The Affordable Care Act Will Change Medicare: The Independent Payment Advisory Board

Sydney Abbott, JD
Policy Coordinator, Association of Community Cancer Centers

The Patient Protection and Affordable Care Act (ACA) of 2010 created many important reforms in healthcare. Many of the ACA’s provisions are very popular, such as the ability of parents to keep children on their health insurance plans until age 26 years and the elimination of insurance denials for pre-existing conditions. Other provisions are not as popular.

The Independent Payment Advisory Board (IPAB), slated to begin in 2013, is one of the more controversial provisions. Created by sections 3403 and 10320 of the ACA, the IPAB has the explicit task of achieving specified savings in Medicare without affecting coverage or quality. Under current law, the Medicare Payment Advisory Council (MedPAC) reviews payment policies and makes recommendations to Congress about ways to reduce spending. Congress must then debate and vote on these recommendations for them to become law.

What Is IPAB?
The IPAB is a 15-member panel appointed by the president and confirmed by the Senate, similar to the US Supreme Court appointment process. Unlike Supreme Court Justices, however, IPAB members will serve in 6-year staggered terms. The panel will replace the decision-making power of MedPAC, but MedPAC will remain an advisory body for Congress. Beginning next year, if the chief Medicare actuary determines that the projected 5-year average growth rate spending per Medicare beneficiary is projected to outpace the target growth rate, the IPAB must submit a proposal to Congress to reduce spending on Medi­care by a specified amount.

Through 2017, the target growth rate is the 5-year projected average of the Consumer Price Index (CPI) for all consumers and the CPI for medical care. For 2018 and beyond, the target growth rate is the 5-year projected average percentage increase in the per-capita gross domestic product plus 1%. If spending exceeds these targets, the IPAB must submit a proposal to Congress that reduces spending on Medicare down to the target spending rate per beneficiary. Congress must then accept the proposal without amendments or come up with its own plan that achieves at least the same amount of savings.

Congress has a poor track record of compromise and agreement, and it is likely that identification of more than $3 billion in savings (the expected savings necessary to achieve targets for Medicare in 2015) will be no different. If the IPAB does not submit a proposal, and if Congress is unable to develop a plan, the Secretary of the US Department of Health and Human Services (HHS) must act unilaterally to achieve the target spending rates in Medicare. Ultimately, it will be the job of the HHS Secretary to implement the final savings plan.

The IPAB significantly changes the current Medicare policy development structure. Once appointed, the Board will be essentially “un­checked,” because there is no oversight by Congress or voters. This means that an unpopular proposal by the IPAB will have no recourse at the polls. In addition, it is still unknown who will serve on the Board and how, and how well community oncology will be represented.

Authority of the IPAB
Achieving $3 billion in savings starting in 2015 could mean significant changes for providers and for beneficiaries. The following 2 questions are just examples of the many questions about IPAB’s ability to change healthcare:

  1. What exactly can the IPAB do? The IPAB’s power is limited to Medicare. Medicaid and other programs are exempt.
  2. What kind of changes can the IPAB make to Medicare? The IPAB’s authority is limited to changes in reimbursement only. It is the intent of the ACA that patients not be impacted by the Medicare savings that must be achieved.

    Therefore, the IPAB may consider reimbursement rates, payment models, and other mechanisms for achieving these goals; however, patient benefits, such as Medicare rosters and beneficiary composition, cannot be altered. Although the aim of the ACA is to achieve savings without impacting access, those in the provider community understand that you cannot dramatically reduce reimbursement without impacting access to care on some level. Continued squeezing of reimbursement rates—particularly in light of the broken sustainable growth rate formula and sequestration—will only make it increasingly difficult for providers to continue to give the most fitting care at the most appropriate time to all of their patients with Medicare.

The Future of the IPAB
Because of the concern that the IPAB will not report directly to the voting public, many in Congress want to repeal the IPAB. In fact, a number of efforts have already been made. To date, however, there has not been sufficient agreement between both chambers to pass the measure; however, that does not mean legislation will not pass in the future.

As elements of the IPAB become more visible, we may see a resurgence of repeal efforts in the House or in the Senate. It is increasingly important for the oncology community to work together to educate our elected officials and our regulatory bodies on the issues that impact community cancer care. The Association of Community Cancer Centers (ACCC) continues to stay on the forefront of this issue and on other issues to educate members of Congress about community oncology. As always, the ACCC will keep its members up to date on the most current topics in cancer care.

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