Meet the iPAB!

Contrary to the title, the IPAB is not a new Apple product. Rather, it is the “Independent Payment Advisory Board” created by the Affordable Care Act to solve the problem of ever-increasing Medicare spending.

In people’s worst nightmares, the IPAB is a death panel that will make decisions about how to ration health care for the elderly and disabled. Images of 15 people sitting in a room handing out death sentences flash through the minds of the anti-government crowd.

Nothing could be further from the truth, as the IPAB has no authority to limit benefits, increase beneficiaries’ out-of-pocket costs, or otherwise alter the Medicare program in any way that would “ration” care.

So what can the IPAB actually do to promote slower spending growth in Medicare?

They can suggest legislation, that’s what. Legislation that, for example, would reduce or alter the way in which payments are made to providers. It’s debatable if the recommendations from IPAB will work to actually control spending. What’s not up for debate is whether action will be taken, and that’s what I’m most pleased about.

I hear often from family and friends about how Congress “never does anything” and how we should “vote the whole sorry bunch out and start from scratch.” It doesn’t seem to matter which party is in power, either. Congressional disapproval knows no party affiliations. And this isn’t just a trend among my social circle. Americans generally disapprove of the job Congress is doing. The IPAB puts an end to that, and here’s how:

Starting in 2013, the chief actuary of the Centers for Medicare and Medicaid Services (CMS) will report both a projected and a target Medicare growth rate for the next five years. If the projected growth rate exceeds the target growth rate, IPAB is tasked with making recommendations to bring things in line. These recommendations are formally submitted to Congress as proposed legislation. In the past, this is where progress ceased to occur, but no longer.

With the ball in Congress’ court, the options are straightforward. Congress may either enact the legislation recommended by IPAB, introduce and enact its own legislation that achieves the same cost savings as the recommendations from IPAB, or fail to act. If Congress fails to act, however, the secretary of the Department of Health and Human Services must implement IPAB’s recommendations, which cannot be overruled by either the executive or the judicial branches. In short, when Medicare spending increases too rapidly, something will be done to address it, even if Congress fails to act.

D. Brad Wright is postdoctoral fellow at Brown University and  holds a PhD in health policy and management from the University of North Carolina.  He has worked as the Assistant Director of Health Policy for the Association of Clinicians for the Underserved. You can follow him at his blog Wright on Health where this post first appeared.

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10 replies »

  1. After watching my husband die under the loving care of CMS… I’d like to ask a question. Do you really want someone in a cubicle deciding anything relating to YOUR health??? Four days before my husband died he was informed by CMS that he had to leave the hospital as he had passed the allowable limit for a hospital stay. He was very upset and stressed , 48 hours later he had a massive stroke and died…. After which I was presented with bills for emergency procedures that CMS deemed non-essential. BECAUSE they were not pre approved.. I rather doubt that my story is unique.
    Doctors have told me that a major chunk of their overhead is caused by malpractice insurance. Their opinion was tort reform would allow them to lower their costs and to be able to pass that on in lower fees. And across the board every doctor I have spoken to in the last 25 years has not be in favor of any one person or group making decisions on an individuals treatment other than the patient (or family).

  2. “The elected representatives are locked in paralysis because the electorate is divided”

    And many billions are spent by some invisible hand to divide the electorate in the tried and true divide et impera strategy.

    “…and the politicians do exactly what they think will get our next vote”

    If that was correct, their approval ratings would skyrocket, which they do not. Perhaps they need to “think” a bit more….

  3. I’m troubled by those who use of the word rationing to mean that anything sort of whatever my doctor thinks has even the slightest chance of helping me no matter how much it costs which someone else will pay for is rationing. Limiting coverage based on cost-effectiveness isn’t rationing in my book. Kidneys are rationed. So are livers and hearts because there aren’t enough organs to go around for everyone who needs one and can benefit from a transplant. As a result, we’ve developed elaborate protocols to determine who even qualifies to be placed on a waiting list and then who gets the organs as they become available.

    I support refusing to pay for services, tests, procedures and drugs that cost more than they’re worth as long as the criteria used to make those determinations are reasonable and transparent. At the same time, I also support allowing anyone to use their own money to access non-covered services and drugs. To avoid confusion, CMS should specifically allow anyone to use their own resources to pay for anything that CMS won’t pay for. At the same time, balance billing for services other than primary care is more problematic because of the large potential patient out-of-pocket liability for services that were thought to be covered by insurance.

  4. Gridlock is not “dysfunction”, it is function. The elected representatives are locked in paralysis because the electorate is divided. I wonder what fantasy America everyone is living in where the Congress, made up of people sent there by the 50 states, is supposed to “work together to get things done”. Get what things done? The things you want done, or the things your political opposite, living next door to you, wants done? Honestly, are we that capable of self-deception? Do the people of South Carolina send their reps to Congress to get the same things done as the people of California?

    We, the people, are fighting with each other through the agency of elections. We have a perfectly representative government, and the politicians do exactly what they think will get our next vote. We are all fighting to increase our own benefits, and decrease our own taxes.

  5. This is not about rationing care. It’s about Democracy.
    If our Democracy doesn’t work well, and Congress is dysfunctional, the remedy is to fix the root problem, not to abandon representative government.
    What if the President stops working as designed? Should we turn to an appointed (by whom?) board to run the country instead?
    Think about all the money we would save on elections…… I’m sure corporate America would love nothing better than to appoint their own “boards” instead of just paying huge amounts on TV commercials and lobbying.
    And by the way, Nate, I am willing to wager that the folks appointed to IPAB will be “representatives” of the industry stakeholders, with a token “consumer” representative.

  6. The problem isn’t that the national insurance company (CMS) decides (or is told) what to cover or not – every insurance company should have the right to lay out the coverages contained in their product and the price and then the purchasers can decide whether or not to purchase or to choose a competitor. The issue here is that the national insurance must be purchased, you have no options except to try and find a physician willing to sign all the paperwork that makes paying cash for non-covered services legal. And if a services is undercovered – i.e. covered but not at the level that makes it financially viable for the service to be offered by a physician, you have no option but to seek that service outside of the US.
    Intelligently implemented balance billing would solve a host of problems – there are countries with national health insurance coverage that allow this option – Australia for example.

  7. This is America, if you don’t like the decision then you can always sue to demand your rights, IPAB must respect the law just like HMOs and Insurers must…..

    …..Secretary of Health and Human Services Kathleen Sebelius told the House Energy and Commerce Committee this morning that if a Medicare beneficiary doesn’t like a decision of the new Independent Payment Advisory Board, they can challenge it in court. Yet the health care law explicitly rules that out:

    (5) LIMITATION ON REVIEW.—There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the implementation by the Secretary under this subsection of the [IPAB] recommendations contained in a proposal.

    or maybe not

  8. “the IPAB has no authority to limit benefits, increase beneficiaries’ out-of-pocket costs, or otherwise alter the Medicare program in any way that would “ration” care.”

    Really, pretty definitive statement, not at all honest either.

    “Under the health care reform bill, if Medicare spending growth is projected to exceed certain targets, the IPAB must come up with plans to slow the increase. If Congress does not act on the recommendation within a set time, it will be automatically implemented. ”

    With Senate rules and Presidential veto Congress not acting is almost a forgone conclusion.

    While you might be able to claim your technically correct its still a dishonest statement.

    “The president appoints 12 of the 15 members, who undergo confirmation by the Senate.”

    Unless the Senate turns it back for 30 seconds then the President will just name what ever radical is next in turn for their handout.

    Down to the meat of your non argument;

    “or otherwise alter the Medicare program in any way that would “ration” care.”

    There are many ways to ration care and PPACA doesn’t even come close to eliminating them.

    “What it can do is reduce how much the government pays health care providers for services,”

    Any of the doctors on here, if Medicare stoped paying you for X service would you continue to provide it to Medicare members? Of course not, care rationed.

    Lets say they deam new cancer drug HJED no less effective then older cheaper treatments and thus wont cover it, once again care rationed. We don;t know how it would play out yet but I bet CMS would be just like NHS and say even if the patient was willing to pay for the cost of that drug their doctor being reimbursed by medicare for other care would not be allowed to adminster it. If you seek treatment outside IPAB’s guidelines nothing will be covered. If that is not rationing what is?

    Biggest problem is this board is to be made up of appointees just like Brad, would you trust anything they do?