House Eyes Medicare Fee Setter Insulation

By Allison Bell
MARCH 6, 2012

A new Medicare cost-cutting entity, the Independent Payment Advisory Board (IPAB), is facing strong, bipartisan opposition in the House.

Members of the House Energy and Commerce voted Monday to approve an IPAB killer bill -- H.R. 452, the Medicare Decisions Accountability Act bill -- by a voice vote, without any recorded opposition.

Earlier, Democrats on the committee's health subcommittee could get only 5 of the 11 Democrats on the subcommittee to vote against H.R. 452: 4 Democrats were absent during the subcommittee vote, and 2 crossed party lines to vote against the bill.

The House Ways and Means health subcommittee today brought two witnesses from groups that generally are supportive of the goals of the federal Patient Protection and Affordable Care Act of 2010 (PPACA) to testify in opposition to IPAB.

One of the witnesses testifying against IPAB was Katherine Beh Neas, a senior vice president at Easter Seals, Washington.

"The IPAB is not designed to be an instrument of delivery reform or to improve the quality of care," Neas said, according to a written version of her testimony posted by the Ways and Means committee. "The charge for this board is to reduce the per capita rate of growth in Medicare spending. For people with disabilities and chronic conditions, it is through better coordination and provision of quality care that real changes in health status can be achieved, not in the reduction of spending per person."

IPAB supporters argue that opposition to the board is so strong mainly because few people, including health care providers, want to see their pay cut.

Marilyn Moon, a senior vice president at the American Institutes for Research, Washington, argued that, if IPAB or some other entity fails to take charge of limiting the rates Medicare providers can charge, then the burden for negotiating for lower rates will fall mainly on elderly, sick patients who may have little ability to make bargains, or even to make active, informed decisions about their care.

"There is no strong evidence that markets work to discipline the costs of health care, so we have no reason to be optimistic that they will indeed be able to hold down cost growth over time," Moon said.

Congress included the IPAB provision in PPACA in an effort to create a body that would have the independence and freedom from lobbying to hold down the prices Medicare pays for care.

Because the IPAB provision includes exemptions for hospitals, hospices and other institutional providers, IPAB effectively has the authority only to change the rates Medicare pays to doctors and other individuals who provide care, Neas said.

Although IPAB has the direct ability to affect only the rates that Medicare pays, IPAB could have an indirect on private payers, because private insurers often base their provider reimbursement rates at least partly on Medicare rates.

The PPACA IPAB provisions calls for the rate cut recommendations made by the 15-member board to take effect unless Congress passes legislation that achieves the same amount of savings.

Once the IPAB recommendations take effect, they are supposed to be exempt from either administrative review or judicial review. IPAB does not have to solicit public comments or hold hearings before or after making rate recommendations.

Dr. David Penson, a Nashville, Tenn., urologist who testified on behalf of the American Urological Association (AUA), Linthicum, Md., noted that IPAB members cannot be directly involved in providing or managing the delivery of Medicare services, or engage in any other business, vocation or employment.

"The explicit exclusion of providers who treat the very patients IPAB's recommendations will impact is more than inappropriate," Penson said. "The AUA views this as negligent."

Dr. Scott Gottlieb, a resident fellow at the American Enterprise Institute, Washington, acknowledged that the PPACA IPAB provision prohibits IPAB from limiting access to benefits.

In spite of that provision, IPAB's "activities are going to inevitably affect patients’ access to care," Gottlieb said. "For practical purposes, IPAB has been given the authority to legislate."

In addition, the limits on who can serve on IPAB ensures that most members will be academics, Gottlieb said.

"It’s a flawed premise to believe that we will get a better result by sidestepping an open, vigorous policy debate about how we price and cover services under Medicare," Gottlieb said.