Independent Payment Advisory Board

The Independent Payment Advisory Board, or IPAB, is a United States Government agency created in 2010 by sections 3403 and 10320 of the Patient Protection and Affordable Care Act which has the explicit task of reducing the rate of growth in Medicare without affecting coverage or quality. Under previous law, changes to Medicare reimbursement rates required an act of congress to take effect, but the new system devolves responsibility to IPAB with congress being given the power to overrule the agency's decisions.

The Board is required to issue its first proposals in 2014. The Chief Actuary of the Centers for Medicare and Medicaid Services will determine in particular years the projected per capita growth rate for Medicare for the second year thereafter. If the projection exceeds a target growth rate, IPAB must develop a proposal to reduce per capita Medicare spending. The Secretary of Health and Human Services must then implement the proposal unless Congress enacts legislation pursuant to a fast-track procedure that the law sets forth.

The law explicitly prohibits the IPAB from from rationing. It requires the board to maintain or strengthen Medicare services and prohibits cost sharing, the restriction of benefits or changing eligibility criteria as means of reducing costs. IPAB has a budget appropriation of $15 million in 2012 with future funding for the agency based on this figure but adjusted for inflation.

Objectives

IPAB is tasked with developing specific proposals to bring the the net growth in Medicare spending back to target levels if the Medicare Actuary determines that net spending is forecast to exceed target levels, beginning in 2015. The proposals must not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums, increase Medicare beneficiary cost sharing (deductibles, coinsurance, or copayments), or otherwise restrict benefits or modify eligibility criteria. The Department of Health and Human Services must implement these proposals unless Congress adopts equally effective alternatives. The board is also required to submit to Congress annual reports on health care costs, access, quality, and utilization. IPAB must submit to Congress recommendations on how to slow the growth in total private health care expenditures.

Every year on September 1, IPAB must submit a draft proposal to the Secretary of Health and Human Services. On January 15 of the next year IPAB must submit a proposal to Congress. If IPAB fails to meet this deadline, the Department of Health and Human Services (DHHS) must create its own proposal . Congress must consider this proposal under special rules. Congress cannot consider any amendment to the proposal that does not achieve similar cost reductions unless both houses of Congress, including a three-fifths super majority in the Senate, vote to waive this requirement. If Congress fails to adopt a substitute provision by August 15, DHHS must implement the proposal as originally submitted to Congress.

Membership and term of office

IPAB is composed of 15 members appointed by the President, subject to Senate confirmation. The Secretary of HHS, the Administrator of the Center for Medicare and Medicaid Services, and the Administrator of the Health Resources and Services Administration serve ex officio as nonvoting members. In making the appointments, the President consults with the Majority Leader of the Senate concerning the appointment of three members; the Speaker of the House of Representatives concerning the appointment of three members, the Minority Leader of the Senate concerning the appointment of three members, and the Minority Leader of the House of Representatives concerning the appointment of three members.

The first members appointed to the board will be divided into three staggered classes in order to ensure that their terms do not expire simultaneously. Five will be appointed for a term of 1 year, five will be appointed for a term of three years, and five will be appointed for a term of six years. All subsequent appointments will be made for six years. A member may not serve more than two full consecutive terms.

Appointed members of the IPAB will include individuals with national recognition for their expertise in health finance and economics, actuarial science, health facility management, health plans and integrated delivery systems, health facilities reimbursement, and other providers of health services or related fields to provide a mix of professionals, a broad geographic representation, and a balance between urban and rural areas. IPAB members must include (but will not be limited to) physicians and other health professionals, experts in the area of pharmaco-economics or prescription drug benefit programs, employers, third-party payers, individuals skilled in the conduct and interpretation of biomedical, health services, and health economics research, and expertise in outcomes and effectiveness research and technology assessment. Members must also include individuals representing consumers and the elderly. Individuals who are directly involved in providing or managing the delivery of Medicare items and services may not constitute a majority of IPAB’s membership. The president of the United States must establish a system for public disclosure by IPAB members of any financial and other potential conflicts of interest. No IPAB member may be engaged in any other business, vocation or employment. Members will be paid at a rate described in Level III of the Executive Schedule that determines pay for senior executive branch officials. As of 2010 this is $165,300 per year.

Legislative history & CBO scoring

IPAB was created in response to criticism of the Medicare Payment Advisory Commission (MedPAC), a body with no regulatory power that advises Congress. Critics claimed that "hundreds of billions of dollars" in spending cuts were proposed by MedPAC but never acted upon by Congress. On June 25, 2009, Senator Jay Rockefeller introduced the Medicare Payment Advisory Commission Reform Act of 2009, which would have changed MedPAC into an executive branch agency. On July 17, 2009, the Obama administration submitted to Congress a similar proposal called the Independent Medicare Advisory Council Act (IMAC), which would have created an independent five-member executive council to make recommendations to the president.

From June 17 to September 14, 2009, three Democratic and three Republican Senate Finance Committee members met for a series of 31 meetings to discuss the development of a health care reform bill, including an independent board that the senators informally described as "MedPAC on steroids." During this period, Senators Max Baucus (D-Montana), Chuck Grassley (R-Iowa), Kent Conrad (D-North Dakota), Olympia Snowe (R-Maine), Jeff Bingaman (D-New Mexico), and Mike Enzi (R-Wyoming), met for more than 60 hours, and their discussions established the principles upon which healthcare reform legislation was later passed. The Senate Finance Committee included a provision establishing an independent Medicare advisory board in its health reform legislation, which passed the Senate on December 24, 2009.

The Congressional Budget Office (CBO) estimated that IPAB will achieve Medicare spending reductions of $15.5 billion over its first five years of operation. This amounts to 0.5% of projected Medicare spending for that period.

Recommendations may not result in rationing

The law says "The proposal [which the board makes to reduce the rate of growth in Medicare costs in line with budget] shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums under section 1818, 1818A, or 1839, increase Medicare beneficiary cost sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria."

Opinions

The bi-partisan National Commission on Fiscal Responsibility and Reform supported the board and in a 11-to-7 vote the commission recommended strengthening IPAB further. The vote however failed to reach the supermajority of 14 required to refer its proposals to Congress. The majority opinion was that the exemptions in the law that prevents IPAB decisions affecting certain providers for several years should be lifted. The commission's report generated strong concern among consumer and industry groups.

Former Office of Management and Budget Director Peter Orszag has called creation of the IPAB "perhaps most important" among the cost-containing steps taken in the Patient Protection and Affordable Care Act. But IPAB has also been listed among targets that Congressional Republicans might deny funds in an effort to thwart the new health care reform law.

Princeton University health care economist Uwe Reinhardt said in November 2010 that he thought the board was the most potent tool to restrain health care inflation but the "problem is that the Republicans, without killing the authorization for this body, could kill it by just not funding it, and they would get some Democrats to go along with this because a lot of Congressmen don't like some outside body to tie its hands. My own feeling is that this commission that would be powerful is not going to survive."

Dr. David Himmelstein of Physicians for a National Health Program says reductions in healthcare spending can be done without harming patients. Other countries have lower healthcare spening and that also enjoy superior average levels of health. he said "In most [medical] resources we have a surplus," snd that "people get large amounts of care that don't do them any good and might cause them harm [while] others don't get the necessary amount."

Sarah Palin charged that the board would ration care when she said that the bi-partisan National Commission on Fiscal Responsibility and Reform "implicitly endorses the use of "death panel"-like rationing by way of the new Independent Payment Advisory Board—making bureaucrats, not medical professionals, the ultimate arbiters of what types of treatment will (and especially will not) be reimbursed under Medicare." FactCheck.org said her description was wrong on three counts:

• the board doesn’t have the power to ration health care;
• board members won’t be all "bureaucrats" (since the law requires that it include medical professionals, other health care providers, medical researchers, experts in health care finance and actuarial science, employers representatives, and the elderly; and
• board members will not be the "ultimate arbiters," since Congress has the authority to change or block their recommendations, although special legislative procedures make it more difficult than usual for Congress to act.

Opposition

In August 2010, high-ranking Senate Republicans introduced a bill to repeal provisions for the panel, "saying that 'unelected, unaccountable bureaucrats' should not be given such significant power over Medicare."

External links

• David Newman and Christopher M. Davis. The Independent Payment Advisory Board. Washington, D.C.: Congressional Research Service, 2010.
• Holly Stockdale. An Overview of Proposals to Establish an Independent Commission or Board in Medicare. Washington, D.C.: Congressional Research Service, 2010.