budget Authority...................................................
1,374
1,393
1,369
-24
Outlays.................................................................
1,342
1,367
1,379
+12
Health Information and Technology Initiative:
Budget Authority...................................................
0
0
75
+75
Outlays.................................................................
0
0
39
+39
Medicare Hearings and Appeals:
Budget Authority...................................................
47
58
80
+22
Outlays.................................................................
47
58
68
+10
Departmental Management/Civil Rights/
PHSSEF*:
Budget Authority...................................................
2,766
2,751
2,822
+71
Outlays.................................................................
2,369
2,455
3,047
+592
Office of Inspector General:
Budget Authority...................................................
39
40
40
0
Outlays.................................................................
21+
40
40
0
Program Support Center
(Retirement Pay, Medical Benefits, and Misc. Trust
Funds):
Budget Authority...................................................
403
425
444
+19
Outlays.................................................................
385
417
454
+37
Proprietary Receipts:
Budget Authority...................................................
-1,183
-1,180
-1,148
+32
Outlays.................................................................
-1,183
-1,180
-1,148
+32
Budget Authority...................................................
$554,393
$581,038
$660,406
+79,368
Emergency Response Fund (Non-add)..............
$2,818
$0
-$2,818
-2,818
Non-Emergency Relief Fund (Non-add)............
$551,575 $581,038
$663,224
+82,186
Outlays.................................................................
$542,006
$583,957
$642,188
+58,231
Ful -Time Equivalents............................................
64,244
67,444
+67,284
-160
Commissioned Corps Detailed Outside HHS.....
1,005
1,262
+1,262
0
* Public Health and Social Services Emergency Fund
9
Advancing the Health, Safety, and Well-Being of our People

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HHS FY 2006 PARTS
(dollars in millions)
Narrative
Rating
2005
2006
Health Resources & Services Administration:
Traumatic Brain Injury.........................................................................
RND
$9
$0
Poison Control Centers....................................................................... Adequate
$24
$23
Emergency Medical Services for Children............................................
RND
$20
$0
Organ Transplantation......................................................................... Adequate
$24
$23
Moderately
Bone Marrow Donor Registry.............................................................
$25
$23
Effective
Indian Health Service:
Health Facilities construction................................................................
Effective
$89
$3
Centers for Disease Control and Prevention:
Epidemic Services and Response.........................................................
RND
$0
$0
Sexualy Transmitted Diseases (STD) and Tuberculosis (TB)................ Adequate
$298
$299
Infectious Disease Control................................................................... Adequate
$226
$225
Occupational Safety and Health (NIOSH)........................................... Adequate
$286
$286
Buildings and Facilities......................................................................... Adequate
$270
$30
National Institutes of Health:
Extramural Research Activities (other than training and facilities)...........
Effective
$21,146
$21,385
Substance Abuse & Mental Health Services:
Moderately
Substance Abuse Prevention PRNS....................................................
$199
$184
Effective
Agency for Healthcare Research & Quality:
Moderately
Pharmaceutical Outcomes...................................................................
$27
$26
Effective
Administration for Children & Families:
Assets for Independence..................................................................... Adequate
$25
$25
Child Welfare -- CAPTA State Grants................................................
RND
$27
$27
Child Welfare -- CBCAP....................................................................
RND
$43
$43
Moderately
Child Care (mandatory and discretionary)............................................
$4,800
$4,800
Effective
Independent Living..............................................................................
RND
$140
$140
Violent Crime Reduction Programs (Shelter and Hotline)......................
RND
$129
$129
Office of the Secretary:
Adolescent and Family Life.................................................................
RND
$31
$31
Women's Health..................................................................................
RND
$29
$29
10
Advancing the Health, Safety, and Well-Being of our People

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COMPOSITION OF THE HHS BUDGET
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Mandatory Programs (Outlays):
Medicare............................................................
$265,062
$290,310
$340,412
+50,102
Medicaid.............................................................
176,231
188,497
192,718
+4,221
Temporary Assistance for Needy Families............
17,725
18,099
18,164
+65
Foster Care & Adoption Assistance......................
6,340
6,474
6,561
+87
State Children's Health Insurance.........................
4,607
5,343
6,233
+890
Child Support Enforcement...................................
3,815
3,934
4,031
+97
Child Care...........................................................
2,695
2,718
2,718
0
Social Services Block Grant.................................
1,752
1,764
1,762
-2
Other Mandatory Programs..................................
1,113
1,373
2,038
+665
Proprietary Receipts............................................
-1,183
-1,180
-1,148
+32
Subtotal, Mandatory (Outlays).......................
$478,157 $517,332 $573,489
$56,157
Discretionary Programs (BA):
Food & Drug Administration................................
$1,386
$1,450
$1,500
+$50
Health Resources & Services Administration........
6,600
6,809
5,972
-$837
Indian Health Service...........................................
2,922
2,985
3,048
+$63
Centers for Disease Control and Prevention..........
4,440
4,572
4,017
-$555
National Institutes of Health.................................
27,878
28,444
28,590
+$146
Substance Abuse & Mental Health Services.........
3,234
3,268
3,215
-$53
Agency for Healthcare Research & Quality..........
0
0
0
$0
AHRQ Program Level (Non-Add)....................
304
319
319
$0
Centers for Medicare & Medicaid Services...........
2,963
3,267
3,257
-$10
Administration for Children & Families..................
13,356
13,845
13,126
-$719
Administration on Aging.......................................
1,374
1,393
1,369
-$24
Office of the Secretary*......................................
442
451
434
-$17
Health Information Technology.............................
0
0
75
+$75
Medicare Hearings and Appeals...........................
47
58
80
+$22
PHSSEF.............................................................
2,164
2,339
2,428
+$89
Subtotal, Discretionary (BA)..........................
$66,806
$68,882
$67,112
-$1,771
Medicare Eligible Healthcare Accruals (Com. Corps)........
27
33
34
+$1
Total, Discretionary (BA)**...........................
$66,833
$68,915
$67,146
-$1,770
Subtotal, Discretionary (Outlays)...................
$63,849
$66,625
$68,699
$2,074
Total, HHS Outlays........................................
$542,006 $583,957 $642,188 +$58,231
** Includi
Including ng
the the
Of Of
fice fic
of e of
the
the Ins
Inspector pector
General Gene
and r
th al
Ofand
fice th
fore Off
Civil ice fo
Rightsr Civil Rights
** Discretionary amounts shown reflect adjustments for the comparability and services provided by other agencies in support of
**Discretionary amounts shown reflect adjustments for comparability and services
Medicare.
provided by other agencies in support of Medicare.
Advancing the Health, Safety, and Well-Being of our People
11

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FDA
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Salaries & Expenses:
Foods....................................................................................
$465
$495
$522
+$28
Animal Drugs and Feeds....................................................
105
115
118
+3
Human Drugs.......................................................................
513
537
556
+19
Biologics...............................................................................
180
184
191
+7
Medical Devices..................................................................
252
277
289
+12
National Center for Toxicological Research....................
40
40
41
+1
Field Inspections and Analysis (non-add)......................
535
560
590
+30
Other Activities...................................................................
124
124
127
+3
FDA Consolidation at White Oak.....................................
2
21
22
+1
Export/Certification Fund...................................................
7
7
8
+1
Subtotal, Salaries & Expenses......................................
$1,688
$1,801
$1,874
+$73
Buildings and Facilities......................................................
7
0
+7
+7
Total, Program Level......................................................
$1,695
$1,801
$1,881
+$81
Less User Fees:
Prescription Drug User Fee Act (PDUFA)......................
-$250
-$284
-$305
-$21
Medical Device User Fees (MDUFMA)..........................
-32
-34
-40
-6
Animal Drugs User Fee Act (ADUFA) ...........................
-5
-8
-11
-3
Mammography Quality Standards Act (MQSA)............
-17
-17
-17
0
Export/Certification Fund...................................................
-7
-7
-8
-1
Subtotal, User Fees..........................................................
-$310
-$350
-$381
-$31
Total, Budget Authority............................................
$1,386
$1,450
$1,500
+$50
Biodefense (non-add):
Food Defense......................................................................
$116
$150
$180
+$30
Medical Product Countermeasures................................
53
57
57
0
Security................................................................................
7
7
7
0
Subtotal, Biodefense (non-add)..................................
$175
$214
$244
+$30
FTE..............................................................................................
10,210
10,446
10,242
-204
Food and Drug Administration
12

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FOOD AND DRUG ADMINISTRATION
The Food and Drug Administration protects the public health by assuring the safety, efficacy, and security of human
and veterinary drugs, biological products, medical devices, our nation's food supply, cosmetics, and products that
emit radiation. The FDA also advances the public health by helping to speed innovations that make medicines and
foods more effective, safer, and more affordable; and helping the public get the accurate, science-based information
they need to use medicines and foods to improve health.
TheFY2006budgetrequestfor companion,orothernon-food
fund research based on food vulnera-
the Food and Drug
animals; and assures that food from
bility threat assessments developed
Administration (FDA) is $1.9 billion,
animals is safe for human consump-
in collaboration with USDA. This
a program level increase of
tion. This program is responsible for
research will focus on closing
$81 million over FY 2005 and
ensuring the availability of safe and
mission-critical knowledge gaps in
$614 million over FY 2001. Of the
effective veterinary drugs and has the
food defense through development of
funds requested, the budget proposes
primary role in Bovine Spongiform
technologies able to detect and
$1.5 billion in budget authority,
Encephalopathy (BSE) or "Mad
prevent threats to the food supply.
while $381 million will be derived
Cow" disease prevention efforts.
FDA will continue its support of the
from industry-specific user fees.
The budget includes $118 million in
government-wide biosurveillance
Significant increases are included to
the Animal Drugs and Feeds
effort with a $3 million increase, for
secure our nation's food supply from
program, a $3 million increase over
a total of $5 million dedicated to
the risks of contamination and for the
FY 2005.
providing the earliest possible
Office of Drug Safety to ensure the
detection of the intentional release of
safety and effectiveness of approved
Food Defense: The FY 2006 budget
deadly pathogens into food, water, or
drugs already on the market. The
requests a $30 million increase over
the environment. This increase will
budget also supports increased
FY 2005, for a total of $180 million
help coordinate existing food surveil-
funding for the premarket review of
devoted to protecting the American
lance capabilities with public health
medical devices as well as drugs and
people against attacks on the national
and environmental officials at the
biologics, while continuing to
food supply. This request is a part of
State and national levels under a
provide funding for the FDA consoli-
a continuing effort with the
unified system. Finally, $1 million
dation at White Oak and restoring
Department of Agriculture (USDA)
of the request will be used for central
FDA-wide facilities repair funds.
and the Department of Homeland
response coordination through the
Security (DHS) to coordinate all
Office of Crisis Management.
strategies used to combat the threat
PROTECTING THE FOOD SUPPLY
of intentional food contamination.
Animal Drugs Premarket Review:
Since 9/11, FDA has strengthened
Within the increase, $20 million will
The budget includes $11 million
the nation's defenses against the risk
be directed to enhance the laboratory
derived from industry-specific fees,
of deliberate contamination of our
surge capacity and national coverage
an increase of $3 million over
food supply. Approximately
of the Food Emergency Response
FY 2005. These funds will allow
80 percent of our country's food is
Network (FERN). FERN is a nation-
FDA to improve review times on
under FDA's direct regulatory
wide network of Federal and State
90 percent of original new animal
oversight, and the agency has
laboratories dedicated to testing for
drug applications by 40 days, while
committed substantial effort and
biological, chemical and radiological
maintaining the safety of approved
resources to combat threats prior to
threat agents. While FDA and
animal drugs.
the occurrence of a terrorist event.
USDA are building FERN surge
In FY 2006, FDA will continue to
capacity, the agency will continue
HUMAN DRUGS AND BIOLOGICS
ensure consumers are protected
work with DHS to award new funds
against intentional and accidental
to existing State labs in geographic
In FY 2006, the budget includes
risks that threaten our food supply.
regions with the greatest need
$747 million for the Human Drugs
Within the FY 2006 budget, the
according to current threat assess-
and Biologics, an increase of
Foods program requests a total of
ments. The budget request will
$19 million for the Human Drugs
$522 million, a $28 million increase
dramatically increase FDA's ability
program and an increase of
over FY 2005 devoted to food
to rapidly test threat agents and
$7 million in the Biologics program.
defense. The Animal Drugs and
respond to terrorist attacks.
Of the total spending on these activi-
Feeds program protects the health
ties, $288 million will be from
In addition to laboratory prepared-
and safety of all food producing,
industry-specific user fees. These
ness, $6 million of this request will
funds will ensure the safety and
13
Food and Drug Administration

---

efficacy of new and existing human
own indication(s) that may result in
MEDICAL DEVICES
drugs and biologics ­ helping to
its differential use in different
make medicines safer, more afford-
populations, it is essential that the
The FY 2006 budget includes an
able and more available. All new
Center for Drug Evaluation and
increase of $12 million, for a total of
drugs will be evaluated for safety
Research have access to a wide range
$289 million to ensure medical
and efficacy before entering the
of databases to adequately assess
devices are safe and effective. This
market, and monitoring efforts will
drug safety.
level of funding is consistent with
be directed toward the 10,000 drugs
the intent of the Medical Devices
that are already on the market to be
FDA will continue its efforts to
User Fee and Modernization Act of
sure they continue to meet the
improve the timeliness and availabil-
2002 (MDUFMA), which provides a
highest standards of safety and
ity of drug safety information and
total of $40 million in industry-
efficacy. In addition, existing and
will seek alternative strategies for
specific user fees for devices work
emerging biological products, includ-
managing drug safety issues. FDA
across FDA.
ing whole blood and blood products;
will also increase the use of external
This request for the Medical Devices
vaccines; and therapeutic products,
experts in evaluating post-marketing
program will lead to marked
including cells, gene therapies, and
safety issues. The agency's actions
improvement in application review
tissues will be assessed for safety
will be harmonized with the
performance while maintaining the
and effectiveness. In FY 2004, FDA
emerging results of an Institute of
consistent quality and safety of
approved 534 new and generic drugs
Medicine (IOM) Study of the Drug
approved medical device products.
and biological products, many of
Safety System. The IOM committee
In FY 2006, FDA expects to meet
which represent significant therapeu-
conducting this study will examine
goals stipulating that the agency
tic advances.
the role of FDA within the health
care delivery system and recommend
must review and make decisions on
Drug Safety: The budget includes
measures to enhance the confidence
80 percent of all original premarket
an increase of $6.5 million, including
of Americans in the safety and
medical device applications within
$1.5 million in PDUFA user fees,
effectiveness of their drugs.
150 and 320 days respectively.
over FY 2005 for the Office of Drug
These are the most challenging
Safety, for a total of $33 million.
Prescription Drug User Fee Act
review goals to date, with goals
This represents a 147 percent
(PDUFA): The budget includes
becoming even more ambitious in
increase in funds for this office since
$305 million from the Prescription
FY 2007. Additional funding will
FY 2001. With increased resources in
Drug User Fee Act (PDUFA) fees, of
also be directed towards medical
FY 2006, FDA plans to hire addition-
which $279 million is available for
device postmarket safety efforts.
al staff to increase personnel
the Human Drugs and Biologics
MDUFMA fees contribute to the
dedicated to evaluating and
programs and the remaining
evaluation of postmarket studies
communicating drug safety risks to
$26 million for costs related to the
required as a condition of medical
the healthcare community and the
management and operations of the
device approval, and the compilation,
American Public. FDA also plans to
program. During renegotiation of
development, and review of postmar-
use additional staff to establish
the PDUFA agreement in 2002, FDA
ket information to identify safety and
policies and processes regarding
sought and received the statutory
effectiveness issues.
safety reviews and risk management,
authority to expend user fees on
manage increased drug safety
postmarket risk management. The
FACILITIES
monitoring workload and internal
PDUFA program has since substan-
Headquarters Consolidation:
communications, and increase
tially increased the amount of funds
The FY 2006 budget request includes
scientific expertise available to
devoted to maintaining the safety
a total of $22 million in resources
explore safety risks and signals in
standards essential to the public's
directed to move and fit out costs for
various populations. Further, FDA
health. These fees have also enabled
the new FDA consolidated facility
intends to apply more funding to
the provision of more technical
the General Services Administration
obtaining access to a wide range of
assistance, advice, and rapid respons-
(GSA) is constructing in White Oak,
clinical, pharmacy and administrative
es to special inquiries during the
MD. This funding is needed for
databases. Given the highly
drug development period and after
completion of the project's next
fragmented healthcare system in the
drugs are approved for sale. As a
phase, which includes the Center for
United States, there is no single
result, industry has been able to
Devices and Radiological Heath
healthcare database that the Agency
shorten the time needed for drug
(CDRH) Engineering and Physics
can rely upon to widely monitor drug
development and continually
Laboratory and the data center
adverse events. As each drug has its
improve the safety profile of market-
ed drugs.
consolidation. These resources will
Food and Drug Administration
14

---

be directed to relocation costs,
laboratories. Funding was paused in
alterations, the budget will allow
including move and fit-out of the
FY 2005, as FDA utilized carryover
greater flexibility in how resources
CDRH lab and communications and
balances from the prior year to pay
are allocated in response to crisis
data equipment for the consolidated
for facility repair.
situations, eliminate the need for
data center. The FY 2006 GSA
many reprogramming requests to
budget includes $128 million
MANAGEMENT IMPROVEMENTS
Congress, and more accurately
primarily for construction of the
portray the cost of operating each
second of two Center for Drug
In FY 2006, FDA proposes a budget
program.
Evaluation and Research buildings to
structure change in order to enhance
be occupied in FY 2007 and the
the agency's ability to respond to
FDA will also seek management
second phase of construction for the
emerging situations without being
efficiencies through a $5 million
consolidated data center.
hindered in performing mission
streamlining of information technolo-
critical activities. The two major
gy efforts and a $1.5 million
Buildings and Facilities:
changes are the establishment of a
administrative reduction.
In FY 2006, the budget seeks
single budget line item for the
To accomplish this, the agency will
$7 million to pay for repair and
agency's field inspection and analysis
spur consolidation of information
maintenance for FDA-owned facili-
activities (Office of Regulatory
technology activities and reduce
ties nation-wide. FDA inventory
Affairs), and changing the display
administrative expenses outside the
includes approximately 40 buildings
and management of facility rent costs
user fee-funded areas. Both of these
in 16 separate locations, plus field
by incorporating rental expenses into
management improvements support
offices and newly established BSL-3
program estimates. By making these
the President's Management Agenda.
15
Food and Drug Administration

---

HRSA
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Health Centers...............................................................................................................
$1,618
$1,734
$2,038
+$304
(Health Center Judgment Fund - non-add).........................................................
45
45
45
0
Free Clinics Medical Malpractice Coverage..............................................................
5
0
0
0
Healthy Community Access Program........................................................................
83
83
0
-83
Nurse Training Programs.............................................................................................
142
151
150
-1
National Health Service Corps....................................................................................
170
132
127
-5
Health Professions Training Activities......................................................................
245
252
0
-252
Scholarships for Disadvantage Students/Workforce Information & Analysis...
48
48
11
-37
Children's Hospitals Graduate Medical Education...................................................
303
301
200
-101
Bioterrorism Hospital Preparedness...........................................................................
515
491
483
-8
Bioterrorism Medical Training, Curriculum Development.......................................
28
28
28
0
Ryan White HIV/AIDS Activities...............................................................................
2,065
2,073
2,083
+10
(AIDS Drug Assistance Program - non-add).......................................................
749
788
798
+10
Rural Health....................................................................................................................
142
144
29
-115
Maternal and Child Health Block Grant.....................................................................
730
724
724
0
Healthy Start..................................................................................................................
98
102
97
-5
Family Planning.............................................................................................................
278
286
286
0
Traumatic Brain Injury..................................................................................................
9
9
0
-9
Poison Control...............................................................................................................
24
23
23
0
EMS for Children...........................................................................................................
20
20
0
-20
Organ Transplantation.................................................................................................
25
24
23
-1
Bone Marrow Donor Registry.....................................................................................
23
26
23
-3
Cord Blood Stem Cell Bank..........................................................................................
10
10
0
-10
Telehealth.......................................................................................................................
4
4
4
0
Black Lung/Radiation Exposure Compensation.......................................................
8
8
8
0
Hansen's Disease Services Programs.........................................................................
20
20
19
-1
Health Care Facilities/Other Improvement Projects.................................................
371
483
0
-483
State Planning Grants...................................................................................................
15
11
0
-11
Universal Newborn Hearing Screening/Trauma/Sickle Cell....................................
13
13
0
-13
Program Management...................................................................................................
155
153
151
-2
National Practitioner Data Bank (User Fee)...............................................................
16
16
16
0
Health Integrity & Protection Data Banks (User Fee).............................................
44
4
0
Total, Program Level.............................................................................................
$7,187
$7,373
$6,527
-$846
Less Funds Allocated From Other Sources:
User Fees.....................................................................................................................
-20
-20
-20
0
PHS Evaluation Funds (Ryan White)......................................................................
-25
-25
-25
0
Public Health and Social Service Emergency Fund...............................................
-543
-519
-511
+8
Subtotal, Funds from Other Sources....................................................................
-588
-564
-555
+8
Total, Discretionary Budget Authority..............................................................
$6,599
$6,809
$5,972
-$838
FTE..................................................................................................................................
1,878
2,034
2,002
-32
Health Resources and Services Administration
16

---

HEALTH RESOURCES AND SERVICES ADMINISTRATION
The Health Resources and Services Administration provides national leadership, program resources, and services
needed to improve access to culturally competent, quality health care.
TheFY2006budgetrequests
$2.0 billion is requested for the
15,500 other health care clinicians
$6.5 billion for the Health
Health Centers program,
including nurse practitioners and
Resources and Services
$304 million over the FY 2005 level.
midwives ­ 33 percent more
Administration (HRSA), a net
physicians and dentists than in
decrease of $846 million from the
By the end of FY 2006, the Health
FY 2001, and almost 30 percent
FY 2005 level. HRSA is the princi-
Centers program will deliver high-
more clinicians. The budget request
pal Federal agency charged with
quality, affordable primary and
includes $45 million in no-year
increasing access to basic health care
preventive health care to over
funding for the Health Centers
for those who are medically
16 million patients at more than
Federal Tort Claims Program, which
underserved. HRSA's portfolio of
4,000 sites across the country. In
provides medical malpractice
programs and initiatives focus on
2006, health centers will serve an
coverage for the increasing number
services through health centers, the
estimated 16 percent of the Nation's
of health center employees.
Ryan White CARE Act programs,
population who are at or below
placing physicians in underserved
200 percent of the Federal poverty
Ryan White, HIV/AIDS: The Ryan
areas, maternal and child health
level.
White CARE Act provides services
programs, and support for the next
to approximately 571,000 individuals
Health centers are effectively target-
generation of nurses. Collectively,
each year with little or no insurance.
ed to eliminate health disparities and
these and other programs provide
provide a range of essential services.
The FY 2006 request provides a total
direct services to improve access to
Forty percent of health center
of $2.1 billion for Ryan White activi-
care for more than 20 million
patients have no health insurance and
ties to ensure a comprehensive
uninsured or underserved individu-
64 percent are racial or ethnic
approach to address the health needs
als. The HRSA budget supports
minorities. Further, 83 percent of
of persons living with HIV/AIDS.
programs that have shown success in
health centers provide pharmacy
In 2004, the President articulated his
providing direct health care and
services on site or by paid referral,
commitment to reauthorize the Ryan
reduces or eliminates funding for
83 percent provide preventive dental
White CARE Act by outlining key
programs that have failed to
care, and 74 percent provide mental
principles to strengthen this legisla-
demonstrate results or are similar to
health and substance abuse services.
tion. These principles include
other activities.
prioritizing lifesaving services for
In 2004, it is estimated that health
E
individuals living with HIV/AIDS,
XPANDING ACCESS TO QUALITY
centers will employ approximately
including HIV/AIDS medications
HEALTH CARE
8,300 physicians and dentists and
and primary care; providing more
Health Centers: The budget will
complete the President's commit-
ment to create 1,200 new or
The FY 2006 request completes the President's initiative to expand access
expanded health center sites to
to health care for the uninsured and underserved by creating 1,200 new
serve an additional 6.1 million
or expanded health center sites and serving 6.1 million more people.
people by 2006. A total of
2.4 million additional individuals
+1,350
will receive health care in 2006
+6.1
through 578 new or expanded
Goal: +6.1 million
sites in rural areas and
Goal: +1,200 New or
patients
underserved urban communities.
Expanded Sites
In addition, the President has
established a new goal to help
every poor county in America in
need that lacks a health center and
can support one. The budget
includes $26 million to fund
2002
2004
2006
2002
2004
2006
40 new health center sites in high
poverty counties. A total of
17
Health Resources and Services Administration

---

This program supports a
$10 million, or nearly 30 percent,
Ryan White CARE Act
network of more than
increase over last year for grants to
Accomplishments
4,500 clinics nationwide
increase the number of baccalaureate
that provide access to a
prepared nurses and to improve the
AIDS mortality has decreased as lives have
wide array of reproductive
quality of nursing practice for those
been extended with HIV/AIDS medications
health care and preventive
already in the workforce through
­ many of which have been purchased
health care services, such
education, practice, and retention
through the AIDS Drug Assistance program.
as pap tests and breast
grants. At this level, approximately
exams to nearly
40 new grants will be awarded.
Ryan White CARE Act grantees have served
five million people,
clients who reflect the demographics of the
primarily low-income
The request provides $31 million to
epidemic; data shows that the disease now
women. Counseling and
support approximately 860 loan
disproportionately impacts minority
education regarding
repayments and scholarships that will
communities.
abstinence are required for
reduce the financial barrier to
Comprehensive approaches have been
all adolescent clients in
nursing education for all levels of
developed all across the country recognizing
this program.
professional nursing students. The
budget also includes $21 million for
that HIV/AIDS now affects all States,
Healthy Start and Poison
nursing workforce diversity,
urban, suburban, and rural communities.
Control: The request
$43 million for advanced nursing
includes $97 million for
education, and maintains over
flexibility to target resources to areas
the Healthy Start program, which
$8 million in loans for nurse faculty
that have the greatest needs; and,
supports community driven programs
and support for comprehensive
encouraging the participation of any
in targeted high risk communities to
geriatric education. These programs
provider, including faith-based and
reduce the incidence of risk factors
will support the recruitment,
other community organizations that
that contribute to infant mortality.
education, and retention of an
show results, recognizing the need
The budget also includes $23 million
estimated 10,700 nurses and nursing
for State and local planning and
for the Poison Control program,
students.
ensuring accountability by measuring
which this year's Performance
progress. The request will support a
Assessment Rating Tool (PART)
Approximately 53 million people
comprehensive approach to address
assessment found, has demonstrated
reside in communities without access
the health needs of persons living
progress in reducing emergency
to primary health care due to
with HIV/AIDS, consistent with the
room visits due to poisoning, its long
financial, geographic, cultural,
reauthorization principles.
term goal.
language, and other barriers. Since
1972 when the first 20 clinicians
Maternal and Child Health Block
DEVELOPING AHEALTH
were assigned to serve in
Grant: The budget provides
PROFESSIONS WORKFORCE FOR
underserved communities, the
$724 million for the Maternal and
THE 21ST CENTURY
National Health Service Corps
Child Health (MCH) Block Grant.
(NHSC) has made nearly 26,000
The MCH Block Grant supports
Today, the Nation faces a shortage of
health professionals available to
Federal and State partnerships that
approximately 150,000 nurses in our
serve in underserved areas across the
provide gap-filling prenatal health
hospitals and other health care facili-
country. In addition, the NHSC
services to more than 2.5 million
ties. As the population continues to
works with the Health Center
women and primary and preventive
grow and age and medical services
program to help meet its provider
care to more than 22.7 million
advance, the need for nurses will
needs. Currently, half of NHSC
children, including over 1.1 million
continue to increase. A report issued
clinicians serve in health centers.
children with special health care
by the Department in 2002,
The budget maintains the current
needs. These services include direct
Projected Supply, Demand, and
field strength of more than
health care services for children with
Shortages of Registered Nurses:
4,000 clinicians in 2006. Through
special health care needs, the
2000-2020, predicted that the nursing
the enactment of the American Jobs
promotion of health and safety in
shortage is expected to grow to
Creation Act of 2004, HRSA will no
child care settings, and enabling
29 percent by 2020, compared to a
longer reimburse loan repayment
services such as home visiting and
6 percent shortage in 2000.
recipients for the tax payment. The
nutrition counseling.
The budget requests $150 million for
FY 2006 request includes
Family Planning: The budget
nursing education programs, an
$127 million for the NHSC program.
maintains the FY 2005 level of
increase of almost 80 percent since
The budget provides $200 million for
$286 million for Family Planning.
FY 2001. Within this total is a
the Children's Graduate Medical
Health Resources and Services Administration
18

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Education program. This level will
other incident requiring mass casual-
qualified organ procurement organi-
provide children's hospitals with
ty care and/or containment of
zations to support the coordination of
substantial resources to train doctors.
infectious agents, in one or more
organ donation activities; fund the
In 2006, hospitals will receive an
metropolitan areas. Funds would be
development and implementation of
estimated per resident payment of
awarded competitively based on,
a program to provide reimbursement
$51,145 to support a total of about
among other factors, threat analysis,
for subsistence expenses to donating
4,100 medical interns, residents, and
quality of design and operational
individuals who lack the resources to
fellows in 61 children's teaching
plan, and financial sustainability of
pay for these expenses; and provide
hospitals.
the project beyond the Federal
grants to States to develop and
funding period.
improve donor registries. This year,
In addition, the request includes
a PART assessment found that the
$10 million for the Scholarships for
In addition, HRSA will continue to
Organ Transplantation program
Disadvantaged Students program.
define a system to ensure that
balances the benefits of a system
In 2006, this program will support
volunteer health professionals are
operated by a private organization,
2,893 scholarships.
able to respond in the event of a
the transplantation network, with the
mass casualty event. The Emergency
PREPARING AMERICA'S HEALTH
need for Federal oversight to ensure
System for Advance Registration of
CARE SYSTEM AND PROVIDERS FOR
public accountability for use of the
Volunteer Healthcare Personnel is a
BIOTERRORISM
limited number of deceased donor
State-based system, which allows for
organs.
The Hospital Preparedness program
the pre-registration of volunteer
directly supports States' efforts to
healthcare personnel who wish to
The FY 2006 budget requests
enhance their capability to provide
respond to an emergency or mass
$23 million to for the National Bone
critical emergency care to America's
casualty event. The system will
Marrow Donor Registry, which
populations in response to acts of
enable users to verify the license and
enables patients to search for a
terrorism and other public health
other credentials of volunteer health
suitable, unrelated bone marrow
emergencies. The budget requests
providers.
donor. This year, a PART assessment
$483 million in FY 2006 to continue
found the National Bone Marrow
The budget also includes $28 million
progress towards the goal of
Donor Registry program to be
for Bioterrorism Training and
100 percent of States having the
effective at increasing recruitment
Curriculum Development to prepare
necessary surge capacity plans,
and the number of donors on the
health care providers across the
including elements of the health care
Registry. The budget does not seek
Nation stand ready for a bioterrorism
provider workforce and pharmaceuti-
additional funding for the Cord
event. The program includes two
cal and laboratory services. As of
Blood Stem Cell Bank. Almost
components: continuing education
the end of 2004, 89 percent of States
$20 million will be available to
for health professionals, funded at
had reached the goal of having plans
implement the program when the
$25 million; and curriculum develop-
in place.
Institute of Medicine (IOM)
ment in health professions schools,
completes a study on the optimal
In FY 2006, HHS will emphasize
funded at $3 million.
design for this new effort in 2005.
performance objectives in relation to
SUPPORTING TRANSPLANTATION
By the end of FY 2006, approximate-
the risks and consequences of terror-
ly 19,000 new cord blood units will
ism. As part of the National
This year celebrates the 50th
be added to the National inventory,
Preparedness Goal called for by
anniversary of the first successful
representing an increase of
Homeland Security Presidential
organ transplant in Boston,
24 percent over the current level of
Directive 8, HHS is developing
Massachusetts. Moving forward
approximately 80,000 units.
performance metrics to help ensure
from the successes achieved since
that hospitals and public health
that first kidney transplant, President
ELIMINATING UNDERPERFORMING
departments are emergency ready.
Bush signed the Organ Donation and
PROGRAMS
These metrics focus on receipt of
Recovery Improvement Act of 2004
This budget represents a thoughtful
emergency case reports, incident
which builds on existing efforts,
analysis of overall available
reporting, laboratory agent testing,
including the Organ Donation
resources. Funding for programs
patient care, and increasing surge
Breakthrough Collaborative and the
which are similar to other activities
capacity.
Gift of Life initiative. The budget
or have failed to demonstrate results
includes $23 million to support the
Within the $483 million, $25 million
is reduced or eliminated and priority
Organ Transplantation program.
is included to create a state-of-the-art
is given to support more targeted
emergency care capability designed
Consistent with this new authority,
efforts to provide direct health
to respond to a terrorist attack or
HRSA will provide grants to
services. In addition, the request
19
Health Resources and Services Administration

---

eliminates nearly $483 million in
to communities in need, including
programs have not demonstrated an
FY 2005 one-time projects,
through the Health Centers program.
impact on placing health profession-
representing almost half of the
Since FY 2001, over $400 million
als in underserved areas. Based on
reduction from the FY 2005 level.
has been awarded to Healthy
this determination, the Admini-
Communities Access Program
stration proposes the elimination of
A number of HRSA programs are
grantees to improve coordination and
most health professions grants in
unable to demonstrate outcomes or
quality of health care; however, only
order to direct resources to activities
provide services similar to other
15 percent of those funds can be used
that are capable of placing health
programs. This year, PART reviews
for direct services. Similarly, over
care providers in medically
found that the Traumatic Brain Injury
the same time period, $60 million
underserved communities.
program did not document an impact
has been awarded to allow States to
on improving the health or well
develop plans to increase health
PROGRAM MANAGEMENT AND
being of individuals with traumatic
insurance coverage through the State
OTHER ACTIVITIES
brain injury and that the Emergency
Planning Grant program. Funding
Medical Services for Children
The budget requests $151 million for
for these programs is not included in
program was unable to demonstrate
program management. Resources
the FY 2006 budget. In addition, the
meaningful results. The Traumatic
will enable HRSA to manage and
Universal Newborn Hearing program
Brain Injury and Emergency Medical
operate a wide array of Federal
is not funded in FY 2006. The
Services for Children programs are
programs as well as to fund Federal
primary purpose of this program is
not funded in FY 2006.
pay cost increases. The budget
not to finance screenings, but rather
includes a total administrative cost
The recently enacted Medicare
state-wide efforts to manage and
savings of $12 million including
Prescription Drug, Improvement, and
track newborn screening activities
$5 million from the National Health
Modernization Act will mean greater
and for training. The Maternal and
Services Corps and $4 million from
access to hospitals, health profes-
Child Health Block Grant provides
transplantation programs.
sionals, and other medical services
States with the flexibility to fund
for rural seniors. The budget reduces
these activities.
The request also includes $30 million
$115 million in HRSA rural
for Telehealth, Hansen's Disease,
The budget maintains support for
programs which were found to be
Black Lung, and Radiation Exposure
nursing programs and health
similar to numerous other HHS
Compensation.
workforce information and analysis,
programs that provide resources to
and funds scholarships for disadvan-
rural areas.
taged students. A previous PART
The budget refocuses resources on
assessment found that, after 40 years
programs that provide direct services
of funding, Health Professions
Health Resources and Services Administration
20

---

21

---

IHS
(dollars in millions)
2006
`
2004
2005
2006
+/- 2005
Indian Health Service:
Clinical Services........................................................
$2,653
$2,723
$2,851
+$128
Contract Health Services (Non-Add)..............
479
498
525
+27
Preventive Health.....................................................
107
110
119
+9
Contract Support Costs...........................................
267
264
269
+5
Tribal Management/Self-Governance....................
8
8
8
0
Urban Health.............................................................
32
32
33
+1
Indian Health Professions.......................................
31
30
31
+1
Direct Operations......................................................
61
62
63
+1
Diabetes Grants.........................................................
150
150
150
0
Subtotal, Services Program Level.......................
$3,309
$3,379
$3,524
+$145
Indian Health Facilities:
Health Care Facilities Construction.......................
$94
$89
$3
-$86
Sanitation Construction...........................................
93
92
94
+2
Facilities & Environmental Health Support..........
138
142
151
+9
Maintenance & Improvement.................................
55
55
56
+1
Medical Equipment...................................................
17
17
18
+1
Subtotal, Facilities Program Level......................
$397
$395
$322
-$73
Total, Program Level...........................................
$3,706
$3,774
$3,846
+$72
Less Funds Allocated From Other Sources:
Health Insurance Collections..................................
-$628
-$633
-$642
-$9
Rental of Staff Quarters...........................................
-6
-6
-6
0
Diabetes Grants.........................................................
-150
-150
-150
0
Total, Budget Authority......................................
$2,922
$2,985
$3,048
$63
FTE..................................................................................
15,034
16,251
16,251
0
Indian Health Service
22

---

INDIAN HEALTH SERVICE
The Indian Health Service raises the physical, mental, social, and spiritual health of American Indians and Alaska
Natives to the highest level.
TheFY2006budgetrequestis Careisprovideddirectlyin
treatment and prevention. IHS also
$3.8 billion, a net increase of
49 hospitals, over 240 outpatient
funds 34 urban Indian health organi-
$72 million over FY 2005. Indian
centers, and over 300 health stations
zations which provide access to care
Health Service (IHS) funding
and Alaska village clinics located
for Indians living in urban areas.
increases are targeted toward the
primarily in the Southwest,
provision of services to a growing
Oklahoma, the Northern Plains, and
CONTINUING TO SERVE A GROWING
population of eligible Indian people.
Alaska. Tribes currently operate 15
POPULATION
IHS will continue to seek ways to
of the hospitals and 80 percent of the
become more efficient and effective
smaller facilities under self-determi-
The challenge for IHS is to continue
in internal operations, helping to
nation agreements with the Agency.
to provide access to quality health
leverage funding towards services
IHS also contracts with hospitals and
care for an increasing population.
while improving service quality.
health care providers outside of its
Additional funding in the FY 2006
own network to provide care for
budget is targeted to the provision of
A
additional services.
GENCY DESCRIPTION
Indian people. In addition to provid-
ing traditional inpatient and
As part of the Federal government's
Population and the Cost of
ambulatory care, IHS and Tribes
special relationship with Tribes, IHS
Providing Care: The budget
provide extensive disease prevention
provides health care to members of
includes new funds to provide for the
and health promotion activities,
more than 560 Federally recognized
additional 29,000 people who are
including sanitation construction to
Tribes. An estimated 1.8 million
expected to seek services in FY 2006,
provide water and waste disposal for
American Indians and Alaska
cover increased pay costs for the
Indian homes, diabetes prevention
Natives will be eligible for IHS
Federal and Tribal employees who
and disease management, injury
services in 2006, an increase of
provide these services, and meet the
prevention, mental health services,
1.6 percent over 2005 and
rising costs of providing these servi-
and alcohol and substance abuse
9.4 percent since 2001.
ces. Based on past experience, these
Indian Health Service
Service Population by Area, CY 2004
23
Indian Health Service

---

funds will pay for a variety of
Special Diabetes Program for
Urban Indian Health Program:
additional services, including
Indians: Through the Special
While most IHS services are provid-
116,000 additional outpatient visits
Diabetes Program for Indians, IHS
ed on or near reservations,
in IHS and Tribally operated facili-
provides funds to over 300 Tribes
approximately one percent of the
ties, 7,800 additional outpatient visits
and Indian organizations. In
budget is used to provide services to
purchased from outside the IHS
FY 2006, IHS will award
Indian people living in urban areas.
system, and 4,200 additional days of
$150 million ­ for a total of
Clients of the Urban Indian program
inpatient treatment for alcohol and
$650 million in the last five years ­
commonly experience barriers in
substance abuse. Funds will go
to support diabetes prevention and
accessing basic health services;
primarily to Clinical Services ­
disease management at the local
examples of such barriers include
operation of hospitals and clinics,
level. The program has substantially
poverty, lack of health insurance,
purchase of medical care ­ but also
increased the availability of services
lack of cultural awareness on the part
to other IHS programs which are
­ physical activity specialists;
of health professionals, unemploy-
providing additional services and are
registered dieticians and nurses;
ment, and homelessness. IHS funds
experiencing increased costs.
wellness and physical activity
a total of 34 Urban Indian health
Tribally operated programs will
centers; newer and better medica-
organizations to reduce barriers to
receive funding on the same basis as
tions ­ which has led to a steady
access in urban areas. In FY 2006,
the programs IHS operates directly.
increase in the percentage of diabetic
Urban Indian health is funded at
patients with ideal blood sugar
$33 million. Urban Indian health
Opening New Health Facilities:
control. IHS has recently revised the
organizations also typically leverage
Additional funds are included to staff
way it distributes program funds by
funding in order to maximize service
six new outpatient facilities in
adding a competitive element in
provision. IHS provides about half
FY 2006, placing larger and more
addition to the existing formula
of all funding available to these
modern health facilities in the areas
grant. In November of 2004, IHS
organizations. Other major funders
which most need them to provide
awarded $24 million competitively,
include Medicaid, State and local
additional health services. Tribes
funding 66 Diabetes Program
programs, and other Federal
have financed construction of two
demonstration project grants. Thirty-
programs separate from IHS.
of these facilities, saving IHS
six grants were awarded for
Services provided vary from
$22 million in construction costs.
prevention of diabetes and 30 were
outreach, referral and case manage-
When fully operational, these facili-
awarded for reduction of cardiovas-
ment to comprehensive care,
ties will increase the number of
cular disease in people with diabetes.
including: ambulatory medical care;
primary care visits that can be
Successful applicants demonstrated a
dental services; community
provided at these sites by nearly
significant burden of diabetes, prior
education (health education,
75 percent and allow the provision of
demonstrated success at prevention
transportation, patient advocacy);
new services ­ 24-hour emergency
or treatment, the basic health
alcohol and substance abuse preven-
rooms, physical therapy, wellness
infrastructure to support planned
tion, treatment and counseling; AIDS
centers, upgraded diagnostic imaging
interventions, and evidence of
and STD information; mental health
and laboratory services, and expand-
successful compliance with past
counseling; and social services.
ed dental services. Including these
program requirements.
6 sites, IHS has opened 13 new
Health Insurance Reimbursements:
health facilities since 2001.
In FY 2006, IHS expects to receive a
total of $642 million in health
insurance reimbursements, including
Benefits of Improved Blood Sugar Control
Medicare, Medicaid, and payments
from private insurers. This amount
IHS has been able to increase the proportion of its diabetic patients who
represents an increase of $9 million
maintain good blood sugar control from 25 percent in FY 1997 to
over FY 2005 estimated collections.
34 percent in FY 2004. This increase is important. NIH-supported
IHS facilities receive Medicare and
clinical trials have found that an improvement in blood sugar control from
Medicaid under a cost-based
poor to ideal results in a 42 percent decrease in total mortality for people
methodology developed in close
with diabetes.
cooperation with the Centers for
Medicare & Medicaid Services.
This increase was achieved even while the total number of diabetics the
Health insurance collections are an
IHS served increased 45 percent during this period.
essential element of the funding that
supports IHS hospitals and clinics.
Indian Health Service
24

---

In some cases, insurance revenue
Belknap staff quarters project. The
currently use a software system that
represents up to 50 percent of the
Fort Belknap project will provide
stores patient information and offers
operating budget of a given facility.
24 units of new and 5 units of
the ability to keep life-long medical
This revenue allows IHS to hire
replacement staff quarters for the
records for patients. This software
additional medical staff and supports
Harlem and Hays outpatient facilities
will be used to create an electronic
activities related to facility
in Montana. Available decent local
health record (EHR) system with
operations, such as supplies,
housing makes it easier to recruit and
clinical case management capabilities
equipment, and building utilities and
retain health professionals at remote
for five diseases prevalent among
maintenance.
sites.
Indian people: diabetes, coronary
vascular disease, asthma, HIV, and
The Medicare Prescription Drug,
obesity. The EHR will be
Improvement, and Modernization
IMPROVING SERVICE DELIVERY
implemented in 32 sites by the end
Act (MMA) included several
IHS is continually working to
of 2005 and IHS anticipates full
provisions that benefit the American
improve its internal operations so as
implementation by 2008. The EHR
Indian and Alaska Native (AI/AN)
to target as much funding as possible
will:
population. IHS estimates the transi-
towards needed services. To this
tional assistance credit of $600 per
end, IHS will implement a new
Improve patient safety through
year for low-income Medicare
organization plan, and continue the
direct provider order entry;
beneficiaries, including AI/ANs,
implementation of new information
could provide $10 million in new
technology to make patient health
Reduce risk to patients through
Medicare revenue for prescription
records easier to access and track,
improved and more legible
drugs dispensed at IHS facilities in
and to streamline insurance billing
documentation;
FY 2005. The Medicare Part D
processes.
prescription drug benefit program,
Strengthen protection of private
when implemented in January 2006,
Headquarters Reorganization:
health information through
will extend outpatient prescription
Following two years of planning and
electronic security;
drug coverage to IHS Medicare
tribal consultation, IHS announced a
Improve quality of care through
beneficiaries and increase Medicare
reorganization of its headquarters in
better documentation of services
revenues at IHS facilities. Other
July, 2004. The reorganization
provided to each patient; and
sections of the MMA expand the
eliminated an administrative layer
benefits covered under Medicare Part
and moved those offices which had
Increase cost efficiency through
B for IHS beneficiaries and allow the
direct contact with Tribes, tribal
improved billing capabilities.
IHS to pay for additional medical
organizations, and Urban Indian
care by increasing its bargaining
programs into the Office of the
INDIAN SELF-DETERMINATION
power when buying services from
Director. The goals of the reorgani-
non-IHS Medicare-participating
zation are: improved management ­
Tribes continue to increase the
hospitals.
with more focus on results rather
number of IHS programs they
than oversight; better alignment with
operate. In FY 2006, Tribes will
Construction: The budget includes a
field programs; and improved collab-
control an estimated $1.8 billion, or
total of $94 million for Sanitation
oration between IHS and other HHS
55 percent of IHS's total budget
Construction to provide safe water
programs ­ all leading to improved
request. To enable Tribes to develop
and waste disposal systems to an
health care for Indian people.
the administrative infrastructure
estimated 20,000 Indian homes. The
critical to their ability to successfully
sanitation program has played a key
Electronic Health Records:
manage these programs, the budget
role in decreasing the rates of infant
Information technology is vital to
includes a total of $269 million for
mortality, gastroenteritis, and other
improving the efficiency and quality
contract support costs, an increase of
environmentally related diseases over
of health facility operations. By
$5 million over FY 2005. The
the last thirty years. Consistent
improving the quality of patient data,
additional funds will allow IHS to
throughout HHS, FY 2006 requests
facilities are able to both increase the
provide contract support costs for the
for facilities funding focus on
quality of services and improve
20 to 25 additional programs it
maintenance of existing facilities; no
operations efficiency. IHS has been
anticipates Tribes will want to take
funding is requested to initiate new
a leader among HHS agencies in the
over administration of in FY 2006.
projects. A total of $3 million is
use of information technology to
included for health facility construc-
improve health facility operations.
tion, sufficient to fully fund the Fort
The majority of IHS facilities
25
Indian Health Service

---

As part of the Federal Government's
special relationship with Tribes, an
IHS Funds Managed by Tribes
HHS-wide budget consultation
Dollars in Millions
session is held annually to give
Tribal leaders the opportunity to
consult with HHS on budgetary
$2,000
$1,677
$1,718
$1,769
issues which concern them. In order
to bring Indian issues to the attention
$1,500
of all parts of the department, the
Intradepartmental Council on Native
$1,000
American Affairs was reactivated in
2002. The Council consists of the
$500
heads of all HHS agencies and other
senior staff.
$0
FY 2004
FY 2005
FY 2006
Indian Health Service
26

---

27

---

CDC
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Infectious Diseases:
Infectious Diseases.....................................................
221
226
225
-$1
HIV/AIDS, STDs & TB Prevention...........................
964
960
956
-4
Immunization:
Current Law:
Section 317 Discretionary Program...................
469
479
529
+50
Vaccines For Children Routine Vaccinations..
1,012
1,147
1,180
+33
VFC Stockpiles & Catch-up Immunizations.....
40
488
322
-166
Effect of Proposed VFC Improvements:
VFC.........................................................................
0
0
140
+140
Section 317 Discretionary Program...................
0
0
-100
-100
Proposed Law Subtotal, Immunization..........
$1,521
$2,114
$2,072
-$42
Global Health....................................................................
280
294
306
+12
Global Disease Detection (non-add)......................
12
22
34
+12
Bioterrorism:
State and Local Capacity.............................................
918
927
797
-130
Upgrading CDC Capacity/Anthrax Research...........
169
157
140
-17
Strategic National Stockpile........................................
398
397
600
+203
Biosurveillance Initiative.............................................
22
79
79
0
Subtotal, Bioterrorism...........................................
$1,507
$1,560
$1,616
+$56
Health Promotion:
Chronic Disease Prevention & Health Promotion...
818
899
840
-59
Youth Media Campaign (non-add) .....................
32
59
0
-59
Birth Defects, Disability & Health.............................
114
125
124
-1
Health Information and Service:
Health Statistics...........................................................
90
109
109
0
Informatics and Health Marketing.............................
127
120
115
-5
Environmental Health and Injury:
Environmental Health..................................................
146
148
147
-1
Injury Prevention & Control.......................................
137
138
138
0
Occupational Safety & Health ......................................
277
286
286
0
Public Health Research...................................................
29
31
31
0
Public Health Improvement and Leadership................
233
267
207
-60
One-time Earmarked Projects (non-add)...............
42
60
0
-60
Business Services Support.............................................
282
279
264
-15
Preventive Health and Health Services Block Grant...
132
131
0
-131
Buildings & Facilities......................................................
260
270
30
-240
ATSDR..............................................................................
73
76
76
0
User Fees ..........................................................................
2
2
2
0
Subtotal, Program Level (proposed law)..................
$7,213
$8,034
$7,543
-$491
Less Funds Allocated from Other Sources:
Vaccines for Children Proposed Law (mandatory).
-$1,052
-$1,635
-$1,642
-7
Public Health and Social Service Emergency Fund
-1,507
-1,560
-1,616
-56
PHS Evaluation Transfers...........................................
-212
-265
-265
0
User Fees.......................................................................
-2
-2
-2
0
Total, Proposed Law Discr. Budget Authority...........
$4,440
$4,572
$4,017
-$555
FTE.....................................................................................
8,636
8,837
9,087
250
Centers for Disease Control and Prevention
28

---

CENTERS FOR DISEASE CONTROL AND PREVENTION
The Centers for Disease Control and Prevention promotes health and quality of life by preventing and controlling
disease, injury, and disability.
TheFY2006budgetrequestsa CDCisreorganizingmostofits
Center for Infectious Diseases; and
total program level of
programs under four coordinating
the National Center for HIV, STD,
$7.5 billion for the Centers for
centers and three coordinating
and TB Prevention. The President's
Disease Control and Prevention
offices. These include Infectious
FY 2006 budget includes a total of
(CDC), a net decrease of
Diseases, Health Promotion, Public
$1.7 billion in discretionary funding
$491 million below the FY 2005
Health and Information Services,
for efforts related to the prevention
enacted level. This net change
Environmental Health and Injury,
and control of infectious diseases and
includes programmatic increases of
Terrorism, Global Health, and
to provide immunization services for
$339 million, including expanded
Workforce and Career Development.
children and adults nationwide.
funding for influenza vaccine;
The coordinating centers and offices
improvements in childhood
lead collaboration within each
Immunization: CDC's $2.1 billion
immunizations; expanded global
thematic area and across other areas
immunization program is focused on
disease detection efforts; and
of CDC. They work with CDC's
achieving two major health goals of
expansions of the Strategic National
Office of the Director to improve
the Nation. CDC seeks to ensure
Stockpile, including a new focus on
business practice efficiency; ensure
that at least 90 percent of all two-
portable mass casualty treatment
high quality, goal-oriented programs;
year olds receive the recommended
units. These increases are offset by
and provide leadership to operational
series of vaccines, and CDC has also
completed facility construction
units. Management and administra-
expanded its role in assuring the
projects, one-time projects,
tive funding has been consolidated
adequacy of annual influenza vaccine
reductions in programs that overlap
from most program lines into two
supplies. This work will be carried
other areas of CDC, internal manage-
areas: Public Health Improvement
out through two streams of funding:
ment efficiencies, and one-time costs
and Leadership, and Business
Vaccines for Children (VFC) and the
in the Vaccines for Children (VFC)
Services Support. Two units former-
Section 317 program. The mandato-
program. CDC's total program level
ly located in CDC's Office of the
ry VFC program provides free
includes $1.6 billion in mandatory
Director (OD), the Epidemiology
vaccine to approximately 42 percent
VFC funding, and $265 million in
Program Office (EPO) and the Public
of the childhood population, includ-
Public Health Service evaluation
Health Practice Program Office
ing Medicaid recipients, the
transfers.
(PHPPO), will be relocated to
uninsured, American Indians and
integrate core functions across CDC.
Alaskan Natives, and children with
An array of new challenges face
For example, functions within EPO
limited health insurance that does not
America's public health system: an
have been consolidated with Health
cover specific immunizations. VFC
aging population; increasing popula-
Information and Services activities,
also funds the development of a
tion diversity; global travel that can
Global Health, and Public Health
six-month stockpile of all routinely
spread diseases; bioterrorism threats;
Improvement and Leadership. This
recommended childhood vaccines.
and an epidemic of chronic diseases.
restructuring is consistent with the
The discretionary Section 317
At the same time, technology
goals of the Futures Initiative, and
program provides funds for State
improvements offer CDC new
the findings of a recent PART review
immunization operational costs and
opportunities to increase program
for the Epidemic Services program
many of the vaccines public health
efficiency, including health informa-
activity, in that programmatic and
departments provide to individuals
tion technology, global
administrative redundancies will be
not eligible for VFC.
communication, rapid diagnostic
reduced and program functions will
tools, and public health genomics.
Influenza Vaccine
have a clear and coherent purpose.
As a result, CDC undertook a
CDC's agency-wide influenza budget
two-year reorganization process, the
totals $197 million, nine times more
Futures Initiative, to maximize the
INFECTIOUS DISEASES
funding than in FY 2001. A year
benefit CDC provides to the
ago, HHS worked with vaccine
Three major programs are overseen
American people in the 21st century.
manufacturers to expand production.
by the new Infectious Diseases
CDC's budget has been realigned to
This was accomplished in part by
Coordinating Center: the National
support this new structure.
making influenza a routinely
Immunization Program; the National
recommended vaccine for young
29
Centers for Disease Control and Prevention

---

children, and setting aside
Near-term action is being taken to
bulk monovalent vaccine production
$40 million in new budget authority
improve the availability of influenza
for next winter. The remaining
in VFC for a pediatric stockpile of
vaccine for this winter and the
$17 million will be used to finance
finished doses. In FY 2006, CDC
upcoming (2005-2006) flu season.
the importation of foreign influenza
will supplement the pediatric
The Administration's plan reallocates
vaccine for this winter under
stockpile with $30 million in
up to $37 million in FY 2005 to
Investigational New Drug (IND)
contracts to expand the production of
expand the availability of influenza
authorities. This vaccine has been
bulk monovalent influenza vaccine.
vaccine for this and the upcoming
made available to States, and a
This will occur through back-end
(2005-2006) flu season. This
contract research organization has
guarantees to manufacturers to
includes up to $25 million in reallo-
been retained to manage IND process
increase influenza supply and
cations from CDC programs the
requirements of vaccination drives.
guarantee higher production levels.
budget proposes to eliminate in
CDC will also purchase an estimated
FY 2006, and $12 million provided
Childhood Immunization
additional two million doses of
through the Secretary's authority to
Improvements
influenza vaccine through a
transfer funds from accounts in other
Children who are Medicaid recipi-
$20 million discretionary funding
agencies. Within this amount,
ents, uninsured, American Indians
increase.
$20 million will be used to expand
and Alaskan Natives, and children
with limited health insurance that
does not cover specific immuniza-
tions are entitled to receive VFC
CDC Influenza Funding - $197 million in FY 2006
vaccines. These children, however,
must do so at a Community Health
Discretiona
Discretionary r
Bulk Vaccine
Center or a specially
Programs
Stockpile
y Programs
designatedFederally Qualified Health
Finished Vaccine
$30 M (15%)
Center. Legislation is sought to
Stockpile
enable these children to obtain VFC
$40 M (20%)
vaccines at public health clinics as
Surveillance,
well. This improved access is
Research & Other
projected to expand the VFC
$23 M (12%)
VFC Programs
program by $140 million while also
reducing by $100 million the demand
for vaccines purchased with discre-
tionary appropriations. The proposed
317 Routine
Routine Purchases
legislation would also eliminate the
Purchases
$76 M (39%)
price caps on VFC that have exclud-
$28 M (14%)
ed some vaccines from the VFC
program. The budget anticipates
substantial FY 2005 progress toward
HHS's goal of establishing a six
HHS Influenza Funding - $439 million in FY 2006
month vendor-managed stockpile of
all routinely recommended pediatric
NIH Research and
Pandemic
vaccines, and catching up on
Development
$119 M (27%)
Preparedness
immunizations that were missed
$120 M (28%)
during vaccine shortages in recent
years. With catchup vaccinations
finished, and the stockpile nearing
completion, FY 2006 costs will be
FDA Research and
$166 million below FY 2005
Licensing
estimates. The stockpile serves dual
$3 M (1%)
purposes: vaccines from the stockpile
can be distributed in the event of a
CDC
disease outbreak; and the stockpile
Discretionary
VFC
will mitigate the effect of any supply
$81 M (18%)
$116 M (26%)
disruptions that might occur on the
manufacturing side.
Centers for Disease Control and Prevention
30

---

HIV/AIDS, STD & TB Prevention:
prevention and control services, as
foodborne pathogens, bloodstream
HIV/AIDS, sexually transmitted
well as conducting surveillance and
infections, pneumococcal disease,
diseases (STDs), and tuberculosis
supporting research related to the
and hepatitis A. The program will
(TB) are among the most prevalent,
prevention, control, and elimination
also measure progress in global
costly and preventable infectious
of these diseases. A recent PART
influenza surveillance and detection
diseases in the United States. The
review determined that both the STD
as one key indicator of our prepared-
President's FY 2006 budget request
and TB activities have a clear
ness for a pandemic influenza
is $956 million to develop,
purpose and address specific and
outbreak
implement, and evaluate effective
ongoing problems. The review
domestic prevention programs for
suggested some improvements that
GLOBAL HEALTH
these diseases through the National
the programs have already begun to
Center for HIV, STD, and TB
make, including the distribution of
Every day, two million people cross
Prevention (NCHSTP).
State funding for TB based on need,
national borders as tourists, business
rather than historical distributions.
travelers, immigrants, or refugees.
Domestic HIV/AIDS Prevention
The program will also examine
World trade moves produce and
CDC's core set of prevention activi-
additional ways to better target State
manufactured goods from one end of
ties include surveillance and case
and local funding for STDs.
the earth to another in a matter of
reporting, community involvement
hours or days. However, disease
and intervention, capacity building,
Infectious Diseases: The National
vectors like mosquitoes have no
and program evaluation. NCHSTP's
Center for Infectious Diseases works
regard for borders. Health events far
budget requests $658 million for
in partnership with State and local
from our shores are significant in
HIV/AIDS prevention. The CDC-
public health officials, other federal
their own right, but also have the
wide domestic HIV/AIDS budget of
agencies, medical and public health
potential to influence health within
$727 million also includes funding in
professional associations, infectious
the United States. As a result, CDC
school health programs (Chronic
disease experts from academic and
supports a range of efforts to both
Diseases) and blood disorders
clinical practice, and international
track and prevent the international
programs (Birth Defects, Disability,
and public service organizations to
spread of infectious diseases. CDC
and Health).
prevent illness, disability, and death
has consolidated funding and policy
caused by infectious diseases in the
oversight of many of these activities
CDC's HIV prevention activities over
United States and around the world.
into a new $306 million Global
the past two decades have focused on
Although modern advances have
Health budget line. While the Office
helping uninfected persons at high
conquered some diseases, the
of Global Health provides policy
risk for HIV change and maintain
outbreaks of severe acute respiratory
guidance on the use of funds, the
behaviors to keep them uninfected.
syndrome (SARS), avian influenza,
work is carried out by the operating
Despite these efforts, the number of
West Nile virus, and monkeypox are
centers that received these funds
new HIV infections is estimated to
recent reminders of the extraordinary
directly in the past.
have remained stable, and the
ability of microbes to adapt and
number of people living with HIV
evolve. The President's FY 2006
Global Disease Detection:
continues to increase. In FY 2003,
budget includes $225 million to
The FY 2006 budget requests
CDC launched a new prevention
conduct surveillance, epidemic
$34 million, a $12 million increase,
initiative, Advancing HIV Prevention
investigations, epidemiologic and
for CDC's global disease detection
(AHP) that capitalizes on new rapid
laboratory research, training, and
initiative. This initiative aims to
testing techniques that provide on-
public education programs to
recognize infectious disease
the-spot results. AHP seeks to
develop, evaluate, and promote
outbreaks faster, improve the ability
expand early diagnosis of HIV
prevention and control strategies for
to control and prevent outbreaks, and
infection; facilitate earlier access to
infectious diseases.
to detect emerging microbial threats.
quality medical care and treatment;
CDC will continue the implementa-
and provide prevention services to
A recent PART review indicated that
tion of a comprehensive system of
reduce the risk of transmission to
the Infectious Diseases program has
surveillance by expanding programs
others.
a clear purpose and evidence of its
and sites abroad. Additional activi-
impact on controlling disease. The
ties include the improvement of early
STD and TB Prevention
program collaborates with a broad
warning systems; researching new
The STD and TB prevention
range of partners to target resources
viral strains; aiding in collaborations
programs provide grants and techni-
and accomplish its mission. The
with multinational organizations; and
cal assistance to State and local
program is measuring progress on
increasing surveillance.
governments and organizations for
new long-term measures focused on
31
Centers for Disease Control and Prevention

---

Global AIDS: Through the Global
use these funds to purchase,
officials with early warnings on
AIDS Program (GAP), CDC works
maintain, and operate portable
potential outbreaks in their
in partnership with USAID; HRSA;
hospital units that can be deployed to
communities. CDC will engage in
the Departments of State, Labor, and
increase hospital surge capacity in
contracts with health departments
Defense; other federal agencies; and
the event of a bioterrorist attack.
and health systems to expand access
multilateral and bilateral partners to
The remaining funding will be used
to local information in the highest
ameliorate the global devastation
to procure commercially available
risk urban areas. In addition to
caused by HIV/AIDS. The FY 2006
countermeasures; provide secure,
BioSense, CDC will continue other
budget includes $124 million in
temperature controlled storage for
aspects of the biosurveillance initia-
direct funding for on-going preven-
the wide range of medicines and
tive, including improvements to
tion, care, treatment, surveillance,
vaccines in the SNS as well as those
laboratory reporting capacity and
and capacity-building programs in
being procured by Project BioShield;
increasing the number of border
25 countries in Asia, Africa, Latin
replace medical products that are
health and quarantine stations at
America, and the Caribbean. CDC is
nearing the end of their useful life;
ports of entry.
also a key federal partner in the
and maintain the capacity to move
President's Emergency Plan for AIDS
SNS assets to any location in the
CDC's commitment to State and
Relief (PEPFAR) that is financed
United States within 12 hours.
local preparedness remains strong;
through the Department of State.
between FY 2002 and FY 2006,
Approximately $185 million in
In January 2004, the Administration
CDC will have invested a total of
PEPFAR funding was allocated to
set a goal of having sufficient antibi-
$4.5 billion in this activity. The
CDC in FY 2004 from the
otics in the SNS to protect 60 million
FY 2006 budget retargets some
Department of State.
Americans from the effects of
preparedness resources, making
exposure to anthrax. The financing
modest reductions in awards to
Global Polio and Measles: CDC's
plan included special transfer author-
States, and concentrating efforts in
request allocates $137 million for
ities in FY 2005 to secure coverage
directed investments that will benefit
global polio and measles activities.
of 50 million people and purchase
the Nation as a whole. Efforts are
While tremendous progress has been
the remaining courses necessary to
continuing, as in the Department of
made with the number of polio-
reach the final 10 million in
Homeland Security, to ensure that the
endemic countries declining from
FY 2006. Since the requested
allocation and use of funds reflects
120 in 1988 to six in 2004, a major
funding flexibilities were not provid-
the best information on risk and
international effort continues to
ed in the FY 2005 appropriation,
needed performance improvements.
strive for the 2005 eradication goal
CDC has modified the SNS operat-
For example, CDC will continue the
set by the World Health
ing plan to stay on track and achieve
Cities Readiness Initiative that is
Organization. If that goal is
the 50 million target in FY 2005.
essential to ensuring local govern-
achieved, continued vigilance will be
HHS plans to use the Secretary's
ments can provide medicines to their
required to guard against reappear-
authority to transfer funds between
citizens in time to protect them from
ance.
appropriations to redirect $12 million
released bioterrorism agents. This
from bioterrorism grant programs to
includes targeted grants and, in
TERRORISM
the SNS, so that the anthrax antibiot-
FY 2006, additional funding for
ic coverage goal can be reached on
cooperative work among CDC, the
The request allocates $1.6 billion to
schedule.
United States Postal Service, and
bioterrorism preparedness, a net
participating cities.
increase of $56 million over
Improving biosurveillance continues
FY 2005. Within this total, priority
to be a high priority, with
Investments in States have markedly
is given to direct Federal responsibil-
$79 million provided to continue the
improved capacity. The Laboratory
ities to ensure a sufficient supply of
interagency biosurveillance initiative.
Response Network (LRN) now
countermeasures and portable
The centerpiece of CDC's efforts in
consists of 134 reference laboratories
treatment units are available to
biosurveillance concentrating on
in all States, up from 91 in 2001.
protect and care for victims of an
electronic disease surveillance is
Most can confirm the presence of
attack. The Strategic National
BioSense. BioSense automatically
anthrax and tularemia, as well as
Stockpile (SNS) is funded at
analyzes electronically available
perform presumptive screening for
$600 million, an increase of
health data to highlight a potential
smallpox. More than 8,800 clinical
$203 million above FY 2005. This
public health problem, rather than
laboratory personnel have been
increase includes $50 million in
relying solely on individual case
trained to play a role in the detection
funding for the Federal Mass
reports from healthcare providers to
and reporting of public health
Casualty Initiative. The SNS will
local public health officials.
emergencies. CDC is also expanding
BioSense will provide public health
the number of trained Federal staff
Centers for Disease Control and Prevention
32

---

that are available to States to up to
CDC has broadened its focus beyond
HEALTH INFORMATION AND
500. (States can request CDC to
preventing infections and seeks to
SERVICE
detail staff in lieu of a portion of
reduce the human and financial
their cash grants.)
impact of chronic diseases. The
The budget for the Health
budget seeks $840 million to
Information and Service
In addition to assistance to States and
maintain at the FY 2005 level a wide
Coordinating Center includes
communities, CDC will invest
range of activities, including support
$224 million for the National Center
$140 million to continue to upgrade
for: programs to promote healthy
for Health Statistics (NCHS) and
its internal capacities by improving
behaviors; studies to better
new centers for Health Marketing
epidemiological expertise in the
understand the causes of these
and Public Health Informatics.
identification and control of diseases
diseases; and surveys to better
caused by terrorism, including better
Health Statistics: The budget
monitor the health of the nation.
electronic communication, distance
requests $109 million for Health
CDC will maintain its focus on
learning programs, and cooperative
Statistics, which maintains funding at
reducing obesity, diabetes, and
training between public health
the FY 2005 level. Major invest-
tobacco use as the $47 million Steps
agencies and local hospitals. No
ments in Health Statistics over the
to a Healthier US program matures
funding is earmarked for research on
past several years reflect the
and the newly-funded State tobacco
older anthrax vaccines as the project
importance of the data systems of the
quitlines become well-established.
is nearing completion; funds were
National Center for Health Statistics
redirected into stockpile purchases.
Youth Media Campaign (VERB)
(NCHS) to track our progress and
The budget does not include funds to
inform solutions on a myriad of
problems in the public and private
HEALTH PROMOTION
continue the VERB: It's What You
Do Youth Media Campaign, for
health sector. Areas of focus have
Chronic diseases - such as heart
which $59 million was provided in
been to preserve and modernize the
disease, cancer, and diabetes - are the
FY 2005. VERB was originally
Nation's vital statistics system; to
leading causes of death and disability
designed as a 5-year demonstration
expand contracts with States to
in the United States. These diseases
project; FY 2005 is the fifth year.
purchase birth and death data; and to
account for 7 out of every 10 deaths
move forward with e-government
and affect the quality of life of
Birth Defects, Developmental
initiatives to update the content of
90 million Americans. Although
Disabilities, Disabilities and Health:
birth and death records.
chronic diseases are among the most
CDC's National Center on Birth
Additionally, funds have been used
common and costly health problems,
Defects and Developmental
to increase the sample sizes
they are also among the most
Disabilities works to identify the
necessary for the National Health
preventable. In addition, birth
cause of birth defects and develop-
and Nutrition Examination Survey
defects are the leading cause of
mental disabilities, to help children
(NHANES) and the National Health
infant mortality in the United States.
develop and reach their full potential,
Interview Survey (NHIS) to provide
The direct and indirect costs associ-
and to promote the health and well-
needed information on a wide range
ated with disabilities in the United
being among people of all ages with
of conditions, diseases, and popula-
States exceeds $300 billion annually.
disabilities. The budget for activities
tion subgroups and to address major
The Health Promotion Coordinating
related to Birth Defects,
emerging data gaps in the National
Center includes the National Center
Developmental Disabilities,
Health Care Survey, such as long-
for Chronic Disease Prevention and
Disability and Health for FY 2006
term care and assisted living
Health Promotion, and the National
includes $124 million. This funding
facilities.
Center on Birth Defects and
will be used for many disability
Public Health Informatics:
Developmental Disabilities.
programs, including those related to
The request includes $68 million for
The President's FY 2006 budget
Fetal Alcohol Syndrome, Autism,
Public Health Informatics. Effective
includes a total of $964 million to
attention-deficit/hyperactivity
public health response involves many
fund a large number of programs that
disorder (ADHD), Duchenne and
organizations working together and
are focused on improving the quality
Becker Muscular Dystrophy,
exchanging information. The new
of medical care targeted at chronic
Disability and Health, monitoring
realities of terrorism and naturally
diseases, prevention programs, and
developmental disabilities, limb loss,
occurring disease trends require a
disabilities.
and spina bifida.
new level of interoperability that
Chronic Disease Prevention and
facilitates rapid, secure, and effective
Health Promotion: Chronic disease
communication. The new National
prevention programs at CDC have
Center for Public Health Informatics
grown continually since 2001, as
is responsible for ensuring that
33
Centers for Disease Control and Prevention

---

public health departments' new
on environmentally related diseases
includes $286 million for NIOSH
disease outbreak detection and
and conditions, including asthma,
activities, level with FY 2005. This
reporting systems incorporate the
childhood lead poisoning and genetic
includes work on the National
common standards that facilitate
diseases; improves the understanding
Occupational Research Agenda
real-time sharing of key data among
of risk factors for, and causes of,
(NORA) and personal protective
public health officials responsible for
environmentally related diseases and
technology and respirator research
verifying, investigating, and respond-
conditions; and develops effective
for the nation's 50 million miners,
ing to outbreaks. The request
prevention programs. The CDC's
firefighters, emergency responders,
reflects a $5 million reduction in
state-of-the-art environmental labora-
and health care, agricultural, and
funding for the Public Health
tories use modern technology to
industrial workers. In addition to
Information Network as CDC moves
assess human exposure to environ-
these ongoing activities, NIOSH
from standards design to system
mental chemicals, and its effects.
assists in the implementation of the
implementation.
Energy Employees Occupational
Injury Prevention and Control:
Illness Compensation Act of 2000;
Health Marketing: CDC's new
Injuries are the leading cause of
funds for this activity are provided
National Center for Health
death of children and young adults in
by the Department of Labor.
Marketing will work to connect the
the United States. Injury is a
agency's research, surveillance,
fundamental threat to human health
NIOSH's recent PART review
programmatic services, and
and life, and CDC employs the same
indicated that the program has a clear
communication efforts to CDC's
scientific methods that prevent
purpose and a well-established
customers, the American public.
infectious diseases to prevent injuries
mechanism for setting priorities to
Funding for the Health Marketing
- defining the health problem, identi-
guide budget requests and funding
activity in FY 2006 is requested at
fying the risk and protective factors,
decisions through the National
$47 million. The initiatives related
and developing and testing preven-
Occupational Research Agenda
to Health Marketing will enhance
tion strategies. The budget request
(NORA). The program is working to
communication support and improve
for FY 2006 includes $138 million to
further focus its research efforts on
outreach to CDC's five priority
support programs focused on
having an impact through a Research
sectors: public health communities;
residential fire deaths, intimate
to Practice initiative. In addition, the
business and workers; education;
partner violence, non-fatal fall
program will advance its work with
health care; and other federal
traumatic brain injury, child abuse
the National Academy of Sciences to
agencies.
and neglect, rape prevention and
develop a standard method of
education, and other injury preven-
measuring the impact of their
ENVIRONMENTAL HEALTH AND
tion and control initiatives.
research on the occupational safety
INJURY
and health field.
OCCUPATIONAL SAFETY AND
The budget for the Environmental
HEALTH
PUBLIC HEALTH RESEARCH
Health and Injury Coordinating
Center includes $285 million to
As American workers are getting
The FY 2006 request includes
maintain funding levels for the
older and becoming more diverse,
$31 million to fund investigator-
National Center for Environmental
working longer hours, and more
initiated prevention research projects.
Health and the National Center for
workers are in temporary positions,
Prevention research at CDC is
Injury Prevention and Control.
the estimated annual cost of occupa-
population-based, and targeted to
tional injuries in the United States
health promotion and disease preven-
Environmental Health: The budget
has grown to over $250 billion. The
tion. All research is proposed by
includes $147 million to maintain
National Institute of Occupational
researchers working with communi-
ongoing environmental disease
Safety and Health (NIOSH) is the
ties, health practitioners, and
prevention programs. The National
primary federal entity responsible for
policymakers, and will address the
Center for Environmental Health
conducting research and making
need for a multi-disciplinary
(NCEH) assists State and local health
recommendations for the prevention
approach to health marketing, health
agencies in developing and increas-
of work-related illness and injury.
communication, and innovative
ing their ability and capacity to
NIOSH translates knowledge gained
statistical methods to estimate the
address environmental health
from research into products and
burden of disease. Research results
problems, especially asthma and
services that benefit workers' safety
are expected to form the basis of
childhood lead poisoning.
and health in settings from corporate
public health policies and best
Additionally, NCEH provides
offices to construction sites and coal
practices for a range of specific
complete, timely, and accessible data
mines. The budget for FY 2006
populations and settings.
Centers for Disease Control and Prevention
34

---

PUBLIC HEALTH IMPROVEMENT
technology infrastructure functions
repairs and improvements for
AND LEADERSHIP
into the new Information Technology
existing facilities, and $22.5 million
Services Office and is consolidating
to complete construction of the
The President's Budget for FY 2006
all budget execution functions within
Ft. Collins, Colorado Vector Borne
includes $207 million for Public
CDC's Financial Management
Infectious Diseases Replacement
Health Improvement and Leadership,
Office. Over 40 public and medical
Laboratory. No funding is requested
a new budget line Congress created
professional inquiry hotlines will be
to initiate new projects.
to more transparently reflect CDC's
merged into a single integrated
programmatic funding. This budget
customer service center. The
The Buildings and Facilities program
line funds the Office of the Director,
$15 million reduction in FY 2006
underwent a PART review for
the newly established coordinating
reflects CDC's expectation of contin-
FY 2006. The program uses a
centers, workforce development
ued efficiency improvements under
master plan of CDC headquarters
staff, and the central management
the new organizational structure.
construction projects, developed by
costs in each of the operating
senior managers from CDC's
Centers, Institute, and Offices at
Centers, Institute, and Offices, to
P
CDC. This budget line includes an
REVENTIVE HEALTH AND HEALTH
target resources. The program is
S
$8 million Director's Discretionary
ERVICES BLOCK GRANT
conducting analyses of trade-offs
Fund that will be used to finance
Since 1981, the Preventive Health
between costs, schedule, and risk for
developing public needs.
and Health Services Block Grant has
construction projects, and the
In FY 2005, the Congress also
provided 61 States, tribes, and
program has supported targeted
included $60 million in one-time
territories with flexible funding the
studies to guide program improve-
projects in this budget line; these
grantee could direct as it deemed
ments. The program has adopted a
projects are not continued in the
appropriate. Funding, however, is
new outcome measure that will track
FY 2006 request.
often duplicative and overlaps with
changes in areas such as the produc-
other CDC programs. As CDC
tivity and expansion of laboratory
BUSINESS SERVICES SUPPORT
strives to improve efficiency, existing
research and techniques resulting
resources will be directed to
from new facilities. The program
The Business Services Support
programs which have traditionally
will also measure performance on
budget activity, as well as the
addressed similar public health
meeting scope, schedule, budget, and
Leadership and Management sub-
issues.
quality targets.
budget activity, were created to
consolidate CDC's administrative and
M
AGENCY FOR TOXIC SUBSTANCES
management costs into two lines and
ODERN AND SECURE
AND DISEASE REGISTRY
more transparently reflect CDC's
LABORATORIES AND FACILITIES
programmatic funding. The Business
Since 2001, CDC has initiated or
The request for ATSDR is
Services Support line includes a wide
completed the construction of more
$76 million, the same as FY 2005.
range of agency-wide operating
than 2.7 million square feet of
ATSDR, managed as part of CDC, is
costs, such as rent, utilities, and
laboratory and other facility space.
the lead agency responsible for
security. It also funds the business
This year, CDC is completing an
public health activities related to
services functions at CDC (such as
Infectious Disease Laboratory, the
Superfund sites. ATSDR develops
grants management, financial
Scientific Communications Center,
profiles of the health effects of
management, facilities management,
the Headquarters and Emergency
hazardous substances, assesses health
etc.), and additional mission-support
Operations Center, and the
hazards at specific Superfund sites,
activities. CDC has made a variety
Environmental Toxicology
and provides consultations to prevent
of improvements in its business and
Laboratory. CDC is also initiating
or reduce exposure and related
management operations in recent
construction of a new Environmental
illnesses. Funds will also be used for
years, as evidenced by recent scores
Health office facility. The FY 2006
the maintenance costs of the World
of all green on the PMA scorecard.
request allocates $7.5 million to fund
Trade Center Exposure Registry.
CDC consolidated 13 information
35
Centers for Disease Control and Prevention

---

NIH OVERVIEW BY INSTITUTE
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Institutes:
National Cancer Institute....................................................
$4,736
$4,825
$4,842
+$17
National Heart, Lung, & Blood Institute..........................
2,878
2,941
2,951
+10
National Institute of Dental & Craniofacial Research....
383
392
393
+1
Natl Inst. of Diabetes & Digestive & Kidney Disease...
1,821
1,864
1,873
+9
National Institute of Neurological Disorders & Stroke..
1,501
1,539
1,550
+11
National Institute of Allergy & Infectious Diseases......
4,303
4,403
4,460
+57
National Institute of General Medical Sciences..............
1,905
1,944
1,955
+11
Natl Inst. of Child Health and Human Development......
1,242
1,271
1,278
+7
National Eye Institute..........................................................
653
669
673
+4
National Institute of Environmental Health Sciences:
Labor/HHS Appropriation..............................................
631
645
648
+3
VA/HUD Appropriation..................................................
78
80
80
0
National Institute on Aging...............................................
1,024
1,052
1,057
+5
Natl Inst. of Arthritis & Musculoskeletal & Skin Dis.....
501
511
513
+2
Natl Inst. on Deafness & Communication Disorders.....
382
394
397
+3
National Institute of Mental Health..................................
1,381
1,412
1,418
+6
National Institute on Drug Abuse.....................................
991
1,006
1,010
+4
National Institute on Alcohol Abuse & Alcoholism......
428
438
440
+2
National Institute for Nursing Research...........................
135
138
139
+1
National Human Genome Research Institute...................
479
489
491
+2
Natl Inst. for Biomedical Imaging & Bioengineering......
289
298
300
+2
National Center for Research Resources..........................
1,179
1,115
1,100
-15
Natl Center for Complementary & Alternative Med.......
117
122
123
+1
Natl Center for Minority Health & Health Disparities....
191
196
197
+1
Fogarty International Center..............................................
65
67
67
0
National Library of Medicine.............................................
317
323
326
+3
Office of the Director...........................................................
327
358
385
+27
Buildings & Facilities..........................................................
99
110
82
-28
Nuclear/Radiological Countermeasures Res. (PHSSEF)
0
47
47
0
Chemical Countermeasures Research (PHSSEF).............
0
0
50
+50
ONDCP Drug Forfeiture Fund Transfer (NIDA).............
4
0
0
0
Total, Program Level......................................................
$28,040
$28,649
$28,845
+$196
Less Funds Allocated from Other Sources:
Nuclear/Radiological Countermeasures Res. (PHSSEF)
$0
-$47
-$47
$0
Chemical Countermeasures Research (PHSSEF).............
0
0
-50
-50
ONDCP Drug Forfeiture Fund Transfer (NIDA).............
-4
0
0
0
PHS Evaluation Funds (NLM)...........................................
-8
-8
-8
0
Type 1 Diabetes Research 1/..............................................
-150
-150
-150
0
Total, Budget Authority.................................................
$27,878
$28,444
$28,590
+$146
Labor/HHS Appropriation...........................................
$27,800
$28,364
$28,510
+$146
VA/HUD Appropriation................................................
$78
$80
$80
$0
FTE.............................................................................................
17,096
17,543
17,547
+4
1/ These funds were pre-appropriated in the Benefits Improvement and Protection Act of 2000 and P.L. 107-360.
National Institutes of Health
36

---

NATIONAL INSTITUTES OF HEALTH
The National Institutes of Health uncover new knowledge that will lead to better health for everyone.
Majoradvancesinknowledge otherresearchfacilities. About
initiative on developing chemical
about life sciences, especially
11 percent of the budget will support
threat countermeasures. Additional
the sequencing of the human
an in-house, or intramural, program
support will be provided to continue
genome, are opening dramatic new
of basic and clinical research activi-
progress in promising arenas of
opportunities for biomedical research
ties managed by world-class
science related to specific diseases
and heretofore un-imagined
physicians and scientists. This
such as cancer, cardiovascular
prospects for preventing, treating,
intramural research program, which
disease, HIV/AIDS, diabetes,
and curing disease and disability.
includes the NIH Clinical Center,
Parkinson's disease, and Alzheimer's
Investment in biomedical research by
gives our nation the unparalleled
disease, while also pursuing whole
the National Institutes of Health
ability to respond immediately to
new avenues of post-genomics
(NIH) has driven these advances, and
health challenges nationally and
research.
the FY 2006 budget request of
worldwide. Another 5 percent will
$28.8 billion seeks to capitalize on
provide for research management
Biodefense: For FY 2006, the
the resulting opportunities to
and support.
President's Budget proposes a total
improve the health of the nation.
of $1.8 billion for NIH biodefense
efforts, a net increase of $56 million,
NIH is the world's largest and most
RESEARCH PRIORITIES IN FY 2006
or 3.2 percent, over FY 2005. When
distinguished organization dedicated
In fulfilling its mission, NIH strives
adjusted for non-recurring extramu-
to maintaining and improving health
to maintain a diverse portfolio of
ral facilities construction in FY 2005,
through medical science. Its budget
research founded on both public
research activities in the NIH
is composed of 27 appropriations for
health need and scientific opportuni-
biodefense program will increase by
its Institutes and Centers, Office of
ty. The FY 2006 budget request will
$175 million, or 11 percent. Of the
the Director, and Buildings and
allow NIH to address imperative
$1.8 billion total, $1.7 billion is
Facilities. In FY 2006, nearly
requirements in biodefense; continue
included within the NIH appropria-
84 percent of the funds appropriated
to implement the NIH Roadmap for
tions accounts, and $97 million is
to NIH will flow out to the extramu-
Medical Research; accelerate
budgeted in the Public Health and
ral community, which supports work
neuroscience research through
Social Services Emergency Fund
by more than 200,000 research
enhanced intra-agency collaborations
(PHSSEF) for support of targeted
personnel affiliated with approxi-
under the NIH Neuroscience
research activities to develop
mately 3,000 university, hospital, and
Blueprint; and manage a research
countermeasures against nuclear,
radiological, and chemical threats.
Our nation's ability to detect and
NIH Total Funding
counter bioterrorism ultimately
(dollars in billions)
depends heavily on the state of
biomedical science. Guided by its
$30
long-range strategic plan that
$27.2
$28.0
$28.6
$28.8
includes short-, intermediate-, and
$23.6
$25
long-term goals, biodefense research
$20.5
supported by NIH stresses two
$20
overarching, complementary, and
urgent components: a) basic research
$15
on the biology of microbial agents
with bioterrorism potential and the
$10
properties of the host's response to
infection and defense mechanisms;
$5
and b) applied research with
predetermined milestones for the
development of new or improved
$0
diagnostics, vaccines, and therapies
2001
2002
2003
2004
2005
2006
needed to control a bioterrorist-
Fiscal Year
caused outbreak. NIH will continue
37
National Institutes of Health

---

to ensure full coordination of these
that biotechnology advances could be
tissues and eliminate radioactive
research activities with other Federal
used to engineer or modify
materials from contaminated tissues.
agencies in the war against terrorism.
organisms to evade current medical
The other $50 million will be used to
countermeasures or enhance their
support an initiative on developing
In just the past three years, NIH has
virulence.
new medical countermeasures for
made tremendous strides towards
chemicals that can be used as
developing countermeasures to
The FY 2006 budget also requests
weapons of mass destruction.
protect all Americans from bioterror-
$30 million to continue support for
ism. For example, researchers
construction of specialized biosafety
NIH Roadmap for Medical
supported by NIH have completed
laboratories at universities and
Research: The FY 2006 budget
the genomic sequencing of at least
institutions across the country that
allocates a total of $333 million, an
one strain of all Category A, B, and
are needed to conduct research on
increase of $98 million over
C agents considered bioterrorism
the highly dangerous and infectious
FY 2005, to continue support for the
threats. In the area of diagnostics,
pathogens in the biodefense research
NIH "Roadmap" initiative in
NIH researchers have developed a
field. Prior to FY 2002, only a few
accordance with the strategic plan
rapid test for the presence of antibod-
of these specialized laboratories
developed in September 2003. These
ies to smallpox that is five-to-ten
existed in the United States. With
funds will be used to target major
times more sensitive than standard
these FY 2006 funds, NIH will have
opportunities and gaps in biomedical
techniques. An assay has also been
spent over $551 million since
research that no single institute at
developed to simultaneously detect
FY 2003 on extramural biodefense
NIH could tackle alone, but which
three priority Category A agents,
construction. The $30 million
the agency as a whole must address
anthrax, plague, and tularemia, in a
investment in FY 2006 will fund an
in order to overcome barriers and
single sample. Human Phase I trials
additional Regional Biocontainment
rapidly develop new disease
are being conducted for a DNA
Laboratory to support extramural
treatments, prevention strategies, and
vaccine against Ebola, and work is
investigators within a region or
diagnostics. The Roadmap is
underway on other vaccine
metropolitan area, bringing the total
organized into three core themes:
candidates against botulism,
number of National and Regional
New Pathways to Discovery;
tularemia, and plague. NIH has also
Biocontainment Laboratories to 18.
Research Teams of the Future; and
developed and expanded contracts to
Also, these funds will support the
Re-engineering the Clinical Research
screen new drugs, develop new
construction or renovation of up to
Enterprise. The FY 2006 request
animal models, establish a reagent
six smaller, local-level laboratories to
includes $83 million, an increase of
and specimen repository, and provide
Biosafety Level 3 (BSL-3) standards.
$23.5 million, in the Office of the
researchers with genomic, proteomic,
Once these facilities are completed,
Director, and $250 million, an
and bioinformatic resources related
NIH will be able to support over
increase of $74 million, in the
to potential bioterrorism agents.
200 research projects at the same
budgets of the Institutes and Centers
NIH is funding almost 150 grants
time aimed at developing medical
for use in a coordinated effort to
and contracts with pharmaceutical
protection from bioterrorism. The
support the Roadmap.
and biotechnology companies in
national and regional facilities will
collaborative projects to develop
also back up State and Federal public
HIV/AIDS Research: The FY 2006
high-priority biodefense products.
health laboratories if there is an
budget includes a total of $2.9 billion
actual or suspected bioterrorism
for HIV/AIDS-related research. This
Biodefense research priorities in
attack, or when naturally occurring
is a net increase of $12 million, or
FY 2006 include continuing the
diseases unexpectedly emerge or re-
0.4 percent over FY 2005. In
clinical development of vaccines for
emerge, such as avian influenza and
addition to these funds, the FY 2006
plague, tularemia, Valley Fever,
SARS.
budget includes $100 million in
Ebola, and botulism. NIH will also
NIAID to continue HHS contribu-
develop clinical studies of anti-
With the $97 million budgeted in the
tions provided since FY 2002 to the
toxin/antibody treatment for anthrax,
PHSSEF for NIH in FY 2006, NIH
Global Fund to Fight HIV/AIDS,
and, in partnerships with industry
will use $47 million to continue the
Tuberculosis, and Malaria.
and academia, accelerate preclinical
nuclear/radiological research effort
development of other promising
begun in FY 2005 to improve
In FY 2006, the NIH HIV/AIDS
medical countermeasures, with a
methods for measuring radiological
research program is placing its
focus on therapies. Research will
exposure and contamination, develop
highest priority on the goal to
address the need for protection
drugs to prevent injury from
develop an HIV/AIDS vaccine.
against both naturally occurring
radiological exposure, and develop
This includes programs focused on
threats and ones arising from the risk
methods or drugs to restore injured
the discovery, development, and pre-
clinical and clinical testing of
National Institutes of Health
38

---

vaccine candidates. The evaluation
research, particularly to address the
In FY 2005, participating Blueprint
of an HIV/AIDS vaccine will require
critical research and training needs in
Institutes and Centers are developing
extensive testing in the United States
developing countries; and research
an inventory of neuroscience tools
and in international settings. An
targeting the disproportionate impact
funded by NIH and other govern-
integral component of this effort is
of the AIDS epidemic on racial and
ment agencies, enhancing training in
the Global HIV Vaccine Enterprise
ethnic minority populations in the
the neurobiology of disease for basic
initiative, which was announced by
United States.
neuroscientists, and expanding
the President at the G-8 Summit in
ongoing gene expression database
Sea Island, Georgia, in June 2004.
NIH Blueprint for Neuroscience
efforts, such as the Gene Expression
The Enterprise will support a virtual
Research: In FY 2006, NIH will
Nervous System Atlas (GENSAT).
consortium of research organizations
continue to implement its
In FY 2006, NIH will invest an
around the world to accelerate HIV
"Neuroscience Blueprint" that is
additional $26 million on Blueprint
vaccine development by enhancing
serving as a framework to enhance
initiatives that include developing
coordination, information sharing,
the effectiveness of the NIH
genetically engineered mouse strains
and collaboration globally.
neurosciences research agenda,
specifically for nervous system
In FY 2006, NIH will devote
which is supported by 15 Institutes
disease research; training in critical
$49 million, an increase of
and Centers. Advances in the
cross-cutting areas such as
$34 million over FY 2005, for the
neurosciences and the emergence of
neuroimaging and computational
second year of this initiative. In the
powerful new technologies offer
biology; and supporting specialized,
United States, these funds will
many opportunities for Blueprint
interdisciplinary "core" centers that
support the Center for HIV/AIDS
activities that will enhance the
might focus on areas such as animal
Vaccine Immunology that will focus
effectiveness and efficiency of
models, cell culture, computer
on intensive and highly collaborative
neuroscience research. Over the past
modeling, DNA sequencing, drug
projects addressing key immunologi-
decade, driven by the science, the
screening, gene vectors, imaging,
cal roadblocks to the discovery and
NIH neuroscience Institutes and
microarrays, molecular biology, or
development of a safe and effective
Centers have increasingly joined
proteomics and their applications to
HIV/AIDS vaccine.
forces through initiatives and
neuroscience research.
working groups focused on specific
Other key components of the NIH
disorders. The Blueprint builds on
HIV/AIDS research agenda continue
this foundation, making collaboration
RESEARCH PROJECT GRANTS
to be HIV prevention research,
a day-to-day part of how the NIH
The support of basic medical
including the development of
does business in neuroscience.
research through competitive, peer-
microbicides, behavioral interven-
By pooling resources and expertise,
reviewed, and investigator-initiated
tions, and strategies to prevent
the Blueprint can take advantage of
research project grants (RPGs)
perinatal transmissions; therapeutics
economies of scale, confront
represents 54 percent of the total
research to develop simpler, less
challenges too large for any single
NIH budget request for FY 2006.
toxic, and cheaper drugs and
Institute, and develop research tools
regimens to treat HIV infection and
and infrastructure that will serve the
In FY 2006, the NIH budget provides
its complications; international
entire neuroscience community.
an estimated $15.5 billion, a
Total RPGs
New & Competing RPGs
2001
34,122
2001
9,101
2002
36,206
2002
9,396
2003
38,219
2003
10,411
2004
39,231
2004
10,020
2005
39,148
2005
9,216
2006
38,746
2006
9,463
25,000
30,000
35,000
40,000
7,000
8,000
9,000
10,000
11,000
Number of Grants
Number of Grants
39
National Institutes of Health

---

0.4 percent increase over FY 2005, to
FY 2006 will be about $347 thousand,
MANAGEMENT INNOVATIONS
fund approximately 38,746 total
approximately the same level as in
projects. This is 402 fewer grants in
FY 2005.
To better integrate research across its
total than are expected to be funded
27 Institutes and Centers, NIH is
in FY 2005. The FY 2006 budget
developing additional decision
FACILITIES CONSTRUCTION
focuses available resources on
support tools to improve the manage-
funding programmatic increases in
In FY 2006, as discussed above,
ment of its large and complex
non-competing continuation grants to
another $30 million is requested to
scientific portfolio. This will allow
which NIH had previously commit-
further expand laboratory space in
NIH to more efficiently address
ted, and to maximizing the number
universities and research institutions
important areas of emerging scientif-
of competing RPGs, in lieu of
around the country critical to
ic opportunities and rising public
providing inflationary adjustments.
biodefense research activities. The
health challenges. This effort is
Within the total number of grants,
budget also includes a total of
intended to stimulate accelerated
NIH estimates it will support
$90 million for other non-biodefense
investments in research involving
9,463 competing RPGs in FY 2006,
intramural facilities projects, such as
multiple Institutes and Centers,
an increase of about 247 over
general repairs and improvements
thereby helping to improve the
FY 2005. Excluding the large cohort
across the NIH campuses. Consistent
nation's health.
of HIV/AIDS clinical trials that are
throughout HHS, FY 2006 budget
cycling into competing status in
requests for intramural facilities
FY 2006, the average cost of a
focus on maintenance of existing
competing research project grant in
facilities.
FY 2006 NIH BUDGET
$28.8 Billion ­ Percent of Total by Mechanism
Research Centers
9.5%
Intramural Research
9.7%
Research Project
Grants
53.7%
Research &
Development
Contracts
9.6%
Research Training
2.7%
Research
M anagement and
Support
3.8%
Other Research,
Cancer Control,
Facilities
NLM , Superfund,
Construction
Office of the
0.4%
Director
10.6%
National Institutes of Health
40

---

NIH OVERVIEW BY MECHANISM
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Mechanism:
Research Project Grants......................................................
$15,165
$15,438
$15,494
+$56
[ # of Non-Competing Grants ]..........................................
[27,030]
[27,750]
[27,092]
[-658]
[ # of New/Competing Grants]...........................................
[10,020]
[9,216]
[9,463]
[+247]
[ # of Small Business Grants]............................................
[2,181]
[2,182]
[2,191]
[+9]
[ Total # of Grants ].......................................................
[39,231]
[39,148]
[38,746]
[-402]
Research Centers.................................................................
2,541
2,687
2,749
+62
Research Training................................................................
745
762
765
+3
Research & Development Contracts.................................
2,820
2,637
2,767
+130
Intramural Research.............................................................
2,653
2,769
2,792
+23
Other Research.....................................................................
2,131
2,172
2,180
+8
Extramural Research Facilities Construction....................
119
179
30
-149
Research Management and Support.................................
1,033
1,079
1,090
+11
National Library of Medicine.............................................
317
323
326
+3
Office of the Director...........................................................
327
358
385
+27
Buildings and Facilities.......................................................
107
118
90
-28
NIEHS VA/HUD Appropriation (Superfund)..................
78
80
80
+
Nuclear/Radiological Countermeasures Res. (PHSSEF)
0
47
47
0
Chemical Countermeasures Research (PHSSEF).............
0
0
50
+50
ONDCP Drug Forfeiture Fund Transfer (NIDA).............
4
0
0
0
Total, Program Level......................................................
$28,040
$28,649
$28,845
+$196
Less Funds Allocated from Other Sources:
Nuclear/Radiological Countermeasures Res. (PHSSEF)
$0
-$47
-$47
$0
Chemical Countermeasures Research (PHSSEF).............
0
0
-50
-50
ONDCP Drug Forfeiture Fund Transfer (NIDA).............
-4
0
0
0
PHS Evaluation Funds (NLM)...........................................
-8
-8
-8
0
Type 1 Diabetes Research 1/..............................................
-150
-150
-150
0
Total, Budget Authority.................................................
$27,878
$28,444
$28,590
+$146
Labor/HHS Appropriation...........................................
$27,800
$28,364
$28,510
+$146
VA/HUD Appropriation................................................
$78
$80
$80
$0
FTE.............................................................................................
17,096
17,543
17,547
+4
41
National Institutes of Health

---

SAMHSA
(dollars in millions)
2006
`
2004
2005
2006
+/-2005
Substance Abuse:
Substance Abuse Block Grant.....................
$1,779
$1,776
$1,776
$0
Programs of Regional and
National Significance:................................
Treatment.................................................
419
422
447
+25
Prevention...............................................
199
199
184
-15
Subtotal, Substance Abuse ......................
$2,397
$2,397
$2,407
+$10
Mental Health:
Mental Health Block Grant............................
$434
$433
$433
$0
PATH Homeless Formula Grant...................
50
55
55
0
Programs of Regional and
National Significance.................................
241
274
210
-64
Children's Mental Health Services...............
102
105
105
0
Protection and Advocacy.............................
35
34
34
0
Subtotal, Mental Health ...........................
$862
$901
$837
-$64
Program Management....................................
$92
$94
$92
-$2
Total, Program Level................................
$3,351
$3,392
$3,336
-$56
Less Funds Allocated from Other Sources:
PHS Evaluation Funds...................................
-117
-123
-121
+2
Total, Discretionary BA...........................
$3,234
$3,269
$3,215
-$54
FTE.......................................................................
519
558
558
0
Substance Abuse and Mental Health Services Administration
42

---

SUBSTANCE ABUSE AND MENTAL HEALTH SERVICES ADMINISTRATION
The Substance Abuse and Mental Health Services Administration builds resilience and facilitates recover for people
with or at risk for substance abuse and mental illness.
TheFY2006budgetrequests
es employment and decreases
program to an additional seven
$3.3 billion for the Substance
homelessness; results in improved
States, for a total of 22 States partici-
Abuse and Mental Health Services
physical and mental health; and
pating. These States will have
Administration (SAMHSA), a net
reduces risky sexual behaviors.
flexibility to design an approach to
decrease of $56 million from
focus on areas of greatest need.
FY 2005. The request seeks to
The FY 2006 budget proposes a
expand substance abuse clinical and
50 percent increase for the
The request also includes $31 million
recovery support services through the
President's Access to Recovery State
for the Screening, Brief Intervention,
President's Access to Recovery State
Voucher program for a total funding
Referral and Treatment program.
Voucher Program, continue to focus
level of $150 million. Access to
Through this program, States are able
on achieving mental health systems
Recovery allows individuals seeking
to expand the continuum of care to
transformation with the State
clinical treatment and recovery
include services for non-dependent
Incentive Grants for Transformation,
support services to exercise choice
drug users. In FY 2006, SAMHSA
and support State implementation of
among qualified community provider
plans to fund an additional two
the Strategic Prevention Framework
organizations, including those that
States, for a total of nine.
to prevent young people from initiat-
are faith-based. This program
Promoting Effective Prevention:
ing drug use. Resources are also
recognizes that there are many
National survey data confirm a
provided for Federal and State level
pathways of recovery from addiction.
17 percent decrease in teenage drug
drug and mental health data collec-
Through Access to Recovery,
use over the past three years, result-
tion activities.
individuals are assessed, given a
voucher for appropriate services, and
ing in 600,000 fewer youth using
provided with a list of service
illicit drugs. This decrease
SUBSTANCE ABUSE
providers from which they can
represents the lowest levels of teen
drug use since the peak levels in the
An estimated 7.3 million Americans
choose. The proposed FY 2006
1990s and holds promise for the
struggle with a serious drug problem
increase will expand this innovative
for which treatment is needed.
Drug abuse has a significant impact
Access to Recovery
on individuals, families, and
communities. Every day substance
Fourteen States and one Tribal organization were awarded Access to Recovery
use leads to lost productivity, the
funding in FY 2004, the first year of funding for this Presidential Initiative.
transmission of HIV/AIDS and
The funded entities have identified target populations that include youth,
other communicable diseases,
individuals involved with the criminal justice system, women, individuals with
domestic violence, child abuse,
co-occurring disorders, and homeless individuals.
criminal involvement, and
premature and preventable deaths.
Access to Recovery Principles:
The FY 2006 request supports
Consumer Choice ­ The process of recovery is a personal one. Achieving
efforts to provide effective
recovery can take many pathways: physical, mental, emotional, or spiritual.
substance abuse treatment and to
With a voucher, people in need of addiction treatment and recovery support
stop drug use before it occurs. The
will be able to choose the programs and providers that will help them most.
budget includes $2.4 billion, a net
Increased choice protects individuals and encourages quality.
increase of $10 million for effective
Outcome Oriented ­ Success will be measured by outcomes, principally
substance abuse treatment and
abstinence from drugs and alcohol, and including attainment of employment
prevention activities.
or enrollment in school, no involvement with the criminal justice system,
Opening New Pathways to
stable housing, social support, access to care, and retention in services.
Recovery: Effective substance
treatment has been shown to reduce
Increased Capacity ­ Access to Recovery will expand the array of services
an individual's illegal drug use by
available including medical detoxification, inpatient and outpatient treatment
nearly half and criminal activity by
modalities, residential services, peer support, relapse prevention, case
80 percent. Treatment also increas-
management, and other recovery support services.
43
Substance Abuse and Mental Health Services Administration

---

future as most addicted adults begin
MENTAL HEALTH
Community Mental Health Services
using drugs at a young age.
Block Grant. The Block Grant is an
The budget includes $837 million for
important component of SAMHSA's
The FY 2006 request continues
mental health services, a net decrease
transformation efforts, as it is the
efforts to achieve the President's goal
of $64 million from FY 2005. The
only Federal program that provides
of reducing illicit drug use. The
request prioritizes Mental Health
funds to every State to provide
request prioritizes programs that
Transformation activities, consistent
services and improve the public
build capacity for comprehensive
with the recommendations of the
mental health system. The Block
prevention services. Of the
President's Commission on Mental
Grant also gives States a flexible
$184 million for Prevention,
Health, through funding for
source of services funding to initiate
$93 million will enhance efforts to
SAMHSA's competitive State
transformation activities on a
implement the Strategic Prevention
Incentive Grants for Transformation
state-wide basis.
Framework. The Strategic
and the Community Mental Health
Prevention Framework is a five-step
Services Block Grant. For all other
Suicide Prevention: Suicide is
process to promote youth develop-
discretionary grant activities, funding
currently the 11th leading cause of
ment, reduce risk-taking behaviors,
is provided to cover all continuation
death among all age groups, taking
build on assets, and prevent problem
grants.
the lives of approximately
behaviors. The five steps are:
30,000 Americans each year. It is
(1) conduct needs assessments;
Transforming the Mental Health
the third leading cause of death for
(2) build State and local capacity;
System: The final report of the
adolescents. Studies of youth who
(3) develop a comprehensive strate-
President's Commission on Mental
have committed suicide have found
gic plan; (4) implement
Health, which was released in 2003,
that 90 percent had a diagnosable
evidence-based prevention policies,
called for a fundamental overhaul of
mental disorder at the time of their
programs, and practices; and
how mental health care is delivered
death. In FY 2006, SAMHSA will
(5) monitor and evaluate program
in America ­ to achieve the promise
continue its efforts to prevent youth
effectiveness, sustaining what has
of recovery for families and children.
suicide. The request continues the
worked well. SAMHSA awarded its
The FY 2006 budget proposes
activities authorized under the
first Strategic Prevention Framework
$26 million for State Incentive
Garrett Lee Smith Memorial Act that
State Incentive Grants in FY 2004 to
Grants for Transformation, an
were funded in FY 2005. It supports
a total of 21 States and Territories.
increase of $6 million over FY 2005.
state-wide youth suicide early
These infrastructure grants will
intervention and prevention strategies
A recent Program Assessment Rating
provide support for developing
in schools, juvenile justice systems,
Tool review identified SAMHSA's
comprehensive State mental health
substance abuse and mental health
competitive prevention grant
plans to reduce system fragmenta-
programs, foster care systems, and
program as making a unique contri-
tion, and increase services and
other child and youth support organi-
bution by focusing on regional and
supports available to people living
zations. The request also provides
emerging problems. It also found
with mental illness.
funding for institutions of higher
that funds were effectively targeted
education to enhance services for
to activities with the best opportunity
SAMHSA will award 8 State
students with mental and behavioral
to succeed in the areas of greatest
Incentive Grants for Transformation
health problems through educational
need.
in FY 2005 and 3 new grants in
FY 2006, for a total of 11. New
seminars, hotlines, informational
Substance Abuse Block Grant: A
grantees will engage in State
materials, and training programs.
total of $1.8 billion is requested for
planning and coordination activities,
SAMHSA will also provide funding
the Substance Abuse Prevention and
with involvement from agencies,
for a national cross-site evaluation
Treatment (SAPT) Block Grant, the
such as criminal justice, housing,
and the Suicide Prevention Resource
same level as FY 2005. The SAPT
child welfare, labor and education.
Center, which in FY 2005 placed a
Block Grant provides funding to over
In the second year of funding, States
more detailed emphasis on adoles-
10,500 community-based organiza-
will be able to use 85 percent of
cent suicide.
tions and is the cornerstone of States'
funds to support programs at the
Other Mental Health: The budget
substance abuse financing, account-
community level as proposed in their
maintains funding for
ing for at least 40 percent of public
State Plan. The remaining 15 percent
community-based systems of care for
funds expended for prevention and
will continue to support planning
children and youth, State grants
treatment.
activities.
providing outreach and services for
In addition, the FY 2006 budget
homeless individuals through
maintains funding for the
Projects for the Assistance for
Substance Abuse and Mental Health Services Administration
44

---

Transition from Homelessness, and
protection and advocacy activities. It
also provides resources to increase
access to mental health services to
some of our most vulnerable citizens
including individuals with co-
occurring mental health and
substance abuse disorders, older
Americans, and traumatized children.
PROGRAM MANAGEMENT
The budget includes $92 million to
maintain staff, and related program
management, and to support activi-
ties necessary to effectively
administer a wide array of Federal
programs. SAMHSA has improved
the efficiency of its grant programs
through contract consolidations and
streamlined grant announcements.
45
Substance Abuse and Mental Health Services Administration

---

AHRQ
(dollars in millions)
2006
2004
2005
2006
+/-2005
Health Costs, Quality and Outcomes Research
Patient Safety
Health Information Technology Initiative....................
$50
$50
$50
$0
Other Patient Safety.........................................................
30
34
34
0
Subtotal, Patient Safety.............................................
$80
$84
$84
$0
Comparative Effectiveness Research...............................
0
15
15
0
Other Quality and Cost Effectiveness Research.............
166
162
162
0
Subtotal, Health Costs, Quality and Outcomes.....
$246
$261
$261
$0
Medical Expenditures Panel Surveys..................................
55
55
55
0
Program Support.....................................................................
3330
Subtotal, Program Level....................................................
$304
$319
$319
$0
Less Funds Allocated From Other Sources:.......................
PHS Evaluation Funds........................................................
-304
-319
-319
0
Total, Budget Authority.....................................................
$0
$0
$0
$0
FTE...........................................................................................
290
296
296
0
Agency for Healthcare Research and Quality
46

---

AGENCY FOR HEALTHCARE RESEARCH AND QUALITY
The Agency for Healthcare Research and Quality promotes health care quality improvement by conducting and
supporting health services research that develops and presents scientific evidence regarding all aspects of health care.
TheFY2006requestforthe
Patient Safety: The patient safety
AHRQ grants provided up to
Agency for Healthcare Research
research portfolio for AHRQ was
50 percent of the total project costs,
and Quality (AHRQ) provides a total
dramatically expanded in FY 2001 in
with a maximum of $500,000 per
program level of $319 million, the
response to the Instititute of
year per project. Working with
same as FY 2005. Priority activities
Medicine's report, To Err Is Human.
public and private partners, AHRQ
include continued efforts to improve
In FY 2004, AHRQ redirected much
will use data from Hospital
patient safety through the implemen-
of its patient safety funding to
Information Technology investment
tation of proven information
accelerate the adoption of health
demonstrations to make the business
technologies, and new comparative
information technologies that are
case for adoption of these tools, and
effectiveness research anticipated by
proven to reduce medical errors and,
help spread proven technology
the Medicare Prescription Drug,
by doing so, reduce the cost of health
through the healthcare system.
Improvement, and Modernization
care. In FY 2005 and FY 2006,
Act of 2003 (MMA).
AHRQ will continue to direct
AHRQ's FY 2004 plan laid the
$50 million of its patient safety
groundwork for the challenge the
AHRQ conducts and sponsors health
resources to information technology
President has issued to the health
services research to inform decision-
investments designed to enhance
care system to enable the majority of
making and improve clinical care
patient safety, with an emphasis on
Americans to be able to benefit from
and the organization and financing of
small community and rural
secure electronic health records
health care. AHRQ evaluates both
hospitals/health care systems. These
within ten years. Outside AHRQ, the
clinical services and the system in
investments will encourage uptake of
FY 2006 request includes a new
which these services are provided.
technologies such as computerized
$75 million account in the Office of
This work contributes not only to
physician order entry, computer
the National Coordinator for Health
improved clinical care, but also to
monitoring for potential adverse drug
Information Technology (ONCHIT)
more cost-effective care. AHRQ
events, automated medication
to finance targeted activities needed
supports the translation of research
dispensing, computerized reminder
to bring together the health care
into measurable improvements in the
systems to improve compliance with
providers in each region to adopt
care Americans receive. AHRQ has
guidelines, handheld devices for
standards-based, interoperable
forged cooperative relationships with
prescription information, computer-
Electronic Health Records systems.
major health care organizations to
ized patient records, and
Reaching the President's ten-year
ensure that research funded by the
patient-centered computerized
goal requires initiating, in FY 2005,
agency is implemented by the major
support groups. The first awards for
regional collaborations to assist
players in the health system. The
implementation of these technologies
health care providers in the deploy-
agency's research agenda is broad
were made in summer 2004.
ment of interoperable applications.
and spans from medical informatics
to long-term care; from pharmaceuti-
cal outcomes to prevention to
Five Steps to Safer Health Care
responses to bioterrorism.
1. Ask questions if you have doubts or concerns.
HEALTH COSTS, QUALITY, AND
OUTCOMES
2. Keep and bring a list of ALL the medicines you take.
The President's Budget will continue
3. Get the results of any test or procedure.
to support improvements through
4. Talk to your doctor about which hospital is best for your health needs.
research on the cost effectiveness
and quality of health care by provid-
5. Make sure you understand what will happen if you need surgery.
ing a total of $261 million. This
total includes $84 million for Patient
Excerpts from Five Steps to Safer Health Care. Patient Fact Sheet. July 2003. AHRQ
Publication No 03-M007. Agency for Healthcare Research and Quality,
Safety and $15 million for compara-
Rockville, MD.
tive effectiveness research authorized
by the MMA.
www.ahrq.gov/consumer/5steps.htm
47
Agency for Healthcare Research and Quality

---

As a result, AHRQ has decided to
messaging standards that support
solicit public comments on regulato-
direct $14 million in FY 2005 to
interoperability. These priority
ry changes under consideration. This
jump-start these collaborations in a
projects will support patient safety in
research will take the form of
number of regions, with funds
the U.S., develop a common vision
systematic reviews and syntheses of
derived from a combination of an
for health information technology
the scientific literature. Researchers
internal reallocation of $11.5 million
and standards across the health care
will focus on the evidence of
into patient safety and an additional
spectrum, and promote and acceler-
outcomes, comparative clinical
$2.5 million provided by the
ate efforts needed to make that vision
effectiveness and the appropriateness
Secretary's authority to transfer
a reality in the U.S.
of use of pharmaceuticals, health
limited amounts between agencies.
care services, and other health care
This additional investment will
The remaining $24 million in
items.
enhance existing and future efforts in
AHRQ's patient safety budget
pharmaceutical outcomes, compara-
supports a variety of activities.
Research and Dissemination
tive effectiveness, and improved care
AHRQ will continue to work collab-
Activities Outside Patient Safety:
delivery. In FY 2006, continuation
oratively with the Centers for
In FY 2006, AHRQ will invest
of these collaborations will be
Disease Control and Prevention, the
$162 million in research and dissem-
provided through the new ONCHIT
Food and Drug Administration, and
ination activities in prevention,
account.
the Centers for Medicare & Medicaid
pharmaceutical outcomes, informat-
Services, to develop a common Web
ics, and other areas to support the
AHRQ will continue to invest
interface for medical providers that
quality and cost-effectiveness of
$10 million on the development of
will both enhance the usefulness of
health care. A number of AHRQ
clinical terminology, messaging
adverse event information and reduce
efforts are oriented toward making
standards, and other tools needed to
the reporting burden for their partners
research findings accessible. For
accelerate the use of cost-effective
in the health care community.
example, in the CERTs program,
healthcare information technology.
studies have been underway to gather
AHRQ will fund research to identify
Comparative Effectiveness
information that Medicaid programs
barriers and practical solutions to the
Research: In FY 2006, AHRQ will
can use to make coverage and other
development and use of health
continue a $15 million research
policy decisions such as drug utiliza-
information systems to support
portfolio to develop state-of-the-art
tion review, economic effects of beta-
quality improvements and patient
information about the effectiveness
blocker therapy in heart failure, and
safety, since one major obstacle is
of interventions, including prescrip-
prevalence of type 2 diabetes
the lack of clinical terminology and
tion drugs, for ten top conditions
mellitus in children. Under its
affecting Medicare
Evidence-based Practice Program,
beneficiaries. This
AHRQ is developing scientific
10 Priority Conditions for
work, authorized by
information for other agencies and
section 1013 of the
Comparative Effectiveness
organizations on which to base
MMA, is being initiat-
clinical guidelines, performance
Research
ed in FY 2005. This
measures, and other quality improve-
new initiative is focused
Ischemic heart disease
ment tools. For example, one of
solely on conditions
AHRQ's Evidence-based Practice
Cancer
that are common and
Centers (EPC) recently issued a
costly among those
report on the effectiveness of laser
Chronic obstructive pulmonary
whose health care is
treatment and vacuum-assisted
disease/asthma
funded by Medicare,
closure on wound healing; this
Medicaid, and the State
Stroke, including control of hypertension
research had been requested by the
Children's Health
American Association of Health
Arthritis and non-traumatic joint disorders
Insurance Program.
Plans.
The list of priority
Diabetes mellitus
conditions was
AHRQ will continue to sponsor the
developed with substan-
U.S. Preventive Services Task Force.
Dementia, including Alzheimer's disease
tial input from the
The USPSTF has issued clinical
public and stakeholders;
recommendations on colorectal
Pneumonia
HHS used both public
cancer, breast cancer, osteoporosis,
Peptic ulcer/dyspepsia
listening sessions and
hormone replacement therapy,
systems for receipt of
depression, and aspirin chemopre-
Depression and other mood disorders
written comments
vention for patients at risk for heart
similar to that used to
disease.
Agency for Healthcare Research and Quality
48

---

MEDICAL EXPENDITURE PANEL
health care quality, clinical quality
SURVEYS
measures of common health care
services, and performance measures
The FY 2006 budget for Medical
related to outcomes of acute and
Expenditure Panel Surveys (MEPS)
chronic disease. The second report ­
includes a request for $55 million,
the National Healthcare Disparities
the same as FY 2005. MEPS is the
Report ­ highlights populations that
collection of detailed, national data
are at high risk for differences in
on the health care services
care. These populations include the
Americans use, how much they cost,
elderly, people in inner-city and rural
and who pays for them. It is the only
areas, women, children, minorities,
national source of visit-level
low-income groups, and individuals
information on medical expenditures.
with special health care needs.
MEPS provides a better understand-
AHRQ used a formal notice and
ing of the quality of care the typical
comment process to solicit public
patient receives, and of disparities in
comments on the measures that
the care delivered. MEPS data are
should be included in the upcoming
critical for tracking the impact of
2005 report. The current editions of
Federal and State programs, includ-
both reports are available on a new
ing the State Children's Health
Web site, www.qualitytools.ahrq.gov.
Insurance Program (SCHIP),
In addition, the site serves as a Web-
Medicare and Medicaid.
based clearinghouse by providing
These surveys also provide a
information for health care providers,
substantial portion of the data used to
health plans, policymakers,
develop two reports, required by the
purchasers, patients and consumers
agency's 1999 reauthorization, that
to take effective steps to improve
seek to measure the quality of health
quality.
care in America and differences in
In FY 2006, AHRQ will be fully
access to health care services for
funded through inter-agency transfers
priority populations. The National
of evaluation funds.
Healthcare Quality Report includes
information on patient assessment of
49
Agency for Healthcare Research and Quality

---

CENTERS FOR MEDICARE & MEDICAID SERVICES
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Current Law:
Medicare /1............................................................
$301,505
$333,442
$401,059
+$67,617
Medicaid /2............................................................
176,231
188,272
192,562
+4,290
SCHIP.....................................................................
4,607
5,343
5,434
+91
State Grants and Demonstrations......................
48
200
399
+199
Total Outlays, Current Law............................
$482,391
$527,257
$599,454
+$72,197
Premiums ...............................................................
-32,140
-38,010
-55,508
-17,498
Other Offsetting Collections/ Receipts.............
-189000
Total Net Outlays, Current Law.....................
$450,062
$489,247
$543,946
$54,699
Proposed Law:
SMI Transfer to Medicaid for QIs......................
0
0
230
$230
Medicaid Benefits.................................................
0
225
156
-$69
SCHIP Benefits......................................................
0
0
799
$799
State Grants and Demonstration........................
0
0
400
$400
Total Proposed Law...........................................
$0
$225
$1,585
$1,360
Premiums, Proposed Law.....................................
$0
$0
-$35
-$35
Total Net Outlays, Proposed Law /3..............
$450,062
$489,472
$545,496
$56,024
1/ Benefits (including Medicare Transitional Drug Assistance and Medicare Prescription Drug), QIOs,
administration (including State low-income determinations for Medicare Part D), and Medicare
Part B transfer to Medicaid for QIs.
2/ Net outlays, without FY 2004/05 outlays for QIs; without FY 2005/06 State low-income determinations.
3/ Total net outlays equal current outlays minus the impact of proposed legislation
Centers for Medicare & Medicaid Services
50

---

CENTERS FOR MEDICARE & MEDICAID SERVICES
The Centers for Medicare & Medicaid Services assures health care security for beneficiaries.
The FY 2006 budget request for
support growth and change in the
States with additional flexibility in
the Centers for Medicare &
Medicare and Medicaid programs.
Medicaid to further increase
Medicaid Services (CMS) is
coverage among low-income
w
$545.5 billion in net outlays, a
Promoting the effective use of IT
individuals and families without
$56.0 billion or 11.4 percent increase
as a central strategy to improve
creating additional costs for the
over FY 2005. The request finances
quality and Agency effectiveness.
Federal Government. This proposal
Medicare, Medicaid, the State
w
would build on the success of SCHIP
Maximizing program integrity
Children's Health Insurance Program
to provide acute care for children and
efforts in all our programs.
(SCHIP), the Health Care Fraud and
families, as well as efforts to reduce
Abuse Control Program (HCFAC),
w Developing evidence-based
the number of uninsured individuals.
the Health Insurance Portability and
approaches to integrating technology
The budget also includes significant
Accounting Act (HIPAA), and CMS
with medical care; and
new efforts to extend services to the
operating costs.
w Improving the quality of health
disabled and those in need of long­term
Our FY 2006 budget request supports
care for all our beneficiaries.
care services through the New
several key Presidential and
Freedom Initiative. In addition, it
Secretarial priorities:
Building upon the success of the
provides assistance to vulnerable
Health Insurance Flexibility and
populations transitioning from
w Implementing the Medicare
Accountability (HIFA) waivers and
welfare to work through the extension
Prescription Drug, Improvement,
SCHIP, the Administration plans to
of the Transitional Medical
and Modernization Act of 2003
work diligently with the Congress to
Assistance Program.
(MMA) provisions, specifically
develop a Medicaid modernization
the prescription drug benefit.
plan. This plan would introduce
Finally, the budget proposes to
restrict the use of intergovernmental
w
more State flexibility and fiscal
Investing in information
stability into the program. The
transfers and cap Federal payments
technology (IT) infrastructure to
Administration proposes to provide
to individual State and local
government providers.
FY 2006 NET OUTLAYS
Total=$545.5 billion
Medicare
62%
Medicaid
Administration
35%
1%
SCHIP 1%
Note: numbers do not add due to rounding
51
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MEDICARE MODERNIZATION ACT IMPLEMENTATION
On December 8, 2003, the
in May 2004, and discounts and
eligible to enroll in a new subsidized
President signed into law the
transitional assistance began in
prescription drug benefit that helps
historic Medicare Prescription Drug,
June 2004. As of June, CMS had
lower out-of-pocket prescription
Improvement, and Modernization
contracted with organizations to
drug costs. Beneficiaries choose
Act of 2003 (MMA). MMA
make a total of 38 national and
either a new stand-alone private plan
transformed the Medicare program
33 regional discount cards available,
that adds prescription drug coverage
by significantly expanding private
and amended 83 Medicare
to their traditional Medicare
health plan options (Part C) and
Advantage contracts to include
fee-for-service coverage, or
adding a prescription drug benefit
exclusive cards for their members.
beneficiaries can enroll in a private
(Part D) to traditional fee-for-service
To date, nearly 6.2 million beneficiaries
plan that provides both medical and
hospital insurance (Part A) and
have enrolled in the discount card
drug benefits from one source.
supplementary medical insurance
program, and more are enrolling
Success in this effort requires CMS
(Part B). In 2004, Medicare
every day. Included in the
to establish major new information
beneficiaries benefitted from
6.2 million are the 1.7 million
systems, to educate and enroll
improvements to provide modern,
beneficiaries who are currently
beneficiaries, and to review and
prevention-oriented health care to
receiving the $600 low-income
approve drug plan bids.
our Nation's elderly and disabled
transitional assistance credit in
CMS has been actively preparing to
populations. In June, the prescrip-
conjunction with their discount
implement this historic new benefit.
tion drug discount card began
cards.
CMS published proposed rules in
providing beneficiaries lower prices
Seniors are seeing real savings on
August 2004, and in December,
for their medications, and these
their prescription drug costs. In
issued formulary guidance. On
discounts will continue until the full
October 2004, CMS found that
January 3, 2005, the United States
drug benefit is implemented. In
beneficiaries were obtaining
Pharmacopia issued model guidelines
2005, beneficiaries will receive new
discounted prices that were about
for drug categories and classes to
preventive benefits, such as a
12 to 21 percent less than the nation-
provide a standard framework for the
"Welcome to Medicare" physical.
al average prices for commonly used
development of formularies. Plans'
And, in 2006, for the first time in the
brand name drugs at retail pharmacies.
formularies are required to provide
history of Medicare, beneficiaries will
Beneficiaries who use generic drugs
beneficiaries with a choice of drugs
be able to participate in a new benefit
obtained even larger savings from
within each category and class that
that offers outpatient prescription
28 to 75 percent below typical prices
appropriately reflects current medical
drug coverage. With all the improve-
for commonly used generics. And,
practice. CMS will review individ-
ments to Medicare, CMS will
low-income beneficiaries who
ual formularies to ensure that plans
conduct extensive outreach efforts to
received the $600 transitional
provide access to medically necessary
help seniors understand their new
assistance credit on their discount
drugs and do not discriminate against
choices. Expanded efforts through
cards experienced reductions as
any sub-groups of beneficiaries.
1-800 Medicare, www.medicare.gov,
much as 90 percent off national
Also in December, the Secretary
community-based organizations, and
average retail pharmacy prices when
announced the establishment of
media outreach will ensure that
they used the Medicare discount card
34 prescription drug plan regions
seniors have the information they
together with their transitional
after significant input from
need to select from the many new
assistance. Independent studies have
stakeholders. These regions
options available.
demonstrated similar results; benefi-
represent the new service delivery
ciaries save about 20 percent off the
areas for the prescription drug plans
PRESCRIPTION DRUG DISCOUNT
retail cost of brand name drugs and
beginning in 2006. Most important-
CARD
up to 60 percent off the cost of
ly, CMS has taken every opportunity
MMA established a temporary
generic drugs as a result of the
to receive input from stakeholders
prescription drug discount card
discount card program.
about the new drug benefit. In
program to immediately help
December 2004, CMS held
Medicare beneficiaries reduce their
VOLUNTARY PRESCRIPTION DRUG
numerous open door forums on
out-of-pocket spending on drugs
BENEFIT
sponsor applications, bidding,
until the full Medicare drug benefit
formularies, and risk-adjustment, and
Beginning January 1, 2006,
begins in January 2006. Enrollment
posted materials on the
approximately 42.7 million
in the discount card program began
www.cms.hhs.gov website for
Medicare beneficiaries will be
Centers for Medicare & Medicaid Services
52

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potential sponsors' use, including a
generally within just a few miles or
potential sponsors and greatly
draft plan benefit package, solvency
less of their homes;
expand beneficiary education
standards, bid instructions, and a
activities. Plans' applications are
pricing tool.
w Guarantee that Medicare
due in March 2005, formulary
beneficiaries living in nursing
information is due in April 2005, and
CMS has met, and will continue to
facilities will be able to enroll in a
plan bids are due to CMS in
meet, many key milestones in 2005
drug plan and take advantage of
June 2005. CMS plans to approve
to ensure that the benefit is
the new benefit, since all prescription
packages by September, and
implemented on time. In January 2005,
drug plans will contract with
beneficiary enrollment in the new drug
CMS published the final rule
long-term care pharmacies; and,
plans will begin November 15, 2005
establishing the drug benefit. The
and continue until May 15, 2006.
new rules ensure the drug benefit
w Ensure that full benefit dual
will:
eligible beneficiaries who have
Drug plans will typically cover about
both full Medicaid and Medicare
half of beneficiaries' drug costs, and
w Offer comprehensive help to those
benefits are automatically enrolled
all beneficiaries will have an
who need it most­ people with
in a drug plan effective
out-of-pocket limit on how much
very high prescription drug costs
January 1, 2006, (with an option to
they pay for their prescription drugs.
and people with low incomes­ and
change plans) so that they have no
The proposed beneficiary premium
for those with low incomes,
gap in coverage during the
for the new Medicare drug benefit is
comprehensive help at little or no
transition to the Medicare benefit.
designed so that, on average, a non-
cost;
w
low income beneficiary pays about
Facilitate enrollment of
w
25 percent of the drug premium. The
Give beneficiaries a choice of at
beneficiaries who have been
remaining 75 percent will be
least two drug plans that will cover
determined eligible for the low-
subsidized by the Federal
a comprehensive set of both brand
income subsidy but have not
Government.
name and generic drugs;
chosen a plan.
w
Medicare will provide additional
Ensure beneficiaries have
In upcoming months, CMS will
financial assistance to low-income
convenient access to pharmacies,
conduct nationwide conferences for
Prescription Drug Benefit Regions
Note: Each Territory (American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and Virgin Islands) is its own PDP
53
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beneficiaries. Beneficiaries with
incur costs at least equal to the gross
administrative costs, or by the Social
incomes below 135 percent of
value of the Part D benefit (taking
Security Administration, with
poverty will pay no monthly
into account the effect of beneficiary
additional funds authorized to cover
premium, no deductible, and nominal
out-of-pocket spending and benefici-
new administrative costs.
co-payments per prescription.
ary premiums).
Finally, MMA created a new
Beneficiaries with incomes between
program to assist States with paying
135 and 150 percent of the Federal
STATE EFFECTS
for uncompensated medical care for
Poverty Level will pay reduced
undocumented aliens. The law
premiums, a $50 deductible, and
Under Part D of MMA, States are
establishes an annual $250 million
reduced cost-sharing.
relieved of a significant portion of
the costs of providing pharmaceutical
fund, which will be allotted among
Medicare will pay subsidies to
benefits to individuals eligible for
the States each year between
employers that continue to offer
both Medicare and Medicaid. States
FY 2005 and 2008. Two-thirds of
retiree health benefits to seniors.
maintain some percentage of the
this money will be distributed based
Medicare will permit employers and
financial responsibility for providing
on the relative percentages of
unions to continue providing drug
drugs to these individuals. In 2006,
undocumented aliens in each State
coverage to their Medicare-eligible
States will be expected to pay
and the District of Columbia.
retirees while retaining their current
90 percent of this amount. This
One-third will be allotted among the
plan designs that are at least equiva-
percentage will be phased down to
six States with the largest number of
lent to the standard Part D drug
75 percent by FY 2015, where it will
undocumented alien apprehensions.
benefit, and allow them to use the
remain thereafter.
The amounts set aside for each State
retiree drug subsidy to reduce the
will not be dispersed through the
cost of providing generous coverage.
States will also participate in the
State itself. The law requires the
Sponsors of employer and union
eligibility determination process for
Secretary to directly pay hospitals,
plans who offer a drug benefit as
the low-income drug benefit. For
doctors, and other providers for their
good as, or better than, Medicare's
the Part D low-income drug benefit,
otherwise uncompensated costs of
drug benefit will be able to apply for
eligibility will be determined by
providing emergency health care to
the subsidy, which is estimated to
either the State Medicaid agency,
undocumented aliens in their respec-
roughly average $668 per beneficiary
with States receiving their regular
tive States.
in 2006. Plan sponsors will have to
matching funds for associated
Medicare Advantage Regions
Centers for Medicare & Medicaid Services
54

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MEDICARE ADVANTAGE
areas, were critical in determining
The diabetes screening test, only
the region design.
given to beneficiaries at risk for
MMA created the Medicare
diabetes, includes a fasting plasma
Advantage (MA) program to offer
CMS has been actively preparing
glucose test and other such tests
more choices and better benefits to
throughout 2004 and will continue in
approved by the Secretary.
Medicare beneficiaries through
2005 to seamlessly implement this
competition among private health
historic new expansion in private
The cardiovascular screening blood
insurance plans. In 2006, 16 percent
plans. In 2004, CMS published the
test and the diabetes screening test
of beneficiaries are expected to be
proposed rule and guidance to plans
do not have a deductible or co-pays
enrolled in private plans, and by
as to how to transition to Medicare
(since Medicare pays 100 percent for
2010, this number is projected to
Advantage (MA), held open door
clinical laboratory tests), so
increase to about 25 percent.
forums on bidding and the MA
beneficiaries do not incur any cost.
Currently, five million beneficiaries
application process, and released
This is an additional incentive for
are enrolled in Medicare Advantage.
draft applications. In January 2005,
those with limited resources who
MMA increased payments to private
CMS published the final rule, and in
might not otherwise access these
plans, and plans have been investing
upcoming months, CMS will conduct
benefits.
these higher payments in improving
nationwide conferences for potential
CMS is also collaborating on
benefits for Medicare beneficiaries.
sponsors, including benefit package
education and outreach with the
Recent studies indicate that benefi-
seminars. CMS will accept bids
American Cancer Society, the
ciaries enrolled in a Medicare
through June 6, subsequently review
American Diabetes Association, and
Advantage plan have overall savings
marketing materials, and then
the American Heart Association. The
for their Medicare and non-Medicare
approve plans in September.
campaign will help maximize
benefits of over $700 per year in out-
Marketing to beneficiaries can begin
attention to Medicare's new preven-
of-pocket costs for the average
in October, and enrollment will begin
tive benefits and help seniors use
beneficiary and nearly $2,000 in
on November 15, 2005 and continue
them.
savings for those beneficiaries in
until May 15, 2006. CMS is
poor health compared to traditional
working to simplify the application
Medicare for beneficiaries without
process to make it as efficient and
CONTRACTING REFORM
supplemental coverage from an
non-duplicative as possible.
MMA includes provisions that allow
employer or Medicaid.
the Secretary to introduce greater
PREVENTIVE BENEFITS
New regional plans will begin on
competitiveness and flexibility to the
January 1, 2006, and provide the
Medicare contracting process. To
MMA introduced a number of
most significant expansion to private
ensure a sufficient number of private
provisions that expanded preventive
plan options since the Balanced
contractors to administer the
benefits coverage beginning
Budget Act of 1997. Regional plans
program, the original law setting up
January 1, 2005. Beneficiaries
will have a network of doctors and
Medicare provided prospective
whose Medicare Part B coverage
hospitals that contractually agree to
contractors with a number of benefi-
begins on or after January 1, 2005,
provide health care services at a
cial provisions such as limiting the
will be covered for an initial preven-
specified rate but also allow
type of contractors, requiring cost
tive physical examination within
enrollees to go outside the network
contracts, and limiting competition
six months of enrollment. This
for care. Unlike local plans, which
for specific functions. The new law:
examination includes counseling or
serve individual counties and groups
referral with respect to screening and
w Removes the distinction between
of counties chosen by the plan
preventive services such as pneumo-
Part A contractors and Part B
sponsor, the new regional PPOs will
coccal, influenza, and hepatitis B
contractors;
bid to serve one of 26 regions. The
vaccinations; screening mammogra-
goal of these larger regional markets
phy; screening pap smear and pelvic
w Allows the Secretary to renew
is to bring more plan options to rural
exam; prostate cancer screening;
contracts annually for up to
areas by grouping States together
colorectal cancer screening; diabetes
five years;
with similar payment rates and
outpatient self-management services;
patient care trends, and to achieve a
w
bone mass measurement; glaucoma
Requires that all contracts be
target population size. These factors,
screening; medical nutrition therapy
re-competed at least every five years;
coupled with existing organizational
services; cardiovascular screening
w Limits contractor liability; and
relationships and learning from plans
blood test; and diabetes screening
about their intentions to participate in
test.
w Allows incentive payments to
the Medicare program in certain
improve contractor performance.
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CMS is requesting $58.8 million to
(Part A) and the Supplementary
reports. If there is an affirmed
implement Medicare contracting
Medical Insurance Trust Fund
determination of excess general
reform in FY 2006. With this
(Part B and Part D) to assess whether
Medicare revenue funding for
amount, CMS plans to implement an
Medicare's "excess general revenue
two consecutive annual reports,
accelerated strategy that features
funding" exceeds 45 percent. As
this will be treated as a funding
two cycles of contractor conversions
defined in the law, excess general
warning for Medicare. In the
from the old Title XVIII contracts to
revenue funding is equal to
event of a Medicare funding
the new Medicare administrative
Medicare's total outlays minus
warning the law provides special
contracts over a period FY 2006
dedicated financing (primarily
legislative conditions for Medicare
through FY 2008. In FY 2006, CMS
payroll taxes and premiums).
legislation submitted by the
will cover the costs of contractor and
Trustees will be required to include
President to Congress;
data center transitions and termina-
the following information in their
w
tions. This accelerated strategy
annual reports starting in 2005:
Comparisons with growth
ensures that expected savings from
trends for gross domestic product,
Medicare contracting reform could
w General revenue Medicare growth
private health costs, national health
come as early as FY 2009.
projections as a percentage of the
expenditures, and other appropriate
total Medicare outlays;
measures; and
FRAUD AND ABUSE
w Financial analysis of the combined
w Expenditures and trends in
MMA includes several provisions to
Medicare Part A and Part B trust
expenditures under Part D.
combat health care fraud and abuse
funds if general Medicare revenue
in Medicare and other CMS
funding were limited to 45 percent
$1 BILLION IMPLEMENTATION
programs. Highlights of these
of total Medicare outlays;
FUNDING
provisions are:
w A determination as to whether
MMA authorized and appropriated
w Revision of average wholesale
there is projected to be "excess
$1 billion in two-year funding for
price (AWP) payments for
general Medicare revenue funding"
CMS to implement MMA. CMS is
Medicare's covered outpatient
for any of the succeeding
tracking its MMA expenditures by
drugs provided in a doctor's office
six fiscal years in their annual
to average sales price (ASP).
w
$1 Billion Spending Plan by Major Provision
Creation of the Program Advisory
Spending Plan by Major Provision
and Oversight Committee (PAOC)
(dollars in millions)
to review and provide advice on
FY 2004
FY 2005
FY 2004-2005
implementation of the competitive
bidding program for durable
Drug Card
$166
$62
$229
Rx Drug Benefit
127
256
384
medical equipment (DME), enteral
Regulatory Reform
6
45
51
nutrition, and off-the-shelf orthotics.
Contracting Reform
6
21
27
Fee-for-Service Improvements
32
62
94
w Implementation in early FY 2005
Overhead (All Provisions*)
35
181
216
of a pilot program to conduct
Total by Provisions
$373
$627
$1,000
National and State background
* Includes $25 million for the Office of the Inspector General.
checks on workers in long-term
care settings. The goal of the pilot
is to identify efficient, effective,
$1 Billion Spending Plan by Major Activity
and economical processes for
Spending Plan by Activity
long-term care facilities or
(dollars in millions)
providers to conduct background
FY 2004
FY 2005
FY 2004-2005
checks on employees with direct
access to residents and patients.
Education/Outreach*
$230
$206
$436
Information Technology
69
207
276
Research
19
33
53
COST CONTAINMENT/LONG TERM
Adminstration
22
46
68
FINANCIAL SECURITY
Other Contracts**
33
136
168
Total by Activity
$373
$627
$1,000
Section 801 of MMA requires the
Medicare Board of Trustees of the
* Includes administrative costs for mailings.
** Includes $25 million for the Office of the Inspector General.
Hospital Insurance Trust Fund
Centers for Medicare & Medicaid Services
56

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major provision in the bill as well as
by several broad activity categories.
The tables display our actual
spending in FY 2004 and estimated
spending in FY 2005 by provision
and by activity. In FY 2005,
$25 million will be transferred to the
Office of the Inspector General.
HEALTH SAVINGS ACCOUNTS
MMA establishes Health Savings
Accounts (HSAs). HSAs allow
individuals with high deductible
plans (a deductible of at least $1,000
for individual plans and at least
$2,000 for family plans) to
contribute up to the lesser of the
deductible amount or $2,650 for
individuals and $5,250 for families
in 2005 to a tax-advantaged account.
The maximum contribution amount
is indexed and increases each year.
Individuals may withdraw money
from their HSA on a tax free basis to
pay for medical expenses below the
deductible, as well as other qualified
medical expenses such as prescrip-
tion drugs, over the counter drugs,
long-term care services, and COBRA
insurance. Any money used for non-
qualified medical expenses is taxable
and subject to an additional
10 percent tax.
57
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MEDICARE
Medicareprovideshealth
insurance to 42.7 million
Medicare Benefits Spending by Service, 2006
individuals who are either 65 or
older, disabled, or suffer from
end­stage renal disease (ESRD). In
FY 2006, spending on Medicare
Drug Benefit
14.9%
benefits will total $394 billion.
Inpatient Hospital
The Medicare Prescription Drug,
30.9%
Improvement, and Modernization
Other
Act of 2003 (MMA) represents the
6.9%
largest transformation of the
Medicare program in a generation,
Hospice
adding a prescription drug benefit
2.5%
and expanded health care choices to
Home Health
3.4%
the existing program. The four parts
of Medicare are summarized below.
Nursing Homes
4.1%
PART A
Outpatient Hospital
w
5.2%
Medicare Part A pays for inpatient
hospital care, skilled nursing
Managed Care
facility care, home health care
14.1%
Physicians and Other
related to a hospital stay, and
Suppliers
18.0%
hospice care.
w Individuals with 40 quarters of
Medicare-covered employment are
Total Benefit Outlays:$393.8 billion
entitled to Part A without paying a
premium.
PART B
PART C
w Financing comes primarily from a
w Medicare Part B pays for physician w Medicare Part C, the
2.9 percent payroll tax split
services, outpatient hospital
Medicare+Choice program, has
between employees and employers.
services, treatment for ESRD,
changed to the Medicare
laboratory services, durable
Advantage program under MMA.
w The most recent Medicare Trustees
medical equipment, certain home
report projected the Hospital
w
health care, and other medical
Medicare Advantage offers
Insurance (HI) Trust Fund's
services and supplies.
beneficiaries a variety of coverage
insolvency date at 2019.
options, including traditional
w Supplementary Medical Insurance
HMOs, preferred provider
w In 2005, beneficiaries will pay a
(SMI) coverage is voluntary.
organizations (PPO), and private
$912 deductible for a hospital stay
Approximately 95 percent of
fee-for-service plans.
of 1-60 days, and a $114 daily
Medicare's beneficiaries are
coinsurance for days 21-100 in a
w
enrolled in Part B.
Currently, five million beneficiaries
skilled nursing facility.
are enrolled in a Medicare
w Approximately 25 percent of
Advantage plan.
w The 2005 Part A premium is $206
Part B costs are financed by
per month for people with 30-39
beneficiary premiums ($78.20 per
w Medicare Advantage plans receive
quarters of Medicare-covered
month in 2005), with the
a capitated monthly payment to
employment, and $375 per month
remaining 75 percent of costs
provide all Part A and B services,
for people with 29 or fewer
covered by general revenues.
plus whatever additional benefits
quarters of such coverage.
and cost sharing arrangements the
plan provides.
58
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PART D
generous assistance in purchasing
and co-payments of up to $2 for
their prescription drugs, as follows:
generics and $5 for brand name
Prescription Drug Standard Benefit:
drugs up to the out-of-pocket limit.
In 2006, the standard benefit offers:
w All Medicaid full-benefit dual
They will have no co-payments for
w
eligible beneficiaries will pay no
a $250 deductible;
drug costs once their total drug
deductible, no premiums, and no
costs reach $5,100.
w a modest average monthly premium
co-payments after the out-of-pocket
w
estimated at less than $37, based
limit is reached.
Non-full benefit dual eligible
on choice of plan; and,
beneficiaries with incomes below
w Full-benefit dual eligible
135 percent of poverty and assets
w a 75 percent subsidy for drug costs
beneficiaries with incomes at or
that exceed $6,000 but do not
between $251 and $2,250.
below 100 percent of poverty will
exceed $10,000 per individual (or
have co-payments of up to $1 for
$9,000 and $20,000 per couple) in
w Once a beneficiary pays $3,600
generics and $3 for brand name
2006 will have no premiums, a
out-of-pocket ($5,100 in total
drugs up to the out-of-pocket limit.
$50 deductible, and have nominal
costs), the Federal Government
w
cost sharing not to exceed
will pay all costs for covered drugs
Full-benefit dual eligible
15 percent co-insurance. They will
except for nominal cost-sharing.
beneficiaries with incomes above
have co-payments of up to $2 for
100 percent of poverty will have
w
generics and $5 for brand name
The cost-sharing, once the
co­payments of up to $2 for
drugs once their total drug costs
beneficiary reaches the
generics and $5 for brand name
reach $5,100.
out-of-pocket limit, is equal to the
drugs up to the out-of-pocket limit.
greater of:
w
w Non-dual eligible beneficiaries
Institutionalized dual eligibles will
(1) a co-payment of $2 for a
with incomes below 150 percent of
pay no premiums, deductibles, or
generic drug or preferred drug /
poverty and assets up to $10,000
cost-sharing.
$5 for any other drug, or,
per individual (or $20,000 per
w Non-full-benefit dual eligible
couple) in 2006 will have a sliding
(2) 5 percent co-insurance.
beneficiaries with incomes below
scale premium subsidy that is
based on income, a reduced
Prescription Drug Low-Income
135 percent of poverty and assets
deductible of $50, and cost-sharing
Benefit: In 2006, low-income
up to $6,000 per individual (or
not to exceed 15 percent
Medicare beneficiaries will receive
$9,000 per couple) in 2006 will
have no deductibles, no premiums,
co-insurance for costs up to the
Beneficiary Prescription Drug Spending in 2006
Under Medicare's Standard Drug Benefit
59
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out-of-pocket threshold. Once
MEDICARE ADMINISTRATIVE
and Abuse Control (HCFAC)
these beneficiaries reach total drug
IMPROVEMENTS
Program. For the first time, the
costs of $5,100, they will pay only
FY 2006 budget proposes to fund the
nominal cost-sharing of up to
In coming years, HHS will make
HCFAC program through both a
$2 and $5 co-payments.
changes to rationalize several
mandatory and a discretionary
components of Medicare's payment
funding stream. Proposed FY 2006
w For non-full-benefit dual eligible
systems. Specialty hospitals, which
total HCFAC funding is
beneficiaries, low-income subsidy
tend to be physician-owned and
$1.155 billion. Of this amount,
eligibility will be determined by
focus on patients with specific
$1.075 billion funds the mandatory
State Medicaid agencies or by the
medical conditions or who need
portion of the program. The HIPAA
Social Security Administration.
surgical procedures, are a small but
statute capped HCFAC spending at
growing segment of the health care
this level since FY 2003. The
PROGRAM ASSESSMENT RATING
industry. MedPAC, the
remaining $80 million represents
TOOL (PART)
Congressional advisory committee
new discretionary proposed funding
for Medicare issues, conducted
for the program.
The Office of Management and
extensive research and found that
Budget (OMB) developed the
there are problems in the physician
The HCFAC program was
Program Assessment Rating Tool
ownership of hospitals and in the
established to:
(PART) to evaluate programs in a
way Medicare pays for hospitals.
systematic manner, using numeric
w Coordinate Federal, State, and
The Administration will seek to
scores that rate overall program
refine the inpatient hospital payment
Local law enforcement programs;
effectiveness and highlight
system and related provisions of
w Conduct investigations, audits, and
strengths and weaknesses. In
regulations to ensure a more level
evaluations relating to the delivery
FY 2003, the Medicare program
playing field between specialty and
of and payment for health care;
was evaluated. Medicare was rated
non-specialty hospitals.
as "Moderately Effective" and
w Facilitate enforcement of statutes
found to be strong overall, but
With regard to Medicare Advantage,
applicable to health care fraud and
needed modernizing to reflect the
the Budget will phase in over
abuse;
evolution of health care since its
four years the savings from the full
inception in 1965. With enactment
implementation of risk adjustment
w Provide for the modification and
of MMA, many of these issues have
payments to account for different
establishment of safe harbors and
been addressed and new perform-
health status of beneficiaries in
issue advisory opinions and special
ance measures were added to
Medicare Advantage plans. The
fraud alerts; and
reflect these new responsibilities.
phase-in will begin in 2007 and will
be completed by 2010, and is
w Provide for the reporting and
The program was not re-evaluated
projected to produce savings to the
disclosure of final adverse actions
during FY 2004. However, CMS is
extent that Medicare Advantage
against health care providers,
addressing the following three
plans serve healthier beneficiaries,
suppliers, or practitioners.
recommendations from the PART
on average, compared to
evaluation:
fee-for-service. The Budget also
HCFAC Mandatory Funds: The
w
proposes to improve payment accura-
HCFAC Program dedicates
Agency commitment to timely
cy for patients who are transferred
$1.075 billion from the Medicare
implementation of the Medicare
from inpatient hospitals to post-
Part A Trust Fund combating health
Prescription Drug, Improvement,
discharge acute settings, such as
care fraud and abuse. The money is
and Modernization Act
nursing facilities. Lastly, HHS will
allocated into three major parts:
of 2003;
refine the Skilled Nursing Facility
1) $720 million for the Medicare
w Greater emphasis on sound
Prospective Payment System in 2006
Integrity Program (MIP);
program and financial manage
to ensure appropriate payments for
2) $114 million to Federal Bureau of
ment; and
certain high-cost cases.
Investigation (FBI); and,
3) $240.6 million in "wedge" funds
w More effort to link Medicare
HEALTH CARE FRAUD AND ABUSE
that are divided among the
payment to provider perform
CONTROL PROGRAM (HCFAC)
Department of Justice (DOJ), the
ance.
HHS Inspector General, and other
The Health Insurance Portability and
HHS agencies, including CMS, AoA,
Accountability Act of 1996 (HIPAA),
and the Office of General Counsel
established the Health Care Fraud
(OGC). The programs and projects
Centers for Medicare & Medicaid Services
60

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financed by these funding streams
addition, the FBI provides
ment for HCFAC in FY 2006 and
are used to detect and prevent fraud,
operational support for national
$120 million in FY 2007, for a total
waste, and abuse through investiga-
initiatives focusing on pharmaceutical
of $200 million over two years. The
tions and audits, educational
diversion, chiropractic fraud, medical
additional HCFAC funds will
activities, and data analysis. From
clinics, and transportation providers.
enhance efforts to safeguard the
1997 to 2003, the HCFAC Account
Medicare prescription drug benefit
The remaining $240.6 million in
has returned approximately
and Medicare Advantage program
wedge monies finance a variety of
$6.2 billion to the Medicare Trust
($75 million) and expand efforts for
anti-fraud and abuse activities. DOJ
Fund.
safeguarding the Medicaid and
uses its portion of the wedge for civil
SCHIP programs ($5 million).
The MIP activity in HCFAC provides
and criminal prosecutions of health
funds for: medical review; benefits
care professionals and providers.
integrity work to identify and refer
The HHS Inspector General uses its
MEDICARE ERROR RATE
patterns of fraud to law enforcement;
share to bring about judgements and
The Medicare fee-for-service error
provider and HMO audits of cost
settlements related to health care
rate for FY 2004 is 9.3 percent. The
reports; Medicare secondary payer
fraud and abuse and to work with
Medicare Integrity Program is the
activities; and provider education and
CMS to develop and implement
primary source of funds to lower the
training. The Administration has
recommendations to correct systemic
Medicare payment error rate. The
requested an additional $75 million
vulnerabilities detected during
Department lowered the Medicare
in discretionary funding to safeguard
HHS/OIG evaluations and audits.
payment error rate from 14 percent in
the Medicare prescription drug
The remaining wedge monies go to
FY 1996 to 6.3 percent in FY 2002
benefit and Medicare Advantage.
HHS and are used primarily for:
(as measured by OIG). FY 2003 was
These funds will increase total MIP
SCHIP and Medicaid financial
the first year that CMS was responsi-
funding to $795 million in 2006. For
management oversight and data
ble for estimating the national
the mandatory funding, MIP is
analysis projects to detect patterns of
Medicare error rate. CMS developed
expected to save the Medicare Trust
fraud, educational activities at AoA,
the Comprehensive Error Rate
Funds $10 billion in FY 2006
and investigative and litigation
Testing (CERT) Program and the
through recoveries, claims denials,
support at OGC.
Health Payment Medicare Program
and accounts receivable, a
(HPMP) to estimate the Medicare
HCFAC Discretionary Funds: As
14:1 return on investment.
payment error rate using a sample
part of the government-wide
The FBI uses its $114 million
approach to funding program integri-
size of 140,000-170,000 claims. The
allocation for health care fraud
ty activities, the budget proposes a
OIG used a sample size of approxi-
enforcement and investigations. In
$80 million discretionary cap adjust-
mately 6,000 claims and produced
only one statistically significant
number (the national error rate).
Returns to the Medicare Trust Fund from the
CERT/HPMP provides contractor,
HCFAC Account, 1997­2003
provider type, and benefit service-
specific error rates at statistically
(dollars in millions)
significant levels. CERT allows
1,600
CMS to see contractor level perform-
1,400
ance data that the agency can use as
1,200
a tool to manage and correct
payment errors. Reducing the
1,000
Medicare payment error rate is a
800
major priority in the Department's
600
effort to implement the President's
400
Management Agenda.
200
The Administration's health care
0
fraud, waste, and abuse control
1997
1998
1999
2000
2001
2002
2003
efforts have made remarkable
Fiscal Year
progress in protecting the Medicare
Trust Funds. Medicare Trustee's
Return to Medicare Trust Fund
HCFAC Spending
reports have cited our health care
Note: Medicare Integrity Program and FBI HCFAC spending and return on investment amounts
fraud, waste, and abuse control
are not reflected on this table. This table is consistent with the FY 2003 annual report.
efforts as a contributing factor in
61
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slowing Medicare spending growth.
publicly reported quality measures.
CMS and the Administration contin-
We hope to bring similar success to
The on-going CMS nursing home
ue to encourage excellence in care by
the state-administered Medicaid and
survey and certification activities are
exploring provider payment reforms
SCHIP programs as well.
also part of the NHQI, and have a
that link quality to Medicare
dedicated funding stream through the
reimbursement in a cost neutral
QUALITY IMPROVEMENT
Survey and Certification budget (see
manner. Such payment reforms
the Program Management, Survey
would be flexible enough to support
Quality Improvement Organizations
and Certification sections).
innovations in health care delivery.
(QIOs) ­previously Peer Review
Organizations­ were established by
The Nursing Home Quality Initiative
On January 15, 2003, a CMS study
Title XI, Section 1151 of the Social
was followed in the spring of 2003
published in the Journal of the
Security Act, Part B, to serve the
with Phase I of Home Health
American Medical Association
following functions:
Compare, which provides compara-
showed that we are making
tive information on 11 home health
important progress in improving
w Improve the quality of care for
quality indicators for beneficiaries in
health care quality. The study shows
beneficiaries by ensuring that
five demonstration States. Following
that from 1998 to 2000, there has
professionally recognized
phase I, HHS and CMS launched a
been across-the-board improvement
standards of care are met;
national Home Health Quality
in a series of health care quality
w
Initiative in November 2003.
measures tracked by QIOs. For
Enhance program integrity by
instance, the study shows that the
ensuring that Medicare only pays
CMS is in the process of completing
percentage of diabetic patients
for items that are reasonable and
implementation of the Hospital
screened for cholesterol problems
medically necessary; and
Quality Alliance, which will provide
rose from 56 percent to 74 percent
comparative outcomes data on
w Protect beneficiaries by
and that the percentage of patients
hospitals. To date, over 3,800 eligible
addressing individual beneficiary's
receiving beta-blockers at hospital
hospitals have voluntarily participat-
complaints, appeals, and case
discharge, which reduce complica-
ed. With incentives built into MMA,
review.
tions in patients who have had a
nearly all eligible hospitals are
heart attack, rose from 72 percent to
QIOs are a central player in the
participating. The results of these
79 percent. Despite these improve-
Administration's efforts to improve
public information programs will be
ments, the study reports that more
the quality of care provided to
better informed consumers and
than a quarter of Medicare benefici-
Medicare beneficiaries. QIOs assist
providers that are better able to
aries still do not receive important
providers seeking to improve the
identify what they must do to
services that could protect them from
quality of care delivered in nursing
improve quality.
disease or prolong life.
homes, home health agencies, and
physicians offices. These quality
improvement efforts are essential to
Estimated Quality Improvement Organization Seventh
the Administration's goals to
Scope of Work (SOW) by Major Tasks
modernize and strengthen the
Medicare program.
(dollars in millions)
In November 2002, HHS and CMS
SOW Total
launched the national Nursing
FY 2002-2006
Home Quality Initiative (NHQI).
Nursing Homes and Home Health Quality Initiatives
$185.2
The initiative provides new compar-
Inpatient Quality and Safety Improvement
$88.0
ative information to consumers and
Physician Office Quality and Safety Improvement
$110.8
resources to facilities all aimed at
Reducing Disparities and Improving Rural Care
$39.3
improving nursing home quality of
Interpret/Promote Public Information
$44.8
care. Since 2002, the number of
Transition to Hospital Public Reporting
$49.8
measures has been expanded from
National and State Level Monitoring of Payment Errors
$24.5
8 to 15, reflecting improvements in
Best Practices in Hospitalization and Procedures
$13.9
quality measurement and endorse-
Beneficiary Protection and Outreach*
$158.7
ment by the National Quality
Systems Capacity and Maintenance
$81.7
Forum. Over the past two years,
Other Spending
significant improvement has been
(including developmental work and support contracts)
$357.6
achieved in a number of the
Total, QIO Seventh SOW
$1,154.3
*Increased by $14.3 million to conduct BIPA 521 reviews.
Centers for Medicare & Medicaid Services
62

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MMA expanded QIO responsibilities
expended for CLIA activities. CMS
Data support the contention that
to include work with Medicare
determines the workloads of each
CLIA has improved the overall
Advantage and Prescription Drug
State survey agency by taking the
quality of laboratory testing in the
Plans to improve prescription choices
total number of laboratories and
nation. The number of quality
and medication therapy management.
subtracting waived laboratories,
deficiencies decreased approximately
laboratories issued certificates of
40 percent from the first laboratory
CLINICAL LABORATORY
provider-performed microscopy,
survey to the second, with further
IMPROVEMENT AMENDMENTS OF
State-exempt laboratories, and
decreases in subsequent surveys.
1988
accredited laboratories.
The Clinical Laboratory
The CLIA program has
Improvement Amendments of 1988
184,036 laboratories registered with
(CLIA) expanded survey and certifi-
CMS, 21 percent of which are
cation of clinical laboratories from
subject to routine inspection (every
Medicare-participating and interstate
two years) under the program. The
commerce laboratories to all facili-
remainder are exempted. Workload
ties testing human specimens for
projections for the FY 2005-2006
health purposes. CLIA also
cycle include 20,674 surveys of non-
introduced user fees to finance
accredited laboratories, 790 State
survey and certification activities at
validation surveys of accredited
clinical laboratories. User fees are
laboratories, and approximately
credited to the Program Management
1,502 follow-up surveys and
account but are available until
complaint investigations.
63
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HCFAC LEGISLATIVE PROPOSAL
(dollars in millions)
2006
2007
Total
Department of Justice/FBI......................................
$0.0
$1.5
$1.5
HHS............................................................................
IG.................................................................................
0.0
1.4
1.4
Medicaid and SCHIP Financial Management......
5.0
10.2
15.2
CMS Medicare Intergrity........................................
75.0
106.5
181.5
Total HCFAC Discretionary Funds......................
$80.0
$119.6
$199.6
Total Mandatory Funds...........................................
$1,074.6
$1,074.6
$2,149.2
Total HCFAC Funds................................................
$1,154.6
$1,194.2
$2,348.8
Centers for Medicare & Medicaid Services
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MEDICARE TRUST FUND OVERVIEW
(beneficiaries in millions)
2006
2004
2005
2006
+/-2005
Aged....................................................................
35.3
35.6
36.0
+0.4
Disabled..............................................................
6.2
6.5
6.7
+0.2
Total Beneficiaries.............................................
41.5
42.1
42.7
+0.6
MEDICARE OUTLAYS
(outlays in millions)
2006
2004
2005
2006
+/-2005
Current Law:
HI Trust Fund:
Part A Benefits...............................................................
163,764
178,889
182,566
+3,677
SMI Trust Fund:
Part B Benefits...............................................................
131,379
145,975
152,397
+6,422
Part D Benefits...............................................................
-
-
58,492
+58,492
Transitional Drug Assistance*...................................
191
1,155
361
-794
Subtotal, Medicare Benefits....................................
$295,334
$326,019
$393,816
+67,797
Other Medicare Payments:
Other Transitional Drug Assistance*........................
25
65
0
-65
Part B Transfer to Medicaid QIs.................................
168
190
0
-190
Drug Replacement Demonstration..............................
0
400
100
-300
Medicare Advantage Enhanced Premiums...............
0
0
109
+109
Administrative Activities:
Administration**..........................................................
4,367
4,290
5,030
+740
MMA Implementation***...........................................
167
968
364
-604
HCFAC****..................................................................
1,051
1,075
1,155
+80
Quality Improvement Organizations...........................
393
362
386
+24
State Low-Income Determinations..............................
-
73
99
+26
Total Outlays, Current Law.....................................
$301,505
$333,442
$401,059
+67,617
Offsetting Collections:
Premiums........................................................................
-32,140
-38,010
-55,508
-17,498
Other Offsetting Collections/Receipts.......................
-189
0
0
0
Total Net Outlays, Current Law.............................
$269,176
$295,432
$345,551
+50,119
Proposed Legislation:
Part B Transfer to Medicaid for QIs...........................
-
-
+230
+230
Part B Medicaid Premium Interaction.........................
-
-
-35
-35
Total Medicare Proposed Legislation....................
$0
$0
$195
+195
Total Net Outlays, Proposed Law............................
$269,176
$295,432
$345,746
+50,314
* The new prescription drug and transitional benefits are a subaccount within the SMI trust fund but are
separated here for informational purposes.
** Includes administrative payments to the SSA and other non-CMS agencies.
*** Reflects estimates of $1.5 billion appropriated in MMA for CMS and SSA implementation. Actual
**** Health Care Fraud and Abuse Control, including FBI and OIG.
65
Centers for Medicare & Medicaid Services

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MEDICAID
Medicaid is a jointly-funded,
Historically, eligibility for Medicaid
Alaska, the poverty level was
Federal-State program that
has been based on qualifying under
$19,590 and for a family of three in
provides medical assistance to
the cash assistance programs of
Hawaii, the poverty level was $18,020).
certain low-income groups. In
AFDC or Supplemental Security
States have the option to cover some
FY 2006, approximately 46.3 million
Income (SSI). With the creation of
individuals not eligible under AFDC
individuals, including children, the
the Temporary Assistance for Needy
or SSI rules and may cover people at
aged, blind, and/or disabled, and
Families (TANF) program in 1996
higher incomes by disregarding a
people who meet eligibility criteria
(which replaced AFDC) eligibility
portion of their incomes. States may
under the old Aid to Families with
for Medicaid and cash assistance
also cover "medically needy" individuals.
Dependent Children (AFDC)
were de-linked. Medicaid eligibility
Such individuals meet the categorical
program will be covered by Medicaid.
remains tied to AFDC program rules
eligibility criteria, but have too much
Additionally, many other individuals
in place as of July 16, 1996. All
income or too many resources to
will receive Medicaid benefits
those who qualify under the 1996
meet the financial criteria.
through waivers and amended State
AFDC rules and most SSI recipients,
plans with somewhat higher income
commonly referred to as the
Generally, States are required to
eligibility limits. Under current law,
"categorically eligible," must be
provide a core of 13 mandatory
the Federal share of Medicaid
covered under State Medicaid
services to eligible needy recipients,
outlays is expected to be about
programs. States must cover three
including: inpatient and outpatient
$192.6 billion in FY 2006. This is a
additional groups: 1) pregnant women
hospital care; health screening,
$4.3 billion (2.3 percent) increase
and infants whose family income
diagnosis, and treatment for children;
over projected FY 2005 spending.
does not exceed 133 percent of the
family planning; physician services;
Federal poverty level; 2) all children
and nursing facility services to
BACKGROUND
under the age of 19 living in families
individuals over 21. States may
with incomes below the poverty
also elect to cover any of over
Under Medicaid, State expenditures
level; and 3) all children under age 6
30 specified optional services such as
for medical assistance are matched
with incomes below 133 percent of
prescription drugs, clinic services,
by the Federal government using a
the Federal Poverty Level. In 2004,
dental care, eyeglasses, and services
formula based on average per capita
the poverty level for a family of three
provided in intermediate care facili-
income in each State relative to
was $15,670 in most of the United
ties for those with developmental
national per capita income. Federal
States (for a family of three in
disabilities.
matching rates for
FY 2006 will
100%
Distribution of People Served through Medicaid
range from 50 to
Other, 5.2%
76 percent for
Other,0.01%
Payments by Basis of Eligibility, FY 2002
medical assistance
Aged, Blind and Disabled, 24.9%
80%
payments. Overall,
the Federal
government pays
Aged, Blind and Disabled, 67.4%
60%
for about 57 percent
of total Medicaid
Children, 49.4%
expenditures. In
addition to
40%
medical assistance
payments, the
Medicaid
20%
appropriation
Adults, 25.7%
funds the Vaccines
for Children
0%
program and the
People Served
Payments
Source: CMS
Federal share of
Medicaid State
and local adminis-
Source: CMS
trative costs.
Centers for Medicare & Medicaid Services
66

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PROGRAM DEVELOPMENTS
Estimated State and Federal Medicaid Outlays
Medicaid Growth: Prescription
$800
drug spending, nursing home care,
FY 2006 - FY 2015
community-based long-term care
(dollars in billions)
costs, and payments to health plans
$600
are significant contributors to
growth in Medicaid outlays. These
expenditures are expected to contin-
ue to contribute to growth in future
$400
State Outlays
years. State programs providing
"enhanced payments" to
institutional providers have also
$200
played a significant role in driving-
Federal Outlays
up Federal Medicaid costs at an
accelerated rate.
$0
Waivers: States have sought
waivers under section 1115 of the
2006
2007
2008
2009
2010
2011
2012
2013
Social Security Act to expand
health care coverage to low-income,
uninsured populations that do not
Pharmacy Plus: The introduction of
applications. Principles that are
otherwise meet Medicaid eligibility
the Medicare prescription drug
employed in SCHIP and emphasize
criteria and to test innovative
benefit assumed much of the cost of
innovation will be expanded to
approaches in health care service
pharmaceutical benefits otherwise
Medicaid beneficiaries, while
delivery. Although demonstrations
covered by Pharmacy Plus waivers.
long-term care reforms will build on
vary greatly, most employ a similar
The Department and CMS continue
successful programs that use
overall approach: expanding the use
to work closely with states that have
consumer direction and home- and
of managed care for the Medicaid
Pharmacy Plus waivers to enable
community-based care to improve
population.
them to provide the same level of
satisfaction and lower costs. A
coverage under the new Medicare
modernized Medicaid system will
To date, CMS has approved
prescription drug program.
continue to grow at a robust rate to
30 Statewide comprehensive health
accommodate increases in health
care reform demonstrations in
MEDICAID LEGISLATIVE
care spending.
27 States. CMS has also approved
PROPOSALS
two sub-State health reform
NEW FREEDOM INITIATIVE
demonstrations and 15 demonstrations
The following sections contain
PROPOSALS
specifically related to family planning.
FY 2006 legislative proposals.
The President's Budget includes
Health Insurance Flexibility and
MEDICAID AND SCHIP
six policies that promote home and
Accountability: In August 2001,
MODERNIZATION
community-based care options for
President Bush announced the Health
people with disabilities. These
Insurance Flexibility and
The Administration proposes to
policies build on the President's New
Accountability (HIFA) demonstra-
provide States with additional
Freedom Initiative, which is part of a
tion, a new section 1115 initiative.
flexibility in Medicaid to further
nationwide effort to integrate people
HIFA enables States to use Medicaid
increase coverage among
with disabilities more fully into
and State Children's Health Insurance
low-income individuals and families
society.
Program (SCHIP) funds in concert
without creating additional costs for
with private insurance options to
the Federal Government. This
Money Follows the Person
expand coverage to low-income,
proposal would build on the success
Rebalancing Demonstration: This
uninsured individuals, with a focus
of SCHIP to provide acute care for
proposal is consistent with the
on those with incomes at or below
children and families, as well as
Administration's effort to promote
200 percent of the Federal Poverty
current efforts to reduce the number
the use of at-home care as an alterna-
Level.
of uninsured individuals.
tive to nursing homes for elderly and
disabled Americans. Under the
A more in-depth discussion of HIFA
A modernized Medicaid system will
"Money Follows the Person"
waivers is included in the SCHIP
give States greater flexibility without
demonstration, at-home care
section.
the need for burdensome waiver
67
Centers for Medicare & Medicaid Services

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combines cost effective benefits with
proposal in FY 2006 is $7 million
cash benefits due to earnings from
increased independence and quality
and $134 million over five years.
work. This provision was enacted
of life for the beneficiary.
along with welfare reform and was
w Respite for Caregivers of Children
scheduled to sunset in September
In this five-year demonstration
with a Substantial Disability: This
2002. Congress has already extended
project, Federal grant funds would
demonstration allows States to
this program through March 31, 2005.
pay for home and community-based
provide respite care to caregivers
This proposal will extend TMA
waiver services for individuals who
of children with substantial
benefits through September of 2006.
move from institutions into at­home
disabilities. The demonstration
care. These costs would be funded at
would enable the Department to
In addition to this extension, the
a Federal matching rate of
collect specific data about the cost
2006 President's Budget includes
100 percent for the first year of each
and utilization of respite services
proposals to simplify eligibility for
individual's participation. As a
for caregivers of disabled children.
TMA benefits to the low-income
condition of receiving the enhanced
The cost for this proposal in
working poor. There are
match, the participating State would
FY 2006 is $1 million and
three provisions to the proposal:
agree to continue care after the first
$23 million over five years.
w
year at the regular Medicaid matching
States will be given the option to
rate and to reduce institutional
Spousal Exemption: This proposal
offer 12 months of continuous
long-term care. This proposal
protects Medicaid coverage of an
coverage to eligible participants.
authorizes $1.75 billion in funding
individual married to a disabled
w States may waive income reporting
for this demonstration over five years.
individual participating in a work
incentive program under 1619(b) of
requirements for beneficiaries.
Home and Community-Based Care
the Social Security Act. Currently, if
w States that offer Medicaid eligibility
Demonstrations: The Budget
an individual is Medicaid eligible
for children and families with
includes three demonstrations
and the individual's spouse partici-
incomes up to 185 percent of
proposals to encourage home and
pates in the 1619(b) program, the
poverty may waive TMA
community-based care for children
spouse's earnings could cause the
assistance altogether.
and adults with disabilities:
individual to lose his/her Medicaid
w
coverage. This proposal will cost
This proposal will cost $560 million
Community Alternative to
$17 million for FY 2006 and
in FY 2006 and $560 million over
Children's Residential Treatment
$102 million over five years.
five years.
Facilities: This demonstration
enables States to offer home and
Presumptive Eligibility: Establishes
Partnership for Long Term Care
community-based services to
a State Medicaid option allowing
Insurance: Eliminates the legislative
children who would otherwise be
presumptive eligibility for institu-
prohibition on developing more
served in psychiatric residential
tionally-qualified individuals who are
Partnership programs. The
treatment facilities. This
discharged from hospitals into the
Partnership for Long Term Care
10-year demonstration would
community. This will increase the
(LTC) was formulated to explore
permit the delivery of intensive
number of Medicaid beneficiaries
alternatives to current long-term care
mental health services for children
who receive home and community-
financing by blending public and
in their homes and communities
based services rather than
private insurance. Four States
and allow the Department to
institutional care. This proposal has
(California, Connecticut, Indiana,
evaluate the cost of providing these
no cost associated with it.
and New York) currently have
services outside of institutions.
partnerships whereby private
The cost for this proposal in
OTHER MEDICAID LEGISLATIVE
insurance is used to cover the initial
FY 2006 is $5 million and
PROPOSALS
cost of LTC. Consumers who
$99 million over five years.
purchase Partnership-approved
Extension and Simplification of
insurance policies can become
w Respite for Caregivers of Disabled
Transitional Medical Assistance:
eligible for Medicaid services after
Adults: This proposal creates a
Transitional Medical Assistance
their private insurance is utilized,
demonstration that tests whether
(TMA) was created to temporarily
without divesting all their assets as is
respite care, or temporary care,
extend health coverage for former
typically required to meet Medicaid
reduces primary caregiver
welfare recipients after they enter the
eligibility criteria. This proposal is
"burn-out" that often leads to
workforce. TMA allows families to
budget neutral.
institutionalization of individuals
remain eligible for Medicaid for up
with disabilities. The cost for this
to 12 months after they lose welfare
Centers for Medicare & Medicaid Services
68

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Extension of Premium Assistance to
Medicaid matching rate or for other
example of this type of service is
Qualified Individuals: Under the
purposes. To avoid this misuse of
school nurse care. This regulatory
Qualified Individuals (QI) program,
funds, the President's budget propos-
change seeks to codify this policy in
Medicaid pays Medicare Part B
es to limit reimbursement levels to
regulation to eliminate any legal
premiums for Medicare beneficiaries
no more than the cost of providing
ambiguity surrounding this topic.
with incomes between 120 and
services. These proposals save
This regulatory change has no budget
135 percent of poverty. Part B
$5.9 billion over five years.
impact.
premiums currently cost a beneficiary
Reforming Provider Taxes: The
Reforming Transfer of Assets
$78.20 per month ­ a 17.4 percent
budget proposes two changes to the
Requirements: Current law requires
increase over 2004. States will
current law regulating provider taxes.
individuals applying for Medicaid
continue to be fully reimbursed for
Under current rules, taxes imposed
long-term care services to divest all
the cost of the program. This one-
on providers may not exceed
but a minimum level of assets before
year extension is estimated to cost
6 percent of total revenues and must
becoming eligible. If applicants
$230 million in FY 2006.
be applied uniformly across all
transfer assets at below market value
Improvements to the Vaccines for
health care providers in the same
to avoid these requirements,
Children Program: Vaccines for
class. The first change proposes to
Medicaid rules hold them subject to
Children (VFC) is a CDC-adminis-
phase down this allowable tax rate
delays in eligibility. Despite these
tered, Medicaid funded program that
from 6 percent to 3 percent. Second,
sanctions, creative estate planning
administers free vaccines to eligible
the Budget proposes that managed
often allows individuals to garner
children. The President's Budget
care organizations (MCOs) meet the
Medicaid eligibility status without
would improve the program by
same provider tax requirements as
divesting their assets. The budget
allowing under-insured children to
other classes of health providers.
proposes to curtail this practice by
receive VFC administered inoculations
This proposal saves $231 million in
tightening existing rules regarding
at State and local health departments
FY 2006 and $3.17 billion over
transfers of assets. This proposal
in addition to Federally Qualified
five years.
saves $99 million in FY 2006 and
Health Centers and Rural Health
$1.48 billion over five years.
Strengthening Medicaid
Centers. This proposal will cost an
Reimbursement Policies: The
Medicaid Administrative Claiming:
additional $140 million in FY 2006
President's budget proposes three
The President's budget proposes to
and $700 million over five years.
changes to Medicaid reimbursement
curtail inefficient Medicaid
Payment Reforms: The
policy. First, the budget proposes to
administrative spending patterns by
Administration proposes to further
clarify which services may be
establishing an allotment for
improve the integrity of the Medicaid
claimed under targeted case manage-
Medicaid administrative claiming.
matching rate funding mechanism by
ment (TCM). Second, the
This proposal saves $1.13 billion
curbing the use of financing arrange-
Administration seeks lower
over five years.
ments that States use to avoid the
reimbursement for TCM services to
Medicaid and SCHIP Financial
legally determined State match
the administrative matching rate of
Management: The Department plans
requirement. Through various
50 percent. Currently States are
to continue its efforts to root out
mechanisms, government providers
shifting costs into Medicaid that are
erroneous and fraudulent uses of
return Federal Medicaid funds back
the obligation of other programs and
Medicaid and SCHIP funding.
to the States. States, in turn, recycle
are using expanded definitions of
Along with an increase in the
these funds by using them to draw
allowable services. These two
number of audits and evaluations of
down additional Federal dollars. The
proposals save $129 million in
State Medicaid programs, the budget
Budget proposes to build on current
FY 2006 and $3.1 billion over
proposes to allocate $20 million from
CMS efforts to curb these question-
five years.
the Health Care Fraud and Abuse
able financing practices by matching
In addition, the Administration
Account and $5 million in discre-
only those funds kept by providers as
proposes to codify Medicaid "free
tionary funding to finance this work.
payment for services.
care" policy in regulation. Currently,
Amending the Medicaid Drug
In addition, current law allows States
the Medicaid program asserts that
Rebate Formula: The Medicaid
to make Medicaid payments to
States cannot bill the Federal
program requires all drug
providers far in excess of the actual
Medicaid program for any service
manufacturers to pay a rebate for all
costs of services. States use this
that would be provided to non-
drugs covered by Medicaid. The
additional money to leverage Federal
Medicaid eligible individuals free of
calculations for this rebate involve a
reimbursements in excess of their
charge. The most prominent
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figure called lowest private market
OTHER LEGISLATIVE PROPOSALS
for the first seven years they reside
price or best price. This figure
WITH MEDICAID IMPACTS
in the United States. To assure that
functions as a price floor, which
refugees and asylees have ample
prohibits manufacturers from negoti-
Child Support Enforcement
time to complete the citizenship
ating deep discounts with large
Proposals: The Administration for
process, the President's Budget
non-Medicaid purchasers such as
Children and Families (ACF) has
proposes extending the current
hospitals and HMOs. The
proposed two changes that have an
seven-year exemption to eight. The
Administration proposes replacing
effect on the Medicaid baseline.
proposal will cost the Federal
best price with a budget neutral flat
Both proposals affect the Child
Government $40 million in FY 2006
rebate, allowing private purchasers to
Support Enforcement program. The
and $145 million over five years.
negotiate lower drug prices. This
first proposal would allow States to
SSA Initial State Disability Review:
proposal will have no effect on the
seek medical child support for
The Social Security Administration
Medicaid budget.
children from both the custodial and
non-custodial parent. States would
has proposed a management
Restructure pharmacy reimburse-
also be able to enforce these support
improvement initiative that has an
ment: In a recent House Energy and
orders against the custodial parent.
impact on the Medicaid program.
Commerce Committee hearing, the
ACF expects this change to increase
The proposal establishes a standard
members focused their attention on
children's access to private sources of
for accuracy in SSI disability awards
government overpayment for
health care.
identical to the one that applies to the
prescription drugs in Medicaid. The
Social Security Disability Insurance
President's Budget proposes a system
The second legislative change
Program. This provision will help
that more closely aligns pharmacy
mandates that all States review child
ensure that only individuals who are
reimbursement to pharmacy acquisi-
support orders for Temporary
disabled will receive SSI disability
tion costs. This proposal saves
Assistance for Needy Families
benefits and related Medicaid
$542 million in FY 2006 and
(TANF) families every three years.
coverage. This program will save
$5.4 billion over five years.
Under current law, States review
the Medicaid program $2 million in
child support orders every
FY 2006, and $113 million over
Health Insurance Portability and
three years if instructed to do so by
five years.
Accountability Act Proposals:
the custodial parent or at the State's
Congress passed the Health
own discretion. This change would
Cover the Kids: This legislative
Insurance Portability and
mandate that States undertake these
proposal provides $1 billion in grants
Accountability Act (HIPAA) in 1996
reviews. ACF believes that required
(in the State Grants and
to increase the continuity, portability
reviews would result in the discovery
Demonstrations account) over
and accessibility of health insurance.
of increased levels of private health
two years to States, schools, and
The President's Budget proposes
insurance among non-custodial
community organizations to enroll
two legislative changes to ensure that
parents that could be used to extend
and provide coverage to many
Medicaid and SCHIP beneficiaries
coverage to their children. This
eligible, but not enrolled, children in
receive the benefits of HIPAA related
increased access to private health
Medicaid and SCHIP. CMS estimates
coverage. The first change establish-
insurance would lead to a decrease in
that this legislative proposal will cost
es the determination of eligibility for
Medicaid costs among TANF
Medicaid $389 million in FY 2006
Medicaid or SCHIP as a qualifying
families.
and $4.1 billion from FY 2006
event to allow access to
through FY 2010.
employer-sponsored insurance (ESI).
These two proposals will be budget
This change allows families to enroll
neutral in FY 2006, but will save the
in ESI through special enrollment
Federal Government $45 million
even if they have missed their
over five years.
employer's open period for enroll-
Refugee and Asylee Exemption
ment. The second change requires
Extension: Under current law, most
SCHIP programs to issue certificates
legal immigrants who entered the
of creditable coverage, which, in
country on or after August 22, 1996,
turn, verifies the period of time an
and some who entered prior to that
individual is covered by a specific
date are not eligible for SSI until
health insurance policy.
they have resided in the country for
five years or have obtained citizen-
ship. Refugees and asylees on SSI
are currently exempted from this ban
Centers for Medicare & Medicaid Services
70

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MEDICAID ENROLLMENT
(enrollees in millions)
2004
2005
2006
Aged 65 and Over...............................................................................................
4.2
4.2
4.8
Blind and Disabled..............................................................................................
7.7
7.7
8.4
Needy Adults.......................................................................................................
10.7
11.1
11.2
Needy Children....................................................................................................
21.2
21.7
21.9
Total*..............................................................................................................
43.7
44.7
46.3
* Numbers may not add due to rounding.
MEDICAID OUTLAYS
(outlays in millions)
2004
2005
2006
2006
Current Law:
Actual
Enacted
Request
+/- 2005
Benefits*.............................................................
$168,172
$179,160
$182,759
$3,598
State Administration ........................................
$8,059
$9,112
$9,803
$691
Total Net Outlays, Current Law* ..............
$176,231
$188,272
$192,562
$4,289
* Includes Vaccines for Children Outlays.
** Number may not add due to rounding.
71
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STATE CHILDREN'S HEALTH INSURANCE PROGRAM
The Balanced Budget Act of 1997 approval for 17 Medicaid expansion manner, rating program effectiveness
created the State Children's
programs, 18 separate programs,
and highlighting strengths and
Health Insurance Program (SCHIP)
21 combination programs, and
weaknesses. SCHIP was assessed
under Title XXI of the Social
226 State plan amendments.
using the PART tool in the FY 2004
Security Act.
cycle and it received a rating of
Today, 11 States cover children in
"Moderately Effective." It was then
SCHIP is a partnership between
families with incomes up to 250 percent
reassessed in the FY 2005 cycle and
Federal and State governments that
of the FPL. Of these States, seven
received a rating of "Adequate." As
helps provide children with the
cover children above that level. Six
a result of the PART findings, CMS
health insurance coverage they need.
of the States cover children up to
developed an SCHIP Action Plan to
The program improves access to
300 percent of the FPL, and one
further strengthen the program.
health care and the quality of life for
State, New Jersey, covers children up
millions of vulnerable children under
to 350 percent of the FPL.
19 years of age. SCHIP reaches
SCHIP REPORTS AND
During FY 2003, 5.8 million children
children whose families have
EVALUATIONS
enrolled in SCHIP. This represents
incomes too high to qualify for
an increase of half a million, or
Congress required several SCHIP
Medicaid, but too low to afford
9 percent, over FY 2002 enrollment.
evaluations in statute. Title XXI
private health insurance.
required States to assess the
Title XXI appropriated almost
operation of their SCHIP State plans
SCHIP PERFORMANCE
$40 billion to the program over
and report to the Secretary by
10 years (FY 1998 through FY 2007).
When SCHIP began in 1997, CMS
January 1 of each fiscal year. The
States with an approved SCHIP plan
adopted a goal of enrolling
statute also directed each State to
are eligible to receive an enhanced
five million children by FY 2005.
submit to the Secretary evaluation
Federal matching rate, which ranges
Specifically, CMS has set annual
reports by March 31, 2000. These
from 65 to 85 percent, drawn from a
target goals for FYs 2000 through
reports are available on the Centers
capped allotment.
2003 to enroll at least 1 million new
for Medicare & Medicaid Services
children in SCHIP and Medicaid per
website, www.cms.hhs.gov. As
States have a high degree of flexibili-
year. CMS has exceeded these
required by the statute, the Secretary
ty in designing their programs. They
enrollment goals every year.
submitted a report on the States'
can implement SCHIP by:
evaluations, which was made
The Office of Management and
w
available to Congress and the public
expanding Medicaid,
Budget developed the Program
in December 2002. In addition to
w
Assessment Rating Tool (PART) to
creating a new, non-Medicaid Title
this report to Congress, CMS has
evaluate programs in a systematic
XXI separate State program, or
w a combination of both approaches.
SCHIP Enrolled FY 1998 through FY 2003
Generally, Medicaid-ineligible,
uninsured children, who are under
5.8 million
6.0
19 years old, in families below
5.3 million
200 percent of the Federal Poverty
4.6 million
5.0
Level (FPL), can receive SCHIP
benefits.
4.0
3.3 million
3.0
IMPLEMENTATION AND
2 million
ENROLLMENT
2.0
Every State, the District of
1 million
1.0
Columbia, and all five Territories
have approved SCHIP plans. As of
0.0
January 2005, States have received
CY 1998
FY 1999
FY 2000
FY 2001
FY 2002
FY 2003
NOTE: FY 2004 enrollment data were not available at print time.
Centers for Medicare & Medicaid Services
72

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planned future evaluations to examine
HIFA: Expanding Health Care Coverage
the SCHIP program in greater detail.
In August 2001, the Administration invited States to participate in the
The Balanced Budget Refinement
Health Insurance Flexibility and Accountability (HIFA) demonstration
Act of 1999 (BBRA) also required
initiative. The main goals of the HIFA initiative are:
HHS to conduct an independent
evaluation of 10 States. The interim
w to encourage innovation in the Medicaid and SCHIP programs;
evaluation report was submitted to
Congress in February 2003. A final
w give States the programmatic flexibility to increase health insurance; and
report is expected to be presented to
w simplify the waiver process.
Congress in early 2005.
States use HIFA demonstrations to expand health care coverage. As of
BBRA also directed the Secretary,
January 2005, CMS has approved nine SCHIP HIFA demonstrations
through the Inspector General, to
expanding coverage to 821,750 people. As of November 2004,
evaluate SCHIP every three years.
289,000 people were enrolled in SCHIP HIFA demonstrations.
The Office of the Inspector General
(OIG) is instructed to evaluate:
States to improve coverage and
LEGISLATIVE PROPOSALS
1) State compliance with the require-
quality of services available to
ment that Medicaid-eligible children
beneficiaries. Using section 1115 of
Cover the Kids: This legislative
are not enrolled in SCHIP, and
proposal provides $1 billion in grants
the Social Security Act, States can
2) State progress made in reducing
(in the State Grants and Demonstrations
more effectively tailor their programs
the number of uninsured children.
to meet local needs and can experi-
account) over two years to States,
The OIG released two reports in
ment with new approaches to providing
schools, and community organiza-
February 2001 that fulfill these
health care services to SCHIP recipi-
tions to enroll and provide coverage to
requirements. To satisfy the require-
many eligible, but not enrolled,
ents. Section 1115 waivers provide
ment to submit these evaluations
children in Medicaid and SCHIP.
health insurance to uninsured
every three years, the OIG released
children, parents, caretaker guardians,
CMS estimates that this legislative
its evaluation of States' progress in
pregnant women, and childless adults.
proposal will cost SCHIP $129 million
reducing the number of uninsured
in FY 2006 and $535 million from
children in August 2004. In 2005 the
The Administration has promoted a
FY 2006 through FY 2010.
OIG will release its second evalua-
new section 1115 approach, called
Medicaid and SCHIP
tion of States' compliance with the
the Health Insurance Flexibility and
Modernization: The Administration
requirement that Medicaid-eligible
Accountability (HIFA) waivers, for
proposes modernizing Medicaid and
children are not enrolled in SCHIP.
States to develop comprehensive
SCHIP by giving States greater
insurance coverage for individuals at
As directed by BBRA, the
twice the Federal Poverty Level and
flexibility to tailor their programs to
Comptroller General submitted a
below, using SCHIP and Medicaid
meet the needs of their populations
report to Congress monitoring these
funds. These demonstration waivers
without complex waiver applications.
OIG audits. The Comptroller
This proposal builds on current
target vulnerable, uninsured popula-
General's report suggests that the
efforts to reduce the number of
tions, such as pregnant women, parents
OIG expand the study to include a
and children on Medicaid and SCHIP,
uninsured individuals and responds
more diverse sample of States. The
and other adults with incomes less
to feedback about current program
scope of the OIG follow-up studies is
than twice the Federal Poverty Level.
structure (please see the Medicaid
expanded to more comprehensively
section for further details).
assess the SCHIP program by analyz-
As of January 2005, 16 SCHIP
SCHIP Reauthorization and
ing a broader array of States.
Section 1115 waivers were approved
for Alaska, Arizona, California,
Redistribution: Under current law,
SCHIP is authorized and appropriat-
SCHIP W
Colorado, Idaho, Illinois, Maryland,
AIVERS
ed through FY 2007. This legislative
Michigan, Minnesota, Missouri, New
The requirements of Federal law and
Jersey, New Mexico (2), Oregon,
proposal seeks to reauthorize the
regulations can be waived by the
Rhode Island and Wisconsin. Of
program early to better target SCHIP
Secretary of the Department of
these 16 waivers, nine are HIFA
funds in a more timely manner. The
Health and Human Services to give
proposal would reauthorize SCHIP at
demonstration waivers (Arizona,
States the programmatic flexibility to
current law levels.
California, Colorado, Idaho, Illinois,
increase health insurance coverage
Michigan, New Jersey, New Mexico,
Please see the Medicaid and State
and encourage innovation in their
and Oregon).
Grants and Demonstrations sections for
SCHIP programs. Waivers allow
additional proposals that affect SCHIP.
73
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SCHIP OUTLAYS
(dollars in millions)
2005
2006
2005
2004
Projected
Projected
+/- 2006
Current Law
Total Outlays.......................................................
$4,607
$5,343
$5,434
+$91
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74

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MEDICAID AND SCHIP PROPOSALS
(dollars in millions)
2006
2006-2010
MEDICAIDPROPOSALS
Medicaid and SCHIP Modernization.........................................................
NA
NA
Extension of Transitional Medical Assistance with Modifications.....
$560
$560
Extension of Medicare Premium Assistance (QI)....................................
$230
$230
Expansion of Vaccines For Children..........................................................
$140
$700
Medicaid/SCHIP as a Qualifying Event for Employer Sponsored Ins.
$0
$0
Cover the Kids (Medicaid Impact).............................................................
$389
$4,053
Money Follows the Indivdiual Rebalancing Demonstration.................
$0
$500
Home and Community-Based Care Demos...............................................
$13
$256
Long-Term Care Insurance.........................................................................
$0
$0
Spousal Exemption.......................................................................................
$17
$102
Payment Reforms..........................................................................................
$0
($5,869)
Phase Down of Safe Harbor Tax................................................................
($231)
($2,768)
Managed Care Provider Tax Reform..........................................................
$0
($399)
Reduce Targeted Case Management Match to 50 Percent....................
($129)
($1,049)
Define Eligible Services for Targeted Case Management......................
$0
($2,035)
Reform of Transfer of Assets Policy.........................................................
($99)
($1,476)
Medicaid Administrative Claiming............................................................
$0
($1,130)
Amend Medicaid Drug Rebate Formula...................................................
$0
$0
Restructure Pharmacy Reimbursement.....................................................
($542)
($5,385)
Pharmacy Plus Demonstrations.................................................................
$0
$0
SUBTOTAL MEDICAID PROPOSALS................................................
$348
-$13,710
OTHER PROPOSALS WITH IMPACT ON MEDICAID
Medical Child Support From Either Parent...............................................
$0
-$15
Child Support Review and Adjustment....................................................
$0
-$30
Refugee Exemption Extension....................................................................
$40
$145
SSA Disability Determinations ..................................................................
-$2
-$113
SUBTOTAL OTHER PROPOSALS........................................................
$38
-$13
ADJUSTEMENT FOR QI TRANSFER FROM MEDICARE................
-$230
-$230
TOTAL FOR MEDICAID PROPOSED LAW........................................
$156
-$13,953
SCHIP LEGISLATIVE PROPOSALS
Cover the Kids (SCHIP Impact)..................................................................
$129
$535
SCHIP Reauthorization................................................................................
$670
$457
SCHIP Certificates of Creditable Coverage..............................................
$0
$0
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STATE GRANTS AND DEMONSTRATIONS
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Budget Authority
Ticket to Work Grant Programs...........................
$77
$81
$81
$0
Qualified High-Risk Pools Grant Programs........
$40
$0
$0
$0
Background Checks-Direct Patient Access.......
$25
$0
$0
$0
State Pharmaceutical Assistance Program.........
$0
$62
$63
+$1
Federal Reimbursement of Emergency Health
Services - Undocumented Aliens...............
$0
$250
$250
$0
Cover the Kids Outreach......................................
$0
$0
$500
+$500
State Purchasing Pools.........................................
$0
$0
$400
+$400
Total Budget Authority........................................
$142
$393
$1,294
$901
Outlays
Ticket to Work Grant Programs...........................
$27
$43
$38
-$5
Qualified High-Risk Pools Grant Programs........
$21
$23
$40
+$17
Background Checks-Direct Patient Access.......
$0
$9
$8
-$1
State Pharmaceutical Assistance Program.........
$0
$62
$63
+$1
Federal Reimbursement of Emergency Health
Services - Undocumented Aliens...............
$0
$63
$250
+$187
Cover the Kids Outreach......................................
$0
$0
$200
+$200
State Purchasing Pools ........................................
$0
$0
$200
+$200
Total Outlays..........................................................
$48
$200
$799
$599
THE TICKET TO WORK AND WORK
FY 2005 and FY 2006 for
approved for funding from the
INCENTIVES IMPROVEMENT ACT
Demonstration to Maintain
Infrastructure Grant Program Section
Independence projects. The
203 since its inception. There are
Ticket to Work and Work Incentives
demonstration program will evaluate
31 States with Medicaid buy-ins and
Improvement Act of 1999
the potential benefits of providing
three additional States have plan
(TWWIIA) authorized two grant
Medicaid services to workers with
amendments under review. As of
programs designed to assist States in
physical or mental impairments that,
September 30, 2004, there were just
developing services and supports to
without medical intervention, are
over 70,000 workers receiving
aid the competitive employment of
likely to result in disability.
Medicaid benefits under the buy-in
people with disabilities by extending
options. Since January 1, 2000,
Medicaid coverage to these individuals.
In FY 2006, the budget authority
there has been a ten-fold increase in
Section 203 of the Act provided an
provided by statute for the two grant
participation. A total of 15 States
appropriation each year from
programs totals $81.8 million.
and the District of Columbia have
FY 2001 to FY 2011 for Medicaid
Medicaid Infrastructure Grants are
applied for and will receive continua-
Infrastructure Grants. These grants
authorized and appropriated for
tion awards in FY 2005. In addition,
provide funding to States to build
$40.8 million of non-matched
one State, West Virginia, will contin-
Medicaid infrastructure and supports,
Federal funding. The Demonstration
ue to carry-out employment goals for
conduct outreach activities, explore
to Maintain Independence and
the working disabled population by
new service options, and form
Employment is authorized and
spending previous grant awards in
partnerships to improve the employ-
appropriated for $41 million. States
FY 2005 through a no-cost extension
ment environment for people with
must match Federal funding for this
of funding. Of the $35 million
disabilities. Section 204 provides for
demonstration program at the normal
(FY 2004) that has been appropriated
an appropriation of $42 million for
Federal matching rate.
for the upcoming grant year,
each of the fiscal years from 2001 to
Through 2004, 49 entities (48 States
$21.8 million was granted to States.
2004, and $41 million for both
and the District of Columbia) were
The reason for the large discrepancy
76
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---

in the FY 2004 appropriation and
These funds were used for the
percentages of undocumented aliens
funding amount is that States are
creation and initial operation of
in each State and the District of
enrolling fewer participants in
pools. The second program made
Columbia. One third will be allotted
Medicaid buy-in programs than
available $40 million per year for
among the six States with the largest
Congress originally anticipated.
FY 2003 and FY 2004 for grants to
number of undocumented alien
Higher levels of funding are
States with existing qualified
apprehensions. The amounts set
legislatively related to the yearly
high-risk pools to be used for the
aside for each State will not be
amount of Medicaid buy-in service
operation of their pools.
dispersed through the State itself.
costs expended by a State. States
The law requires the Secretary to
States that did not have existing
may be hesitant to enroll individuals
directly pay hospitals, doctors, and
qualified high-risk pools were given
in the optional buy-in category
other providers for their otherwise
until March 31, 2004 to apply for up
because of budget shortfalls. The
uncompensated costs of providing
to $1 million each to create and
remaining funding rolled over into
emergency health care to undocu-
initially operate a qualified high-risk
the FY 2005 appropriation. With this
mented aliens in their respective
pool. The TAA legislation made
funding, the recipients plan to make
States.
available $20 million in FY 2003 for
systemic changes that will help
these "seed grants." Six States
individuals with disabilities gain
received a total of $4.2 million in
PILOT PROGRAM FOR NATIONAL
employment and retain their health
seed grant funding before the author-
AND STATE BACKGROUND CHECKS
care coverage. These changes are
ity lapsed at the end of FY 2004.
ON DIRECT PATIENT ACCESS
designed to increase Medicaid buy-in
EMPLOYEES OF LONG-TERM CARE
programs and enhance State personal
The TAA also made available
FACILITIES OR PROVIDERS
assistance service programs.
$40 million per year for FY 2003 and
FY 2004 for the States that already
Section 307 of the MMA creates a
Six States (Kansas, Louisiana,
operate qualified pools that meet the
$25 million pilot program that runs
Minnesota, Mississippi, Rhode
requirements of the statute. The
through the end of FY 2007 to
Island, and Texas) and the District of
FY 2003 money was available until
evaluate State and national
Columbia were awarded
the end of FY 2004 and the FY 2004
background checks of direct patient
Demonstration to Maintain
money will be available until the end
access employees of long-term care
Independence and Employment grant
of FY 2005. CMS published a
facilities or providers. On
funding since the program was
Federal Register Notice on
December 22, 2004, CMS selected
started. States implementing
May 2, 2003 announcing the
seven States to participate in the pilot
demonstration grant programs will
availability of funding and inviting
program: Alaska, Idaho, Michigan,
provide Medicaid-equivalent services
States to apply. All $40 million was
Nevada, New Mexico, South
to targeted populations of working
awarded for FY 2003, divided among
Carolina, and Wisconsin.
individuals with disabilities. The
19 States. To date, $25.5 million of
Subsequently, South Carolina
demonstration projects will be used
FY 2004 funding has been awarded,
withdrew from the program. CMS
to evaluate the impact of providing
divided among fourteen States. We
extended an offer to Illinois (one of
Medicaid benefits to a working
expect that the remaining
the alternate States) to participate in
person with a potentially severe
$14.5 million for FY 2004 funding
the pilot and is awaiting their
disability. The State demonstration
will be awarded before the deadline
response. Information gathered from
projects approved so far will cover
at the end of FY 2005.
this pilot will inform CMS about the
individuals with all types of disabili-
cost associated with conducting
ties including HIV/AIDS and various
background checks, the impact and
mental illnesses.
FEDERAL REIMBURSEMENT OF
E
effectiveness of a background check
MERGENCY HEALTH SERVICES
program, and possible unintended
Q
FOR UNDOCUMENTED ALIENS
UALIFIED HIGH-RISK POOLS
consequences of implementing such
The Trade Adjustment Assistance
The MMA created a new program to
a program on a nationwide basis.
Reform Act of 2002 (TAA)
assist States with paying for
established two grant programs for
uncompensated medical care for
STATE PHARMACEUTICAL
States to provide health insurance
illegal aliens. The law establishes an
ASSISTANCE PROGRAM
coverage through high-risk pools.
annual $250 million fund, which will
The State Pharmaceutical Assistance
The first program made available a
be allotted among the States each
Program provides funds to educate
total of $20 million to States that, as
year between FY 2005 and 2008.
Part D eligible individuals enrolled
of August 6, 2002, did not already
Two-thirds of this money will be
in the Program about prescription
have a qualified high-risk pool.
distributed based on the relative
Centers for Medicare & Medicaid Services
77

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drug coverage available through
Part D of the MMA.
LEGISLATIVE PROPOSALS
Cover the Kids: Despite the
availability of health care coverage
through Medicaid and SCHIP,
millions of children eligible for these
programs have not enrolled. This
proposal will provide $1 billion in
grants over two years to States,
schools, and community organiza-
tions with the aim of enrolling as
many Medicaid- and SCHIP-eligible
children as possible.
State Purchasing Pools: To help
low-income individuals purchase
coverage with the health insurance
tax credit, the Administration propos-
es providing for establishing
purchasing pools. By combining the
purchasing power of individuals and
families, these pools would offer
tax-credit recipients an additional
affordable health insurance option
and would make it easier and faster
to shop for coverage. This proposal
costs $200 million in FY 2006 and
$1.7 billion over five years.
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PROGRAM MANAGEMENT
(dollars in millions)
2006
2004**
2005**
2006
+/-2005
Medicare Operations ...........................................
$1,723
$1,747
$2,190
+$443
Survey and Certification......................................
253
261
261
-
Federal Administration.........................................
581
586
657
+71
Research.................................................................
79
78
45
-33
Revitalization Plan.................................................
30
24
24
-
CMS Budget Authority Subtotal*..................
$2,665
$2,696
$3,177
+481
Rescissions.........................................................
-28
-24
0
+24
Appropriation, net............................................
$2,637
$2,673
$3,177
+505
Adjustments for Comparaability......................
Appeals Function (Medicare Operations)...
-47
-8
-
+8
MMA**............................................................
$373
$602
-
-$602
CLIA, Data Spending, and Reimbusables.........
$60
$45
$45
-
Medicare Advantage/ PDP User Fee activity...
12
13
56
+43
Reimbursable Spending Subtotal...................
$72
$58
$101
$43
CLIA/Sale of Data User Fees & Reimb..............
-60
-45
-45
-
Medicare Advantage/PDP User Fee .................
-12
-13
-56
-43
Reimbursable Income Subtotal.......................
-$72
-$58
-$101
-$43
Comparable BA/Approp. Level* **..............
$2,963
$3,267
$3,177
-$89
FTE** ***...............................................................
4,514
4,843
4,843
0
* Numbers may not add due to rounding.
** Includes funding and FTE associated with the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 adminstrative funds appropriated in FY 2004 for two years. However,
Section 1015(d) of P.L. 108-173 authorizes the President to transfer some of these funds from CMS
to SSA.
*** The FTE totals exclude HCFAC-funded FTEs. CMS will fund the following FTEs from the HCFAC
account: FY 2004 -- 3 FTEs; FY 2005 -- 100 FTEs; FY 2006--100 FTEs.
MMA IMPLEMENTATION
(in millions)
2006
FY 2004
FY 2005
FY 2006
+/-2005
Medicare Operations
325
510
478
-32
Federal Administration
39
59
62
3
Research
9
33
20
-13
Total*
$373
$602
$560
-$42
* FY 2005 total excludes the $25 million for the Office of the Inspector General.
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PROGRAM MANAGEMENT
The comparable CMS FY 2006
MMA activities as well as the
needs and inquiries of Medicare
Program Management budget
budget, legislative, and management
beneficiaries and health care
request is $3.2 billion in budget
priorities of the Administration,
providers and suppliers; and develop-
authority, an $89 million or
including: educating beneficiaries
ing and implementing management
2.7 percent decrease over FY 2005.
about their health plan and benefit
changes to improve program
However, FY 2004 and FY 2005 are
choices; improving financial
operations. In addition, Medicare
transitional years for CMS. In
management performance through
Operations funds a variety of mission
FY 2004 and FY 2005 funding is
ongoing implementation of the
critical information technology
higher to allow for the start-up
healthcare integrated general ledger
systems. For example, it funds
activities associated with the MMA.
accounting system (HIGLAS); and
managed care systems, standard
Many of these start-up activities are
strategically managing human resources.
processing systems, and maintenance
expected to be substantially complete
of current contractor systems.
All comparisons in the following
by FY 2006, and CMS' focus will
sections are on a comparable basis
CMS Medicare Operations includes:
begin to shift from start-up to
(e.g., FY 2005 levels include MMA
oversight and administration. The
implementation funds).
w Carriers' and fiscal intermediaries'
shift in activities and changes in
regular activities, such as process-
funding complicate the comparison
Medicare Operations: The Medicare
ing claims, holding hearings and
of the FY 2006 request with prior
Operations budget supports a broad
appeals, answering inquiries, and
years. The FY 2006 request does not
array of activities. The budget is
educating providers and
propose any new user fees.
$2.2 billion, a decrease of
beneficiaries.
$42.8 million or 1.9 percent below
The FY 2006 budget request includes
total FY 2005 resources. The
w Activities to keep shared claims
all funding for CMS operations to
Medicare fee-for-service program is
processing systems current,
support Medicare, Medicaid, and
administered by private contractors.
Common Working File (CWF),
SCHIP related activities. Also, this
Contractor responsibilities include:
and managed care systems
request now includes funding to
processing claims and making
maintenance.
administer and implement the new
benefit payments; responding to the
Program Management Overview
Total FY 2006 BA Request: $3.2 billion
Survey and
Certification
8%
Federal
Medicare Operations
Administration
69%
21%
Research
1%
Revitalization Plan
1%
Centers for Medicare & Medicaid Services
80

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w Funding provider services such as
is $32.2 million below FY 2005
This request supports the agency's
toll-free lines and training, and
spending levels at $477.6 million.
Government Performance and
other operational costs.
This spending request is consistent
Results Act (GPRA) goals through
with the commencement of the new
the development of a comprehensive
w Funding for the Consolidated
Medicare drug benefit beginning on
workforce planning process and
Information Technology
January 1, 2006 and the continuing
automated system. CMS is
Infrastructure Contract (CITIC),
MMA activities such as Medicare
implementing a strategic human
the Medicare data communications
contracting reform.
resources (HR) plan to ensure that
network, and hardware and
the agency has the human capital it
software maintenance.
Of the remaining spending in
needs to accomplish its mission.
Medicare Operations, operations
w Funding for implementing
support spending will be
CMS requests $13 million to contin-
legislation such as the Health
$265.6 million in FY 2006, an
ue the Healthy Start, Grow Smart
Insurance Portability and
increase of $37.7 million or
program. This will support the
Accountability Act of 1996
16.5 percent over FY 2005.
printing costs and postage for a
(HIPAA), the Balanced Budget Act
Enterprise activity spending remains
series of 13 informational brochures
of 1997 (BBA), the Balanced
relatively steady at $60.6 million, a
in English and Spanish to new
Budget Refinement Act of 1999
decrease of just $1.9 million below
mothers supported by Medicaid.
(BBRA), the Benefits Improvement
FY 2005. Systems maintenance costs
These brochures are distributed at the
and Protection Act of 2000 (BIPA),
will be increasing $56.3 million to
time of birth and monthly over the
the Federal Financial Management
$187.9 million in FY 2006. Systems
first year of the child's life. Each
Improvement Act of 1996 (FFMIA),
maintenance will now include the
publication focuses on activities that
the Chief Financial Officers Act of
maintenance costs for the portions of
stimulate infant brain development
1990, and the of MMA.
HIGLAS-- the new health care
and build skills these children need
integrated general ledger accounting
to be successful in school. In addition,
In FY 2006, CMS will process
system -- that will be on-line at the
each Healthy Start pamphlet includes
1.1 billion claims and answer
contractor level in FY 2006.
vital health and safety information
approximately 50 million inquiries.
for new parents. The Healthy Start,
In FY 2006, the unit cost to process a
Finally, CMS will provide
Grow Smart program has disseminat-
Part A claim will be $0.96, the same
$10.1 million towards the
ed over 20.7 million brochures in
as the FY 2005 unit cost projection.
Department-wide Information
24 States and the District of Columbia.
Part B unit costs are estimated to
Technology (IT) Enterprise
Approximately 10 percent of the
remain constant at $0.65 in FY 2006.
Infrastructure Fund ($7.1 million)
brochures are in Spanish and 90 percent
and Unified Financial Management
Approximately 53 percent of the
in English. CMS is also working
System ($3.0 million).
FY 2006 Medicare operations
with the American Hospital
program level request will be spent
Federal Administration: The
Association to target small rural
on processing claims, on-going
President's Budget requests
hospitals, which may not have the
appeals (as distinguished from the
$657.4 million for CMS Federal
funds to print their own high quality
new appeals process), inquiries, and
administrative costs. This is an
educational materials for new mothers.
provider assistance. Medicare
increase of $16.5 million or
Research, Demonstrations and
contractors expect a 1 percent
2.6 percent over FY 2005.
Evaluation: The FY 2006 budget
decrease in total claims volume
The Program Management budget
requests $45.2 million for the
below the FY 2005 estimate due to
supports a total of 4,843 FTE, of
Research, Demonstrations and
beneficiaries shifting from Medicare
which 3,209 FTE will staff the
Evaluation program, $65.0 million
fee-for-service to Medicare
central office and 1,634 FTE will
less than FY 2005. This request
Advantage. Hence, CMS will spend
staff the regional offices. The
includes $25.5 million to
$1.2 billion in FY 2006, a 4.3 percent
Federal Administration account
continue and refine projects initiat-
decrease below FY 2005 estimates.
supports a staffing level of 4,761 direct
ed in previous years and
Legislative mandates comprise
FTE, a straight line from FY 2005.
$19.7 million for MMA-related
34 percent of the Medicare
Ten additional FTE are funded in
activities.
Operations budget and are funded at
Medicare Operations, and the remain-
Ongoing research activities include
$750 million in FY 2006, a 4 percent
ing 72 FTE are funded through user
the Medicare Current Beneficiary
decrease from the FY 2005 spending
fees. The FY 2006 budget assumes
Survey, beneficiary information
level. The FY 2006 request for
500 of CMS total FTE will be
campaign evaluations, refinement
Medicare Operations MMA activities
involved in MMA implementation.
and monitoring of prospective
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payment systems, and support for
focusing surveys on repeat offenders
The Revitalization Plan will continue
legislative mandates in BBA, BBRA,
with serious violations. NHOIP
the process of modernizing the
and BIPA.
activities are part of the wider CMS
agency's Medicare fee-for-service
Nursing Home Quality Initiative
claims processing systems
The remaining $19.7 million of the
(NHQI), which receives additional
($15.2 million), and modernizing
request will support MMA-related
funding from the Quality
CMS information technology data
research projects including monitor-
Improvement Organizations budget
structure ($9.1 million). These
ing beneficiary access to covered
(see the Medicare Quality
modernization efforts improve
drugs and evaluating numerous
Improvement section).
efficiency, enable e-gov activities,
demonstrations and pilots mandated
and improve systems security at
by MMA.
Of the total request, $244.4 million
CMS, and help prepare CMS
will allow States to inspect long-term
The budget does not requets contin-
systems for the increase in claims
care facilities and home health
ued funding for Real Choice Systems
processing as today's "baby
agencies at their legislatively mandated
Change Grants. After five years,
boomers" become eligible for
frequencies, as well as maintain the
these grants have largely accomplished
Medicare benefits.
FY 2005 recertification levels for
ther goals of helping States make
ESRD facilities, non-accredited
The Revitalization Plan continues the
improvements to their home and
hospitals, hospices, rural health
Agency's commitment to provide the
community-based health care delivery
clinics, ambulatory surgical centers,
flexibility and security needed to
service systems. The President's New
outpatient physical therapy, and
take on the growing workload and
Freedom Initiative provides
outpatient rehabilitation facilities.
health care options and provide
$858 million (outlays) to support
CMS expects to complete over
future beneficiaries with the informa-
home and community-based services
23,200 initial or recertification
tion that they need to make informed
for individuals with disabilities.
inspections. In addition, CMS expects
choices.
Survey and Certification: The
to conduct 52,500 visits in response
FY 2006 budget request is
to beneficiary or family complaints.
PROGRAM MANAGEMENT
$260.7 million, $2 million more than
The remaining $16.3 million will
PRIORITIES
the 2005 level. Ensuring the safety of
fund base support contract activities.
beneficiaries and the quality of care
Implementing the Prescription Drug
These activities include maintenance
provided in health facilities are
Benefit and Regional PPOs: In
and enhancements to the Online
two of CMS most critical
FY 2006, CMS will implement the
Survey Certification and Reporting
responsibilities. CMS contracts
new Medicare prescription drug
(OSCAR) data system, which
with State agencies to inspect health
benefit and the new regional
contains information on nursing
facilities providing services to
Medicare Advantage plans. The first
home survey results and outcomes;
Medicare and Medicaid beneficiaries
half of FY 2006 encompasses key
support services for surveying
and to ensure compliance with
education and open enrollment
psychiatric hospitals; and curricula
Federal health, safety, and program
periods. Success of this enormous
development for surveyor training.
standards.
effort depends on CMS implement-
Revitalization Plan: The FY 2006
ing major new information
Included in this total is $25.7 million
budget request includes $24.2 million
technology systems, conducting
to support and implement activities
in two-year funds to continue
intelligent and focused outreach, and
associated with the Nursing Home
funding efforts by CMS to revitalize
educating beneficiaries so that they
Oversight Improvement Program
the Agency's long-term information
choose the best options to fit their
(NHOIP), such as: investigating,
technology systems. This funding
health needs. In FY 2006, CMS
processing, and reporting complaints
level is the same as the FY 2005
requests $560 million for MMA
that allege actual harm within
appropriation. The Medicare program
activities, including implementing
10 days; imposing immediate
has relied on a number of antiquated
prescription drug plans, regional
sanctions on nursing homes found
legacy systems that have been
PPOs, the new Medicare preventive
guilty of a second offense that causes
characterized by the Government
benefits, numerous fee-for-service
actual harm to residents; developing
Accountability Office (GAO) and the
improvements, and initiating
a systematic, more comprehensive
Department's Office of the Inspector
contracting reform.
survey process to more effectively
General (OIG) as inflexible, not
detect critical quality of care
The National Medicare & You
secure, and obsolete. MMA will
problems; staggering inspection
Education Program: Beneficiary
require extensive upgrading of CMS
times to include a set amount begun
education is a top priority for CMS,
information technology systems.
on weekends and evenings; and
especially as CMS implements the
Centers for Medicare & Medicaid Services
82

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new benefit options. CMS must
CMS is implementing call center
Puerto Rico, and the Virgin
ensure that beneficiaries have the
technology that will modernize and
Islands. SHIPs provide one-to-one
essential information they need to
improve its customer service
counseling to beneficiaries on
make complex and personal choices.
system.
complex Medicare-related topics,
Many beneficiaries have two or more
including Medicare entitlement
w
chronic conditions, have less than a
The www.medicare.gov web site:
and enrollment, health plan
high school education, and many
This beneficiary-centered web site
options, Medigap and long-term
have cognitive impairments. It is
provides beneficiaries and
care insurance, Medicaid, and
vital that CMS invest resources in
stakeholders a variety of real-time,
prescription drug assistance.
reaching the most vulnerable popula-
interactive tools that enable users
During FY 2004, an estimated
tion.
to receive information on their
1,200 counselors at over
benefits, plans, and medical
1,100 local SHIPs served more
The total FY 2006 budget request for
options. The website is integrated
than 1.7 million beneficiaries.
the NMEP is $318.2 million, a
into the desktop that the
decrease of $22.2 million from the
1-800-MEDICARE operators use
HIGLAS: One of the Secretary's top
FY 2005 level. In FY 2006, over
to respond to calls. CMS expects
priorities is to centralize the
54 percent of the NMEP funding
that there will be 411 million page
Department's financial accounting
covers the 1-800-MEDICARE
views in FY 2006. CMS is invest
process through its Unified Financial
helpline 24 hours a day, seven days
ing in FY 2005 to be able to
Management System (UFMS).
per week. The remaining funds will
support the enrollment demands
UFMS is expected to achieve greater
be used for beneficiary materials,
that will begin in FY 2006.
economies of scale, eliminate
CMS websites, community-based
duplication, mitigate security risks,
outreach, the national advertising
w National Multimedia Campaign:
and provide timely and accurate
campaign, and program support
Under the new prescription drug
financial information. A major
services.
benefit, beneficiaries will have to
component of UFMS is the
decide whether to enroll in a stand
Healthcare Integrated General
w The Medicare & You Handbook:
alone drug plan, a Medicare
Ledger Accounting System
In FY 2006, CMS expects to
Advantage regional plan that offers
(HIGLAS), which will perform the
distribute more than 42 million
a prescription drug benefit, keep
accounting for over one billion
handbooks to beneficiaries and
their retiree drug coverage, or
Medicare claims processed each year
stakeholders, approximately
choose not to enroll now and
as well as the everyday administra-
one million more handbooks than
possibly pay more for the drug
tive financial dealings of CMS. The
in FY 2005. The handbooks are
benefit if they choose to enroll at a
development of HIGLAS will also
offered in English and Spanish,
later date. As a result of these
help CMS and the Department to
and in Braille, audiocassette, or
complexities, the FY 2005
fulfill the financial management
large print formats. Each month,
multimedia campaign will employ
portion of the President's
approximately 250,000 new
techniques to spread messages at
Management Agenda.
beneficiaries receive the handbook
the local level, and to tailor
as they enroll in Medicare.
messages to meet the needs of
In FY 2006, the President's Budget
requests $149.8 million
w
specific audiences.
The 1-800-MEDICARE line: This
($79.9 million in two-year money in
toll-free line provides access to
w Community-Based Outreach: CMS
Medicare Operations and
customer service representatives in
administers and conducts many
$69.9 million in systems mainte-
English and Spanish
outreach programs including the
nance costs also in Medicare
24 hours a day, seven days per
State Health Insurance and
Operations) for HIGLAS. As
week. CMS is anticipating approx
Assistance Programs (SHIPs)
contractors adopt HIGLAS, systems
imately 32 million calls in
grants, Regional Education About
maintenance costs will increase. The
FY 2006, an increase of approxi
Choices in Health (REACH), and
portion of HIGLAS dealing with the
mately 8.9 million calls over the
Health Outreach Zeroing In On
agency's administrative accounts has
FY 2005 current estimate. Costs
Needs (HORIZONS). Research
been transferred from Federal
include telecommunications
has shown that beneficiaries prefer
Administration to Medicare
network management, interactive
one-to-one assistance. CMS will
Operation keeping all HIGLAS
voice response, personnel and
continue its successful grant
funding in one place and as two-year
training costs of call center
relationship with the SHIPs, which
funding.
operators, and fulfillment of
are located in all 50 States, the
requests for printed information.
CMS began developing HIGLAS in
District of Columbia, Guam,
FY 2001. Thus far, CMS has
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---

demonstrated that the application can
Secretary's budget request. Please
relevant government agency that
support the integrated general ledger
refer to the Medicare Hearings and
serves its citizens, CMS will
and Medicare financial management
Appeals section of the Budget-in-
continue to focus attention on
requirements; conducted perform-
Brief for additional information.
citizen-centered governance in
ance tests demonstrating that
FY 2006 and beyond.
HIPAA Implementation: The CMS
HIGLAS can process 3.5 million
budget request includes $39.5 million
Consistent with the principles of the
transactions per day and support
for HIPAA implementation activities.
Government Performance and
52 Medicare contractors; and begun
CMS was tasked with implementing
Results Act (GPRA), CMS has
implementation of HIGLAS at two
the non-privacy administrative
focused on identifying a set of
pilot contractors in FY 2004 and
simplification provisions of HIPAA.
meaningful, outcome-oriented
additional contractors in FY 2005.
In October 2002, CMS was also
performance goals that speak to
In FY 2006, CMS will implement
given the responsibility for enforcing
fundamental program purposes and
HIGLAS at additional Medicare
the HIPAA Administrative
to the Agency's role as a steward of
contractors as well as roll out the
Simplification security, transactions
taxpayer dollars. CMS' FY 2006
administrative accounting module at
and code sets, and identifier
performance budget reinforces CMS,
CMS central office, complete other
standards.
HHS, and Administration priorities
payment management system
including the HHS Strategic Plan and
The FY 2006 request includes
interfaces, and attain statutory
CMS strategic goals.
$18.3 million to begin activities
compliance by accounting for
related to the National Plan and
Following are some of the CMS
52 percent of total CMS costs.
Provider Enumeration System.
performance achievements and
Appeals Reform: The budget
Activities include maintaining the
advancements that support important
requests $51.5 million to implement
enumeration system and enumerating
Administration priorities:
Medicare appeals reform as required
approximately 1.3 million health care
Program Integrity: CMS program
by BIPA Sections 521 and 522 and as
providers. The request also includes
integrity efforts ensure the Medicare
modified by the MMA. Of this total,
funding for enforcement of HIPAA
program pays the right amount to a
CMS requests $44 million for
transactions and code sets, security,
legitimate provider for covered,
Qualified Independent Contractors
and identifier standards; compliance
reasonable and necessary services
(QICs) to process Medicare redeter-
outreach; implementing local
that are provided to an eligible
minations originating from both
systems changes, new standards, and
beneficiary. CMS is also committed
carriers and fiscal intermediaries
technical modifications; and operat-
to assisting interested States in
(FI). The QICs will begin processing
ing and maintaining the HIPAA data
developing methodologies and
the FI workload in FY 2005. The
center.
conducting pilot studies to measure
carrier workload will be phased in to
and ultimately reduce Medicaid
the QICs in 2006. The funding
LEGISLATIVE PROPOSAL FOR THE
payment error rates.
requested allows CMS to fund
DISCRETIONARY BUDGET
eight QICs. In addition, the budget
In 2003, CMS implemented a new
also includes $7 million for enhance-
As part of a government-wide
method for measuring improper
ments to the Medicare appeals
initiative, the Administration is
payments. The new method resulted
system and $0.5 million for national
proposing legislation to add funding
in a higher rate of provider
and local coverage determinations.
in the discretionary budget by
non-response and a higher error rate
increasing budget caps to increase
of 9.8 percent. The Comprehensive
MMA requires that the Office of the
resources for the Health Care Fraud
Error Rate Testing (CERT) program
Secretary (DHHS) assume responsi-
and Abuse Control account and the
was initiated in FY 2003 and has
bility for processing cases currently
Medicare Integrity Program. This
produced a national error rate for
handled by the Social Security
additional funding will support
each year since its inception. In
Administration's (SSA) administra-
program integrity efforts for the new
2004, CMS began reporting gross
tive law judges (ALJ) by FY 2006.
activities under MMA as well as
error rates in addition to the net error
By law, SSA will continue hearing
Medicaid.
rates previously reported. This
Medicare cases until the function
change was necessary in order to
transfers to the Office of the
CMS PERFORMANCE HIGHLIGHTS
comply with new Improper
Secretary. Thus, funds previously
Payments Information Act (IPIA)
included in the CMS budget request
The primary CMS mission is to
requirements. CMS adjusted its
for paying SSA to adjudicate
assure health care security for its
baseline to reflect the change in
Medicare claims appeals are now
beneficiaries. To ensure that CMS
reporting. The new baseline is
included in the Office of the
remains a responsive, dynamic, and
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84

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10.1 percent. In the meantime, CMS
Diabetes is a highly-prevalent
has stimulated enormous change in
will continue to work with its
condition in the Medicare popula-
the availability of health care
partners in conducting everyday
tion. Many complications of the
coverage for children and in the way
business of ensuring Medicare claims
disease, such as blindness, can be
government-sponsored health care is
are paid properly.
prevented or delayed with appropri-
delivered. The energy invested by
ate monitoring and treatment. While
States and Territories, communities,
Quality Improvement: Improving the
continuing emphasis on diabetic eye
and the Federal Government has
quality of care for Medicare
exams, CMS is replacing this goal in
resulted in significant expansions in
beneficiaries is one of the primary
FY 2006 with a goal to increase the
coverage, as well as new systems for
objectives for the Department and
rate of hemoglobin A1c and lipid
enrolling children in health care
CMS. Several of the Quality
screening in this highly prevalent
coverage.
Improvement Organizations' (QIOs)
population at high risk for cardiovas-
national quality priorities are reflect-
CMS and States exceeded the
cular complications. For FY 2003,
ed in performance goals and
FY 2003 goal to increase by
CMS exceeded its target (of
represent health conditions that affect
5 percent more children enrolled in
68.9 percent) at 69.3 percent.
a large number of beneficiaries and
SCHIP or Medicaid over the
impose a significant burden on the
One of the QIO goals is to protect
FY 2002 level. In fact, CMS and the
health care system. A sampling of
the health of Medicare beneficiaries
States increased enrollment by
these conditions are highlighted
age 65 years and older by increasing
2,200,000 children or 7.2 percent.
below:
the percentage of those who receive
The most recent Bureau of Census'
an annual vaccination for influenza
Current Population Survey (CPS)
A key performance goal is to
and a lifetime pneumococcal
data (three-year rolling average for
increase the percentage of female
vaccination. For FY 2003,
FY 2001-FY 2003) suggested that
Medicare beneficiaries age 65 and
70.4 percent (target 72.5 percent)
there were approximately
older who receive a biennial
received an influenza vaccination
5.7 million children who lacked
mammogram. In FY 2003,
and 66.4 percent (target 67 percent)
health insurance coverage, down
51.3 percent (target 51.5 percent) of
received a pneumococcal vaccina-
from over 7.5 million in 1997
female beneficiaries received a
tion. Shortages of vaccination were
(FY 1996-FY 1998). In addition, a
biennial mammogram. CMS
among the reasons for not reaching
recent CDC survey found that the
believes this rate may represent
this target.
percentage of uninsured children
under-reporting because of a
dropped from 13.9 percent in 1997 to
"technical claims processing
Children's Health Care: The
10.1 percent in 2003.
issue."
implementation of State Children's
Health Insurance Program (SCHIP)
CMS continues to collaborate with
States to improve health
care delivery and
Medicare Error Rate
quality for Medicaid
and SCHIP populations
using performance
12%
measures. CMS contin-
10.1%
Target
Actual
ues to work with States
to explore strategies to
effectively use perform-
7.9%
8%
ance measures to
6.9%
quantify and stimulate
Rate
measurable improve-
5.4%
ment in delivering
4.8%
Error
4.7%
quality health care.
FFS
4%
Beneficiary Education:
In order for Medicare
beneficiaries to have
greater knowledge of
Medicare and its
0%
benefits, CMS is
FY04 Baseline
FY05
FY06
FY07
FY08
focusing on a number of
85
Centers for Medicare & Medicaid Services

---

educational programs. These
programs not only provide informa-
FY 2004 CMS Performance Highlights
tion about Medicare but also gauge
the beneficiaries' awareness of
w
Medicare benefits.
79 percent of the measures were reported.
One performance measure is to
w Of the 79 percent of goals reported, 88 percent of the measures met or
improve the effectiveness of dissemi-
exceeded the target.
nating Medicare information to
w Approximately 40 percent of the measures supported the President's
beneficiarie s. In order to help
Management Agenda.
beneficiaries make informed health
care decisions, CMS employs a
w SCHIP has exceeded its enrollment goal every year.
variety of strategies through many
CMS beneficiary-centered programs
w At 61.1 percent, CMS surpassed its FY 2003 target of 60.5 percent
to maximize information channels
through optimizing the timing of antibiotic administration to reduce the
and to ensure that targeted audiences,
frequency of surgical site infection in Medicare beneficiaries.
are reached with the "right informa -
w
tion at the right time." In FY 2004,
69.3 percent of diabetic beneficiaries received a biennial eye exam,
CMS continued to track beneficiary
exceeding the target of 68.9 percent (FY 2003).
understanding of the Medicare
Advantage and Fee-for-Service
programs.
To promote beneficiary and public
understanding of CMS and its
programs, CMS developed a goal to
improve and measure beneficiary
awareness of (1) the core features of
Medicare needed to use the program
effectively, and (2) CMS sources
from which additional information
can be obtained.
Centers for Medicare & Medicaid Services
86

---

87

---

ACF: DISCRETIONARY SPENDING
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Head Start..................................................................................................
$6,775
$6,843
$6,888
+$45
Abstinence Education:
Community-Based Abstinence Education.............................................
$74
$104
$143
+$39
Abstinence Education Grants to States.................................................
50
50
50
0
Subtotal, Abstinence Education.........................................................
$124
$154
$193
+$39
Faith-Based and Community Initiative Programs:
Compassion Capital Fund.....................................................................
$48
$55
$100
+$45
Mentoring Children of Prisoners...........................................................
50
50
50
0
Maternity Group Homes......................................................................
0
0
10
+10
Center for Faith-Based and Community Initiatives..............................
1
1
1
0
Subtotal, Faith-Based Community Initiative.....................................
$99
$106
$161
+$55
Refugee:
Refugee and Entrant Assistance............................................................
$394
$430
$489
+$59
Unaccompanied Alien Children.............................................................
53
54
63
+9
Subtotal, Refugees.............................................................................
$447
$484
$552
+$68
Child Welfare Services...............................................................................
290
290
290
0
Child Welfare Training...............................................................................
7
7
7
0
Abandoned Infants Assistance Programs..................................................
12
12
12
0
Promoting Safe and Stable Families (discretionary)..................................
99
98
105
+7
Independent Living (discretionary)...........................................................
45
47
60
+13
Adoption Incentives..................................................................................
8
32
32
0
Adoption Opportunities...........................................................................
27
27
27
0
Adoption Awareness.................................................................................
13
13
13
0
Child Abuse Programs...............................................................................
90
102
102
0
Child Care & Development Block Grant:
Block Grant...........................................................................................
$2,078
$2,073
$2,073
0
Research and Evaluation Fund...............................................................
10
10
10
0
Subtotal, Child Care...........................................................................
$2,088
$2,083
$2,083
0
LIHEAP:
Regular Appropriation..........................................................................
$1,789
$1,885
$1,800
-$85
Emergency Contingency Fund...............................................................
99
297
200
-97
Subtotal, LIHEAP.............................................................................
$1,888
$2,182
$2,000
-$182
Developmental Disabilities........................................................................
165
168
168
0
Native Americans......................................................................................
45
45
45
0
Community Services:
Community Services Block Grant.........................................................
$642
$637
$0
-$637
Individual Development Accounts........................................................
25
25
25
0
Community Services Discretionary Programs.......................................
64
65
0
-65
Subtotal, Community Services .........................................................
$731
$727
$25
-$702
Violence Crime Reduction.........................................................................
129
129
129
0
Runaway and Homeless Youth.................................................................
105
104
104
0
Early Learning Fund .................................................................................
33
36
0
-36
Social Services Research & Demonstration...............................................
19
32
6
-26
Federal Administration .............................................................................
178
185
185
0
Total, Discretionary Program Level.............................................
$13,417
$13,906
$13,187
-$719
Less Funds Allocated from Other Sources:
PHS Evaluation Funds...............................................................................
-11
-11
-11
0
Abstinence Education Grants to States.....................................................
-50
-50
-50
0
Total, Discretionary Budget Authority........................................
$13,356
$13,845
$13,126
-$719
FTE........................................................................................................
1,338
1,382
1,313
-69
Administration for Children and Families
88

---

ADMINISTRATION FOR CHILDREN AND FAMILIES
The Administration for Children and Families promotes the economic and social well-being of children, youth,
families, and communities, giving special attention to vulnerable populations, such as children in low-income
families, refugees, Native Americans, and the developmentally disabled.
TheAdministrationforChildren learningtoteachers,caregivers,
within communities to support
and Families's (ACF's) over
parents, and grandparents and by
adolescent decisions to postpone
60 programs provide services to
closing the gap between research and
sexual activity and, where appropri-
children and families, including
practice in early childhood education.
ate, mentoring, counseling, and adult
Native Americans, persons with
supervision to promote abstinence
disabilities, and refugees, and
Head Start programs help ensure that
with a focus on those groups which
communities through cooperative
children are ready to succeed at
are most likely to bear children out
efforts between Federal, State, local,
school by supporting the social and
of wedlock.
and Tribal governments, and through
cognitive development of children.
public and private non-profit organi-
Head Start programs provide com-
The budget provides up to
zations. The FY 2006 budget request
prehensive child development servic-
$10 million for a public awareness
for ACF totals $45 billion, a net
es, including educational, health,
campaign designed to help parents
decrease of $4.3 billion, or 9 percent
nutritional, social, and other services,
communicate with their children
below FY 2005.
to primarily low-income families.
about health risks of early sexual
They also engage parents in their
activity. ACF and OPHS will work
DISCRETIONARY SPENDING
child's preschool experience by
together on the public awareness
helping them achieve their own
campaign efforts. The budget also
The FY 2006 discretionary budget
educational and literacy goals as well
continues to support evaluation of
totals $13.1 billion, a net decrease of
as employment goals, supporting
abstinence education programs.
$719 million or 5 percent below
parents' role in their children's
FY 2005. This decrease primarily
learning, and emphasizing the direct
reflects the elimination of programs
FAITH-BASED AND COMMUNITY
involvement of parents in the adminis-
that have been unable to demonstrate
INITIATIVE
tration of local Head Start programs.
long-term outcomes.
The budget maintains a commitment
A
to fund faith-based and community
BSTINENCE EDUCATION
HEAD START
organizations, including a total of
The budget increases funding for
$161 million in ACF to help grass-
The budget request includes
Abstinence Education activities by
roots organizations expand services
$6.9 billion for Head Start to provide
$39 million totaling $206 million.
to their communities, mentor
919,000 children with services
Of this total, ACF will administer
children of prisoners, and provide a
including 62,000 children in Early
$193 million through two programs ­
safe place for young pregnant and
Head Start. The budget includes a
the Community-Based Abstinence
parenting mothers. As part of the
$45 million increase to support the
Education program and the
larger Faith-Based and Community
President's initiative to improve Head
Abstinence Education Grants to
Initiative, these programs help
Start by funding nine State pilot
States program. Within the Office of
empower those at the community
projects to promote coordination of
Public Health and Science (OPHS),
level who can best identify the social
State preschool programs, child care
the budget also includes $13 million
and health problems to address the
programs, and Head Start into a
for the abstinence activities conduct-
unmet needs of Americans. The
comprehensive system of early
ed through the Adolescent Family
Center for Faith-Based and
childhood programs. Consistent with
Life program. By 2008, funding for
Community Initiatives works with
the President's comprehensive Head
all abstinence education programs
Agencies across the Department to
Start reauthorization proposal, these
will increase to a total of
eliminate barriers in regulations,
new pilot projects will provide States
$270 million.
rules, internal guidance, policies and
with assistance to strengthen the
procedures, and practices to the
program and, through coordination,
ACF's abstinence education
participation of faith-based and other
improve other preschool programs.
programs provide grants to
community organizations; to propose
ACF will continue to support the
communities and States to develop
the development of innovative pilot
goals of the President's Good Start
and implement abstinence programs.
and demonstration programs; and to
Grow Smart Initiative to strengthen
These programs focus on educating
expand Charitable Choice provisions.
Head Start by providing information
adolescents, ages 12 through 18, and
on child development and early
creating a positive environment
89
Administration for Children and Families

---

Compassion Capital Fund:
become incarcerated themselves and
Unaccompanied Alien Children:
The Compassion Capital Fund
are more likely to display a variety
The Unaccompanied Alien Children
advances the efforts of community
of behavioral, emotional, health, and
(UAC) program provides a safe and
and charitable organizations, includ-
educational problems.
appropriate environment for minors
ing faith-based organizations, to
until custody can be transferred to a
increase their effectiveness and
Maternity Group Homes: The
relative or appropriate guardian or
enhance their ability to provide
budget includes $10 million for the
until the child is returned to his or
social services where they are
Maternity Group Homes program, a
her country of origin. Since the
needed. Among the priorities within
recently authorized component of the
program was transferred from the
the 2006 proposal is an emphasis on
Runaway and Homeless Youth
former Immigration and
supporting anti-gang efforts through
program. These funds will support
Naturalization Service in 2003, the
community and faith-based organiza-
adult-supervised community-based
Office of Refugee Resettlement has
tions. The budget provides
group homes for young mothers and
increased the use of less restrictive
$100 million, an increase of
their children who cannot live safely
shelter and foster care placements,
$45 million over the FY 2005 level.
with their own families. These
and provided necessary support for
women are vulnerable to abuse and
improved medical care. The
In its first two years, the Compassion
neglect, and often end up in homeless
FY 2006 budget for the UAC
Capital Fund, which began in
shelters or on the streets. Grantees
program of $63 is $9 million more
FY 2002, awarded intermediary
will provide a range of coordinated
than the FY 2005 level to meet
grants to 31 organizations which in
services such as child care, education,
anticipated increases in the number
turn awarded over $24 million in
job training, and counseling and
of minors in care. Current estimates
sub-awards to over 1,700 grassroots
advice on parenting and life skills.
indicate that the number of UACs
organizations. Grants are also direct-
will increase by over 30 percent from
ly awarded to faith-based and com-
REFUGEE PROGRAMS
6,200 in FY 2004 to almost 8,200 in
munity organizations for capacity-
FY 2006. In FY 2006, the Office of
building activities, as well as for
Refugee and Entrant Assistance:
Refugee Resettlement will expand
research into best practices and to
The budget requests $489 million in
the pilot pro bono services program
develop a national resource center
FY 2006 to support services for
to a national level and continue
and information clearinghouse.
refugees, asylees, Cubans/Haitians,
efforts to reunite UACs with family
These capacity-building mini-grants
and victims of torture and trafficking,
members in the United States.
began in the second year of the
$59 million more than the FY 2005
program with 52 awards and grew to
level. The increase will maintain
102 awards the following year.
access to a full eight months of cash
CHILD WELFARE, ADOPTION AND
and medical assistance and up to
CHILD ABUSE
Mentoring Children of Prisoners:
60 months of social services
The request includes $50 million,
The FY 2006 budget includes
programs such as English language
maintaining the FY 2005 level, to
$648 million for a range of programs
training, case management, employ-
provide grants of up to $5 million to
that support child welfare systems,
ment preparation, and job placement
enable public and private organiza-
adoption efforts, and child abuse
and retention services. The State
tions to establish or expand projects
prevention.
Department's refugee entrant ceiling
that provide mentoring for children
for 2006 is 70,000 or 20,000 higher
Child Welfare: The Child Welfare
of incarcerated parents and those
than 2005. Between 1993 and 2003,
programs support States and locali-
recently released from prison.
the employment rate of refugees
ties in their efforts to keep families
Grantees are required to become
increased by almost 70 percent, to a
together. Services offered include
gradually more self-sufficient
level approaching the U.S. popula-
preventive intervention, where
through public-private partnerships.
tion as a whole. In addition, the
appropriate, so that children can
These programs will establish
request includes support for services,
remain in their homes; identifying
approximately 33,000 mentoring
including rehabilitation, social, and
alternative placements like foster
relationships a year. Nearly
legal services for those who have
care when necessary; and reunifica-
2 million children have a parent in a
experienced torture as well as
tion services so that a child can return
Federal or State correctional facility,
benefits and services for up to
home. Grants are also provided to
a number that more than doubled
1,000 victims of trafficking.
develop and improve education and
over the 1990s. Research indicates
training programs and resources for
that children with incarcerated
child welfare professionals and to
parents are seven times more likely
prevent the abandonment of infants
than the general population to
and young children exposed to
Administration for Children and Families
90

---

HIV/AIDS and drugs. The budget
post-adoption family support servic-
research and evaluation of innovative
requests $309 million for these efforts.
es. The budget also includes $40
child care subsidy policies and web-
million for grant programs that facili-
based access to reports, data, and
The Independent Living Education
tate the elimination of barriers to
other research-related information.
and Training Vouchers program
adoption and support adoption
provides up to $5,000 for costs
efforts, including adoption of
ACF's most recent data indicates that
associated with college or vocational
children with special needs, through
$4.8 billion in total Federal child
training for foster care youth ages
training and a public awareness
care funds, including $2.1 billion in
16 to 21. The FY 2006 request of
campaign.
discretionary funds, provide child
$60 million will provide more than
care assistance to approximately
2,600 additional youth with vouchers
Child Abuse: The most recent
1.8 million children each month.
through this program. The Promoting
annual HHS Child Maltreatment
However, when combined with other
Safe and Stable Families program
Report indicates that each year an
Federal and related State funds, child
provides funds for each State to
estimated 896,000 children in the
care assistance is available to
operate a coordinated program of
United States are victims of abuse
2.4 million children, representing an
family preservation services,
and neglect. The budget includes a
estimated 28 percent of children
community-based family support
total of $102 million for programs to
eligible under State rules.
services, time-limited reunification
reduce the incidence of child
services, and adoption promotion and
maltreatment and provide services to
This year, a PART assessment found
support services. The FY 2006 budget
those who are victims. The Child
that CCDBG plays a critical role for
includes a total of $410 million, of
Abuse State Grant program plays a
families transitioning from welfare to
which $105 million is financed
key role in the prevention of child
work and that child care subsidies
through discretionary resources, and
abuse and neglect including
expand parental access to a range of
will be used to expand services
post-investigative services such as
care options. The assessment
provided to children and families.
individual counseling, case manage-
concluded that the program structure
ment, and parent education. Other
and use of vouchers maximizes
Adoption: The FY 2006 request
programs help complete the continu-
parental choice and creates
includes $32 million for the
um of prevention efforts by providing
incentives for States to develop a
Adoption Incentives program. States
funds for community-based efforts
single coherent system for families.
can earn bonus payments by increas-
including general public awareness
ing the number of adoptions of
and education activities and by
LOW INCOME HOME ENERGY
children in foster care over previous
supporting research on child
ASSISTANCE PROGRAM
years. At the end of FY 2003, there
maltreatment and training and techni-
were 523,000 children in foster care,
The FY 2006 budget requests a total
cal assistance on improved methods
of which 118,000 were waiting to be
of $2 billion for the Low Income
and procedures to prevent and treat
adopted. Bonuses are based on the
Home Energy Assistance Program.
child abuse and neglect. Program
total number of children adopted, the
The request includes $1.8 billion for
Assessment Rating Tool (PART)
adoption of children with special
formula block grants to States and
assessments completed this year
needs who are under the age of nine,
$200 million for contingency
concluded that the State child abuse
and, as part of the recent program
funding. The contingency funds are
prevention and treatment programs
reauthorization, the adoption of
available for release in a heating or
address specific and existing needs
children over the age of nine. Data
cooling emergency such as extreme
and are effectively managed.
show that once a child waiting for
temperature or high fuel prices or to
adoption reaches eight or nine years
meet energy needs related to a
old, that child is more likely to
CHILD CARE
natural disaster.
continue in foster care than to be
The Child Care and Development
LIHEAP provides heating and
adopted. This newest bonus
Block Grant (CCDBG) program to
cooling benefits to approximately
recognizes the current reality and
States, Territories, and Tribes
4.5 million households each year.
targets incentives to older children
provides direct child care assistance
Of the households receiving heating
by providing a $4,000 bonus for each
payments to low-income families
assistance, about one-third include a
older child adoption over the
when the parents work or participate
member 60 years or older, about half
baseline regardless of whether the
in education or training. States have
include a person with a disability,
State qualifies for the other bonuses.
flexibility in developing child care
half include a child under age 18,
Payments can be used toward recruit-
programs and policies that meet the
and about one-third do not receive
ing prospective adoptive parents,
needs of children and parents within
any other public assistance.
child welfare staff training, and
each State. CCDBG also supports
91
Administration for Children and Families

---

DEVELOPMENTAL DISABILITIES
COMMUNITY SERVICES PROGRAMS
assistance, and non-residential
services. The assessment also
Today, there are nearly 4 million
The budget proposes $25 million for
indicated that the National Domestic
Americans with developmental
the Individual Development
Violence Hotline is efficiently run
disabilities. Developmental disabili-
Accounts (IDA) program. IDAs are
and continues to respond to a steadi-
ties are severe, chronic disabilities
dedicated savings accounts for low-
ly increasing number of calls while
attributable to mental and/or physical
income individuals that can be used
ensuring consistent quality of servic-
impairment, which manifest before
for purchasing a first home, paying
es. Based on the PART findings,
age 22 and are likely to continue
for post-secondary education, or
ACF, working with an existing
indefinitely. The budget requests
capitalizing a business. This
national advisory group, will develop
$168 million for programs that
demonstration program provides
appropriate national grantee-support-
support partnerships with State
grants to agencies that in turn
ed performance outcome measures
governments, local communities, and
empower low-income individuals to
and demonstrate improved efficien-
the private sector to assist people with
save by providing matching contribu-
cies and cost effectiveness.
developmental disabilities to reach
tions for savings and intensive
their maximum potential through
financial counseling and economic
The FY 2006 budget does not request
increased independence, productivity,
literacy education. This year, a
funds to continue the Early Learning
inclusion, and community integration.
PART assessment found the IDA
Fund, which was provided $36 million
program to both provide benefits to
in FY 2005. The Administration
Disabled Voter Services: The Voting
low-income and low-wealth families
continues to target resources on
Access for Individuals with
and produce knowledge about the
similar activities which promote
Disabilities grant programs provide
effects of the Federal asset-based
early literacy in the Department of
support to States to establish, expand,
policy on these families.
Education and the Head Start program.
and improve access to the election
process to the over 20 million individ-
The FY 2006 budget does not request
R
uals with disabilities who are of
funds for the Community Services
ESEARCH/FEDERAL
voting age. Of the $168 million for
Block Grant (CSBG) and a number
ADMINISTRATION
Developmental Disabilities, $15 million
of smaller community services
There is continuing interest and need
will support these efforts. Grant
programs. The CSBG program has
for sound research to help guide
awards have supported a range of
been unable to demonstrate results as
efforts to assist low-income families
activities including developing a
noted in its previous PART assess-
become and remain economically
training video for election officials, poll
ment. The budget also does not
self-sufficient and to strengthen
workers, and volunteers on providing
request funds for Community
families. The FY 2006 budget
assistance to voters with visual impair-
Economic Development, Rural
includes $6 million in PHS evalua-
ments and surveying polling places to
Community Facilities, Community
tion funds for the Social Services
determine accessibility needs.
Food and Nutrition, Job Opportunities for
Research and Demonstration
Low-Income Individuals, and
program which will support cutting-
NATIVE AMERICANS
National Youth Sports. The
edge research and evaluation projects
Administration proposes to focus
in areas of critical national interest.
The programs of the Administration
economic and community develop-
for Native Americans promote the
ment activities through a more
The request includes $185 million in
goal of social and economic self-
targeted and unified program to be
FY 2006 to support staffing and
sufficiency. The budget request
administered by the Department of
maintain activities to administer the
includes a total of $45 million for
Commerce.
programs of ACF. Consistent with
these programs which, through direct
the President's Management Agenda,
grants, contracts, and interagency
O
the budget supports efforts to reduce
THER CHILDREN AND FAMILIES
agreements, provide financial assistance
A
erroneous and improper payments in
CTIVITIES
for social and economic development
several key ACF program areas,
and governance, training and techni-
The budget maintains funds for
including Child Care, Head Start,
cal assistance, and research,
programs that offer safe havens and
and Foster Care, and supports a
demonstration and evaluation. Funds
access to services for victims of
continued focus on the Public
support a range of projects from
domestic violence and runaway and
Assistance Reporting Information
establishment of new Tribal employ-
homeless youths. This year a PART
System (PARIS), a voluntary
ment offices to the formulation of
assessment determined the programs
program for States to share public
environmental ordinances and
serving victims of domestic violence
assistance data to maintain program
training in the use and control of
allow States flexibility to provide a
integrity and detect and reduce
natural resources.
combination of shelter stays, related
erroneous payments.
Administration for Children and Families
92

---

ACF: ENTITLEMENT SPENDING
(dollars in millions)
2004
2005
2006
+/- 2005
Current Law Budget Authority
TANF....................................................................................................................
$19,167
$17,881
$16,689
-$1,192
High Performance Bonus* non add..........................................
$200
$1,000
$0
-$1,000
TANF Contingency Fund**...........................................................
$1,958
$1,958
$0
-$1,958
Child Care Entitlement........................................................................................
$2,732
$2,717
$2,717
$0
Child Support Enforcement & Family Support (net BA)***........................
$4,413
$4,074
$3,322
-$752
Foster Care/Adoption Assistance/Independent Living Program ...............
$6,814
$6,806
$6,620
-$186
Children's Research & Technical Assist (net BA) ........................................
$56
$45
$34
-$11
Promoting Safe and Stable Families..................................................................
$305
$305
$305
$0
Social Service Block Grant.................................................................................
$1,700
$1,700
$1,700
$0
Total, Budget Authority.....................................................................................
$37,345
$36,486
$31,387
-$4,099
2004
2005
2006
+/- 2005
Current Law Outlays
TANF....................................................................................................................
$17,725
$18,070
$17,918
-$152
TANF Contingency Fund ...............................................................
$0
$30
$39
$9
Child Care Entitlement........................................................................................
$2,695
$2,718
$2,718
$0
Child Support Enforcement & Family Support (net outlays)........................
$3,815
$3,934
$4,081
$147
Foster Care/Adoption Assistance/Independent Living Program ...............
$6,340
$6,474
$6,619
$145
Children's Research & Technical Assist (net outlays) .................................
$34
$49
$47
-$2
Promoting Safe and Stable Families..................................................................
$336
$301
$305
$4
Social Service Block Grant.................................................................................
$1,752
$1,764
$1,762
-$2
Total, Outlays......................................................................................................
$32,697
$33,340
$33,489
$149
* FY 2005 includes $1 billion for High Performance Bonuses. T hese funds are available for obligation for the period of FY 2005-FY 2009.
** FY 2004 and FY 2005 Contingency Funds are prior year funds, not new budget authority. T his funding is available for obligation through
2009. In FY 2004, no States chose to draw down these funds.
***T he decrease in Child Support budget authority from FY 2005 to FY 2006 is due to projected carry over balances. T he FY 2006 BA refle
the use of prior year funds.
TheACFentitlementprograms andtheChildCareEntitlementto TEMPORARYASSISTANCEFOR
serve some of the Nation's most
States. In the Child Support
NEEDY FAMILIES
vulnerable populations through
Enforcement program the budget
programs such as Temporary
also includes modifications, which
The Personal Responsibility and
Assistance for Needy Families
increase both financial collections
Work Opportunity Reconciliation Act
(TANF), Child Support Enforcement
and medical support to families. In
of 1996 (PRWORA) dramatically
(CSE), the Child Care Entitlement to
Foster Care, the budget includes an
changed the Nation's approach to
States, Foster Care, Adoption
option for States to receive their
income support for low-income
Assistance, and Independent Living.
foster care funds in the form of a
families. PRWORA replaced the
ACF entitlement outlay estimates for
flexible grant. The Foster Care
individual entitlement to welfare
FY 2006 are $33.5 billion, an
budget also clarifies the eligibility
with time-limited assistance and
increase of $149 million in
definition and modifies the matching
work requirements. PRWORA also
entitlement spending from FY 2005.
rate for the District of Columbia.
created a new partnership between
This overall increase is a combination
Additional information on FY 2006
States and the Federal Government,
of a small decrease in TANF outlays
legislative proposals can be found in
giving States considerable flexibility
and typical growth in Child Support
the TANF, CSE, Foster Care,
to design their own TANF programs.
and Foster Care.
Adoption Assistance, and
TANF provides approximately
Independent Living sections.
This year's budget includes the
$16.9 billion annually to States,
anticipated reauthorization of TANF
Territories, and eligible Tribes for the
93
Administration for Children and Families

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creative programs to help families
transition from welfare to self-sufficien-
The President's TANF Reauthorization Proposal
cy. States have tremendous
flexibility in determining how to use
their TANF dollars. Since welfare
Strengthens the Federal-State-Tribal-Territories Partnership by
reform, States are spending less on
Providing Full Funding and Flexibility:
cash assistance payments and more
on education and training, child care,
Funds State Family Assistance Grant and Family Assistance Grants for
and other work supports to help
Territories at current levels for five years -- $16.6 billion annually.
families achieve self-sufficiency.
Reinstates authority for Supplemental Grants for Population Increases
For example, in 1998, States spent
in Certain States -- $319 million annually.
63 percent of combined State and
Federal funds on cash assistance; in
Reauthorizes the Child Care and Development Fund -- $4.8 billion in
FY 2003 States spent 39 percent. In
total mandatory and discretionary funds in FY 2006.
addition, States may transfer up to a
combined 30 percent of their TANF
Establishes a more accessible contingency fund with more flexible
funding to either the Child Care and
Maintenance of Effort requirements, allowing States to count child care
Development Fund or the Social
and separate State program expenditures -- $2 billion is available over
Services Block Grant (SSBG) with
five years.
not more than 4.25 percent of this
Allows for 10 percent transfer to SSBG.
transferred to SSBG. The FY 2005
appropriations bill overrides the
Maximize Self-Sufficiency through Work:
4.25 percent transfer cap and provid-
ed for a 10 percent SSBG transfer
Requires TANF participants to engage in work-related activities and
authority.
employment for 40 hours a week, with at least 24 hours in direct work
activities. States have discretion to define other countable activities.
Welfare reform is widely regarded as
States may count certain activities like substance abuse treatment or
a success. TANF caseloads continue
rehabilitation as meeting the work requirement for three months.
to decrease. As of June 2004,
4.7 million individuals received
Promote Child-Well Being , Healthy Marriage, and Responsible
TANF benefits-- 61.4 percent fewer
Fatherhood:
than in August 1996. From
Eliminates the bonus to reduce out-of-wedlock births and creates an
June 2003 to June 2004 caseloads
initiative to fund research, demonstrations, and technical assistance,
dropped 4.4 percent for individuals
targeted to family formation and healthy marriage -- $100 million
and 3 percent for families. National
annually.
data from the Current Population
Survey suggest that even during the
Establishes matching grant program for States and Tribes to develop
economic downturn, women leaving
innovative approaches to promoting healthy marriages --
welfare or at risk for coming onto
$100 million annually.
welfare continue to find employment.
Provides $40 million annually in mandatory funds to promote
The TANF program expired at the
responsible fatherhood.
end of FY 2002. To date, Congress
has provided funding through
Improve Program Performance:
March 31, 2005 for TANF State and
Terroritory Family Assistance
Modifies the reward for high performing States to focus on
Grants, Supplemental Grants,
employment­based results --$100 million annually.
Matching Grants to Territories, and
Program Integration:
the Contingency Fund.
Enables broader State welfare and workforce program integration
TANF P
through new demonstrations. States can request demonstration
ERFORMANCE
authority to integrate aspects of Federal programs, including
The TANF program achieved success
program eligibility and reporting requirements.
towards its primary goal of moving
TANF recipients from welfare to
work and self-sufficiency. In
FY 2003:
Administration for Children and Families
94

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39 percent of adult TANF
organizations. States are mandated
ensures financial and emotional
recipients became newly
to spend at least 70 percent of the
support for children from both
employed, up from 36 percent in
Child Care Entitlement on families
parents by locating non-custodial
FY 2002 but short of the target of
receiving TANF, transitioning from
parents, establishing paternity, and
44 percent.
TANF, or at risk of becoming
establishing and enforcing child
eligible for TANF. States must also
support orders. Child support
33 percent of recipients attained
spend a minimum of 4 percent of all
services, as mandated in Title IV-D
higher earnings over two quarters,
child care funds to improve the
of the Social Security Act, are
exceeding the target of 29 percent.
quality and availability of healthy
available for all families with a
and safe child care for all families.
non-custodial parent, regardless of
Job participation rates declined
whether or not the custodial parent
from 30 percent in FY 2002 to
For FY 2006, the budget funds the
receives welfare.
28 percent in FY 2003. The recent
Child Care Entitlement at
decline in work rates underscores
$2.7 billion. This is equal to the
Child support collections play an
the importance of welfare reform
funding level provided in FY 2005.
important role for families transition-
reauthorization and strengthening
These funds will continue to provide
ing from welfare to self-sufficiency,
work requirements.
valuable support for working
particularly in light of time limits on
families who are moving from
receipt of cash assistance. Families
TANF LEGISLATIVE PROPOSALS
welfare to work.
in which a custodial parent has never
received cash assistance, receive all
The FY 2006 budget reproposes the
CHILD CARE PERFORMANCE
child support collected on their
President's FY 2004 and FY 2005
behalf. State and Federal
plan to build on the considerable
The Child Care and Development
Governments share child support
successes of welfare reform and to
Fund helps families achieve and
collections on behalf of families
reauthorize TANF. The President's
maintain self-sufficiency and
receiving TANF and some collections
proposal strengthens work require-
improve the overall quality of child
on behalf of former TANF recipients.
ments while allowing States greater
care. The Child Care Bureau collab-
States can choose to pass through a
flexibility in determining what
orates with the Head Start Bureau,
portion of the State share of collec-
should count as work. The proposal
Department of Education, and the
tions to these families as well.
strengthens marriage and families,
Health Resources and Services
making child well-being a central
Administration to achieve these
The Federal Government shares in
tenet of the legislation (see the box
goals. In addition to improving
the financing of this program by
outlining the President's TANF
access and affordability of child care,
providing a 66 percent match rate for
Reauthorization Plan on the previous
the Child Care Bureau is working
general State administrative costs
page). The President's proposal
with States to use early learning
and 90 percent for paternity testing.
includes $200 million annually to
guidelines to improve the school
The CSE program also includes a
promote healthy marriage through
readiness skills of young children
capped entitlement of $10 million
demonstrations, research, and a
from low-income families.
annually for grants to States to
matching grant program. The
facilitate non-custodial parents'
FY 2006 Budget also requests
In the Program Assessment Rating
access to and visitation of their
$40 million for the Promotion and
Tool (PART) assessment for the
children. In addition, States receive
Support of Responsible Fatherhood
FY 2006 budget, the Child Care
incentive payments based on their
as mandatory funding.
Entitlement received a "Moderately
performance on five key measures:
Effective" rating. The assessment
paternity establishment, support
notes that the program is critical to
C
order establishment, collections on
HILD CARE ENTITLEMENT TO
families transitioning from welfare to
S
current support, collections on
TATES
work, and that the program is
past-due support, and cost effective-
The Child Care Entitlement to States,
improving how it tracks the
ness. In FY 2006, the Federal
which was preappropriated under
availability, accessibility, and afford-
Government will spend an estimated
PRWORA, is a component of the
ability of child care for low-income
$4.2 billion for all of these costs.
Child Care and Development Fund
families.
(CCDF). The Child Care
CSE PERFORMANCE
Entitlement is composed of
CHILD SUPPORT ENFORCEMENT
mandatory and matching funds.
The CSE program continues to make
The Child Support Enforcement
Two percent of the mandatory
impressive gains on order and
(CSE) program is a joint Federal,
entitlement funds are reserved for
paternity establishment, and
State, and local partnership that
eligible Indian Tribes and Tribal
collections:
95
Administration for Children and Families

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Child support collections hit a
two proposals from FY 2005 budget
distribution have significant Food
record $21.2 billion in FY 2003,
aimed at improving and increasing
Stamp savings of $114 million
serving an estimated 16 million
the collection of medical child
over five years.
child support cases.
support (see box outlining these child
support proposals on the following
In total, these child support
The CSE collected $1.6 billion in
page). These proposals will also
proposals offer an impressive
overdue child support from Federal
improve automation tools, strengthen
$3.4 billion in increased
income tax refunds in tax year
existing enforcement tools, and assist
collections to families for a net
2003 on behalf of more than
families in gaining self-sufficiency.
Federal cost of $52 million over
1.6 million families.
Overall these proposals have a
five years.
significant impact in terms of savings
CSE established paternity for
and increased collections for
CHILDREN'S RESEARCH AND
almost 1.5 million children in
families:
TECHNICAL ASSISTANCE
FY 2003.
The FY 2006 President's Budget
CSE tracks performance using
In FY 2006, these proposals will
includes $49 million to support child
measures that cover the key elements
save $50 million in child support
support enforcement training and
of child support enforcement such as
administrative costs and increase
technical assistance efforts; operation
paternity and order establishment and
the Federal share of collections by
of the Federal Parent Locator Service
collection of current and back
$13 million. These result in a net
(FPLS), which assists States in
support. Highlights include:
Federal savings of $63 million
while increasing collections to
locating absent parents; and welfare
For every dollar invested in the
families by $147 million.
research. Of this amount,
program in FY 2003, CSE
$34 million will be devoted to:
collected $4.32 in child support,
Proposals for mandatory review
1) training and technical assistance
far exceeding their target of
and adjustment and health insurance
($11 million) and 2) operating FPLS
$4.25. CSE aims to increase the
from either parent proposals
($23 million). The funds appropriat-
cost-effectiveness ratio to $4.49 by
generate Medicaid savings of
ed for these activities are equal to
FY 2006.
$45 million over five years.
1 and 2 percent respectively of the
Federal share of child support collec-
In FY 2003, CSE achieved a
Proposals for optional pass through
tions during the preceding year. The
current collection rate of
and disregard; and optional simplified
remaining $15 million will fund
58 percent, meeting their target.
This measure tracks regular and
Child Support Collections Increase to $21.2 billion
timely payment of support. CSE
seeks to increase the collection rate
in FY 2003
to 62 percent by FY 2006.
(dollars in billions)
In the PART assessments for the
25
FY 2005 budget, CSE received a
$21.2
rating of "Effective" and continues to
be one of the highest rated
20
block/formula grants of all reviewed
programs government-wide. This
high rating is due to its strong
15
mission, effective management, and
demonstration of measurable
progress toward meeting annual and
10
long term performance measures.
CHILD SUPPORT LEGISLATIVE
5
PROPOSALS
The budget anticipates the enactment
of the child support provisions
0
included in the President's TANF
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Reauthorization proposal, as well as
Fiscal Year
Administration for Children and Families
96

---

welfare research as included in the
President's TANF reauthorization
Child Support Enforcement Legislative Proposals
proposal.
Proposals to Enhance and Increase Collection of Medical Child Support:
FOSTER CARE, ADOPTION
Require health care plan administrator to notify the IV-D agency when
ASSISTANCE, AND INDEPENDENT
a child loses health coverage. The Proposal will help alert IV-D
L
workers of potential lapses in children's coverage so they can work to
IVING PROGRAMS
secure alternative coverage, if necessary.
The FY 2006 budget request for the
Foster Care, Adoption Assistance,
Require State child support enforcement agencies to seek medical
and the Independent Living programs
support for children through health insurance available to either parent.
is $6.6 billion. These programs,
The proposal recognizes that it may be more suitable for some children
authorized by Title IV-E of the Social
to be covered under their custodial parent. States will have the option
Security Act, provide essential
to enforce orders against custodial parents. This will result in savings to
services to vulnerable children by
the Medicaid program -- $ 15 million over 5 years.
supporting safe living environments
Proposals to Enhance Automation and Significantly Increase Collections
and preparing for independence older
to Families:
foster youth who are likely to age out
of the system.
Federal seizure of accounts in multi-state financial institutions, which will
enable more families in interstate situations to benefit from this data match.
Of the total request, $4.6 billion will
support the Foster Care program.
Require intercept of gambling proceeds, a significant source of
This is a $252.5 million decrease
untapped income for recovery of overdue child support.
from last year's request and includes
the effects of the legislative
Provide for garnishment of Longshore and Harbor Worker's
proposals described in the following
Compensation Act benefits
section. The funds will be used for
maintenance payments and
Provide Federal matching of insurance claims and settlements
administrative costs for
databases for recovery of past due support.
approximately 230,300 children per
Increase funding for access and visitation grants in support of the
average month, a 1.3 percent
Administration's commitment to strengthening fatherhood and
decrease over 2005. In addition,
parenting skills and increasing family stability.
States may use the funds for training
and for the operation and develop-
Authorize direct Tribal access to Federal Parent Locator Service.
ment of the Statewide Automated
Child Welfare Information Systems
Authorize contractors and IV-D Tribes to access tax offset data.
(SACWIS), a computer-based data
Proposals Under Welfare Reform to Further Assist Families Gain Self-
and information collection system.
Sufficiency:
The budget includes $1.8 billion for
Assist families on TANF and formerly on TANF by sharing in the
the Adoption Assistance program,
costs of State efforts to pass through and disregard child support for
which supports families that adopt
TANF families; a second proposal simplifies distribution rules for the
special-needs children. This is an
benefit of former TANF families.
increase of $26.9 million over the
FY 2005 request. These funds will
Require States to review and adjust child support orders at least every
be used to provide maintenance
three years for families receiving TANF.
payments to adoptive families,
administrative payments for the costs
Reduce the threshold for denying passports to non-custodial parents
associated with placing a child in an
owing overdue child support from $5,000 to $2,500.
adoptive home, and training for
Give States the ability to collect past-due child support by withholding
professionals and adoptive parents.
a limited amount of OASDI payments from beneficiaries, if appropriate.
The proposed level of funding will
support approximately
Require States to charge a $25 annual fee to families who have never
369,500 children each month.
received AFDC or TANF assistance and receive child support
The budget also contains
collections through the IV-D program.
$140 million for the Independent
97
Administration for Children and Families

---

Living Program (ILP), the same as
the FY 2005 request. This program
Child Welfare Program Option Proposal
funds a variety of services to ease the
States That Choose the Grant Option Would Be Able to Use the
transition from foster care for youth
Funds for:
who will likely remain in foster care
until they turn 18 and former
Foster care payments
foster children between the ages of
18 and 21.
Prevention activities
Permanency efforts
TITLE IV-E PERFORMANCE
Case management
The Foster Care, Adoption
Assistance, and Independent Living
Administrative activities
programs demonstrated success in
improving safety, permanency, and
Training for child welfare staff
well-being of children. Working
Other such child welfare activities
with the States, the Children's Bureau
strives to minimize the disruption to
Under the Flexible Funding Plan States Will Be Required to:
the continuity of family and other
relationships for children in foster
Continue to uphold the child safety protections outlined in the
care by decreasing the number of
Adoption and Safe Families Act,
placement settings per year for a
Agree to maintain existing levels of State investment in child
child in care. The programs also
welfare programs
provide children in foster care
permanency and stability in their
Continue to participate in the Child and Family Services Reviews.
living situations by improving the
timeliness of reunification, if
The proposal provides access to the TANF Contingency Fund from which
possible, or guardianship and
States may receive additional funding under certain circumstances if a
adoption.
severe foster care crisis were to arise. A $30 million set-aside will be
available for Federally recognized Indian Tribes, and a one-third of one
The Foster Care program received a
percent set-aside will be available for monitoring and technical assistance
rating of "Adequate" from the
of State foster care programs.
Program Assessment Rating Tool
(PART) in FY 2005. This is an
PART ratings in line with the
The second proposal would clarify
improvement over the "Results Not
President's Management Agenda
the process for determining
Demonstrated" rating received for
initiative on Budget and Performance
Title IV-E eligibility in the Foster
FY 2004. The better rating can be
Integration.
Care program. On March 3, 2003,
attributed to completing adoptions
the Court of Appeals for the
for 268,000 children with child
9th Circuit held in Rosales v.
welfare involvement from FY 1997
FOSTER CARE LEGISLATIVE
Thompson that a child living with an
through FY 2002. The programs
PROPOSALS
interim caregiver may be eligible for
also received a higher rating due to
The FY 2006 President's Budget
Title IV-E foster care even though
new program performance measures,
includes three legislative proposals
the child would not have been
an initiative to develop an error rate,
for Foster Care and related programs.
eligible in the home from which the
and improved program management.
The alternative funding proposal,
child was legally removed. The
The proposed alternative financing
detailed in the Child Welfare
Rosales decision contravenes the
system for Foster Care, discussed in
Program Option box (see above),
Department's long-standing
the next section, would address
would allow States the option to
interpretation of the Social Security
PART findings to further improve the
receive their foster care funding as a
Act that eligibility is based upon the
program. In the PART assessment
flexible grant over five years to
home from which the child is
for the FY 2006 budget, ILP received
support a continuum of services to
removed, not the home of the interim
a "Results Not Demonstrated" rating
families in crisis and children at risk.
caretaker. HHS has never interpreted
because the program needs to
This proposal will increase budget
the statute to mean that States may
develop a data system to track
authority by $36 million in FY 2006,
consider whether the child is eligible
program participation and outcomes.
and it is budget neutral over five years.
in either the home from which the
HHS is committed to improving
Administration for Children and Families
98

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child is removed or the home where
include community-based family
by SSBG funds include child care,
the child is living. This proposal
support, family preservation,
child welfare, home-based services,
would amend the statute to come into
time-limited reunification services,
employment services, case manage-
accord with the Department's
and adoption promotion and support
ment, adult protective services,
long-standing policy. This proposal
services. States generally must
prevention and intervention
saves $84 million in FY 2006 and
spend at least 20 percent of their
programs, and special services for
$399 million over five years.
funds on each of the above
people with disabilities.
four categories. The Adoption and
The third proposal brings the Foster
Safe Family Act of 1997 (ASFA)
Care and Adoption Assistance
established that a child's health and
matching rate for the District of
safety must be of paramount concern
Columbia in line with the District's
in any efforts made by a State to
matching rate in Medicaid and
preserve or reunify a child's family.
SCHIP. This would increase the
The FY 2006 request for PSSF
Federal matching rate for the District
includes $305 million in mandatory
of Columbia from 50 percent to
funds provided by formula to States.
70 percent and cost the Federal
government $8 million in FY 2006
and $40 million over five years.
SOCIAL SERVICES BLOCK GRANT
The Social Services Block Grant
PROMOTING SAFE AND STABLE
(SSBG), a capped entitlement, under
FAMILIES
Title XX of the Social Security Act,
provides funds to States for deliver-
The Promoting Safe and Stable
ing social services and allows States
Families (PSSF) program, under
substantial discretion in allocating
Title IV-B of the Social Security Act
funds in order to best suit their
is a capped entitlement program to
specific needs. SSBG is funded at
assist States in coordinating services
$1.7 billion for FY 2006. This is the
related to child abuse prevention and
same level as FY 2005. Programs or
family preservation. These services
services that are frequently supported
99
Administration for Children and Families

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CHILD SUPPORT ENFORCEMENT: COLLECTIONS & COSTS
(dollars in millions)
2005
2006
2006
2004
Estimate
Estimate
+/- 2005
Total Collections Distributed:
All Families......................................................................................
$19,410
$20,520
$21,894
+$1,374
TANF program................................................................................
$1,977
$1,974
$2,028
+$54
Federal Share...................................................................
$1,092
$1,087
$1,097
+$10
State Share.......................................................................
$885
$887
$895
+$8
Foster Care program.......................................................................
$76
$78
$82
+$4
Federal Share...................................................................
$43
$44
$46
+$2
State Share.......................................................................
$33
$34
$36
+$2
Total..................................................................................................
$21,463
$22,572
$24,004
+$1,432
Administrative Costs:
Federal Share...................................................................................
$3,540
$3,610
$3,716
+$106
State Share.......................................................................................
$1,760
$1,856
$1,913
+$57
Total..................................................................................................
$5,300
$5,466
$5,629
+$163
Incentive Payment to States.............................................................
$454
$446
$458
+$12
Program Costs (Costs minus Distributed Collections ):
Federal Costs ..................................................................................
$2,859
$2,925
$3,018
+93
State Costs.......................................................................................
$388
$489
$501
+12
Net Costs to Taxpayers.................................................................
$3,247
$3,414
$3,519
+105
NOTE: Program Costs equal the Administrative Costs minus the portion of collections distributed to TANF
and Foster Care Programs. The Federal costs also include incentive payments to States.
Administration for Children and Families
100

---

TANF LEGISLATIVE PROPOSAL
(dollars in millions)
Five Year
2004
2005
2006
2006-2010
2006 President's Budget, Current Law
$19,167
$19,839
$16,689
$86,403
TANF ............................................................................................
$17,209
$17,881
$16,689
$84,445
Contingency Fund*.....................................................................
$1,958
$1,958
$0
$1,958
Legislative Changes, Budget Authority
State and Territory Family Assistance Grants...............................
$0
$0
$0
Matching Grants to Territories........................................................
$0
$0
$0
Supplemental Grants .........................................................................
$128
$319
$1,595
Redirect High Performance Bonus**..............................................
-$500
$0
-$500
Family Formation Grants...................................................................
$100
$100
$500
Research, Demonstration, Technical Assistance.........................
$100
$100
$500
Responsible Fatherhood...................................................................
$40
$40
$200
Elimination of the Illegitimacy Bonus***......................................
-$100
-$100
-$500
Tribal Work Program.........................................................................
$0
$0
$0
Contingency Fund.............................................................................
$42
$0
$42
SUBTOTAL, Legislative Changes.................................................
-$190
$459
$1,837
2006 President's Budget, Proposed Policy.........................
$19,167
$19,649
$17,148
$88,240
Explanation of decrease from FY 2005 to FY 2006: In FY 2005, current law estimates assume half-year funding of
Supplemental Grants and routine appropriations of the High Performance Bonus and the Contingency Fund.
* FY 2004 and FY 2005 Contingency Funds are prior year funds, not new budget authority.. This funding is
available for obligation through FY 2009. FY 2004 no States drew down these funds.
** Current law estimates assume $1 billion in BA in FY 2005. Under the FY 2004 President's Budget,
$500 million will be redirected towards Family Formation Grants.
*** PB 06 eliminates the out-of-wedlock bonus and funds TANF research, demonstration, and
technical assistance which is geared in part towards Family Formation efforts.
101
Administration for Children and Families

---

CSE LEGISLATIVE PROPOSALS
(dollars in millions)
Admin
Fed. Share
Collections Admin
Fed. Share
Collections
Costs
Collections to Families
Costs
Collections to Families
Health Insurance from Either Parent**..............................................
$0
$0
$0
$3
$0
$0
Send COBRA Notice to IV-D Agency...............................................
100600
Federal Seizure of Accounts in Multi-State Financial Institutions
1
4
67
4
52
934
Require Intercept of Gaming Proceeds...............................................
3
3
54
40
48
860
Provide for Garnishment of Longshore and Harbor Worker's
Compensation Act Benefits..............................................................
0
0
10
0
4
90
FPLS Access to Insurance Settlement Databases...........................
00106
116
Increased Access and Visitation Funding........................................
2
0
1
32
0
16
Direct Tribal Access to Federal Parent Locator Service (FPLS)
00000
101
Contractor and Tribal Access to Tax Data........................................
000000
Optional Pass Through and disregard above Current Effort***...
0000
-92
169
Optional Simplified Distribution***...................................................
0000
-541
984
Mandatory Review and Adjustment of Child Support Orders**..
0
0
0
96
136
0
Reduce Threshold for Passport Denial to $2500..............................
01309
35
$25 Annual Fee for Never -TANF Cases with Collections.............
-57
0
0
-315
0
0
OASDI Benefit Match..........................................................................
05
11
0
33
65
Also Included in Child Support/Family Support Account
Raise the Cap for Repatriation to $5 million .....................................
03
Child Suport Enforcement Subtotal*.............................................
-$50
$13
$147
-$131
-$345
$3,369
Current Law .....................................................................................
$3,322
$22,008
Proposed Law.............................................................................
$3,272
$21,877
* In FY 2006, these proposals save $50 million in child support administrative costs and increase the Federal share of collections by $13
million. This results in a net Federal savings of $63 million while increasing collections to families by $147 million.
** The mandatory review and adjustment and health insurance from either parent proposals have Medicaid savings, $45 million over five years.
*** The optional pass through and disregard and optional simplified distribution proposals have significant Food Stamp savings, $114 million
over five years. In total, these child support proposals offer an impressive $3.4 billion in increased collections to families for a net Federal cost of
$52 million over five years.
Administration for Children and Families
102

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TITLE IV-EE CHILD WELFARE LEGISLATIVE PROPOSALS
(dollars in millions)
Five Year
2004
2005
2006
2006-2010
2006 President's Budget Current Law
Budget Authority..........................................
$6,814
$6,806
$6,620
$35,955
Outlays............................................................
$6,340
$6,474
$6,619
$35,786
Legislative Changes:
Child Welfare Program Option
Budget Authority.....................................
$0
$0
$36
$0
Outlays.......................................................
$0
$0
$7
$2
Home of Removal
Budget Authority.....................................
$0
$0
-$84
-$399
Outlays.......................................................
$0
$0
-$72
-$383
DC Matching Rate
Budget Authority.....................................
$0
$0
$8
$40
Outlays.......................................................
$0
$0
$7
$38
SUBTOTAL, Legislative Changes
Budget Authority..................................
$0
$0
-$40
-$359
Outlays...................................................
$0
$0
-$58
-$343
2006 President's Budget Proposed Policy
Budget Authority............................................
$6,814
$6,806
$6,580
$35,596
Outlays.............................................................
$6,340
$6,474
$6,561
$35,443
Note: IV-E includes Foster Care, Adoption Assistance, and Independent Living.
103
Administration for Children and Families

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AOA
(dollars in millions)
2006
2004
2005
2006
+/-2005
National Family Caregiver Support..................................
$159
$162
$162
$0
Home and Community-Based
Supportive Services and Centers.................................
354
354
354
0
Nutrition Services:
Home-Delivered Meals..................................................
$180
$183
$183
$0
Congregate Meals..........................................................
387
387
387
0
Nutrition Services Incentive Program..........................
148
149
149
0
Subtotal, Nutrition Programs .................................
$715
$719
$719
0
Program Innovations..........................................................
$34
$43
$24
-$19
Aging Network Support Activities..................................
13
13
13
0
Protection of Vulnerable Older Americans.....................
19
19
19
0
Preventive Health Services...............................................
22
22
22
0
Grants for Native Americans.............................................
26
26
26
0
Alzheimer's Disease............................................................
12
12
12
0
Program Administration.....................................................
17
18
18
0
Senior Medicare Patrols (HCFAC)...................................
4
3
3
0
White House Conference on Aging................................
3
5
0
-5
Total, Program Level.................................................
$1,378
$1,396
$1,372
-$24
Less Funds Allocated From Other Sources:
Senior Medicare Patrols (HCFAC)...............................
-$4
-$3
-$3
$0
Total, Budget Authority............................................
$1,374
$1,393
$1,369
-$24
FTE........................................................................................
117
126
123
-3
Administration on Aging
104

---

ADMINISTRATION ON AGING
The Administration on Aging promotes the dignity and independence of older Americans and helps society prepare for
an aging population.
SUMMARY
AoA programs provide services to
tively, comes from sources other than
T
elders at home and in the community
the Older Americans Act. Priority
he FY 2006 budget request for
through a nationwide network of
for the receipt of meals is given to
the Administration on Aging
State, Tribal, and area agencies on
those who are in greatest economic
(AoA) is $1.4 billion. This amount
aging and through over 29,000 local
or social need, with particular
maintains funding for AoA core
service providers. These services
attention to older low-income and
services at the FY 2005 level, includ-
complement existing medical and
minority adults as well as individuals
ing community-based supportive
health care systems and support
residing in rural communities.
services, elderly nutrition, and
some of life's most basic functions:
caregiver support. It also continues
nutrition, transportation, respite and
H
investments in program innovations
OME AND COMMUNITY-BASED
counseling for caregivers, and
to test new models of home and
SUPPORTIVE SERVICES
personal care to those who need
community-based care. Funding for
assistance with activities of daily
The FY 2006 request for Home and
the White House Conference on
living such as bathing and eating.
Community-Based Services is
Aging, scheduled for October 2005,
$354 million. This grant program to
was completed in the FY 2005
N
States and Territories supports the
appropriation.
UTRITION PROGRAMS
implementation of comprehensive
Over 47 million Americans are age
Nutrition programs­including
and coordinated service systems for
60 and over, including more than
Congregate and Home-delivered
older individuals and their families.
4.6 million who are age 85 and over,
Meals and the Nutrition Services
The array of services provided by
and these numbers are increasing
Incentive Program­total
these grants helps to keep seniors as
rapidly with the aging of the baby
$719 million, over half of AoA's
independent as possible and enables
boom generation. While advances in
funding. Nutrition services help over
them to stay in their homes and
medicine and technology are
two million older adults have access
communities as long as possible,
enabling seniors to live longer and
to the nutritious food they need to
delaying the need for costly institu-
more active lives than ever before,
stay healthy and decrease their risk
tional care.
those of advanced age are also at
of disability. Meals served in a
Services provided include transporta-
increased risk of chronic disease and
congregate setting also provide
tion assistance; information and
disability. Older Americans with
opportunities for social engagement
referral services; chore, homemaker
chronic conditions may be unable to
and meaningful volunteer roles,
and personal care services; and adult
perform basic activities of daily
which contribute to overall health
day care. These services are offered
living, and many of them require
and well-being. Finally, while meals
through multi-purpose senior centers
assistance to remain at home and
are the core service, these programs
which function as community focal
avoid the need for institutional care.
also provide related services such as
nutrition screening, assessment,
points to coordinate and integrate
Studies have repeatedly found that if
education, and counseling.
services for the elderly, or through
given the choice, older Americans
other community-based settings. In
overwhelmingly express a preference
Funding for nutrition programs is
the last fiscal year for which data is
for long-term care services that allow
significantly leveraged: 61 and
available, AoA provided nearly
them to remain at home. AoA is
67 percent of funding for Congregate
36 million rides to help seniors visit
addressing these challenges through
and Home-Delivered meals, respec-
doctors, pharmacies, grocery stores,
its efforts to create a more balanced
system of long-term care and to
State Flexibility in Using Nutrition Funding
focus on care in the community. The
infrastructure of AoA's aging servic-
As authorized by the Older Americans Act, States may transfer up to
es network­one of the largest
30 percent of funding between Home-Delivered and/or Congregate
providers of home and community-
Nutrition Services and Home and Community-Based Supportive Services.
based long-term care
States may also transfer 40 percent of funding between Home-Delivered
services­provides an important
and Congregate Nutrition Services. This option allows greater flexibility
foundation for these efforts.
for individual States to better meet the needs of their seniors.
105
Administration on Aging

---

meal sites, and senior centers.
significant impact on the health and
These and other projects are critical
Information and referral services
well-being of caregivers, delay the
for ensuring the continued effective-
helped empower individuals and
need for institutionalization of the
ness of AoA's core service delivery
families to make informed choices
care recipient, and significantly
programs, by finding ever more
about their service and care needs.
reduce costs to Medicare, Medicaid
efficient and relevant methods for
Personal care and homemaker servic-
and private payers.
meeting the needs of America's
es enabled elders to live with dignity
elderly population. The budget does
at home through assistance with
PROGRAM INNOVATIONS
not continue one-time FY 2005
activities of daily living.
projects.
AoA continues to identify more cost-
N
effective and efficient ways of
ATIONAL FAMILY CAREGIVER
PROTECTION, PREVENTION, AND
S
delivering services and to implement
UPPORT PROGRAM
AGING NETWORK SUPPORT
positive change in systems of care.
The National Family Caregiver
The FY 2006 request of $24 million
The FY 2006 request includes
Support Program is another critical
for Program Innovations supports
$54 million for health promotion and
element in rebalancing the system of
projects for local service programs to
disease prevention programs, includ-
long-term care towards community-
improve access, better integrate
ing health screenings, physical
based programs and away from
services, and increase emphasis on
fitness, and medication management.
institutional care. Family caregivers
prevention. Projects funded by the
These programs promote healthy
have always been the main source of
program include:
lifestyles and help delay or prevent
long-term care services provided in
the onset of chronic disease; and also
the United States. AoA is committed
Aging and Disability Resource
protect vulnerable elders from abuse
to assisting these caregivers by
Centers ­ 24 of which have been
and exploitation through training,
providing grants to States and
funded to date ­ that serve as
outreach, and technical assistance to
Territories for developing multifac-
highly visible and accessible
State and community elder advocacy
eted systems of support for family
resources for elders and their
programs.
caregivers of disabled elders, as well
families to gain access to informa-
as for grandparents caring for
tion on the full range of public and
NATIVE AMERICAN NUTRITION AND
disabled grandchildren. The
private long-term care options;
SUPPORTIVE SERVICES
FY 2006 budget includes
Integrated Care Management
$162 million for the National Family
The budget requests $26 million for
projects that improve the quality of
Caregiver Support Program; this
grants for Native Americans. These
care for seniors by identifying and
includes $6 million to support Native
grants will enable 243 tribal organi-
supporting innovations that involve
American caregivers. Support
zations serving approximately
partnerships with managed care
services for caregivers include
300 Tribes to continue to provide
organizations or capitated financ-
information, training, counseling,
American Indians, Alaskan Natives,
ing arrangements;
respite, and assistance services.
and Native Hawaiians who are over
Research indicates that informal
Evidence-Based Disease
the age of 60 with nutritional and
caregiving supports can have a
Prevention grants that translate
supportive services which help them
research results into community-
remain healthy and independent.
level prevention programs;
Caregivers' Economic
ALZHEIMER'S DISEASE
Partnerships to help States
DEMONSTRATION GRANTS
Value
rebalance their long-term care
The number of unpaid informal
systems, integrate services at the
The FY 2006 budget also includes
caregivers (spouses, adult
community level, and promote
$12 million for the Alzheimer's
children, relatives, and friends)
healthy and active aging;
Disease Demonstration Grant
program. These grants improve the
or elderly individuals is estimat-
Outreach to seniors ­ particularly
quality of services provided to those
ed to be 23 million or more.
the disadvantaged ­ on the
suffering from Alzheimer's Disease
A study in the journal Health
Medicare Modernization Act and
by assisting States to incorporate
Affairs estimated that this
the introduction of new prescrip-
new research findings, innovative
informal care, if provided by
tion drug and preventive health
approaches to care, and cultural
home care aides, would cost
benefits.
competencies into their state-wide
$257 billion annually.
systems of home and community-
based services.
Administration on Aging
106

---

PROGRAM ADMINISTRATION
A total of $18 million is requested to
maintain staffing levels, and for
related program management and
support activities necessary to
effectively administer a wide array of
AoA programs. This request also
supports efforts to strengthen
management through greater
efficiencies and economies of scale
in information technology, financial
systems, and personnel operations.
WHITE HOUSE CONFERENCE ON
AGING
The White House Conference
on Aging is scheduled for
October 23-26, 2005, in
Washington, D.C. The last White
House Conference occurred in 1995.
The purpose of the Conference is to
develop recommendations for the
President and Congress on policy
and research issues in the field of
aging.
107
Administration on Aging

---

DM
(dollars in millions)
2006
2004
2005
2006
+/- 2005
General Departmental Management:
Adolescent Family Life.............................................
$31
$31
$31
$0
Office of Minority Health.........................................
55
50
47
-3
Office on Women's Health.......................................
29
29
29
0
Minority HIV/AIDS ..................................................
50
52
52
0
IT Security and Innovation Fund............................
15
15
15
0
Afghanistan................................................................
5
6
6
0
Embryo Adoption Awareness Campaign..............
1
1
1
0
Other General Departmental Management ............
174
190
178
-12
Evaluation Activities.................................................
41
40
40
0
Health Care Fraud and Abuse Control ..................
5
5
5
0
Total, GDM Program Level.................................
$406
$419
$404
-$15
Health Information Technology Initiative:
Health IT ....................................................................
$0
$0
$75
+$75
Evaluation Activities.................................................
1
3
3
0
Total, Health IT Program Level..........................
$1
$3
$78
+$75
Medicare Hearings and Appeals:
Medicare Hearings and Appeals.............................
$47
$58
$80
+$22
Total, MH&A Program Level.............................
$47
$58
$80
+$22
Public Health and Social Services Emergency Fund:
PHSSEF.......................................................................
$2,164
$2,339
$2,428
+$89
Total, PHSSEF Program Level...........................
$2,164
$2,339
$2,428
+$89
Total, DM Program Level....................................
$2,618
$2,819
$2,990
+$171
Less funds from other sources:
Evaluation Activities.................................................
$42
$43
$43
$0
Health Care Fraud and Abuse Control ..................
5
5
5
0
Total, DM Budget Authority...............................
$2,571
$2,771
$2,942
+$171
FTE...................................................................................
1,570
1,873
2,053
+180
Departmental Management
108

---

DEPARTMENTAL MANAGEMENT
The office of Department Management supports the Secretary in his role as chief policy officer and general manager
of the Department.
DepartmentalManagement(DM) willsupportONCHIT'seffortsto Inadditiontofundsrequestedwithin
includes funding for
coordinate Federal efforts across
Departmental Management for
four appropriation accounts in the
many initiatives and activities,
Health IT, the FY 2006 request for
Office of the Secretary: General
including:
AHRQ includes $50 million to
Departmental Management (GDM);
advance the use of Health IT to
Health Information Technology;
Implementing electronic prescribing
enhance patient safety.
Medicare Hearings and Appeals; and
as an option for program providers,
Public Health and Social Services
as mandated by the Medicare
MEDICARE HEARINGS AND
Emergency Fund (PHSSEF).
Prescription Drug, Improvement
A
and Modernization Act of 2003;
PPEALS
The FY 2006 budget request for
The FY 2006 budget request includes
GDM provides a total program level
Developing interoperability
$80 million in Medicare Trust Funds
of $404 million, including appropria-
standards and prototypes for the
to support a new Office of Medicare
tions of $359 million, interagency
secure exchange of Electronic
Hearings and Appeals (OMHA), as
transfers of $40 million in evaluation
Health Records (EHR) and other
mandated by the Medicare
funds (including $18 million in
health data;
Prescription Drug, Improvement and
evaluation funds from the former
Modernization Act of 2003 (MMA).
Policy Research account), and
Working with regional collaborations
MMA transferred responsibility for
$5 million in health care fraud and
to assist health care providers in
hearing Medicare appeals at the
abuse funds.
the deployment of interoperable
applications;
Administrative Law Judge (ALJ)
The FY 2006 DM request also
level ­ the third level of Medicare
reflects funding for two new
Identifying standards and
claims appeals ­ from the Social
appropriation accounts: Health
mechanisms for the broad adoption
Security Administration to the Office
Information Technology, including
of EHR, including the evaluation
of the Secretary at HHS by no later
appropriations of $75 million and
of physician incentives and other
than October 1, 2005. The Medicare
interagency transfers of $3 million in
strategies; and
Benefits Improvement and Protection
evaluation funds; and funding of
Act of 2000 (BIPA) also mandated
Realizing the overarching economic
$80 million for Medicare Hearings
that ALJ appeals be heard within
and health benefits of Health IT,
and Appeals.
90 days after receipt of a request
while reducing the risks associated
from a Medicare appellant for such a
The FY 2006 DM budget request
with EHR adoption.
hearing. To be able to meet this
also includes a total of $2.4 billion
The FY 2006 budget request will
timeframe, OMHA plans to invest
for the PHSSEF account.
enable ONCHIT to provide strategic
heavily in technology and to utilize
direction for a national interoperable
video-teleconferencing (rather than
HEALTH INFORMATION
health care system, and to encourage
face-to-face hearings) for the majority
TECHNOLOGY
clinicians to connect and collaborate
of cases.
The FY 2006 budget request includes
within a national Health IT network.
GENERAL DEPARTMENTAL
a total of $78 million for Health
The Administration also plans to
M
Information Technology (IT). The
propose expansion of the Department's
ANAGEMENT
Office of the National Coordinator
Health IT investment in FY 2005.
The GDM account supports those
for Health Information Technology
The National Coordinator will work
activities associated with the
(ONCHIT) was created in April 2004
with the Agency for Healthcare
Secretary's roles in administering
by Presidential Executive Order, to
Research and Quality (AHRQ) and
and overseeing the organization,
address strategic planning, coordina-
the National Library of Medicine to
programs, and activities of the
tion, and analysis related to key
develop regional collaborations for
Department. These activities are
technical, economic and other issues
the deployment of interoperable
carried out through 15 Staff
surrounding the public and private
applications, and to accelerate the
Divisions (STAFFDIVs). The GDM
adoption of Health IT. This request
development of standards and
budget request for FY 2006 totals
prototypes.
109
Departmental Management

---

$404 million, a decrease of $15 million
Minority HIV/AIDS: The FY 2006
One of the offices included in Other
or 4 percent below the comparable
request includes $52 million, the
GDM is the Office on Disability
FY 2005 level. The GDM request
same level as FY 2005, to support
(OD). Established in 2002 in
provides funding for the following
innovative approaches to HIV/AIDS
support of President Bush's New
activities:
prevention and treatment in minority
Freedom Initiative, OD has been
communities heavily impacted by
charged to: lead the HHS New
Office of Population Affairs
this disease. These funds allow the
Freedom Initiative; oversee, coordi-
(OPA)/Adolescent Family Life: The
Department to continue priority
nate, develop and implement
Adolescent and Family Life (AFL)
investments and public health strate-
disability programs and initiatives
request of $31 million will continue
gies targeted to reduce the disparities
within HHS that affect persons with
to provide support for the AFL
and burden of HIV/AIDS in racial
disabilities; ensure that persons of
demonstration and research program
and ethnic minority populations.
every age with disabilities have a
authorized under Title XX of the
voice within HHS; and heighten the
Public Health Service (PHS) Act.
Information Technology Security
interaction of programs within HHS
Through the grants awarded under
and Innovation Fund: The FY 2006
and with Federal, State, community
this program, AFL provides funding
budget request includes $15 million
and private sector partners.
in three areas: care demonstration
to continue funding for the IT
projects, prevention projects, and
Security and Innovation Fund.
research projects. This request
Projects funded through the IT
PUBLIC HEALTH AND SOCIAL
includes $13 million in abstinence-
Security and Innovation Fund focus
SERVICES EMERGENCY FUND AND
only prevention projects, as defined
on HHS enterprise-wide investments,
BIOTERRORISM
by the Welfare Reform legislation
notably: enterprise architecture, key
The FY 2006 request funds HHS
(P.L. 104-193). Further, OPA also
E-Government projects, HHS
bioterrorism and other emergency
administers the Family Planning
common IT infrastructure services,
preparedness activities in two ways.
program under Title X of the PHS
and security and infrastructure to
The Public Health and Social
Act, which is funded through the
enable HHS common administrative
Services Emergency Fund (PHSSEF)
Health Resources and Services
systems.
provides $2.4 billion for pandemic
Administration (HRSA).
Afghanistan: Included in the
influenza preparedness and bioterror-
Office of Minority Health: The
FY 2006 request for the Office of
ism efforts in the Centers for Disease
Office of Minority Health request of
Global Health Affairs is $6 million to
Control and Prevention, the Health
$47 million, a $3 million decrease
continue support of HHS health care
Resources and Services
from FY 2005, will provide funding
initiatives in Afghanistan, particular-
Administration, the Office of the
to continue disease prevention,
ly in the areas of maternal and child
Secretary, and targeted countermea-
health promotion, service demonstra-
health.
sure research at the National
tion, and educational efforts that
Institutes of Health. Direct appropri-
focus on health concerns that cause
Embryo Adoption Awareness
ations are also provided to NIH and
the high rate of death in racial and
Campaign: Included in the
the Food and Drug Administration
ethnic minority communities. The
President's Budget request for the
for their bioterrorism efforts.
reduction is attributed to FY 2005
first time is $1 million to continue
Bioterrorism: The HHS FY 2006
Congressional earmarks which are
the Embryo Adoption pubic
request includes $4.2 billion for
not continued in FY 2006.
awareness campaign grant award
program. The purpose of the
bioterrorism, a net increase of
Office on Women's Health: The
campaign is to educate Americans
$154 million above FY 2005. Of the
Office on Women's Health request of
about the existence of frozen
total, $2.3 billion is funded through
$29 million, the same as FY 2005,
embryos (resulting from in-vitro
the PHSSEF, and $1.9 billion
will provide funding to continue the
fertilization) which are available for
through NIH and FDA accounts.
advancement of women's health
adoption.
The FY 2006 budget supports thr
programs through the promotion and
new Federal Mass Casualty
coordination of research, service
Other General Departmental
Initiative, a model emergency
delivery, and education ­ both
Management: The FY 2006 budget
response demonstration, a new
throughout HHS agencies and
request includes $178 million to fund
chemical countermeasures research
offices, with other government
offices which provide leadership,
initiative, and expanded procurement
organizations, and with consumer
policy, legal, and administrative
funding for the Strategic National
and health professional groups.
guidance to HHS components.
Stockpile (SNS).
Departmental Management
110

---

Mass Casualty Initiative
have lost potency. This appropria-
therapies. A complementary invest-
The FY 2006 President's Budget
tion also includes funding for
ment of $30 million is requested to
includes $70 million within HHS for
specialized facilities needed to store
expand extramural laboratory capaci-
a new Federal Mass Casualty
SNS and BioShield procured
ty to conduct biodefense research.
Initiative. Since FY 2002, HRSA has
countermeasures, including enough
This additional funding raises the
funded work to expand state and
smallpox vaccine for every
five-year NIH investment total to
local hospital capacity to treat mass
American. Finally, funds are
$1 billion for the construction of
casualties. This new initiative
necessary to maintain the capacity to
intramural and extramural biodefense
reflects the concern that local
move SNS assets anywhere in the
facilities.
medical systems will need added
U.S. within 12 hours and to provide
assistance in the case of an attack
technical assistance to State and local
Food Defense
involving the use of weapons of
governments participating in the
The budget for FDA includes
mass destruction. The FY 2006
Cities Readiness Initiative; this
$244 million for bioterrorism activi-
request includes a three-pronged
initiative seeks to upgrade their
ties. This total includes $180 million
effort. First, the request for the SNS
ability to provide anthrax antibiotics
for food defense, an increase of
includes $50 million in new funding
to all residents within 48 hours of an
$30 million above FY 2005. This
for the purchase, maintenance, and
anthrax event.
request includes $20 million to
operation of portable hospital units
increase analytic surge testing
that can be deployed to increase
National Institutes of Health
capacity for biological, chemical, and
hospital surge capacity in the event
The FY 2006 request for the National
radiological threat agents for the
of a bioterrorist attack. Second, the
Institutes of Health (NIH) biodefense
Food Emergency Response Network
Medical Reserve Corps (MRC)
activities totals $1.8 billion, a net
(FERN), $6 million for research, and
budget includes an increase of $12.5
increase of $56 million, or
$1 million to continue development
million for a total of $22 million.
3.2 percent, above FY 2005. Within
of an Emergency Response and
The MRC is the Citizen Corps
this amount, research and develop-
Operations Network. Finally, FDA
component that organizes local
ment funding will increase
will use $3 million, for a total of
volunteers to assist regular medical
$175 million, partially offset by a
$5 million, to coordinate food
response professionals and facilities
$119 million reduction in extramural
surveillance activities within the
during a large-scale local emergency.
laboratory construction funding. Of
Biosurveillance Initiative.
Finally, $7.5 million will finance the
the NIH total, $97 million is budgeted
development and updating of
in the PHSSEF to develop counter-
HRSA Curriculum Development and
systems designed to rapidly access
measures against chemical, nuclear,
Education
credentialing information on
and radiological threats. NIH will
The request maintains the FY 2005
healthcare providers in an
use $47 million to continue work
level of $28 million. The
emergency. These systems will be
initiated in FY 2005 on nuclear and
Bioterrorism Training and
able to obtain data from federal,
radiological countermeasures. In
Curriculum Development program is
state, and non-government sources,
FY 2006, the President's Budget
designed to provide bioterrorism-
including the State-based Emergency
includes an additional $50 million to
related continuing education and
System for Advance Registration of
complement this work with a new
training opportunities for practicing
Volunteer Healthcare Personnel.
targeted research effort to expand the
health care providers and support for
current range of chemical counter-
new emergency preparedness curric-
Strategic National Stockpile
measures. Of the funds directly
ula in health professions schools.
The FY 2006 President's Budget
appropriated to NIH, $1.7 billion will
includes $600 million for the
fund basic research addressing both
State and Local Preparedness
Strategic National Stockpile (SNS),
naturally occurring threats and the
CDC and HRSA continue to
an increase of $203 million above
risk of biotechnology advances
demonstrate a strong commitment to
FY 2005. This increase includes
leading to engineered or modified
preparing States and local public
$50 million for the purchase of
organisms that could evade current
health departments and hospitals to
portable mass casualty treatment
medical countermeasures or enhance
prepare against public health
units. In addition to housing these
their virulence. These research
emergencies and acts of bioterrorism.
new units, the SNS finances the
efforts will focus on the biology of
A total of $6.7 billion will have been
procurement of commercially
microbial agents with bioterrorism
invested between FY 2002 and
available countermeasures, such as
potential, the properties of the host's
FY 2006. The FY 2006 request
anthrax antibiotics to cover 60 million
response, and applied research and
includes $1.3 billion for this work,
people, and the replacement of
advanced development of new or
including $25 million for one or
pharmaceuticals and supplies that
improved diagnostics, vaccines, and
more competitive grants for a model
111
Departmental Management

---

emergency response demonstration.
Surveillance efforts. This appropria-
domestic vaccine surge production
This net reduction of $138 million
tion also allows OPHEP to target
capacity that would be needed in a
reflects the targeting of resources to
advanced research projects and
pandemic. It will finance contracts
direct Federal efforts, including
support the development of an
with vaccine manufacturers to
portable mass casualty treatment
effective risk communication and
develop and license influenza
capacity that can assist any State and
information strategy for the public.
vaccines using new production
expanded countermeasure readiness.
OPHEP also manages HHS's role in
techniques and establishing a
HHS will also re-evaluate State and
Project BioShield countermeasure
domestic manufacturing capability.
local preparedness funding formulas
needs analysis and is responsible for
Second, HHS will continue to ensure
in an attempt to assure that alloca-
procuring these DHS-funded
a year-round supply of specialized
tions reflect risk and performance.
countermeasures for the SNS.
eggs needed for domestic production
of currently licensed vaccines.
Upgrading CDC Capacity and
Cybersecurity funding is maintained
Moreover, manufacturers will be
Anthrax Research
at $10 million in FY 2006 for
encouraged to license and implement
The FY 2006 request includes
cybersecurity. These funds continue
new processing and other technolo-
$140 million for upgrading CDC
to protect the Department's informa-
gies to improve vaccine yields from
capacity. With these funds, CDC will
tion technology infrastructure from
both new cell culture vaccines and
continue to improve epidemiological
cyber-terrorist attacks. These funds
existing egg-based vaccines. In
expertise in the identification and
will provide continuous security
addition, HHS will sponsor develop-
control of diseases caused by terror-
monitoring for all HHS systems,
ment and licensing of
ism, including better electronic
assets, and services.
antigen-sparing strategies that would
communication, distance learning
increase the number of individuals
programs, and cooperative training
EMERGENCY PREPAREDNESS
who could be vaccinated from a
between public health agencies and
Pandemic Influenza: The budget
given amount of bulk vaccine
local hospitals. This request
includes $120 million, an increase of
product. Finally, the budget
provides support for upgrading
$21 million, to ensure the Nation has
maintains the flexibility to redirect
capacity at CDC, national planning
the vaccine production capacity to
these funds to initiate pandemic
efforts, oversight of inter-laboratory
respond to an influenza pandemic.
vaccine production at any time a
transfers of dangerous pathogens and
It is normal for influenza strains to
pandemic appears imminent.
toxins, and laboratory safety inspec-
change slightly from year to year.
tions. No funding is earmarked for
When major changes occur to the
research on older anthrax vaccines,
influenza strain genetic structure,
as the project is nearing completion;
widespread disease and death can
funds were redirected into the
result. Three such global events -
Strategic National Stockpile.
called pandemics - occurred in the
Office of the Secretary
20th century. Such a pandemic could
The FY 2006 request for the
cause an additional 90,000 to
PHSSEF bioterrorism activities
300,000+ deaths in the U.S.,
includes $81 million for the Office of
especially if adequate vaccines were
the Secretary. This amount includes
not available quickly. Once a
an increase of $20 million over
pandemic began, time would be
FY 2005 to fund the new Mass
critical in accomplishing necessary
Casualty Initiative discussed above,
research, development, and delivery
as well as:
of vaccines required to mitigate the
pandemic.
The President's Budget includes
$41 million to support the Office for
The Department issued a draft
Public Health and Emergency
Pandemic Influenza Response and
Preparedness' (OPHEP) ongoing
Preparedness Plan in August, 2004.
operations, including the Secretary's
This plan lays out action steps in
Emergency Response Team, and the
several areas. This appropriation is
International Early Warning
focused on expanding the year-round
Departmental Management
112

---

BIOTERRORISM
(dollars in millions)
2006
`
2004
2005
2006 +/-2005
Bioterrorism, Public Health and Social Services Emergency Fund
Centers for Disease Control and Prevention:
Upgrading State and Local Capacity............................................................
$918
$927
$797
-$130
Biosurveillance Initiative...............................................................................
22
79
79
0
Upgrading CDC Capacity/Anthrax Research................................................
169
157
140
-$17
Strategic National Stockpile.........................................................................
398
397
600
$203
Federal Mass Casualty Initiative (non-add)..........................................
00
50
+50
Subtotal, CDC .................................................................................
$1,507
$1,560
$1,616
+$56
Health Resources and Services Administration:
Hospital Preparedness and Infrastructure......................................................
$515
$491
$483
-$8
Emergency Response Demonstration (non-add)....................................
00
25
+25
Education Incentives for Medical Curriculum................................................
28
28
28
0
Subtotal, HRSA.....................................................................................
$543
$519
$511
-$8
Office of the Secretary:
Office of Public Health and Emergency Preparedness...................................
$41
$41
$41
0
CyberSecurity.............................................................................................
10
10
10
0
Medical Reserve Corps...............................................................................
10
10
22
+12
Healthcare Provider Credentialing................................................................
008
+8
Subtotal, Office of the Secretary..........................................................
$61
$61
$81
+$20
National Institutes of Health:
Nuclear/Radiological Countermeasures (NIH)..............................................
$0
$47
$47
-$0
Chemical Countermeasures (NIH)...............................................................
00
50
+50
Subtotal, NIH PHSSEF......................................................................
$0
$47
$97
+$50
Subtotal, PHSSEF Bioterrorism......................................................
$2,111
$2,187
$2,305
+$118
Bioterrorism, Agency Budgets
National Institutes of Health:
Research.....................................................................................................
$1,629
$1,539
$1,664
+$125
Subtotal, Research including PHSSEF funding..................................
1,629
1,586
1,761
+175
Extramural Laboratory Construction.............................................................
0
149
30
-119
Subtotal, Appropriated to NIH Accounts..................................................
$1,629
$1,688
$1,694
+$6
Subtotal, NIH including PHSSEF funding..................................
1,629
1,735
1,791
+56
Food and Drug Administration:
Food Safety................................................................................................
$116
$150
$180
+$30
Vaccines/Drugs/Diagnostics.........................................................................
53
57
57
0
Physical Security..........................................................................................
7770
Subtotal, Appropriated to FDA Accounts.............................................
$176
$214
$244
+$30
Total Bioterrorism Funding............................................................................
$3,916
$4,089
$4,243
$154
Public Health and Social Services Emergency Fund, Non-Bioterrorism
Pandemic Influenza......................................................................................
$50
$99
$120
+$21
Transformation of the Commissioned Corps.................................................
3330
Hurricane Relief Efforts................................................................................
050
0
-50
Subtotal, Non-Bioterrorism.......................................................................
$53
$152
$123
-$29
Total, PHSSEF................................................................................................
$2,164
$2,339
$2,428
+$89
113
Departmental Management

---

OFFICE FOR CIVIL RIGHTS
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Program Level.................................
$34
$35
$35
$0
FTE.................................................
244
268
268
0
The Department of Health and Human Services (HHS), through the Office for Civil Rights (OCR) promotes and
ensures that people have equal access to and opportunity to participate in and receive services in all HHS programs
without facing unlawful discrimination, and that the privacy of their health information is protected while ensuring
access to care. Through prevention and elimination of unlawful discrimination and by protecting the privacy of
individually identifiable health information, OCR helps HHS carry out its overall mission of improving the health and
well-being of all people affected by its many programs.
TheFY2006budgetrequestfor SomekeyprioritiesforOCRin
agency with authority and responsi-
OCR is $35 million, the same as
FY 2005-FY 2006 are: increasing
bility to protect the rights of persons
the FY 2005 level. The budget
access by vulnerable populations to
with disabilities under the Americans
supports the activities of OCR as the
quality health care; promoting non-
with Disabilities Act (ADA). It
primary defender of the public's right
discrimination in adoption and foster
plays a leading role in carrying out
to nondiscriminatory access to and
care and Temporary Assistance for
the President's New Freedom
receipt of Federally funded health
Needy Families (TANF); enhancing
Initiative (NFI) and Executive
and human services - from hospitals
provision of appropriate services in
Order 13217, which commits the
and nursing homes to Head Start and
the most integrated setting for
U.S. to a policy of community
senior centers. In addition, it
individuals with disabilities; and
integration for individuals with
supports the significantly expanded
ensuring understanding of and
disabilities, and calls upon the
compliance responsibilities of OCR
compliance with the Privacy Rule.
Federal Government to enforce the
that protect the rights of individuals
ADA through complaint investiga-
with respect to their health informa-
Through these varied efforts, OCR
tion and alternative dispute
tion as provided in the Privacy Rule,
promotes integrity in the expenditure
resolution and to work with States to
issued pursuant to the Health
of Federal funds by ensuring that
swiftly implement the Olmstead v.
Insurance Portability and
these funds support programs which
L.C. decision.
Accountability Act (HIPAA).
provide access to services by intended
recipients free from discrimination
During FY 2006, the efforts of OCR
OCR assesses compliance with
on the basis of race, national origin,
will continue its NFI leadership role,
nondiscrimination and Privacy Rule
disability, age, and sex. The efforts
improving access to community-
requirements through complaint
of OCR also maintain public trust
based services for people with
resolution, pre-grant and preventative
and confidence that the health care
disabilities through technical
compliance reviews; monitoring
system will maintain the privacy of
assistance to States and Olmstead
corrective action plans; and carrying
protected health information while
complaint resolution.
out public education, voluntary
ensuring access to care.
compliance, training, and technical
TITLE VI (RACE, COLOR, AND
assistance activities. The work of
NEW FREEDOM INITIATIVE AND
NATIONAL ORIGIN) ACCESS
OCR protects individual rights and
OLMSTEAD
INITIATIVES
simultaneously supports HHS goals
for strengthening the health and well-
OCR is involved in a variety of
OCR ensures compliance with the
being of individuals, families, and
efforts to increase the independence
non-discrimination requirements of
communities by improving access to
and quality of life of persons with
Title VI of the Civil Rights Act
HHS programs and activities.
disabilities, including those with
of 1964, requiring recipients of HHS
long-term needs. OCR is the HHS
Federal financial assistance to ensure
Office for Civil Rights
114

---

that their policies and procedures do
treatment, and to assist OMH
Analyze and provide
not exclude or limit, or have the
efforts to address social, cultural,
recommendations with respect to
effect of excluding or limiting, the
and other potential barriers to access.
implementation of the Privacy
participation of beneficiaries on the
Rule to promote its workability;
basis of race, color, or national
HIPAA - HEALTH INFORMATION
and issue additional guidance, as
origin. These efforts, which reach
PRIVACY
needed, to aid in implementation
beneficiaries of all health and human
and to dispel misconceptions.
services programs that HHS funds,
OCR is responsible for implementing
seek to achieve voluntary compliance
and enforcing the HIPAA Privacy
CROSS-CUTTING CIVIL RIGHTS
and corrective efforts when
Rule. Compliance with the HIPAA
ACTIVITIES
violations are found.
Privacy Rule was required for most
covered entities as of April 14, 2003,
The work of OCR often addresses
In FY 2004, OCR and the HHS
when the responsibility for OCR to
more than one of its legal authorities.
Administration for Children and
enforce the Privacy Rule
Certain population groups may face
Families (ACF) entered into an
commenced. The Rule protects the
multiple barriers to services that
agreement with the Ohio Department
privacy of individually identifiable
cross-cut race, national origin,
of Job and Family Services and the
health information maintained or
disability, and age non-discrimination
Hamilton County Job and Family
transmitted by health plans, health
authorities, and that may also raise
Services to resolve civil rights
providers, and clearinghouses. This
issues involving privacy of health
violations identified by OCR and
landmark rule provides individuals,
information.
ACF regarding race discrimination in
for the first time, with Federal
adoption placements. OCR also
protection against the inappropriate
In FY 2006, OCR will continue to
recently collaborated with the
use and disclosure of personal health
build upon its successes in working
Department of Justice (DOJ) and the
information.
with other HHS components and
U.S. Department of Agriculture to
Federal agencies to coordinate its
produce a video and informational
FY 2004 was the first full year
cross-cutting initiatives.
brochure in multiple languages to
during which OCR received and
For example:
advise service providers and
investigated complaints under the
consumers with limited English
Privacy Rule. Because the Privacy
OCR will continue to work with
proficiency (LEP) about their respon-
Rule does not provide a private right
ACF, States, local governments,
sibilities and rights under Title VI.
of action, OCR is the only govern-
and other service providers to
ment entity to which aggrieved
ensure that TANF programs remain
In FY 2006, OCR will continue to
parties can turn for redress, through
free from discriminatory barriers
focus on a broad range of Title VI
civil monetary penalties. (DOJ is
that could prevent minorities and
access issues including non-discrimi-
charged with enforcing Privacy Rule
individuals with disabilities from
nation in adoption, foster care, and
criminal violations). The number of
obtaining the training and jobs that
TANF, as well as access to quality
complaints OCR has received since
can lead to self-sufficiency.
health services. For example:
the April 14, 2003 compliance date
now exceeds 10,000. OCR resolved
OCR will continue to work with
To support the HHS HIV/AIDs
more than 4,400 of these complaints
DOJ to coordinate compliance
initiative, OCR has initiated a
in FY 2004. OCR has also reached
activities involving the Privacy
disparities outreach partnership
tens of thousands of covered entities
Rule, disability rights, and access
with a regional Public Health
and consumers through conferences,
to services by LEP persons.
Service Office of Minority Health
a toll-free call line, and an interactive
(OMH) to plan conferences and
website providing answers to specific
other activities focusing on
questions about the Rule, which has
HIV/AIDs in minority
received more than 2.5 million hits.
communities in all five States in
Region VI. OCR and its Federal
In FY 2006, OCR will continue to:
partners will work with providers
and consumer groups, including
Promote compliance with the
faith-based organizations in those
Privacy Rule by complaint
States, to inform minorities of their
investigation and developing and
rights to non-discriminatory access
providing outreach and guidance to
to prevention education and
covered entities and the public; and
115
Office for Civil Rights

---

OFFICE OF INSPECTOR GENERAL
(dollars in millions)
2006
2004
2005
2006
+/- 2005
Program Level /1..............................
$199
$225
$200
-$25
FTE ................................................
1,500
1,507
1,395
-112
1/ The FY 2006 level assumes $160 million for Medicare and Medicaid related fraud, waste, and abuse
activities, the maximum allowed under the Health Care Fraud and Abuse Control Program and
budget authority of $40 million.
Under the authority of the Inspector General Act, the Office of Inspector General (OIG) improves HHS programs and
operations and protects them against fraud, waste, and abuse. By conducting independent and objective audits,
evaluations, and investigations, OIG provides timely, useful, and reliable information and advice to Department
officials, the Administration, the Congress, and the public.
ForFY2006,theOfficeof
Grant oversight and reviews that
and bioterrorist activity. On
Inspector General (OIG) requests
cover internal controls, accounting
December 13, 2002, HHS issued
a discretionary appropriation of
controls, performance measurements,
the interim final rule for
$40 million, the same as the FY 2005
and program evaluation; and
Possession, Use, and Transfer of
discretionary level. OIG will also
Select Agents and Toxins,
receive between $150 and
Nation-wide involvement with the
42 CFR Part 73. Based upon these
$160 million in FY 2006 from the
10 Project Save Our Children
new regulations, OIG will pursue
Health Care Fraud and Abuse
(PSOC) Task Forces that identify,
violations of regulations
Control (HCFAC) Account for
investigate, and prosecute individuals
concerning possession, use, and
Medicare and Medicaid related
who willfully avoid the payment of
transfer of select agents and toxins
fraud, waste, and abuse activities.
their child support obligations.
through civil monetary penalties.
In addition to this, in FY 2005 OIG
In addition to this, OIG will continue
received $25 million to fight fraud,
Hospital Surge Capacity. OIG will
its HCFAC activities to identify and
waste, and abuse associated with the
review the surge capacity guideline
prosecute health care fraud; prevent
implementation of the Medicare
of the Health Resources and
future fraud, waste, or abuse; protect
Prescription Drug, Improvement, and
Services Administration (HRSA)
HHS program beneficiaries; and
Modernization Act (MMA). The
Hospital Bioterrorism Preparedness
ensure the solvency of the Medicare
FY 2006 budget request proposes to
Program, which calls for States to
Trust Fund; as well as play an active
extend the date that OIG can obligate
accommodate 500 patients per
role in implementation of the MMA.
this $25 million by one year, from
one million population. OIG will
FY 2005 to FY 2006.
conduct onsite evaluations in a
BIOTERRORISM
small number of States to
Over the FY 2005 - FY 2006 period,
determine the extent to which the
OIG will use its discretionary
OIG has an important role in further-
guideline is being met and also
funding to continue its work across
ing the Department's bioterrorism
survey all States to gain a broad
the non-Medicare and non-Medicaid
efforts and ensuring the security of
overview of how this guideline is
areas of HHS, which are public
HHS programs, staff, facilities, and
being met, if States are encountering
health, children and families, aging,
equipment. In FY 2006, OIG has a
barriers, and their interaction with
and department-wide activities. The
variety of activities planned.
HRSA to facilitate preparedness.
funding level of OIG for FY 2006
For example:
allows OIG to continue its efforts in:
Bioterrorism Investigations. Since
GRANTS OVERSIGHT
Bioterrorism oversight,
the events of September 11, 2001,
OIG plans to review Department
investigations, audits, and
OIG has received numerous
grant programs to determine whether
evaluations;
requests for information and
investigations relating to terrorist
they are appropriately monitored and
Office of Inspector General
116

---

managed throughout the grant life
ed and 458 individuals sentenced.
monitor the market prices of
cycle. OIG will assess mechanisms
The total ordered amount of restitu-
Medicare Part B drugs; statutory
in place to ensure that proper
tion related to Federal investigations
requirements relating to safe harbors
procedures are used to award grants,
is over $22.8 million. There have
for electronic transmission of drug
fund them, account for expenditures,
been 352 arrests at the State level and
prescriptions and collaborative
and verify that they are used only for
310 convictions or civil adjudications
efforts of Federally Qualified Health
authorized purposes. The work of
to date, resulting in over $17.3 million
Clinics; effects of Medicare payment
OIG will include review of perform-
in restitution being ordered.
rates on the availability of hematol-
ance measures used to determine the
ogy and oncology drugs; prices of
nature and value of the product of
HEALTH CARE FRAUD AND ABUSE
drugs included in the End-Stage
the grants, as well as the methods
Renal Disease composite rate;
used to evaluate the individual grants
Through the Health Insurance
payment methods for training
and grant programs as a whole. The
Portability and Accountability Act
residents in non-hospital settings;
reviews of OIG will cover internal
(HIPAA), OIG receives mandatory
and notices to beneficiaries relating
controls, accounting controls,
funding for its activities that focus on
to hospital lifetime reserve days.
performance measurements, and
fraud, waste, abuse, and efficiency
Even without specific mandates, OIG
program evaluation.
improvements in the Medicare and
is expected to conduct investigations,
Medicaid programs. The Act
audits, and evaluations and provide
OIG anticipates conducting grant
provides for minimum and maximum
advice and technical assistance on all
oversight activities in FY 2005-
amounts of funding that are decided
aspects of the Medicare program.
FY 2006 that touch almost every
each year by the Secretary of HHS
Examples of planned work include:
Operating Division within HHS and
and the Attorney General. Starting in
include such diverse issues as patient
FY 2003, and each year thereafter,
Graduate Medical Education
safety, the National Electronic
the maximum amount available to
(GME) Voluntary Supervision in
Disease Surveillance System, nursing
OIG for its HCFAC Program is
Nonhospital Settings. The MMA
workforce development, Native
capped at $160 million.
requires that OIG study the
American diabetes prevention /
appropriateness of alternative
treatment, and community health
OIG works with the Centers for
payment methodologies for GME
centers.
Medicare & Medicaid Services
involving the costs of training
(CMS), other HHS agencies, and the
residents in nonhospital settings.
C
Department of Justice to ensure that
HILD SUPPORT ENFORCEMENT
P
funds due to the Medicare Trust
Beneficiary Understanding of Drug
ROGRAM
Fund or CMS are recovered through
Discount Card Program. OIG will
OIG will continue its coverage of all
audits and investigations, and
assess beneficiary understanding of
50 States and the District of
provides recommendations for
the Medicare Prescription Drug
Columbia by its multi-agency task
statutory, regulatory, and program
Discount Card program and
forces (PSOC Task Forces) that
changes that could strengthen
materials CMS provides to
identify, investigate, and prosecute
program integrity.
beneficiaries, as well as determine
individuals who willfully avoid
if beneficiary materials comply
payment of their child support
MEDICARE PRESCRIPTION DRUG,
with MMA requirements and if
obligations under the Child Support
IMPROVEMENT, AND
beneficiaries understand the
Recovery Act. These task forces
MODERNIZATION ACT
program.
bring together State and local law
enforcement and prosecutors, United
In FY 2005 OIG received $25 million
Administrative Costs. Using the
States Attorneys' Offices, the OIG,
to fight fraud, waste, and abuse
Federal Employees Health Benefit
United States Marshals Service
associated with the implementation
guidelines, OIG will examine the
personnel, the Federal Bureau of
of the MMA. The FY 2006 budget
administrative amounts currently
Investigation, State and county child
request proposes to extend the date
claimed by managed care
support personnel, and all other
that OIG can spend this $25 million
organizations (MCOs). Congress
interested parties.
by one year, from FY 2005 to FY 2006.
has expressed interest in how
Under the MMA, OIG is tasked with
MCOs determine funding amounts
As of September 30, 2004, the task
several mandatory requirements, as
to meet administrative costs, which
force units have received over
well as general oversight activities.
must be allocable, allowable,
8,200 cases from the States. As a
reasonable, and limited under the
result of the work of the task forces,
Initially, OIG will focus on audits of
program.
494 Federal arrests have been execut-
drug manufacturers and surveys to
117
Office of Inspector General

---

PROGRAM SUPPORT CENTER
(dollars in millions)
2006
2004
2005
2006
+/-2005
Expenses.........................................
$507
$536
$542
+$6
FTE.................................................
1,119
1,379
1,379
0
The Program Support Center provides customer-focused administrative services and products for the Department of
Health and Human Services.
ThePSCwascreatedtostreamline extensivearrayofpersonnelsystems, andpersonalpropertymanagement,
and minimize duplication of
administration and management,
technical support and communica-
traditional administrative services.
training, and payroll services. These
tions management, and management
The PSC provides services on a
include automated personnel and
of regional contracts for administra-
competitive, fee-for-service basis to
payroll systems support, equal
tive support.
customers throughout HHS, as well
employment opportunity, and
as to 14 other Executive departments
workforce development.
FEDERAL OCCUPATIONAL HEALTH
and 20 independent Federal agencies.
SERVICE
The activities and services of the
FINANCIAL MANAGEMENT SERVICE
PSC are supported through the HHS
The FY 2006 estimated expenses for
Service and Supply Fund, a revolv-
The FY 2006 estimated expenses for
the Federal Occupational Health
ing fund. The Fund does not receive
the Financial Management Service
Service (FOHS) are $175 million, an
appropriated resources, but is funded
(FMS) are $57 million, the same as
increase of $5 million above the
entirely through charging its
the revised FY 2005. FMS supports
revised FY 2005 level. The increase
customers for their use of services
the financial operations through the
of $5 million represents anticipated
and products. Services are provided
provision of grant payment services
increased reimbursements from other
in six broad areas: human resources,
for Departmental and other Federal
Federal agencies. The FOH provides
financial management, administrative
grant and program activities;
occupational health services, includ-
operations, strategic acquisitions
accounting and fiscal services; debt
ing health, wellness, employee
service, Federal occupational health,
and travel management services; and
assistance, work/life, safety, and
and HR centers. The customers of
rate review, negotiation, and
environmental and industrial
the PSC include HHS agencies and
approvals for departmental and other
hygiene-related services to more than
other Federal agencies and organiza-
Federal grant and program activities
174 Federal components across the
tions, such as components of the
to HHS and other Federal agencies.
country.
Departments of Agriculture,
Commerce, Defense, Education,
ADMINISTRATIVE OPERATIONS
STRATEGIC ACQUISITION SERVICE
Energy, Homeland Security, Housing
SERVICE
and Urban Development, Interior,
The FY 2006 estimated expenses for
Justice, Labor, State, Transportation,
The FY 2006 estimated expenses for
the Strategic Acquisition Service
Treasury, Veterans Affairs, and the
the Administrative Operations
(SAS) are $117 million, an increase
U.S. Postal Service.
Service (AOS) are $88 million, the
of $1 million above the revised
same as the revised FY 2005. AOS
FY 2005 level. The increase reflects
provides a wide range of administra-
anticipated increased reimburse-
HUMAN RESOURCES SERVICE
tive and technical services within the
ments. The SAS is responsible for
The FY 2006 estimated expenses for
Department, both in headquarters
providing leadership, policy,
the Human Resources Service (HRS)
and in the regions, and to customers
guidance, and supervision to the
are $61 million, the same as the
throughout the Federal Government.
procurement operations of the PSC
revised FY 2005. HRS provides an
The major areas of service are real
and for improving procurement
Program Support Center
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operations within HHS. The SAS
HUMAN RESOURCES CENTERS
provides strategic sourcing services;
acquisition management; and
The FY 2005 estimated expenses for
provides pharmaceutical, medical,
the Human Resources Center (HRC)
and dental supplies to HHS and other
are $44 million, the same as the
Federal agencies. The SAS will
revised FY 2005. The HR Centers
streamline procurement operations in
represent a consolidation of human
HHS through activities such as the
resources services within the
reduction of duplicate contracts, the
Department, with sites located in
use of consolidated contracts, and
Rockville, Baltimore, and Atlanta.
implementation of new procurement
In cooperation with their customers,
practices designed to provide higher
the Centers have implemented
quality procurement services.
human capital strategies that identify,
recruit, hire, and retain employees
with the skills to accomplish the
mission of HHS.
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Program Support Center

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RETIREMENT PAY & MEDICAL BENEFITS
FOR COMMISSIONED OFFICERS
(dollars in millions)
2006
2004
2005
2006
+/-2005
Retirement Payments............................
$227
$242
$256
+$14
Survivor's Benefits................................
14
14
16
+$2
Medical Care for Retirees and Survivors
53
55
57
+$2
Accrued Medical Benefits for over-65...
27
33
34
+$1
Total, Budget Authority................
$321
$344
$363
$19
Thisappropriationprovidesfor TheFY2006requestof$363million
annuities of retired Public Health
is a net increase of $19 million over
Service (PHS) Commissioned
the FY 2005 level. This amount
Officers; payment to survivors of
reflects increased retirement
deceased retired officers; and
payments of $14 million, increased
medical care to active duty PHS
survivor benefits of $2 million,
commissioned officers, retirees, and
increased medical care benefits costs
dependents of members and accrued
of $2 million, and increased accrual
medical benefit payments for PHS
medical benefit payments for officers
Commissioned Corps officers and
and beneficiaries over age 65 of
beneficiaries over age 65.
$1 million.
Retirement Pay & Medical Benefits for Commissioned Officers
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