Why is the Medical Community Concerned About Medicare’s Independent Payment Advisory Board (IPAB) and MedPAC?

IPAB and MedPAC are Medicare’s cost control systems. We discuss concerns that the medical community has about their potential to limit services and profits.

What is The Independent Payment Advisory Board (IPAB)?

The Independent Payment Advisory Board (IPAB) is, in theory, a fifteen-member bi-partisan Government Agency established in 2010 by sections 3403 and 10320 of the Patient Protection and Affordable Care Act (ACA). Its mandate is to submit recommendations to Congress to slow the growth of health care expenditures by limiting fees paid to doctors and other providers of health care services.  Its power is scheduled to be phased in over time.

IPAB does not yet exist, but can be triggered if Medicare growth exceeds spending targets. If triggered, mandatory spending cuts proposed by IPAB can come into play. Many medical providers and stakeholders maintain that the program will limit access to care and become a “Death Panel.” This is false.

A Supreme Court has already rejected this challenge to IPAB. See Supreme Court Won’t Hear “Death Panel” Challenge.[1] In fact, the myth of the “Death Panel” has served as a propaganda tool against the ACA; it has been directed both at attempts to moderate the high cost of end-of-life care in a person’s final six months and also at efforts to limit corporate profits. See our piece on Separating ObamaCare Facts from the ObamaCare Myths.[2]

The only way to limit the IPAB’s budgetary influence is for Congress to pass legislation each year by a complicated process involving a supermajority. If it fails to pass, the IPAB’s regulations are slated to take effect automatically.[3]

What about the Medicare Payment Advisory Commission (MedPAC)?

Current oversight comes from the Medicare Payment Advisory Commission (MedPAC), which was established in 1997 by the Balanced Budget Act. It advises the Congress on payments in the traditional fee-for-service program and offers its opinion on the quality of care and access to care under Medicare. It is made up by 17 part-time members appointed by the Comptroller General who meet publicly and issue two reports a year.[4]

Who is Concerned?

Stakeholders such as pharmaceutical companies, medical device makers, and hospitals fear that Medicare’s Independent Payment Advisory Board (IPAB) may make payment cuts and drug regulations that affect their profit margins. They object loudly to the Independent Advisory Council ‘s theoretical legislative ability to slow growth in private health care expenditures. However, IPAB cannot make decisions on individual cases under any circumstances; much of the fear is deliberate emotional propaganda.

IPAB’s recommendations could carry the force of law. MedPAC, in contrast, produces only advisory recommendations. Congress could amend IPAB by creating equivalent budget cuts.

Why are People Concerned About IPAB?

The American Medical Association (AMA) would like to see the IPAB repealed since it objects to what they call the “arbitrary…cuts physician’s and other providers.”[5] Other stakeholders such as pharmaceutical companies and medical device makers have generated significant publicity by calling to eliminate the board. To read the AMA’s objection, see Independent Payment Advisory Board[6]

The essence of the argument against IPAB appears to be an assertion by those collecting fees for Medicare services that cutting or limiting those fees would deny care to those who needed it. Some people, Primarily big pharmaceutical companies, medical device makers, and other stakeholders argue that moderating the price of medical care would serve to ration care and institute a “death panel” limiting services.

Please keep in mind that big pharmaceutical companies, medical device makers, hospitals, dialysis chains, and many other medical providers are in business to make a profit. No doubt individuals in these firms also want to help people, but medical providers, like big banks and insurance companies, are in business to earn money. Regulation might protect individual consumers, but it limits the corporation’s yield.

When Would The Independent Payment Advisory Board (IPAB) Act?

IPAB will only be mandated if the projected 5-year average increase in Medicare’s per-capita spending exceeds its targets. So far, the growth of excess Medicare spending that would trigger its formation has not yet occurred. You can read the annual reports on IPAB Determination if you wish.[7]

The legislation establishing IPAB is complicated. The law contains numerous statutory deadlines for action. It also limits jurisdiction. For example, IPAB may not raise beneficiary premiums, ration care, change eligibility, and make cost sharing more expensive. You can find a summary in this article, Independent Payment Advisory Board (IPAB) What is Happening Now.[8]

 

Does the IPAB have any adverse effects?

If triggered, IPAB would set up another government board. It was designed to force budget cuts in a manner that would not limit individual services such as chemotherapy or dialysis but might limit corporate profits. At this point, however, it is a rhetorical question. IPAB exists only as a regulation on paper. Please note that, despite the rhetoric, nobody has been appointed to the IPAB yet and it is not active.

Citations

  1. Supreme Court Won’t Hear “Death Panel” Challenge
  2. Separating ObamaCare Facts from the ObamaCare Myths
  3. 5 Takeaways from the 2016 Medicare Trustee Report
  4. About MedPAC
  5. Independent Payment Advisory Board
  6. Independent Payment Advisory Board
  7. IPAB Determination
  8. Independent Payment Advisory Board (IPAB) What is Happening Now