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IPAB to Kick In Early to Ease Impact of Medicare Cuts

Margaret Dick Tocknell, for HealthLeaders Media, September 21, 2011

The Independent Payment Advisory Board received a presidential vote of confidence on Monday when the Obama administration released its deficit reduction plan. Instead of eliminating the board altogether or trimming back its powers, the plan calls for IPAB to be strengthened.

Its authority will kick-in at a lower threshold – the GDP plus .05% and it will have additional tools at its disposal such as the ability to consider value-based benefit design in making its recommendations.

In his budget proposal, President Obama has included $320 billion in cuts to Medicare and Medicaid. IPAB is considered key to helping achieve those cuts in a way that minimizes the immediate effect on beneficiaries.

A creation of the Affordable Care Act, IPAB is empowered to analyze the drivers of Medicare cost growth and then recommend to Congress policies to control Medicare costs if spending exceeds a targeted growth rate. The 15-member board will be comprised of doctors, nurses, medical experts, and consumers who recommend ways to reduce healthcare spending. Board members will be appointed by the president and must be confirmed by the Senate.

Supporters see IPAB as similar to Medicare Payment Advisory Commission or MedPac but with the power to actually implement what it thinks needs to be done. IPAB recommendations to reduce Medicare costs will be put in place unless Congress votes to block them and comes up with an equivalent cost-cutting measure.

Strengthening IPAB was among the stakeholder proposals reviewed by the American Academy of Actuaries in a recent policy brief. It noted that the board was somewhat restricted in the recommendations it could make and that with more authority IPAB could help move Medicare toward a more sustainable financial model.

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