IPAB to Kick In Early to Ease Impact of Medicare Cuts

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.

Value-based benefit design may enable IPAB to more effectively target cost sharing for those services that are most likely produce positive patient outcomes while reducing payments for services with less effective outcomes, explained Cori Uccello, the senior health fellow for the American Academy of Actuaries.

Timothy Jost, a law school professor at Washington & Lee University, and a self-described "IPAB skeptic" noted that the president's September IPAB proposals are identical to the one's he made in April. Jost, who is also the a consumer representative to the National Association of Insurance Commissioners, said that while many of the president's budget proposals seemed like reasonable ideas, he didn't want to rely on IPAB to do all of the heavy lifting for Medicare. "It's impractical. There's not much it can do from year to year other than cut provider payments." By law IPAB can't increase Medicare premiums or reduce its benefits.

Jost suggested that the Center for Medicare and Medicaid Innovation would be a better place to work on Medicare costs. "It could take a long view, experiment and find out things that actually effect healthcare over the long term."

To say that IPAB is unpopular in some circles is an understatement. Almost all Congressional Republicans and some Democrats would like nothing more than to see IPAB disappear. Objections concerning the board focus on its power, its potential to cut provider payments, and the possibility that patient access to medical care could be limited if fewer providers participate in Medicare.

Earlier this summer more than 270 groups, including the American Association of Neurological Surgeons, the California Medical Association and the U.S. Chamber of Commerce sent a letter to Congress expressing, among other concerns, that IPAB's charge to "achieve scoreable savings in a one-year time period is not conducive to generating savings through long-term delivery system reforms.

Rep. Phil Roe (R-TN) has filed legislation, H.R. 452, to repeal IPAB. He has also written to the Joint Select Committee on Deficit Reduction requesting that it eliminate funding for IPAB as part of its work. 

Following the president's budget announcement, Robert Zirkelbach, press secretary for America's Health Insurance Plans, expressed a common concern by health plans that hospital costs will continue to be exempt from IPAB recommendations until 2019. "Exempting the largest drivers of healthcare spending from any cost savings recommendations ensures that healthcare costs will continue to rise at an unsustainable rate," he said in an e-mail statement.

IPAB Pushback Centers on Power, Politics

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