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Results from Military Health System Review Forthcoming

At the end of May, Defense Secretary Hagel ordered a review of the Defense Department’s Military Health System, targeting access to care and identifying areas for improvement.  The assessment is expected to be completed by the end of August 2014.

Last year, a report from the Government Accountability Office (GAO) on Defense Health Care Reform noted that the cost of DOD’s Military Health System (MHS) has increased to almost $50 billion over the last decade, and that cost is expected to double by 2030. As the GAO report explained, “health care consumes an increasingly large portion of the defense budget, DOD leadership has acknowledged the need to reduce duplication and overhead, operate its health system as efficiently as possible, and realize savings in the MHS through the adoption of common clinical and business processes.”

Secretary Hagel ordered the assessment of MHS in the wake of issues around access to care at Veterans Affairs hospitals. The 90 day review of the Military Health System is being led by Deputy Secretary of Defense Bob Work, with support from the Acting Undersecretary of Defense for Personnel and Readiness Jessica L. Wright and the Assistant Secretary of Defense for Health Affairs Jonathan Woodson, and the direct participation of the secretaries of the Departments and the Service chiefs.

According to a statement from DOD, the “review will focus on the following core areas: access to health care, safety of care, and quality of care.” The MHS assessment will aim to address eight objectives:

 

1.     Assess prior recommendations and findings from relevant internal and external reports, including the last ten years of Government Accountability Office (GAO) and DoD Inspector General (IG) reports. The assessment will include what problems were identified, what actions were taken to remedy the problems, and whether the remedy has been sustained.

2.     Review all relevant Office of Secretary of Defense (OSD), Service and TRICARE policy standards and assess the degree to which the policies have been implemented.

3.     Evaluate data to assess compliance with existing policy or national standards. Determine how the MHS can consistently exceed these standards. Determine if any variance from the standards is due to data inaccuracy or inconsistency.

4.     Review education and training documentation of health care professionals and staff regarding the execution of policies and assess knowledge of existing standards.

5.     Compare MHS performance to at least three civilian health systems, where standards are relevant and comparable.

6.     Assess the experiences and perceptions of MHS patients’ regarding access, quality and safety standards.

7.     Determine the effectiveness of governance in policy and system performance.

8.     Identify current resources for access, safety and quality efforts to the extent possible.

A final report to Defense Secretary Hagel is due by August 29, 2014. This report will include recommendations for specific improvements paying particular attention to meeting nationally defined standards or DOD policy-directed standards. Planned improvements resulting from the review are likely to receive priority funding as the program progresses.

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @FIAGovWin.

Predicted increase in patient portal technology

State and local health departments are increasingly looking for IT solutions that allow beneficiaries to have greater access to their personal health information through patient portals. Since 2010, Deltek has tracked 30 solicitations that mention or require patient portal technology. In 2013 alone, Deltek saw a nearly 50 percent increase in patient portal solicitations, partly due to Stage 2 Meaningful Use requirements, which kicked off this year for many providers.
 
Technology review site Software Advice conducted a recent survey of providers who use electronic health record (EHR) software and found that 35 percent of EHR users are planning to invest more in patient portals in 2014 than they did in 2013. Spending on patient portals is estimated to reach $900 million by 2017, demonstrating the increased role patient portals and other patient engagement technology are expected to play in the coming years. 
 
Patient portals are usually procured for as part of an electronic health record system or health information exchange (HIE). In 2010 and 2011, states like Illinois, Georgia, and Louisiana released solicitations for health information exchanges that either gave vendors the option of providing a patient portal or expressly required a portal in later phases of implementation. In more recent years, states like Arkansas, Florida, and New York are issuing solicitations for patient portals as a stand-alone technology that can be seamlessly integrated into a state’s HIE. As states look to strengthen their EHR systems, we expect to see an increased demand for solutions that include patient portals.
 
GovWin IQ subscribers can read further about these projects in the provided links. Non-subscribers can gain access with a GovWin IQ free trial.

 

 

Where DME Dollars are Going in FY 2015 Defense-Wide IT Funding

In last week’s post, I provided an analysis of “net new” IT funding in the Army’s budget request for fiscal year 2015.  This week’s post shifts the perspective a bit to take a look at IT development, modernization, and enhancement (DME) funding in the Defense Agencies for FY 2015.  Net new funding, defined as DME dollars slated in FY 2015 for programs that received zero total dollars in FY 2014, will not be part of the equation this week for the simple reason that there is none.  Yes, you read that correctly.  The Defense Agencies will have $0 in net new IT funding in FY 2015, making it critical that vendors focus business development efforts on existing Defense-Wide programs receiving DME and/or operations and maintenance dollars.

Top Ten Defense-Wide Programs Receiving DME Funding


DME funding for the top ten Defense-Wide programs in FY 2015 totals $673 million, up $144 million from total DME funding in FY 2014 of $529 million for these same programs.  Looking at the list, it is clear that DoD intends to fund the following priorities:

  • Health IT/Defense Health Modernization
  • Joint Information Environment (JIE)
  • Command and Control
  • Financial Management/ERP

Health IT/Defense Health Modernization

The presence of three major health IT initiatives sticks out prominently.  Funding for the DoD Healthcare Management System Modernization probably reflects the fact that the government anticipates it will make an award for the DHMSM effort at least partway through FY 2015.  Curiously, the Integrated Electronic Health Record Increment 1 effort, now called the Defense Medical Information Exchange (DMIX), anticipates receiving $82 million in DME funding despite the fact that the DoD expects the program will enter sustainment by FY 2015.  The $53 million requested for the second increment of the Theater Medical Information Program (TMIP) will fund a host of installation, integration, and testing efforts.

Joint Information Environment (JIE)

Another program in the top ten list is the Defense Information System Network (DISN), with $104 million in requested FY 2015 DME funding.  As the DoD’s primary transport network, the DISN is central to standing up the Joint Information Environment.  Activities to be funded in FY 2015 include the ongoing refresh of network hardware to enable Internet Protocol-based communications, additional network testing, and a focus on expanding the classified optical transport network and classified unified capabilities in the area of responsibility of U.S. Pacific Command.  Similarly, the activities of the Joint Interoperability Test Command (JITC) are increasingly important for the future success of the JIE.  The JITC is the DoD’s command organization responsible for certifying interoperability across components, making its efforts central to the effective operation of the JIE.  Funding for the JITC will be down in FY 2015, in part because of delays in the evolution of testing and evaluation methodology for the JIE.  Lastly, the DoD CIO Programs line is also focused heavily on developing the policy framework for supporting the JIE, including expanding the use of advanced analytics and cloud computing.

Command and Control

Three areas of investment make up funding for command and control.  The first is C4IAS, for which $40 million has been requested.  Funding for C4IAS reflects an ongoing shift at the DoD toward a greater reliance on Special Operations Forces globally.  The investment provides command and control and information sharing capabilities from the garrison to tactical environments by incorporating local and wide area networks into a unified enterprise network.  Requested funding for the Global Command and Control System – Joint comes in slightly under that for C4IAS at $39 million.  GCCS-J is an older system currently in sustainment.  However, it is also being modernized to enable greater use by the joint force.  Investment in GCCS-J illustrates the increasing importance the DoD is placing on joint operations.  Similarly, funding for the Teleport Generation 3 investment is joint-focused, “replacing obsolete and end of life equipment with new, more capable equipment that supports [greater] throughput requirements” for a network-enabled force.

Financial Management/ERP

The final investment rounding out the top ten is the second increment of the Defense Agencies Initiative.  Funding for the DAI indicates DoD’s ongoing drive to achieve a clean audit by FY 2017.  This is a program driven by Congressional mandate, signifying to vendors the importance of knowing how legislative requirements can translate into Defense spending.  In the current environment knowing these requirements is about as close to a sure thing as anyone can ask for.

 

 

 

FY 2015 President’s Budget Request – A First Take

The White House released its much-anticipated FY 2015 Budget request yesterday, a month past its legal and historical due date. Several of my fellow GovWin Federal Industry Analysis (FIA) colleagues and I dug right into reading the budget so that we could provide you with our first impressions of what we found noteworthy.

Like any presidential budget, the FY 2015 President’s Budget Request provides a blueprint for the administration’s policy and legislative agenda for the coming fiscal year and beyond. We reviewed the largest federal departments’ discretionary and information technology (IT) budgets to get a sense of direction and priorities for FY 2015, which begins October 1, 2014. Below is a summary table followed by key funding details and initiatives arranged by department.

 

Defense

DoD’s budget request is down this year as FY 2015 discretionary funding of $495.6B represents a 0.8% decrease from the FY 2014 enacted budget of $496B.

Funding highlights include:

  • $120.3B for the Army (a decrease of $1.3B from the FY 2014 enacted level)
  • $147.6B for the Navy (an increase of $300M from the FY 2014 enacted level)
  • $137.7B for the Air Force (an increase of $3B from the FY 2014 enacted level)
  • $89.8B for Defense-Wide operations (a decrease of $2.5B from the FY 2014 enacted level)
  • $199B for DoD operations and maintenance funding (an increase of $6B from the FY 2014 enacted level)
  • $90.3B for DoD procurement funding (a decrease of $2B from the FY 2014 enacted level)
  • $63.5B in DoD RDT&E funding (a decrease of $700M from the FY 2014 enacted level)

Provisions of Interest

  • $128M for military infrastructure in Guam, $51M of which is to establish facilities for Marine Air-Ground Task Forces throughout the region
  • $47.4B for the DoD Unified Medical Budget
  • $2.9B for the Defense Advanced Research Projects Agency
  • $11.5B for basic and applied research and advanced technology development

Agriculture

The USDA’s budget request is down this year as FY 2015 discretionary funding of $23B represents a 4% decrease from the FY 2014 enacted level of $24B.

Funding highlights include:

  • $7.2B for the Food and Nutrition Service (an increase of $124M from the FY 2014 enacted level)
  • $4.8B for the Forest Service (a decrease of $700M from the FY 2014 enacted level)
  • $2.4B for Rural Development (a decrease of $400M from the FY 2014 enacted level)
  • $1.8B for the Foreign Agricultural Service (same as the FY 2014 enacted level)
  • $1.5B for the Farm Service Agency (a decrease of $100M from the FY 2014 enacted level)
  • $1.1B for the Agricultural Research Service (same as the FY 2014 enacted level)
  • $1B for the Food Safety and Inspection Service (same as the FY 2014 enacted level)
  • $837M for the Animal and Plant Health Inspection Service (a decrease of $8M from the FY 2014 enacted level)
  • $815M for the Natural Resources Conservation Service (a decrease of $14M from the FY 2014 enacted level)

Provisions of Interest

  • The Opportunity, Growth, and Security Initiative provides funding to build a new biosafety research laboratory in Athens, GA
  • $45.2M for the USDA OCIO
  • $15M for IT investments for the Comprehensive Loan Program (CLP)
  • $44 million to address climate change’s risk to agriculture, including investments in cyber infrastructure for big data

Commerce

The president’s budget request provides $8.8B in base discretionary funding to Commerce, a 6% increase over FY 2014 enacted levels.  It requests $2B in IT funding, an increase of 5.3% over FY 2014 enacted levels. 

Funding highlights include:

  • Provides funding for NIST to accelerate advances in areas such as cybersecurity and advanced manufacturing
  • Supports key trade promotion activities to stimulate economic growth
  • Seeks to promote business investment in the US to create jobs and promote US competitiveness
  • Provides $753M for innovative design methods for achieving the lowest cost possible 2020 decennial census
  • Establishes up to 45 manufacturing innovation institutes across the US
  • Continues strong support of NOAA, including $2B to continue the development of polar-orbiting and geostationary weather satellite systems
  • Provides $1.6B for research and development
  • Funds a new investment line item for modernizing IT and business processes at PTO ($64.4M)

Energy

The DOE’s budget request is up this year as FY 2015 discretionary funding of $27.9B represents a 2.6% increase over the FY 2014 enacted level of $27.2B.

Funding highlights include:

  • $11.7B for the National Nuclear Security Administration (an increase of $M from the 2014 enacted level)
  • $6.0B for Department Management and Performance (a decrease of $200M from the FY 2014 enacted level)
  • $5.1B for Science Programs (an increase of $100M from the FY 2014 enacted level)
  • $4.0B for Energy Programs (an increase of $300M from the FY 2014 enacted level)

Provisions of Interest

  • $180M in R&D to facilitate the transition to a Smart Grid
  • $325M for Advanced Research Projects Agency–Energy programs
  • $141M ($91M in Science and $50M in NNSA) for R&D related to exascale computing
  • More than $300M for DOE cyber security initiatives

Health and Human Services

The president’s budget request provides $77.1B in base discretionary funding to HHS, a 1.7% decrease over FY 2014 enacted levels.  It requests $8.6B in IT funding, a decrease of 10.4% over FY 2014 enacted levels. 

Funding highlights include:

  • Supports the Affordable Care Act and operation of the Health Insurance Marketplace
  • Provides $30.2B to NIH for medical research
  • Improves mental health services for youth and families
  • Invests in payment innovations and other reforms for Medicare and Medicaid and other federal health programs to improve program integrity and delivery of high-quality, efficient health care
  • Invests in a new initiative to improve access to high-quality health care providers
  • Funds construction of two new Indian Health Service health care facilities
  • Increases the investment in CMS IT infrastructure by $58.6M, a 19.4% gain
  • Increases the investment in CMS Healthcare Fraud Prevention Partnership (HFPP) by $17M, a 354% increase
  • Decreases IT funding for the CMS  investment that developed the health insurance marketplace (-$297M) and transfers to states for CMS Medicaid Management Information System (-$618M) 

Homeland Security

DHS is slated to receive $38.2B in base discretionary funding in the president’s budget request, a 2.6% decrease over FY 2014 enacted levels. The budget also includes and $6.8B for disaster relief. The budget requests $5.8B in IT funding which includes a $3M reduction from the FY 2014 enacted levels, a 0.1% decrease year over year.

Funding highlights include:

  • $514M for research and development in homeland security technology and developing state-of-the-art solutions for first responders – target opportunities in cybersecurity, explosives detection, nuclear detection, and chemical and biological detection.
  • $300M to initiate construction in 2015 of the National Bio- and Agro-Defense Facility to study large animal zoonotic diseases and develop countermeasures
  • $124M to support, expand, and enhance E-Verify system to aid U.S. employers with employment legality verification
  • $112.5M for Secure Flight, under which DHS conducts passenger watch list
  • $3.8B for the Transportation Security Administration (TSA) screening operations. Supports risk-based security initiatives at the Transportation Security Administration that enhance the efficiency of passenger screening operations, while improving the customer experience for the traveling public.
  • $1.25B for cybersecurity activities including:
    • $377.7M for Network Security Deployment, including the EINSTEIN3 Accelerated (E3A) program
    • $143.5M for the Continuous Diagnostics and Mitigation (CDM) program
    • $173.5M to support ICE cyber and cyber-enabled investigations of cyber-crime, etc.
    • $28M for the classified Homeland Secure Data Network to security and info sharing
    • $67.5M for Cybersecurity/Information Analysis Research and Development
    • $8.5M to establish a voluntary program and an enhanced cybersecurity services capability to support Executive Order 13636, Improving Critical Infrastructure Cybersecurity
    • $3.9M for Secret Service Cybersecurity Presidential Protection Measures to support monitoring of protective sites which directly or indirectly support a Presidential visit

Justice

The president’s budget request provides $27.4B in discretionary funding for the Justice department, $122M above the 2014 enacted level – for DOJ core law enforcement needs, safe and secure prisons, and other Federal, State, and local programs. DoJ’s IT budget is just slightly better than flat (+0.4%) year-over-year at $27.4B.

Funding highlights include:

  • $722M for cybersecurity efforts to combat increasingly sophisticated and rapidly evolving cyber threats
  • $13M to the FBI for investment in the National Instant Criminal Background Check System as part of the DOJ’s overall $182M budget for Federal, State, and local gun violence reduction efforts
  • $8.4B for Federal prisons and detention facilities, to maintain secure prison facilities and to continue bringing newly completed or acquired prisons online
  • $15M under the Smart on Crime initiative for prisoner reentry programs and for Prevention and Reentry Coordinators
  • $15M to expand the Residential Drug Abuse Program at the Federal level and $14M to expand the Residential Substance Abuse Treatment program at the state level
  • $1.7M to develop new multidisciplinary program evaluation and policy analysis capability to improve budget, management, and policy decisions
  • $299M for the Department’s Juvenile Justice Programs
  • $423M (roughly half of which are grants) to combat violent crimes against women
  • $9M to establish a National Center for Building Community Trust and Justice to promote procedural fairness in policing, use deterrence strategies to reduce crime, and encourage police departments to track the quality of their interactions with the public

Transportation

DOT’s budget request is down this year as FY 2015 discretionary funding of $13.7B represents a 2.14% decrease from the FY 2014 enacted level of $14B.

Funding highlights include:

  • $48.6B for the Federal Highway Administration (an increase of $7.2B from the FY 2014 enacted level)
  • $15.3B for the Federal Aviation Administration (a decrease of $584M from the FY 2014 enacted level)
  • $4.9B for the Federal Railroad Administration (an increase of $3.3B from the FY 2014 enacted level)
  • $17.6B for the Federal Transit Administration (an increase of $6.9B from the FY 2014 enacted level)
  • $851M in mandatory and discretionary funding for the National Highway Traffic Safety Administration (an increase of $32M from the FY 2014 enacted level)
  • $669M for the Federal Motor Carrier Safety Administration (an increase of $97M from the FY 2014 enacted level)
  • $261M for the Pipeline and Hazardous Materials Safety Administration (an increase of $51M from the FY 2014 enacted level)

Provisions of Interest

  • $302B four-year surface transportation reauthorization proposal to support critical infrastructure projects
  • Funding for FAA NextGen investments is preserved
  • $370 million for National Airspace System Sustainment
  • $5M for cyber security initiatives, a decrease of $7M from the FY 2014 enacted level

Treasury

The president’s budget request provides $12.4B in base discretionary funding to Treasury, a 1.5% decrease over FY 2014 enacted levels.  However, provides total resources of $13.8B which is a $1.2B increase partially funded by proposed program integrity caps. It requests $4B in IT funding, an increase of 13.4% over FY 2014 enacted levels. 

Funding highlights include:

  • Continues implementation of the Affordable Care Act
  • Continues implementation of the Wall Street Reform and Consumer Protection Act to create a more stable  and responsible financial system
  • Invests $12.5B in the IRS, which includes a $480M program integrity cap adjustment.  Aimed at improving enforcement of current tax laws and reducing the current tax gap.  Includes more than a $100M increase to improve customer service, and an additional $165M is proposed to further enhance customer service through the Opportunity, Growth, and Security Initiative
  • $1.5B for a new round of State Small Business Credit Initiatives
  • Expands the level of detail and capabilities of sorting federal spending data to enable better use of the data
  • Calls for a $227M increase to the IRS Main Frames and Servers Services and Support investment over FY 2014 levels

Veterans Affairs

The president’s budget request provides $65.3B in base discretionary funding to VA, a 3% increase over FY 2014 enacted levels, giving VA total budget authority of $68.4B which includes $3.1B of estimated medical care collections.  The budget requests $4B in IT funding, an increase of 4.7% over FY 2014 enacted levels.

Funding highlights include:

  • $56B for VA medical care, and $58.7B in advanced funding for FY16 appropriations for medical care
  • Emphasis on ending veterans’ homelessness. ($1.6B) Working with HUD
  • Supports continued improvements in delivery of mental health care and telehealth technologies ($7B)
  • $1B in mandatory funding to help put veterans back to work protecting and rebuilding America
  • An additional $400M for high priority capital projects
  • Invests $138.7M in the Veterans Claims Intake Program and $173.3M for the Veterans Benefit Management System to address the claims backlog

Stay tuned to FIA as we will be publishing our complete analysis of the FY 2015 budget request later this month, where we will go into greater detail on the key initiatives, IT investments and contractor implications that will shape the federal IT marketplace for FY 2015.

Fellow GovWin Federal Industry Analysis (FIA) analysts Angela Petty and Alex Rossino contributed to this entry.

Idaho's FY2013-2014 Budget

Governor “Butch” Otter introduced the 2014 Idaho budget earlier this year, which will see a nearly $300 million increase from FY 2013. Of the $162 million in increased state revenues, nearly half will be transferred to the Budget Stabilization Fund, which will rebid the state’s savings accounts depleted during the recession. Figure 1 below shows total state spending starting in FY 2010.

 

 

Medical Assistance Services saw an increase of $77 million to a total FY 2014 budget of $2 billion. Health and human services spending for the state comprises 39.3 percent of the total state budget, with education spending following at 35.2 percent. The Department of Labor saw a $66 million increase, and Public School Support rounded out the top three with an increase of $57 million. Very few departments saw decreases in spending from FY 2013-2014, with the highest drop of $37 million in the Idaho Transportation Department.

The total IT spending for the state decreased by approximately $9 million in FY 2014, bringing total spending to $72.9 million. Some notable projects in the budget included $1.6 million for a benefit and tax system upgrade in the Department of Labor; $5.2 million for a GenTax upgrade for the Department of Revenue and Taxation; $1.7 million for Phase III interoperable communications for the Idaho State Police; and nearly $21 million for the Electronic Health Record (EHR) Incentive Program.

 

Despite tough times that followed the economic recession, Idaho has rebounded with increased revenues that are being used to restart its savings program for the long haul. Vendors working in the education and health and human services space should check out Deltek’s analysis on Idaho’s budget here, and brush up on the Deltek’s state profile application. For a free trial, please click here.

Deltek Pulse: Health care and social services in review – April 2013

April saw the release of a tenth round of Health Insurance Exchange (HIX) Establishment Grants, awarded to Arkansas ($16.5 million), Hawaii ($128.1 million), Illinois ($115.8 million), New Hampshire ($5.4 million), and Rhode Island ($9.8 million). Details about states’ plans for these funds are explained here. On a related note, the Centers for Medicare and Medicaid Services’ (CMS) also announced the availability of new funding to support navigators in states with federally-facilitated or state-partnership HIX models. Activity also picked up in states that received funding for model design through CMS’ state innovation model (SIM) initiative, including Texas and Iowa.

Notable solicitation releases in April included:

  • The District of Columbia Department of Health Care Finance (DHCF) released an RFP for a Medicaid Information Technology Architecture (MITA) State Self-Assessment (SS-A). Deltek will provide updates about the future procurement of a Medicaid management information system (MMIS) here.
  • The Rhode Island Department of Administration, on behalf of the Department of Human Services (DHS), released an RFP for maintenance and operations of the InRHODES eligibility system.
  • Three states released RFPs for pharmacy benefits management (PBM) services, including the Kentucky Cabinet for Health and Family Services (CHFS), Mississippi Department of Health (DOH), and the Indiana Department of Administration (DOA).
  • New Hampshire’s Department of Health and Human Services (DHHS) released an RFP for SIM planning services.

Notable contract awards in April included:

Big news surfaced in Louisiana with the cancelation of a $29 million contract with Deloitte for the replacement Medicaid Eligibility Determination System (MEDS), originally awarded in April 2011. The state’s Office of Contractual Review cited the original RFP included a preference for a .net solution while Deloitte's contract proposal uses Microsoft Dynamics. The Department of Health and Hospitals (DHH) asked for an additional requirement for the system that was outside the original scopeand warranted a new RFP release. Prior to becoming the secretary of DHH, Bruce Greenstein was managing director of Worldwide Health for Microsoft. Greenstein also hired another Microsoft employee, Zachery Jiwa, to be DHH's chief technology officer, but he left the department in November 2012. DHH now plans to release a new RFP for the replacement MEDS.

Looking to May and the upcoming summer months, we anticipate activity will pick up in states participating in the SIM initiative as CMS approves states’ proposals, of which many have now undergone changes after initial review from CMS. We also anticipate an influx of contract awards for HIX navigator programs, particularly with CMS’ announcement of the availability of federal funding for navigators. States in federally-facilitated or partnership HIX models may also begin to draft legislation and plan for takeovers of additional HIX functions in the future, such as the recently enacted House Bill 1508 in Arkansas.

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The Outlook for Defense Health Programs in FY 2013-FY 2014

Since February 2013 the media has focused considerable attention on the cancellation of the DoD-VA joint effort to develop a new Integrated Electronic Health Record (iEHR). Focusing on iEHR, however, misses the point that out of the $1.3B proposed FY 2014 development budget for the Military Health System (MHS), the iEHR represents a paltry $64M. Approximately $423M will be spent on medical technology development, advanced concepts development, and medical products support, making those the true areas of business opportunity.

In today’s climate of ongoing federal budget cuts, government contractors can be forgiven for feeling unsettled.  The good news is that the fiscal climate has stabilized somewhat, allowing us to peer ahead for potential business opportunities.  One of the areas attracting vendor interest is in military health.  Both the DoD and Department of Veterans Affairs have made the creation of an Integrated Electronic Health Record (iEHR) a priority.  Therefore, iEHR gets the lion’s share of media attention.  The iEHR initiative is only one aspect of Defense Health Programs (DHP), however, so this post will provide a high-level look at the shape of the DHP budget situation and where vendors might want to focus their business development efforts in the months ahead.

Starting with what remains of FY 2013, funding for the DoD’s Military Health System (MHS) in the 2013 Consolidated Appropriations Act (CAA) provided $32.7 billion, a $16 billion drop from the $48.7 billion called for in the President’s FY 2013 Budget Request.  The funding in the 2013 CAA represented a stunning 38% cut in the MHS’ budget, which received $52.8 billion in fiscal 2012.

Despite these cuts, the 2013 CAA also provided up to $16 billion for contracts for the remaining 5½ months of fiscal 2013.  This includes $522 million for TRICARE/MilHealth procurement until the end of September 2015 and $1.3 billion for TRICARE/MilHealth RDT&E until the end of September 2014.  Digging into the RDT&E number we find the following top 10 priorities outlined in the FY 2014 DoD Budget Request.

As we can see from this list, proposed RDT&E funding for iEHR in fiscal 2014 amounts to $64 million.  This is the issue that everyone is so narrowly focused on.  Meanwhile, there are potentially several larger pools of money that very few people are paying attention to.  For example, the proposed budgets for Medical Technology Development and Medical Products Support/Advanced Concept Development equal approximately $423 million.  Then there is the $43 million budget for basic IT Development not related to TMIP-J.

These budget areas are where opportunity at MHS can be found.  For the last few years $2.4 billion worth of MHS/TRICARE IT and concept development requirements have flowed through the Defense Systems Integration, Design, Development, Operation, and Maintenance Support (D/SIDDOMS) III contracts.  These contracts expire in December 2013 and the MHS has already stated that a follow-on contract vehicle will not be put into place.  This means that contracts for IT and concept development requirements like those listed on the TRICARE Acquisition Forecast will be competed in other ways, providing opportunities for large and small businesses alike. The TMA acquisition forecast for FY 2013 shows $225.4 million in planned procurements, equivalent to 43% of the procurement budget provided through FY 2014.  This suggests that ample procurement dollars have been provided to move ahead with a number of the technology acquisitions that are listed in the forecast.

Lastly, readers will notice that in my focus on the procurement of technology requirements I have not mentioned the $72.5 million budgeted for Medical Program-Wide Activities.  Assuming these activities comprise program management, acquisition support, and other professional services, I believe most of those budget dollars will find their way into task and delivery order contracts competed among holders of the Tricare Evaluation Analysis and Management Support (TEAMS) contracts.  A quick look through the TMA Acquisition Forecast for FY 2013 shows that the projected value of requirements which fall under the TEAMS scope of work equals $201 million out of $225 million.  This leaves $24 million in pure IT requirements available for competition in FY 2013.  Keep in mind that these are just the requirements listed on the TMA acquisition forecast.  More IT efforts are likely in the pipeline.