IPAB: Death Panel or Spending Tool?

The Independent Payment Advisory Board (IPAB) was created by the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) to accomplish what Congress has been unable to do, slow Medicare spending. But is the IPAB also going to be acting as a death panel, making recommendations regarding what care can or can not be provided?

The function of the IPAB is to keep Medicare spending from increasing at too rapid a rate. If the Chief Actuary for CMS determines that the five-year average of growth in Medicare spending calculated (as the sum of per capita spending under Parts A, B, and D) exceeds the five-year average percentage increase in: (1) the average of the projected percentage increase in the Consumer Price Index for All Urban Consumers and the medical care expenditure category of that Index, where the determination is prior to 2018, and (2) the nominal gross domestic product per capita plus 1.0 percentage point for determination years after 2017, the IPAB will have to recommend cuts in Medicare spending the achieve the a savings target also set by the CMS Actuary.  These cuts become effective unless Congress passes a law repealing the cuts.

The CMS Chief Actuary is supposed to make the initial determination by April 30, 2013 with cuts, if necessary to take affect on August 15, 2014.  This process is set to repeat itself each and every year.

The House Budget Committee on July 12th held hearings to determine if the IPAB would lead to cuts limiting the types of care that Medicare would cover. In his opening statement House Budget Committee Chairman Paul Ryan (R-Wi.) asked “how can IPAB impose sharp cuts to providers without any adverse impact on their patients?”

At that Hearing HHS Secretary Kathleen Sebelius said that PPACA prohibits IBAP from making recommendations that ration care, raise beneficiary premiums or cost-sharing, reduce benefits, or change eligibility for Medicare (see Social Security Act 1899A (a)(c)(2)(A)(ii)). The IPAB cannot eliminate benefits or decide what care Medicare beneficiaries can receive, said Sebelius.

Chief Medicare Actuary Richard S. Foster said in a supplementary report to the annual Medicare Trustees’ report that under current law Medicare is on track to pay providers less than Medicaid does, and this would lead to “severe problems with beneficiary access to care.”  As a result of cuts in current law, Chief Medicare Actuary Richard S. Foster said “Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance, according to the testimony delivered at the House’s Budget Committee hearing of Grace-Marie Turner, President of the Galen Institute.

Douglas Holtz-Eakin, President American Action Forum, testified at the same hearing that  the Medical Group Management Association Sustainable Growth Rate Study in 2010 reported that the last time a major payment reduction loomed, 11.8 percent of physicians stopped accepting new Medicare patients, 29.5 percent reduced the number of appointments for new Medicare patients, 15.5 percent reduced the number of appointments for current Medicare patients, and 1.1 percent of physicians decided to stop treating Medicare patients altogether.

Chairman of the Health Subcommittee of the House’s Energy and Commerce Joe Pitts (R – Pa.) said in his opening statement at hearing that he chaired on this same topic on following day, July 13th, “we need be clear about one thing: this isn’t about death panels. The intent of creating IPAB was not to kill seniors.” While that is not the intent, will the result of IPAB’s actions be that there is less access to care for Medicare beneficiaries?