You might have missed it in the noise about Oregon, but HHS has hit “pause” on the controversial Independent Payment Advisory Board (IPAB, in the jargon). Politics aside, is the IPAB good policy?
Dependent on Medicare spending, the board (15 health care experts who would be appointed by the President) is responsible for submitting proposals to reduce program expenditures. There are limitations to what the board can do: they’re forbidden from rationing health care by restricting benefits, changing eligibility, or increasing cost-sharing. Congress would have a chance to match proposed reductions in a different way—but if they failed to offer a viable alternative, IPAB reductions would go into effect.
But not yet. As Sarah Kliff reports:
This isn’t due to any great success of IPAB opponents. It’s a relatively straightforward provision of the law … The IPAB would only come into effect when Medicare’s per-enrollee spending grew faster than the average of overall price growth (measured by the Consumer Price Index) and medical price growth …
The law also set a deadline: By April 30, 2013, Medicare’s chief actuary would need to determine whether the entitlement program would hit that trigger point. And, a few days ago, acting chief actuary Paul Spitalnic made his determination: Medicare cost growth would not be high enough to call the IPAB into action.
This actually gives us extra time to discuss something worthwhile: is the IPAB an effective tool? I could give you the more common “good” and “evil” arguments, but those are shallow. Whether it’s likely to be effective policy is trickier, and far more important.
Valid concerns have been raised about the Administration’s ability to staff the board, but I consider that tangential to the broader policy question. This alternative debate—whether the IPAB is sound policy—really traces back to the root of most health policy problems: incentives. According to the statute, the board must offer recommendations that “will result in a net reduction in total Medicare program spending in the implementation year that is at least equal to the applicable savings target [for that year]” (emphasis added).
Spot the problem?
The Affordable Care Act imbues the IPAB with considerable power—so long as they’re acting within the context of annual spending targets. In this way, the board functions almost like a second sustainable growth rate, though one that’s insulated from political pressures to which Congress has proven vulnerable, year after year. This creates an incentive for the board to prioritize quick-fix cost adjustments over the kind of systemic reform that holds real promise, but takes longer to generate savings. The IPAB is instructed to recommend such efforts, but their authority to act is exclusively short-term—which I fear may render the board’s proposals short-sighted, to the detriment of the Medicare program.
To be entirely fair, the Center for Medicare and Medicaid Innovation does have serious potential to pick up slack in the domain of long-term, systemic reform (that’s CMMI’s entire purpose, after all). Perhaps that is enough that IPAB could bring providers to the bargaining table. As Nicholas Bagley writes:
About the best that can be said about IPAB is that steadily mounting cuts to Medicare could bring providers to the negotiating table. This has been a consistent pattern in Medicare reform: legislative threats followed by negotiation … IPAB proposals may put pressure on provider groups to accept Medicare reforms that they might otherwise have successfully resisted.
For better or worse, the IPAB is the policy we have, assuming Medicare rates rise in the future (forecast: likely). It may not be game-changing reform—not in the way controversy might lead you to believe—but it’s surely better than nothing, and it remains one of the most powerful cost-containment measures in the Affordable Care Act. Whenever the IPAB is implemented, it’s important to understand what it is, is not (see also: ‘death panel‘), and limitations the board will face, even if it functions perfectly.
Further reading, for the hyperwonks:
- Who wants to be a ‘death panelist’? (Sarah Kliff, Wonkblog)
- Bedside Bureaucrats: Why Medicare Reform Hasn’t Worked (Nicholas Bagley, Georgetown Law Journal) — alternatively, see a write-up here.
- The Independent Medicare Advisory Board (Timothy Jost, Yale Journal of Health Policy, Law, and Ethics)
Adrianna works in clinical research and is a graduate student in public policy & public health at the University of Michigan. Follow her on Twitter @onceuponA.