Does Congress Need IPAB?
Two House committees meet this week to mark up a bill repealing the Independent Payment Advisory Board, an executive-branch board with control over Medicare prices that even Democrats don't like. A bill from Rep. Phil Roe, R-Tenn., to repeal IPAB has 19 Democratic cosponsors.
The 15-member IPAB garners ire on Capitol Hill because it can cut Medicare payment rates to doctors and hospitals without congressional approval. To override the board, Congress must pass its own equivalent cut with a supermajority.
Congress doesn't have a great track record when it comes to Medicare prices. One easy example: the sustainable growth rate that controls Medicare physician payments. Democrats and Republicans want to get rid of it, but can't agree how to do it. Should the executive branch get to control Medicare pricing? The executive branch controls the money supply through the Federal Reserve - is IPAB really that different?

March 6, 2012 12:42 PM
GOP Misleading About Medicare IPAB
By Ethan Rome
Executive Director, Health Care for America Now
Hyperbolic conservative partisans repeatedly (and deliberately) mislabel the Independent Payment Advisory Board (IPAB) as an “unaccountable rationing board” or “the real death panel.” Only in Washington could an expert panel on the critical issue of affordable health care for seniors and people with disabilities beconsidered a threat to liberty.
Congress needs the IPAB for this simple reason: Without it, Congress isn't likely to propose real solutions to control Medicare costs without hurting seniors, and if they did, they probably would not act on them. The IPAB addresses both of these problems.
The ACA established IPAB as a panel of experts—each one individually confirmed by the Senate—to recommend options for controlling costs when Medicare cost growth exceeds the budgeted target. In other words, when benefit costs rise, Medicare experts will be asked why that happened and what Congress should do about it. But there will be str...
Hyperbolic conservative partisans repeatedly (and deliberately) mislabel the Independent Payment Advisory Board (IPAB) as an “unaccountable rationing board” or “the real death panel.” Only in Washington could an expert panel on the critical issue of affordable health care for seniors and people with disabilities beconsidered a threat to liberty.
Congress needs the IPAB for this simple reason: Without it, Congress isn't likely to propose real solutions to control Medicare costs without hurting seniors, and if they did, they probably would not act on them. The IPAB addresses both of these problems.
The ACA established IPAB as a panel of experts—each one individually confirmed by the Senate—to recommend options for controlling costs when Medicare cost growth exceeds the budgeted target. In other words, when benefit costs rise, Medicare experts will be asked why that happened and what Congress should do about it. But there will be strict limits on the kinds of solutions the panelists can offer. By law, they can’t cut benefits, can’t raise the eligibility age, can’t increase costs for seniors, and can’t recommend health care rationing. Instead, experts must speak to the root causes of cost growth and deliver a plan of action to Congress for its consideration. Congress can accept or reject the proposal. Or in true Washington fashion, it can do nothing and allow the experts’ recommendations to take effect. But Congress will have the power to act if it so chooses. So if, for example, the experts were to make a proposal to cut provider payments to unacceptable levels, Congress could stop the proposal. Despite the hysterical Republican rhetoric, Congress has nothing to fear from the IPAB.
The Sustainable Growth Rate (SGR) saga is a great example of why Congress needs to bring in reinforcements. Congress created a payment formula in 1997 to restrain rising physician costs, but nearly every year after—rightly or wrongly—they have prevented the cost cuts from taking effect. This usually pushes the program’s fiscal deficits to future years and digs the hole deeper. However, Congress has enacted no alternative proposal or formula adjustment to revamp physician payment.
The irony is that the same Republicans who trumpeted the Ryan budget’s unconscionable beneficiary cuts last year are the fiercest voices against the IPAB—a new tool for cutting costs from the system instead of cynically shifting costs to seniors. By dramatically shifting costs to beneficiaries (and eliminating the Medicare guarantee of coverage), the Ryan budget would end Medicare as we know it. For starters, the Ryan budget included a $6,400 out-of-pocket increase for the typical Medicare beneficiary—a price hike that would in fact inflict government-imposed rationing because so many seniors would no longer be able to afford the health care they need.
But let’s be optimistic. Maybe Republicans have listened to their middle-class constituents about the impossibility of Ryan-care. Maybe the Republicans will step forward with a sensible and compassionate budget that keeps seniors’ costs low, maintains Medicare benefits, preserves the current eligibility age, and explicitly prohibits rationing—the same protections they want to erase by repealing the IPAB. One can hope.
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March 5, 2012 4:02 PM
Congress Must Accept Its Responsibility
By Grace-Marie Turner
President, Galen Institute
Medicare must be improved to save the program -- and the country -- from fiscal calamity. But Congress is abdicating its constitutional responsibility by giving a panel of 15 unelected technocrats the power to cut Medicare spending and make decisions which the Constitution vests only in the hands of elected representatives.
The first step to getting on the right track is repeal of the Independent Payment Advisory Board (IPAB). Members of the House Energy and Commerce Committee’s Subcommittee on Health voted last week to approve legislation repealing the IPAB (H.R. 452, the “Medicare Decisions Accountability Act of 2011”). The vote was 17-5 in favor of the measure, with two Democrats joining all the Republicans present in sending the measure to the full committee for consideration.
Opposition to the IPAB crosses party lines. Rep. Frank Pallone (D-NJ), the top Democrat on the Energy and Commerce Health Subcommittee, has said he has no interest in defending the board: “I’ve never supported it, and I would certainly be in favor ...
Medicare must be improved to save the program -- and the country -- from fiscal calamity. But Congress is abdicating its constitutional responsibility by giving a panel of 15 unelected technocrats the power to cut Medicare spending and make decisions which the Constitution vests only in the hands of elected representatives.
The first step to getting on the right track is repeal of the Independent Payment Advisory Board (IPAB). Members of the House Energy and Commerce Committee’s Subcommittee on Health voted last week to approve legislation repealing the IPAB (H.R. 452, the “Medicare Decisions Accountability Act of 2011”). The vote was 17-5 in favor of the measure, with two Democrats joining all the Republicans present in sending the measure to the full committee for consideration.
Opposition to the IPAB crosses party lines. Rep. Frank Pallone (D-NJ), the top Democrat on the Energy and Commerce Health Subcommittee, has said he has no interest in defending the board: “I’ve never supported it, and I would certainly be in favor of abolishing it.” A bill sponsored by Rep. Phil Roe (R-TN) to repeal IPAB has 19 Democratic cosponsors.
Nonetheless, President Obama is doubling down. In his proposed budget, he plans to give the IPAB even greater powers to cut Medicare spending.
In creating the IPAB, the president and Democrats in Congress wanted to take difficult decisions about cutting spending on Medicare out of the legislative process. In so doing, they gave unprecedented authority to unelected experts to make Medicare payment policy involving hundreds of billions of dollars and impacting tens of millions of seniors.
The power is unprecedented because there is to be no judicial, administrative, or realistically, congressional review over its decisions.
The government’s approach to holding down Medicare spending traditionally defaults to making deeper and deeper reductions in payment rates to providers. The IPAB will be true to form. Despite claims from its supporters that the board could encourage innovation, it must meet short-term budget targets, and its primary tool will be cutting payments to providers.
Ironically, with all of its power, the tools available to IPAB members are limited. The board cannot make structural recommendations to improve how Medicare operates. It is barred from making changes that would modernize the program’s outdated fee-for-service structure or change beneficiary incentives.
While the law says the IPAB can try innovative approaches to modernize care, the Congressional Budget Office does not count these programs as achieving any meaningful cost savings. Because the IPAB will be required to make changes that demonstrate actual savings in a one-year time frame, the only tool the board will realistically have will be to cut Medicare payment rates for those providing services and medicines to beneficiaries.
And the IPAB is even limited in the kind of spending it can cut. Between 2013 and 2020, the health law directs the IPAB to achieve its targets through payment reductions primarily in the Part D prescription drug program, Medicare Advantage, and skilled nursing facility services. Since the board is forced to reduce overall Medicare spending by focusing only on these relatively smaller segments of Medicare spending, the cuts would have to be very deep to achieve overall per capita spending reductions. Access to care inevitably will be impacted.
Even before the board’s cuts begin, Medicare is on track to pay doctors and hospitals so little that it will lead to “severe problems with beneficiary access to care,” according to Medicare actuaries.
And President Obama wants give the board authority to cut payments to doctors even more deeply and be able to sequester congressional appropriations if Congress tries to overrule its cuts.
The decisions of this unelected, stand-alone board will be virtually untouchable by Congress or the courts. Unless Congress can muster super-majority votes to come up with its own cuts to reach the same targets, the board’s dictates will carry the force of law. No judicial review of the IPAB’s decisions is allowed — a highly controversial rule that is contrary to the constitution’s system of checks and balances in government.
The IPAB clearly is not the right solution to holding down Medicare cost. Far from being strengthened, IPAB needs to be repealed. It should be replaced with market-oriented reforms that actually address the pernicious incentives now driving Medicare off a fiscal cliff.
Grace-Marie Turner is president of the Galen Institute and a co-author of Why ObamaCare Is Wrong for America (Broadside/HarperCollins, 2011).
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March 5, 2012 2:43 PM
IPAB is no Fed, will fail
By Joseph Antos
Wilson H. Taylor Scholar in Health Care and Retirement Policy, American Enterprise Institute
What Congress gives, it can take away. Particularly if a different Congress is doing the take-away. That’s why the Independent Payment Advisory Board (IPAB) is doomed to failure, assuming that it can get off the ground. Laws can be changed. In the case of the inaptly-named sustainable growth rate (SGR), they are changed several times a year—a testament to the practical realities of price controls and formula-driven decision-making. The IPAB was created by an act of the last Congress and is supposed to meet an arbitrary spending target that is not feasible without structural changes in Medicare and the health care delivery system. The IPAB has one tool—price controls—to hit the same kind of fiscal target that the SGR has. If the board requires politically unacceptable payment cuts, a future Congress will neutralize IPAB just as it has neutralized the SGR. Congress could pass its own version of the IPAB cut if it plays by the Affordable Care Act’s (ACA) rules. Congress could also change IPAB’s charter or even abolish it. But that probably wil...
What Congress gives, it can take away. Particularly if a different Congress is doing the take-away. That’s why the Independent Payment Advisory Board (IPAB) is doomed to failure, assuming that it can get off the ground. Laws can be changed. In the case of the inaptly-named sustainable growth rate (SGR), they are changed several times a year—a testament to the practical realities of price controls and formula-driven decision-making. The IPAB was created by an act of the last Congress and is supposed to meet an arbitrary spending target that is not feasible without structural changes in Medicare and the health care delivery system. The IPAB has one tool—price controls—to hit the same kind of fiscal target that the SGR has. If the board requires politically unacceptable payment cuts, a future Congress will neutralize IPAB just as it has neutralized the SGR. Congress could pass its own version of the IPAB cut if it plays by the Affordable Care Act’s (ACA) rules. Congress could also change IPAB’s charter or even abolish it. But that probably will not be necessary as IPAB is unlikely to become the policy authority that some hope it will be. Senate confirmation of 15 experts to dictate Medicare policy is a near-impossibility. Any group that size is designed to debate issues, not decide them. It took the Federal Reserve two decades before it had the tools (with the Federal Open Market Committee) to directly affect our money supply. The IPAB won’t have that much time.
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