Healthcare Business News

Reform Update: Its funding gutted, IPAB fades into background

By Jessica Zigmond
Posted: January 24, 2014 - 4:30 pm ET

Once a hot-button issue in Washington, the healthcare reform law's Independent Payment Advisory Board has faded to the point that policy experts describe it as a topic for discussion, but nothing more.

News about the 15-member panel, whose members have yet to be named, quietly reappeared last week when Congress agreed to reduce $10 million in funding for IPAB in the 2014 omnibus spending bill. The Patient Protection and Affordable Care Act created the board of presidential appointees to suggest ways to reduce the per-capita growth rate in Medicare spending starting this year if growth per enrollee exceeded targets. The Affordable Care Act provided $15 million in funding for IPAB in 2012 and increased the amount each year to adjust for inflation.

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Both physicians and hospitals oppose IPAB, while lawmakers—including some Democrats—have expressed concern that the panel could usurp control of Congress, and the House of Representatives has voted to repeal it. Meanwhile, the Obama administration has said IPAB is just a backstop measure. HHS Secretary Kathleen Sebelius testified in 2011 that Congress is “in the driver's seat from day one” and pointed out that the panel is prohibited from making recommendations that would ration care, raise beneficiary premiums, increase cost-sharing, reduce benefits or change Medicare eligibility.

But all of the noise surrounding IPAB has since subsided, and news that Congress gutted the program raises questions about the panel's relevance.

“It's sort of an academic discussion,” said Dr. Robert Berenson, a senior fellow at the Urban Institute, a left-of-center think tank. Berenson said IPAB was always intended as a “safety valve” if per-capita cost growth in Medicare surpassed targets, and there has been no need to pull the trigger.

Total Medicare spending per enrollee grew just 0.7% in 2012, even slower than the 2.5% growth rate in 2011, economists in the CMS Office of the Actuary reported this month.

“And yet it's still politically like gunpowder,” Berenson said. “You have a bunch of groups that continually attack it. So I assume the administration doesn't want to have to defend IPAB when it doesn't serve any practical purpose at this point,” he continued. “More importantly, the appointees have to go through hearings to be approved and they didn't even put Don Berwick up,” he said, referring to the Harvard-trained physician who President Barack Obama appointed as CMS administrator during a congressional recess. Berwick departed from his post in late 2011 and never went through the Senate confirmation process.

Stu Guterman, vice president of Medicare and cost control at the Commonwealth Fund, echoed Berenson's comment that there hasn't been a need for IPAB because the growth in spending per person in Medicare has been very low. Earlier this month, economists in the CMS Office of the Actuary reported (PDF) that Medicare spending per enrollee rose by 0.6% in 2012, slower than the 2.5% growth rate in 2011.

In addition to the lack of a pressing need for IPAB, there hasn't been talk of potential appointees.

“I haven't heard anything about nominations being offered or even rumors of people being talked to on the panel,” Guterman said.

If IPAB members are ever appointed and confirmed, Guterman said it will be important that the panel look at policies aimed at slowing not just Medicare cost growth, but overall cost growth in healthcare.

“People have described it as MedPAC on steroids,” Guterman said. “I would kind of describe it as MedPAC on vitamins. MedPAC is a terrific organization, but it was developed to advise Congress and HHS on Medicare policy,” he added. “The IPAB would have its own focus. IPAB would hopefully be able to take a step back and take a broader view.”

White House healthcare adviser leaving

Chris Jennings, a healthcare adviser to President Barack Obama, will leave the White House because of a recent healthcare scare and other family issues, according to a White House aide. A former top Clinton administration healthcare adviser, Jennings said in a statement that he will continue working to ensure that the Affordable Care Act's promise of affordable, quality healthcare becomes a reality for all Americans, which he described as “the cause of my professional life.” The aide said the administration's Domestic Policy Council will still have a strong healthcare team under the direction of Jeanne Lambrew and with the addition last month of Phil Schiliro.

Ways and Means' SGR repeal bill would cost $121B, CBO says

The Congressional Budget Office estimates that the House Ways and Means Committee's version of a bill to permanently repeal Medicare's sustainable growth-rate formula will cost about $121 billion over 10 years. In an eight-page report (PDF), the CBO highlighted the law's key provisions. They include an “alternative payment model” program between 2017 and 2022, which would give physicians incentive pay for bearing financial risk and meeting quality measures, and a value-based incentive program starting in 2017. A short-term fix to the SGR expires on March 31, and members and staff of the House Ways and Means, House Energy and Commerce, and Senate Finance committees are working to hammer out differences on their respective bills to draft a permanent repeal bill. Discussions have been ongoing and the largest task lies ahead: how to pay for it.

Healthcare analysts offer State of the Union advice

Healthcare policy analysts weighed in this week on what President Barack Obama might say next Jan. 28, when he gives the first State of the Union address since the Affordable Care Act's coverage expansions kicked in for millions of Americans on Jan. 1. “I think he would be wise not to say anything about the website,” said Joe Antos, a scholar in health and retirement policy at the American Enterprise Institute, a conservative think tank. It would be better, Antos said, for the president to sound a note of caution and assure Americans that the administration is working to improve the rollout and is getting better. But Henry Aaron, a senior fellow at the left-of-center Brookings Institution, said he expects the president to be apologetic and shoulder the responsibility for the catastrophic rollout last fall. Meanwhile, House Speaker John Boehner (R-Ohio) announced this week that Rep. Cathy McMorris Rodgers (R-Wash.), chairwoman of the House Republican Conference, has been tapped to give the official GOP response. Antos said it would be wise for the GOP to seize the opportunity and highlight what they have planned for healthcare policy, rather than “kill 15 minutes telling us how much they hate the ACA.”

Follow Jessica Zigmond on Twitter: @MHjzigmond

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