• How PCORI gets paid

    With a few exceptions, this is a very helpful summary of how the Patient Centered Outcomes Research Institute (PCORI) obtains funding.

    Research for PCORI is funded through surtaxes on Medicare and private health insurance, as well as through general revenues. Under the ACA, PCORI funding is expected to reach $3.5 billion from its start up in 2010 through the end of fiscal year 2019. Twenty percent of funding is transferred to the HHS Secretary to disseminate information and to build research capacity. The remaining 80 percent of funding will be provided to AHRQ for research.

    On December 6, 2012, the Department of Treasury released final regulations on to implement fees on health insurers and health plan sponsors to support PCORI. The regulations apply to plan years beginning on or after October 1, 2012 and continuing through October 1, 2019. The ACA imposes a $1 fee per covered life for plan years beginning after October 1, 2012, and $2 per covered life for plan years beginning after October 1, 2013. For plan years beginning on or after October 1, 2014, the fee is increased based on the projected per capita amount of National Health Expenditures.

    Certain plans are exempt from the fee. They include, among others, accident-only and disability income insurance policies, general liability insurance, automobile liability insurance, workers’ compensation policies, and certain health insurance policies, if offered separately, including dental or vision benefits and long-term care insurance or similar benefits. Disease-specific, hospital indemnity, and Medicare supplemental insurance policies are also exempt from the fee.

    Unless exempt, fees apply to health insurance policies, including a policy under a group plan, issued for individuals residing in the United States. Prepaid health insurance arrangements are also included. Fees also apply to self-insured plans if any portion of the coverage is provided other than through an insurance policy, and the plan is established or maintained by one or more employers for the benefit of their employees or former employees, by a voluntary employees’ beneficiary association, 501(c)(6) business leagues, multiple employer welfare arrangements, rural electric cooperatives or rural telephone cooperative associations. […]

    Exempt Government Programs: Federal programs exempted from the tax include Medicare, Medicaid, the Children’s Health Insurance Program, veterans and active military programs, and Indian health programs. […]

    Health Reimbursement Arrangements (HRAs) and Flexible Spending Arrangements (FSAs): HRAs and FSAs are included as self-insured health plans and are subject to fees. [Bold added.]

    Here’s what I don’t understand:

    1. Is the funding expected to be $3.5 billion over the entire 2010-2019 period. Or is it expected to reach $3.5 billion per year by the end of that period? The language at HealthReformGPS is ambiguous. 
    2. Is Medicare exempt or not? The post says it both ways.
    3. How is the fee indexed to National Health Expenditures?
    4. At the risk of looking stupid, I will confess that I did not appreciate that the vast majority of the fee revenue will flow through AHRQ. I had PCORI and AHRQ separated in my mind. This makes them seem more intertwined. Now, I’m not sure how to think about the relationship between the two.

    I could try to look these things up. But I don’t care to pay the opportunity cost right now. I’m hoping the information will just find its way to me, as it often does. Yes, I will share it with you.


    Comments closed
    • The information in the linked slide deck about dissemination makes it seem as though PCORI is positioned to fill “contextual” gaps in AHRQ and other agency research. Although PCORI makes it clear in multiple places that it’s not a “federal agency”, etc.

    • Since the “tax” is only $1 or $2, it would be difficult to raise $3.5 billion a year so I would read the first part “funding is expected to reach $3.5 billion from its start up in 2010 through the end of fiscal year 2019” as including the entire interval.
      The indexing of the fee seems to adjusted for health care spending. This is covered in Section B (d) page 18 of the document available on the pcori.org web page below.
      It is odd that the first sentence states a tax on Medicare and at the end it states Medicare is exempt. This page ) is more clearly written and states that funding does come from Medicare. If you read the law, it seems that the “Medicare” funding is actually just a grant of $150 million a year from the government.
      Good to see that AHRQ will get lots of funding. They do good work.

    • Of the total PCOR Trust Fund, 80% goes to PCORI and 20% goes to HHS. Of the 20% going to HHS, 80% goes to AHRQ for dissemination (including disseminating findings from PCORI-funded projects) and research workforce training (i.e., PHSA Sec. 937(a)-(e)); and 20% goes to the Office of the Secretary for CER data capacity/infrastructure work. (i.e., PHSA Sec. 937(f)).

      26 USC 9511 (d) (2) describes how the funds are split between PCORI and HHS; 9511 (d) (2) (C) describes the split and purposes for the AHRQ and Office of the Secretary funds.