Fight for independence

With all of the noise out of Washington about ways to reduce Medicare costs, healthcare providers crave a clear message about what their future with the federal program will look like. And when it comes to the Independent Payment Advisory Board, that message isn't coming through.

Created in last year's Patient Protection and Affordable Care Act, the IPAB, as it's known, is intended to be a 15-member panel of presidential appointees responsible for suggesting ways to reduce the per capita growth rate in Medicare spending.

But questions abound regarding who will be appointed to the board and when; if those appointees will be able to make it through the Senate confirmation process; why there is a need for such an agency when the Medicare Payment Advisory Commission already exists to advise Congress on payment matters; whether pending legislation to repeal this provision will succeed, especially after the president has sought to strengthen the board; and what this will mean for hospitals, inpatient rehabilitation facilities, hospice care and other healthcare segments that are exempted from IPAB's purview through Dec. 31, 2019, because they are already scheduled to receive payment reductions as a result of last year's law.

The concept has drawn the ire of federal lawmakers—even from some Democrats who strongly support last year's law—who say the panel of presidential appointees will usurp Congress' power to make decisions about the program. It includes “fast track” procedures that mandate the immediate introduction of legislation in Congress with stringent deadlines for committees and floor consideration. Congress can make changes, but only in ways that achieve the same targeted reductions.

And the law further ties the hands of Congress, which would need to muster super-majorities to change the fiscal targets or block the process, which is triggered when Medicare costs grow too quickly.

According to Obama administration officials, the IPAB is merely a “backstop” measure. But in April, the president called for strengthening the IPAB by giving the panel the authority to hold Medicare spending to the nominal per capita growth in GDP plus 0.5% beginning in 2018, half the rate in the current statute.

Physicians and hospitals strongly oppose the IPAB concept altogether. The American Hospital Association, in a March letter to Sen. John Cornyn (R-Texas), sponsor of the Senate bill to repeal the IPAB provision, wrote that the panel “threatens the important dialogue between hospitals and their elected officials about how hospitals can continue to provide the highest quality care to their patients and communities.” There also is House legislation to repeal it, and two extensive federal hearings examined the issue last week.

“When you listen to vintage radio, it's hard to listen to the signal. It pops and fades and goes,” said Herb Kuhn, president and CEO of the Missouri Hospital Association who served as deputy administrator at the CMS from 2006 to 2009 and is a current MedPAC commissioner. “If you're out in the field trying to deal with taking care of patients, you're looking for a pretty clear signal,” he added. “When you look at IPAB, you're listening to vintage radio.”

Congressional leaders sought some clarity last week when the House Budget Committee and House Energy and Commerce Health Subcommittee hosted hearings that featured a host of expert witnesses on the matter, including HHS Secretary Kathleen Sebelius, former Congressional Budget Office Director Douglas Holtz-Eakin, and four members of Congress, including Cornyn and Rep. Phil Roe (R-Tenn.), a physician who introduced the House bill to repeal the board.

The Congressional Research Service has noted that the IPAB's responsibility is to develop proposals for the HHS secretary to implement that reduce the per capita growth in Medicare expenditures, not to reduce Medicare expenditures. The Congressional Budget Office projects the board's recommendations from 2015 through 2019 will reduce total spending by $15.5 billion in those years, with Medicare expenditures totaling $3.9 trillion and average spending-per-beneficiary increasing nearly 18%, from $13,374 to $15,749, according to a 2010 CRS report.

“While the board's potential impact on total expenditures is likely to be relatively small compared to overall Medicare expenditures, its impact on particular Medicare providers or suppliers may be significant, particularly if the board alters payment mechanisms,” the CRS report's authors wrote. “Finally, the board's impact may be larger if private insurers continue to track Medicare payment policies and adopt similar reductions in payments to their providers and suppliers.”

Starting in 2013, the CMS' chief actuary must project whether per capita Medicare spending will exceed a target growth rate in the next two years, which would trigger the IPAB to recommend ways to achieve savings that make up the difference.

“While the proponents claim that beneficiaries will be held harmless from the board's decisions, how can IPAB impose sharp cuts to providers without any adverse impact on their patients?” House Budget Committee Chairman Paul Ryan, the Wisconsin Republican who is chief architect of a plan to privatize Medicare through a premium-support system, said in his opening remarks at his committee's hearing July 12. “Given their unprecedented new power over Medicare,” he continued, “to whom are these 15 bureaucrats accountable?”

Ryan later expressed concern to Sebelius about investing “all of the power and money decisions into the hands of 15 people who aren't even elected” and the possibility of providers eliminating services if they're not paid adequately. “First of all, IPAB, as you know, in the statute, doesn't come into effect unless Congress has not taken action,” Sebelius responded. “So Congress is in the driver's seat from day one,” she said, emphasizing later that IPAB is prohibited from making recommendations that would ration care, raise beneficiary premiums, increase cost-sharing, reduce benefits or change Medicare eligibility.

In a second hearing the next day, Rep. Frank Pallone Jr. (D-N.J.), ranking member on the House Energy and Commerce's Health Subcommittee, said he supports the Affordable Care Act but opposes the IPAB because it's not the job of an independent agency to interfere in congressional matters. He also said Congress relies on MedPAC for recommendations, but those suggestions are not automatic.

“MedPAC is well-respected and, oftentimes, Congress does consider and implement their recommendations,” said Eric Zimmerman, an attorney with McDermott, Will and Emery in Washington. “But they are just that—merely recommendations,” he said, adding that the IPAB “has authority to put forth recommendations that, unless Congress acts, will become law. So it's vested with enormous authority and additional powers that MedPAC does not have.”

Zimmerman also said it could be difficult to find qualified candidates who could withstand the scrutiny of serving as a presidential appointees on the IPAB because it has become so politicized and also be confirmed by the Senate.

Sebelius said in the Energy and Commerce hearing that it's “absolutely the president's intention that when the provision would begin to operate, there would be appointees.” Those appointed are supposed to represent a range of backgrounds, fields and geographic locations and include physicians, employers, third-party payers, consumers and the elderly. For their time, they will be compensated at Level 2 of the government's executive pay schedule, which was $165,300 for 2010. And the funding for those positions will come from the Medicare trust fund.

“People talk about IPAB likes it's 15 bureaucrats who are in a closed room that issue an edict,” Stuart Guterman, vice president for payment and system reform at the Commonwealth Fund, told Modern Healthcare. Guterman, who previously worked at the CMS, MedPAC and the CBO, also testified last week. “I don't think that process should work that way; I don't think it's intended to work that way; and I don't think we should let it work that way.”

Meanwhile, physicians are opposed to the IPAB, largely because it comes on top of—and is reminiscent of—Medicare's sustainable growth-rate formula for physician pay, which will force a 29.5% cut next year if Congress doesn't act. Practices are telling the Medical Group Management Association they will reduce the number of Medicare patients they see or drop out of the program, said Anders Gilberg, senior vice president for government affairs. “The IPAB is flawed because it's the same macro-level, arbitrary spending target system that almost completely mirrors that of the failed SGR system.”

To date, there are 165 co-sponsors to Roe's legislation to repeal the IPAB provision in the House. Rep. Tim Murphy (R-Pa.), a psychologist who sits on the Energy and Commerce Health Subcommittee, said the government continues to invent new ways to overcome its deficiencies and inefficiencies.

“What is it supposed to do different from MedPAC,” Murphy said of the IPAB, “and how is CMS going to handle this? I go back to this point: It takes an act of Congress between you and your doctor to decide what they're going to do,” he added. “And it shouldn't be that way. That's frightening.”