Info about repeal of the Independent Payment Advisory Board (IPAB)

Wednesday, March 21, 2012

What you need to know about the IPAB repeal

What is IPAB?

The Independent Payment Advisory Board (IPAB) is part of the new health care law, and its focus is Medicare. The health care law creates this new, 15-member board with far-reaching powers over the future of Medicare treatments and services in Medicare, and Medicare Advantage and prescription drug coverage are singled out. In a nutshell, IPAB is a cost-control board. H.R. 5, the Protecting Access to Healthcare (PATH) Act, includes provisions to repeal IPAB. The House will begin debate on H.R. 5 today and a vote is scheduled tomorrow.

Why do we need IPAB?

According to the non-partisan Congressional Research Service (CRS), the health care law "created the Independent Payment Advisory Board (IPAB) and charged the board with developing proposals to "reduce the per capita rate of growth in Medicare spending."

Per CRS, "The Secretary of Health and Human Services (the Secretary) is directed to implement the Board's proposals automatically unless Congress affirmatively acts to alter the Board's proposals or to discontinue the automatic implementation of such proposals."

When would IPAB start working?

If not repealed, it will begin in 2013 and will be mostly implemented in 2018.

Who will the members be and how are they chosen?

Board members will be nominated by the President and confirmed by the Senate. No members have been nominated so far.

Will IPAB members be paid?

Yes. According to CRS, "Appointed members of the Board will be compensated at a rate equal to Level III of the Executive Schedule ($165,300 for 2011), and the Chairperson will be compensated at a rate equal to Level II ($179,700 for 2011)."

For comparison purposes: the board chair will be paid more than most members of the U.S. House of Representatives and the U.S. Senate.

Does the IPAB have a staff and budget?

Absolutely, according to the Congressional Research Service (CRS). The staff can be direct hires or federal staff from other agencies. The board's budget for Fiscal Year 2012 is $15 million and annual adjustments will be based on the consumer price index.

Where does the IPAB board budget come from?

It comes from the Medicare trust funds. Per CRS, the $15 million budget "will be funded out of Medicare trust funds-specifically, 60% of the Board's funds will come from the Federal Hospital Insurance Trust Fund and 40% from the Federal Supplementary Medical Insurance Trust Fund."

Can Congress overrule an IPAB recommendation?

Yes, but Congress cannot filibuster or delay recommendations according to language in the health care law.

What happens if Congress doesn't act on IPAB recommendations?

If Congress fails to pass legislation by Aug. 15 each year to achieve the required savings through other policy changes, IPAB's recommendations will automatically take effect.

Can IPAB cut Medicare benefits at whim without limits?

While IPAB can recommend cost savings, there are limits. It can't ration care, raise Medicare beneficiary premiums or drop beneficiaries.

What does CRS have to say about what IPAB can and cannot do?

The Board must come up with a proposal , and the health care law states that IPAB's proposal may:

relate only to the Medicare program;

result in a net reduction in total Medicare program expenditures in the IY (implementation year) that are at least equal to the applicable savings target established by the Chief Actuary;
not include any recommendation to ration care, raise revenues or Medicare beneficiary premiums, increase cost-sharing, restrict benefits, or alter eligibility;
not reduce payments to providers or suppliers scheduled to receive a reduction in payment as the result of productivity adjustments under Section 3401;
include, as appropriate, recommendations to reduce Medicare payments under parts C and D, such as reductions in direct subsidy payments to Medicare Advantage and prescription drug plans that are related to administrative expenses (including profits) for basic coverage, denying high bids or removing high bids for prescription drug coverage from the calculation of the national average monthly bid amount and reductions in payments to Medicare Advantage plans that are related to administrative expenses (including profits) and performance bonuses for Medicare Advantage plans; and
include recommendations with respect to administrative funding for the Secretary to carry out the Board's recommendations.

In addition, if the Chief Actuary has made a determination that the growth in per capita national health expenditures is greater than the Medicare per capita growth rate (a determination to be first made in 2018), then the Board's proposals should be designed to help reduce the growth in national health expenditures while maintaining or enhancing Medicare beneficiary access to quality care.

In order to develop proposals, the Board is empowered to request and receive official data.

What happens to physician rates with IPAB?

According to the House Energy and Commerce Committee, "hospitals, skilled nursing facilities, long-term care hospitals, and other providers are exempt from IPAB cuts through 2019, and laboratory services through 2015. This has led some to be "concerned that physicians will be disproportionately affected by IPAB recommendations."

Can the IPAB Board hold hearings?

Yes. According to CRS it may "hold hearings, including field hearings." It can also "take testimony, and receive evidence as the Board considers advisable. Finally, Board proposals require a majority vote of the appointed members."

Is the constitutionality of IPAB the subject of any court cases?

Yes, according to CRS the constitutionality of the Board is being challenged in Coons v. Geithner, a case filed by the Goldwater Institute in federal district court in Arizona: http://goldwaterinstitute.org/article/coons-v-geithner-federal-health-care-lawsuit.

NOTE: all information from CRS is from a March 12, 2012, report called The Independent Payment Advisory Board. The CRS report number is R41511.

ShareThis