Independent payment advisory board and the center for medicare and medicaid innovation

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Center for American Progress. Download this issue brief pdf. Read this issue brief in your web browser Scribd. The U. The purpose of the board as originally conceived, however, was to protect the Medicare program from special interests. For too long these special interests have wielded their money and used their lobbyists to block or delay commonsense reforms that would strengthen Medicare and put the program on a sustainable path.

This issue brief details several case studies of this undue influence. With the Independent Payment Advisory Board, policy recommendations will be driven by science, data, evidence, the expert advice of physicians, and the input of stakeholders—not by the lobbying clout of special interests.

The final say will still rest with Congress, but doing nothing will no longer be an option. The Independent Payment Advisory Board is essential to reducing health care costs while improving the quality of care. The board will save taxpayers money, limit the growth in Medicare spending, and reduce federal budget deficits and the federal debt.

It will do so by changing the way health care is paid for and delivered—not by rationing care or cutting benefits. If the Independent Payment Advisory Board is repealed or hamstrung, the only alternative would be to ration care by privatizing Medicare, shifting costs to beneficiaries, and restricting eligibility. If growth exceeds a target rate—growth in the economy plus 1 percentage point after —then the board must propose savings that either reduce growth to the target rate or reduce spending by 1.

Congress always has the option to enact different policies that achieve the same level of savings. In many ways this model is similar to the Defense Base Closure and Realignment Commission, which provides recommendations to close military bases that Congress must accept or reject.

Board members must be confirmed by the Senate. The members will be national experts in health care, including physicians and other health professionals, employers, consumers, and seniors. In other words, the Independent Payment Advisory Board will not be a board of government bureaucrats. The board will improve the efficiency of the health care system by reforming the payment and delivery system.

But the Independent Payment Advisory Board will not ration care. The board is specifically prohibited by law from:. By law the board is required to consider the effects of cuts on beneficiaries. In addition, the law established a Consumer Advisory Council to advise the board on the impact of payment policies on consumers. The Independent Payment Advisory Board is essential to containing health care costs over the long term.

That is the judgment of many independent experts—Democrats and Republicans alike. In fact, Rep. In short, the Independent Payment Advisory Board was a major reason why CBO concluded that the Affordable Care Act will continue to reduce deficits over subsequent decades indefinitely. For too long special interests have influenced Medicare policy to serve their own interests—not the interests of beneficiaries and taxpayers. Here are just a few case studies. From to , Medicare conducted a demonstration of competitive bidding for durable medical equipment such as hospital beds and wheelchairs.

Under this program prices are market-based: Medicare holds an auction and lower bids win the contract. Congress phased in an expansion of the program. But only two weeks after the program was first implemented in , Congress terminated the contracts that already existed and delayed the program.

In the first round of the expansion finally went into effect. Not surprisingly, the benefits to seniors and taxpayers were substantial: The average price savings was 35 percent.

Ultimately, the Affordable Care Act will expand competitive bidding nationwide by , but not without substantial delays and setbacks to a program that has been proven to work and to yield substantial savings. Through Medicare Advantage, Medicare beneficiaries have a choice of private insurance plans as an alternative to traditional Medicare. But these private plans do not compete with traditional Medicare on a level playing field—payments to private plans have on average been more than 10 percent higher than payments under traditional Medicare.

Since premiums for physician services are linked to program costs, these payments increase premiums for beneficiaries. But there is no evidence that private plans provide better quality care than traditional Medicare, and the quality of private plans is highly uneven.

Although the IPAB was supposed to begin operations in , the president has yet to nominate anyone to fill the 15 seats. That has not been a problem to date because Medicare spending has risen at rates that are low by historical standards, and thus there has not yet been a finding by the actuaries that spending must be reduced to keep spending growth below the targeted rate.

Thus, nothing yet has occurred which would trigger the IPAB to take action. For one thing, the timeline is too constrained. Those recommendations automatically go into effect on August 15 unless Congress passes, and the president signs, an alternative plan before that date.

Inevitably, the changes needed to reduce Medicare spending below the target will be controversial, making swift congressional consideration difficult, at best. It seems far more likely that the president will prefer the recommendations of the IPAB, a board to which he will likely have appointed at least some of the members. If that is the case, he will veto the congressional alternative and thus force Congress to attempt an override, which requires a two-thirds majority vote in both the House and Senate.

Overrides of presidential vetoes are very rare occurrences. The broad delegation of authority to the IPAB to rewrite much of how Medicare operates is a major encroachment on what should be a congressional function. Congress has the constitutional power to write new legislation for a reason: voters can hold their elected representatives accountable for the kinds of laws they pass. Not so, at least not directly, with the IPAB. Board members are appointed for six-year terms and may be reappointed once.

Removing them from their positions is extremely difficult. In short, once they are on the board, IPAB members will answer to no one for what they recommend and put into effect in the Medicare program. That lack of accountability is reason enough to oppose the entire concept of the IPAB. The restraints placed on what the IPAB can recommend—in effect, no changes in the relationship of the beneficiaries to the program—were not accidental.

The authors of the ACA support restraining Medicare spending, but only with government-imposed payment restrictions, not consumer financial incentives. This means the IPAB can propose blunt payment cuts for physicians and hospitals as well as for the HMOs serving Medicare patients, but it cannot recommend structural changes, like introducing stronger price competition among competing insurance offerings or giving participants in the program more up-front responsibility for the cost of care.

This is the case even though these changes would encourage the beneficiaries to use services more judiciously or to sign up for lower-cost options. Using payment cuts exclusively as a means of controlling Medicare costs is a shortsighted approach. As can be seen in the Medicaid program today, if payments are reduced too much, the network of willing providers of medical services becomes very constrained, and the participants in the program begin to have trouble securing access to the care they need.

The IPAB was created to facilitate cost control through payment rate reductions, but this means it also pushes aside reforms that have the potential to do much more to improve value and efficiency in the Medicare program. In , as part of the Affordable Care Act, Congress put a cap on future Medicare spending growth and created a new, unaccountable board to enforce the growth cap with payment regulations.