Obama Deficit Reduction Plan Prompts Call for Repeal of IPAB

Healthcare stakeholders are beginning to respond to President Obama's plan to reduce the federal deficit by $4 trillion over the next 12 years.

With healthcare on the hook to deliver $480 billion in savings by 2023 and another $1 trillion in savings by 2033, Medicare and Medicaid are among the most visible programs slated for changes that the administration hopes will reduce the cost of care but not the quality.

Changes would also come to the Independent Payment Advisory Board, a 15-member commission of doctors, nurses, medical experts, and consumers who recommend ways to reduce spending, was mentioned three times in the president's speech. Mr. Obama proposed to strengthen IPAB, provide it with additional enforcement measures, and to give the board additional tools to improve the quality of care such as promoting value-based benefit designs.

IPAB is a sticking point across the board. Physicians groups such as the American Medical Association, the American College of Cardiology, and the American Hospital Association, have long voiced their concerns about the board, which was created by the Affordable Care Act, and has the power to analyze the drivers of Medicare cost growth and then recommend to Congress policies to reduce that growth.

Congress must either vote on IPAB's recommendations or enact policies that achieve equivalent savings.

In a statement released Wednesday in response to the president's speech, AHA president and CEO Rich Umbdenstock made it clear that the organization would prefer to see IPAB repealed rather than given more power. "America's hospitals support the repeal of IPAB because its existence permanently removes Congress from the decision-making process, and threatens the important dialogue between hospitals and their elected officials about the real healthcare needs of their communities. Expanding IPAB adds to that problem.

The White House deficit reduction plan sets a target of Medicare growth per beneficiary as the gross domestic product plus 0.5%.

Ardis D. Hoven, M.D., chair of the AMA said in a statement, "We have strong concerns about the potential for automatic, across-the-board Medicare spending cuts because they are not consistent with meeting the medical needs of patients, which is our primary focus. The AMA urges President Obama and Congress to work with the medical profession on patient-centered reforms.

"Like all Americans, physicians appreciate the urgent need to get the nation's fiscal house in order, and we are willing to do our part.  The AMA is actively engaged in developing and promoting new health care payment and delivery models to promote high-quality, cost-effective care for all patients, including those on Medicare."

AHA's Umbdenstock is concerned by what he terms "formula-driven, arbitrary budget targets could result in across-the-board cuts to healthcare. We will continue to oppose the use of this trigger that could impede patients' access to care and further exacerbate the "cost-shift," which would increase healthcare costs to employers and other purchasers of private coverage."

Obama's plan also clamp down on states' use of provider taxes to lower their own spending while not providing additional health services through Medicaid.Once again AHA's Umbdenstock takes issue. "Curtailing this option will result in less funding and even more pressure to cut Medicaid, jeopardizing services to the poor and the disabled."

Another area targeted isspending cuts is prescriptions drugs.President Obama proposes that Medicare leverage its purchasing power to reduce costs. He would also like to implement management of high prescribers and users of prescription drugs, speed up the availability of generic biologics, and prohibit brand-name companies from entering into "pay for delay" agreements with generic companies.