Independent Payment Advisory Board May Be Much Further Off Than Originally Planned

One of the major issues with the Affordable Care Act (ACA) is the repeal of the Independent Payment Advisory Board (IPAB), something a recent article from POLITICO noted is not likely to happen this year. 

However, repeal is not necessary for the next year or two because Medicare spending is actually in check — far from the runaway train the Medicare board’s creators had worried about. Its recent growth rate, 5 percent in 2010, puts it on a trajectory much milder than experts had expected. 

That means the health program for the elderly is likely to meet its first fiscal target without any help from the yet-to-be appointed independent board of experts. The later years, of course, are less predictable and depend on the economy, the impact of the health care reform law and the inclinations of future Congresses.  But in the short term, IPAB’s start date may not matter that much. 

“With the sequester that’s scheduled, and changes through the other budget deals, it could keep Medicare under the targeted growth rate. And that’s something to think about, given some of the limitations and structures on IPAB,” said Jack Hoadley, a health policy analyst at Georgetown University.  Those limitations are abundant. 

The chances that President Barack Obama and the congressional leadership could find 15 highly competent people who want to serve up to six-year terms under very strict ethics rules on a board the Republicans want to dismantle — and who can muster 60 votes needed for confirmation by the cantankerous Senate in an election year — aren’t too hot.  Most people POLITICO contacted said they did not want to be on the board. 

“It’s very unlikely before the election that they would be appointed,” said Harvard University health politics expert Robert Blendon. “Even if there was the funding to pay for them.”  Joseph Antos, a health policy scholar at the American Enterprise Institute, who is no fan of IPAB, put it this way: “There’s a budgetary issue. A membership issue. And a confirmation issue.” 

IPAB’s budget, pared by $10 million in the previous omnibus spending bill, is only one piece of the controversy. It was created by the 2010 health care reform law and charged with keeping per capita Medicare spending in check, based on a formula in the legislation. Recommendations were to be developed in 2013, submitted early in 2014, and take effect in 2015, according to a detailed summary of the provisions by health care law experts at George Washington University. 

The White House, and then-budget chief Peter Orszag, had pushed to make the board part of health care reform. Advocates said Congress just wasn’t good at dealing with Medicare. Some of the spending decisions are technically complicated. For example, how do a bunch of elected officials know what Medicare should pay for a tank of oxygen, let alone some complex new biologic anti-cancer agent?

So the idea was to put some of these decision in the hands of experts — economists, health providers, policy wonks — who have both the technical expertise and the political space to make tough calls.  Congress could disapprove on a fast-track process, but it would have to come up with an alternative way of generating the same amount of savings. The board could not recommend changes that would directly affect beneficiaries, such as higher co-pays or taxes. 

But some in Congress — including some Democrats who generally back the health care reform law — thought IPAB was a bad idea. They see it as a weakening of congressional authority that puts important national health spending decisions in the hands of unelected technocrats. Rep. Frank Pallone (D-N.J.), for instance, said ceding congressional authority to groups like IPAB illustrates the need to reverse “a growing imperialistic presidency.” And he’s an ally of the president on health care. 

Republicans who oppose the health care law take the IPAB argument even further, saying it would damage care quality and move toward rationing.  “Decisions that have significant impact on quality of life — and in the most extreme cases, on life and death — should be made by patients and their doctors. The IPAB would step into the middle of this relationship, and threaten seniors’ access to essential medical care,” Rep. Phil Roe (R-Tenn.), a leader of the repeal movement, has said. 

 “IPAB is an important backstop to help reduce Medicare cost growth if Congress fails to do so. The board’s recommendations will go into effect only if Congress accepts them or if Congress fails to act. IPAB recommendations are required when spending is estimated to exceed the benchmark set in the statute,” said Chris Stenrud, a spokesman for the Department of Health and Human Services. 

Even if IPAB haters get a repeal vote through the House, a similar initiative would most likely die in the Senate.  So for now, the board is basically in limbo. It will exist in the law. But it won’t have any members, and as of now it has no office or staff, according to HHS.  However, time isn’t of the essence, given the unexpected slowdown in Medicare spending. 

Whether that’s a short-term dip, because the economy is forcing people to cut back, or a more permanent reduction in people’s use of medical services is open to debate. But other changes in Medicare finances contained in the health care reform law, plus the 2 percent provider cuts to be “triggered” next year under last summer’s debt ceiling deal, strongly suggest that Medicare spending growth will remain under the IPAB targets at the outset. 

The “trigger” — assuming Congress doesn’t repeal it — is bigger than the cut IPAB is allowed to make at first. And the debt deal includes cuts to hospitals, which are off limits to IPAB the first few years.  Whether the sequester cuts will go into subsequent years is uncertain; the next Congress could undo the work of this Congress. 

Ultimately, the article noted that in the immediate future, IPAB is unlikely to be an action item. That could buy time either for a more Republican Congress to try to scrap the board after the elections or for the political controversy to subside a bit until both parties decide to set up the board — or a modified version of it — to deal with Medicare’s long-term fiscal challenges. 

More importantly, finding people who want to serve could still be a challenge. Six years is longer than most academics can take a leave of absence, and the government salary is lower than some industry-types might want for that length of time. And the conflict-of-interest rules limit the role of doctors, hospital administrators or others who have provided care under Medicare. 

“You can’t jump out of the practice of medicine and serve on this,” Hoadley said. “You will have to have a certain independence and be at a certain stage of life and be willing to go into the political maelstrom. You will be up there making recommendations that lots of people will dislike.”