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If not repealed, it will begin in 2013 and will be mostly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