The Independent Payment Advisory Board (IPAB) is one of the “cost control mechanisms” that can be found within the Affordable Care Act (ACA) and is designed to bring per-capita Medicare spending back in line with statutory benchmarks, if those benchmarks are exceeded. While an IPAB trigger was avoided this year, the IPAB continues to be a reality threatening healthcare stakeholders.
The IPAB is close to the current Medicare Payment Advisory Commission (MedPAC), but there are some stark differences. For one, recommendations made by the IPAB have the force of law unless Congress acts to amend them in ways that also achieve the required savings. Such an automatic implementation has stakeholders on edge: the IPAB is unaccountable to anyone or any entity (including Congress) and could therefore possibly exercise outside authority with significant implications for various industries, including pharmaceutical manufacturers.
Parameters
Interestingly, since the ACA’s enactment in 2010, the current Administration has taken no steps to formalize, or even appoint, the IPAB. The ACA calls for the IPAB to be made up of fifteen members, each appointed by the President for six-year terms, and confirmed by the Senate. The President also selects a Chair, while the Vice Chair is chosen among the members. IPAB members are supposed to be nationally recognized experts in healthcare finance, economics, actuarial science, and health facility management, as well as physicians and other providers from various professional and geographic backgrounds. The Secretary of the Department of Health and Human Services (HHS), the Administrator of the Centers for Medicare and Medicaid Services (CMS), and the Administrator of the Health Resources and Services Administration (HRSA) serve as non-voting members of the board.
Benchmarks
Each year, CMS’ Office of the Actuary is to issue an annual IPAB determination in which it will compare projected five-year average Medicare per-capital spending growth to the statutory benchmark noted in the ACA. The five-year period considers two years prior, the current year, and two subsequent years. Each determination since 2013 has confirmed actual growth to be below the benchmark level.
The Actuary recently stated that the IPAB has not been triggered for the 2016 determination year. From this year onward, the Medicare savings target for IPAB recommendations to meet (if IPAB is targeted) is the lesser of: 1.5% or the percentage of excess Medicare spending.
Process
If – and when – IPAB is triggered, several statutory deadlines come into play. By September 1, the IPAB is to send the draft proposal to two organizations: to MedPAC for consultation and to HHS for comment. By the following January 15, the proposal is to be sent to Congress and the President, along with an explanation, a legislative proposal, and actuarial cost-saving certification. If IPAB was triggered but does not produce its proposal, HHS has until January 25 to send the proposal to Congress. By April 1, Congressional Committees will have considered the proposal and reported on legislative language suggestions. Congress may amend the proposal if the same savings target is met, or may also vote to block the proposal. On August 15, HHS begins automatically implementing the proposal, with FY proposals taking effect on October 1 and CY proposals, Medicare Advantage proposals, and Part D proposals taking effect January 1.
Exemptions
The ACA seems as though it wants the IPAB to address certain areas, while leaving other areas untouched. For example, prior to 2020, hospitals and hospices that are subject to productivity adjustments under the ACA are excluded. Further, IPAB proposals are not to include raising beneficiary premiums, rationing care, changing Medicare eligibility criteria, or increasing cost sharing.
The IPAB is also limited by statute to only make recommendations on the Medicare program and dual-eligible listed beneficiaries. The IPAB should also give priority to recommendations that extend Medicare solvency, improve healthcare delivery, improve access to evidence-based-services in rural areas, and consider the impacts on provider payments.
Potential Proposals
As with any other uncertainty, stakeholders are trying to bring some certainty to the game by speculating on the areas that are most likely to be touched with it comes to IPAB-driven cuts. Some ideas include: giving HHS the authority to negotiate drug prices in Medicare Part D, implementing a Part B formulary, adopting MedPAC’s Part D recommendations on reducing Part D reinsurance and eliminating antidepressant and immunosuppressant drugs’ protected class status, and increasing the coding intensity adjustment received by Medicare Advantage plans.
Potential Timelines
In its June 2016 report, the Medicare Trustees projected that the IPAB will be triggered in the 2017 determination year and again in 2022, 2024, and 2025. A 2017 determination year trigger would result in a 2019 implementation year for proposals, barring congressional intervention.
Conclusion
While the trigger has once again been averted, IPAB determinations are an annual process and according to the Medicare Trustees report, it is likely that the threshold will be exceeded next year. It is likely that next spring, stakeholders will once again focus on the IPAB as the CMS actuarial determination and Trustee report approach.