Opponents bristle at IPAB's overly broad authority

September 1, 2011

Republicans are fairly united in seeking to kill the Independent Payment Advisory Board and have gained support from physicians, pharma, insurers, and some consumer groups.

IPAB was created by the Patient Protection and Affordable Care Act (PPACA) as a key strategy for controlling spending. A panel of 15 healthcare experts appointed by the President will send cost-cutting proposals to Congress if Medicare outlays grow faster than a certain target level; the cuts go into effect automatically unless the legislators enact alternative changes that achieve similar savings.

Because IPAB proposals have to cut expenditures without raising out-of-pocket costs for Medicare beneficiaries, providers and suppliers see themselves as easy targets for payment cuts. Doctors and pharmaceutical companies fear they'll be hit particularly hard because hospitals won a five-year exemption from IPAB cost-cutting proposals. Without hospitals involved, insurers fear IPAB will look first to cut payments for Medicare Advantage and Part D plans.

CHALLENGING IPAB

Republicans have proposed legislation to eliminate the board, while a conservative group is challenging the constitutionality of IPAB in court. A number of Democrats joined the opposition, as did other skeptics, when President Obama included IPAB in his April budget-cutting plan. His proposal would increase IPAB's clout by lowering the threshold for spending increases that prompt board actions.

These issues were discussed at hearings in July held by the House Budget Committee and the House Energy & Commerce. E&C Health Subcommittee Chairman Joe Pitts (R-Pa.) objected that the legislation gives "an unaccountable board power to limit treatment options" and that IPAB recommendations will be pushed through Congress with little discussion or time to develop "realistic alternatives."

IPAB supporters championed the program as the only PPACA provision designed specifically to impose some controls over exploding healthcare costs. Health and Human Services (HHS) Secretary Kathleen Sebelius emphasized that IPAB proposals won't kick in unless spending soars too high and that "Congress still has the authority to make final decisions."

The process for calculating spending targets, for developing IPAB proposals and for Congress to act are complex and confusing. The first IPAB proposal for reducing expenditures is due in 2014. Implementation of the recommended cost-cutting measures is supposed to start in 2015, but no one is rushing to name board members or get IPAB up and running.

Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.