In our January 8th blog about the ACA (Obamacare), I suggested that Medicare would not be significantly affected.  There is one contentious provision, however, of the ACA; namely, the Independent Payment Advisory Board (IPAB) which, if it is ever implemented, could have a dramatic affect.

What is IPAB?

Starting in 2014, IPAB—a statutory board of 15 advisors created by the ACA that is tasked with keeping Medicare costs in check—must submit annual cost-cutting  proposals to Congress whenever the five-year growth in Medicare spending per beneficiary is expected to exceed a growth limit.

Those proposals would be automatically implemented unless Congress enacts legislation to block it, a provision of the ACA created to curb political influence over difficult Medicare decisions.  However, at least theoretically, the proposals cannot include efforts to restrict benefits, ration care, raise premiums or cost-sharing requirements, or change eligibility criteria.

Why isn’t IPAB up and running?

The board is stalled, because many challenges block its implementation.

All 15 members named to the panel must be nominated by President Obama and confirmed by the Senate.  Any Obama nomination to the board is unlikely to obtain the necessary 60 votes to overcome a filibuster.

The board may hold little appeal for qualified candidates.  In addition to the intense Senate scrutiny, ACA requires that IPAB members have certain skills and backgrounds, such as actuarial science experts and health professionals, and prohibits members from maintaining any other employment during their six-year board term.

Members of the board will be paid $165M per year, which may not be adequate to attract the expertise needed on the board.

Moreover, the Obama administration need not rush to find and confirm candidates.  Although the board must begin producing reports in 2014, it is unlikely that it will commence its cost-cutting responsibilities in the near future.  The Congressional Budget Office earlier this year said Medicare would remain below the spending threshold until 2022.

What happens if IPAB is not in place when Medicare hits the spending threshold?

If IPAB fails to produce a spending report when Medicare has hit its spending threshold, the ACA gives IPAB’s responsibility to the secretary of HHS.  Policy experts have interpreted that provision to include scenarios where the spending threshold is reached before IPAB has been put in place.

“That certainly does provide a further inducement for Congress to actually approve, or actually to consider, nominees for the board, because that surely is better than having the secretary do it,” says Center on Budget and Policy Priorities Paul Van de Water.

Critics frequently denounce the IPAB as a “death panel” that will ration care through the board’s directives on payment policies.

Proponents, on the other hand, say the board will most likely increase fees to primary care doctors and decrease fees to specialists.  An effective, functioning IPAB could promote evidence-based medicine which could result in lower costs and better medical outcomes.

At this point, there is no definitive conclusion, only the specter of a provision which may or may not even be implemented and which could have a significant or zero affect on Medicare participants.

(Prepared in consult with Dr. Spence Koerner.)


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