Medicare advisory board causing anxiety

May 1, 2010

The new Medicare Advisory Board will have broad responsibility to make recommendations to reduce spending in the Medicare program.

NATIONAL REPORTS-The Independent Medicare Advisory Board, a 15-member board established as a result of the Patient Protection Act, will launch in 2014 among mixed reviews.

The new board, composed of a variety of healthcare stakeholders, will have broad responsibility to make recommendations to reduce spending in the Medicare program if it exceeds the projected budgets for 2015, 2016, 2017 and 2018. The board's proposals will automatically be implemented by the secretary of Health and Human Services unless Congress blocks the measures.

"On the positive side, the new board will develop a procedure to reduce Medicare spending," says Jay Nawrocki, senior Medicare analyst, CCH, part of Wolters Kluwer, a research and software company. "On the other hand, the responsibilities of the board open the door for lobbying by organizations if proposals are too severe, such as a reduction in the physician fee schedule. Recommendations could trigger reform-type legislation annually."

The primary cost drivers are hospitals and physicians, says Robert Zirkelbach, press secretary, America's Health Insurance Plans (AHIP).

"The new board is exempted from 'recommending proposals that would impact, prior to Dec. 31, 2019, providers of services and suppliers under certain conditions,'" he says. "The board will be limited in its ability to address systematic problems with healthcare. We have to go beyond Medicare in changing how healthcare is delivered and how we pay for it."

The American Medical Assn. (AMA), in a January 13 letter to Senate Majority Leader Harry Reid (D-Nev.), expressed opposition to "any provision that would empower an independent commission, such as the new board, to mandate payment cuts for physicians. Physicians are already subject to an expenditure target and other potential payment reductions as the result of the Medicare physician payment formula."

The letter went on to say AMA has already seen the ill effects of the Medicare sustainable growth rate and the lack of a long-term payment solution.

"Congress must also move immediately to correct problems with [the Independent Medicare Advisory Board]," says J. James Rohack, MD, AMA president. "The current board's framework could result in misguided payment cuts that undermine access to care and destabilize healthcare delivery. The AMA will be relentless in our pursuit of permanent repeal of the Medicare physician payment formula, corrections to the board and other important changes."

Most stakeholders will be cautious about forming an opinion about the Advisory Board until they know its ultimate goal, says Paul Keckley, executive director, the Deloitte Center for Health Solutions.

"They are concerned about how the board will decelerate spending," he says. "Cuts will not be across the spectrum, but instead, will target costs where there is a suggestion of overutilization. What concerns me is once the board cuts out the fat, where's the meat?"

The provision for the new board follows up on the 2003 Medicare Modernization Act's provision that says Medicare Trustees must identify in an annual report when general revenues will account for more than 45% of total Medicare funding in any of the seven fiscal years in a reporting period. If this determination is made in two consecutive years, it will generate a "warning" about future Medicare funding.