Now that the latest annual “doc fix” is in, physicians have been granted another reprieve from potentially crippling cuts to their Medicare reimbursement under the flawed sustainable growth rate (SGR) payment formula.
Beginning this year, there’s a new player in town that will have the authority to achieve what Congress has consistently failed to do—cut Medicare provider spending to keep it below a cap—and it can do so with unprecedented autonomy.
Say hello to the Independent Payment Advisory Board (IPAB), a creature of the Affordable Care Act (ACA) that will propose ways to reduce “overpayment” to Medicare providers if target-spending levels are exceeded.
What distinguishes the IPAB from the Medicare Payment Advisory Commission (MedPAC) is that its proposals will automatically become law, unless Congress enacts its own proposals that reduce Medicare provider spending by at least as much as IPAB’s, or the Senate musters a three-fifths majority vote to override IPAB’s proposals entirely. Further, the IPAB’s changes to Medicare cannot be overruled by the executive branch or a court of law.
MedPAC never wielded such authority; in fact, many of its cost-control recommendations were ignored.
The IPAB is a structural intervention to put pressure on Congress, the Executive, and CMS to guarantee the ACA’s investment in cost-containment.
—Judith Feder, PhD, professor of public policy, Georgetown University, Washington, D.C., former dean, Georgetown Public Policy Institute, fellow, the Urban Institute
The IPAB comes to life this year, with a $15 million appropriation from the ACA, and begins ramping up its operations (see “The IPAB Timetable,” p. 26). The board will be comprised of a 15-member, multi-stakeholder group—expected to include physicians, nurses, medical experts, economists, consumer advocates, and others—appointed by the President and subject to Senate confirmation.
Dubbed by its most vociferous and largely Republican critics as “dangerously powerful,” “the real death panel,” and “bureaucrats deciding whether you get care,” the IPAB even has some Democrats decrying its power grab. Rep. Pete Stark (D-Calif.) called the IPAB “an unprecedented abrogation of Congressional authority to an unelected, unaccountable body of so-called experts.”1
Even Allyson Schwartz (D-Pa.), who helped draft the ACA, has come out against the IPAB, joining a handful of Democrats and more than 200 Republicans in signing on to a bill (H.R. 452) to repeal the ACA’s IPAB provision. The Senate has a similar bill (S. 668).
Although the IPAB legally is barred from formally making recommendations to ration care, increase beneficiary premiums or cost sharing, and from restricting benefits or eligibility criteria, critics worry that its authority to control prices could hurt patients by driving Medicare payments so low that physicians cease to offer certain services to them.
IPAB will have unprecedented power to enforce Medicare’s provider spending benchmarks. Beginning in 2014, if Medicare’s projected spending growth rate per beneficiary rises above an inflation threshold of Gross Domestic Product per capita plus 1%, the IPAB would be triggered and would propose ways to trim provider payments. President Obama has since proposed a lower threshold of GDP per capita plus 0.5%, meaning that the IPAB would be triggered earlier and likely would have deeper cuts to make.
It is unclear how the spending growth benchmark will be affected by the $123 billion in Medicare payment cuts to hospitals and other providers over nine years, which were triggered when the so-called “super committee” failed to reach a budget-cutting consensus last fall.
U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius describes the IPAB as a “backstop to ensure that rising costs don’t accelerate out of control, threatening Medicare’s stability,” and she maintains that the board is a necessary fallback mechanism to enforce Medicare spending within budget while healthcare providers continue to prove the effectiveness of various value-based delivery and reimbursement reform projects the ACA is funding.2