Medicare cost-cutting board is under fire

August 13, 2011

Even as congressional leaders launch the “supercommittee” charged with making major inroads with the nation’s debt, Republicans and health industry lobbyists are waging a sustained campaign against a panel with notably similar goals and powers that is a centerpiece of the new health-care law.

Known as the Independent Payment Advisory Board, or IPAB, it has been touted by President Obama as an essential tool for curbing Medicare spending over the long term. Comprising 15 health-care experts to be appointed by the president and confirmed by the Senate, the IPAB will have unparalleled authority to make cuts to the health insurance program for the elderly if yearly spending exceeds the law’s targets by as soon as 2015. Congress could overrule the panel, but only if it musters a super-majority in the Senate or comes up with an alternate plan that saves the same amount.

Critics say this cedes too much control to what they describe as unelected, unaccountable bureaucrats. In recent months, lobbyists representing doctors, hospitals and drug companies have been working alongside Republicans to lay the groundwork for a vote to kill the IPAB sometime next year.

This week, a provider group called the Coalition to Protect Patients’ Rights began a $1.4 million nationwide TV ad campaign denouncing the board. The spot likens the IPAB to “a Medicare IRS — with the power to cut payments to doctors and deny seniors care to pay for more Washington spending.”

The attack is the latest in a steady drumbeat that began the moment the health-care law was adopted — when Pharmaceutical Research and Manufacturers of America issued a statement praising the law but urging Congress to amend the IPAB provision.

In January, 74 other groups signed a letter to Congress registering their “strong opposition” to the IPAB. In June, the American Medical Association adopted a resolution calling for its repeal.

Republican House members have been sounding similar themes all year at news conferences and hearings. And in contrast to most other GOP efforts to chip away at the health-care law, this one has a chance of attracting Democratic support.

More than 70 House Democrats opposed the IPAB when the health-care law was being drafted, keeping it out of the House version of the bill. Eleven have signed on as co-sponsors of a Republican-authored bill to eliminate the IPAB. Rep. Frank Pallone Jr. (D-N.J.) said he and other Democrats are holding back only out of concern that their GOP colleagues are using the IPAB to undermine public support for the entire health-care law.

“Republicans have made this so politicized that I’m not going to be a party to it,” Pallone said.

The White House and a majority of the Senate support the board. But opponents of the panel say their strategy is aimed at the long run. And Pallone predicted that “ultimately the IPAB is going to get repealed.”

Supporters of the board counter that the zeal with which so many members are attacking it — including Republicans and Democrats who count health-care providers among their top campaign contributors — is just the latest example of the industry’s warping influence on Congress.

During years of lobbying by providers, Congress has created a web of laws governing Medicare payments so detailed that they leave little discretion to the administration officials charged with running the program.

“Congress has become intimately involved to the point of in some cases [effectively] legislating that a particular hospital will get a particular rate,” said Timothy Jost, a law professor at Washington and Lee University in Lexington, Va., specializing in health-care issues.

In 1997, Congress attempted to counter industry sway by creating an agency to counsel it, the Medicare Payment Advisory Commission, or MedPAC.

But Obama’s deputy chief of staff, Nancy-Ann deParle, who served as a MedPAC commissioner in the late 1990s, said she had watched in dismay as “year after year” Congress ignored the panel’s waste-reducing proposals.

“It’s just an unnatural act for [Congress] to vote to make these kinds of changes to providers,” she said. “It became clear that Congress needed some action-forcing, external, independent body to make recommendations that would go into effect without requiring that everything be subject to a vote of Congress.”

And she noted that the IPAB was intended only as a backstop if Congress fails to act. “If Congress doesn’t like [the IPAB’s plan], they can make another to achieve those savings,” she said.

There are also significant limits on the IPAB’s room to maneuver. By law it cannot ration care, cut benefits, change eligibility rules, or raise revenue by increasing beneficiary premiums or cost-sharing.

That leaves cuts to provider payments as its main tool. And until 2020, it can’t touch hospitals and some other institutions that already agreed to lower payment increases as part of the health-care law — leaving doctors, drug and device companies, and a few other types of providers to bear the brunt of any cuts.

Mary Grealy, president of the Healthcare Leadership Council, which represents a range of industry groups, said the IPAB is likely to favor blunt “across-the-board” cuts because it will be required to meet the spending targets within one year.

Rep. Phil Roe (R-Tenn.), author of the House repeal bill, predicted that if payments to doctors and other providers are cut too drastically, many will stop serving Medicare patients — effectively limiting seniors’ access to care. That makes the law’s prohibition against rationing and limiting benefits just “verbiage,” he said.

Meanwhile, some policy analysts say the trouble with the IPAB is not that it’s too powerful but that it’s too weak because of the limits on where it can reduce spending.

“If you’re going to keep the IPAB, you should give it more options,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget.

Last April, Obama suggested doing just that, in a speech laying out his vision for restoring the nation’s long-term fiscal health.

Yet for all the debate, it’s not clear how prominent the board’s role will be. The Congressional Budget Office recently estimated that, partly due to other cuts to Medicare in the health-care law, spending will be within the law’s targets for the next 10 years — eliminating the need for the IPAB to step in.

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