AAOS Now

Published 9/1/2015
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Elizabeth Fassbender; Catherine Boudreaux

IPAB Could Set Rules for Medicare in 2017

Growth in Medicare spending could trigger action

Until passage of the Affordable Care Act (ACA) in 2010, the U.S. Congress had to approve any proposals that would affect Medicare payment rates and program rules. But that may change in 2017, according to a recent report from the Medicare Trustees, a group that oversees the financial operations of the Hospital Insurance and Supplementary Medical Insurance trust funds.

The ACA created the Independent Payment Advisory Board (IPAB), a 15-member panel that would be empowered to propose changes if Medicare exceeds spending growth thresholds. The IPAB’s proposals are intended to extend the solvency of Medicare, slow Medicare cost growth, and improve the quality of care delivered to Medicare beneficiaries. Any recommendations would automatically go into effect, unless Congress took steps to override them.

According to the Medicare Trustees, the Medicare per capita growth rate is projected to exceed the per capita target growth rate in 2017, triggering the IPAB for the first time.

The American Association of Orthopaedic Surgeons (AAOS), as well as many other healthcare organizations, has long opposed the IPAB. They point out that IPAB members are appointed, not elected, and they would not be accountable to external stakeholders. Under the ACA, IPAB members must be nominated by the president and approved by the Senate. Although they must include healthcare providers, as well as third-party payers, researchers, and representatives of consumers and the elderly, they cannot be employed other than as members of the IPAB. Fewer than half of the IPAB members can be healthcare providers.

Additionally, the IPAB’s mandatory recommendations are subject to special fast-track congressional procedures and default implementation by the Secretary of Health and Human Services (HHS) if Congress does not act.

Also troubling is the provision that would give the HHS Secretary the power to make changes unilaterally if the president does not nominate individuals to serve on the IPAB, or if the IPAB fails to recommend cuts. This would give a single individual tremendous power over Medicare payments and policies.

Repeal efforts underway
More than 400 orthopaedic surgeons visited Capitol Hill during the National Orthopaedic Leadership Conference (NOLC) earlier this year to urge repeal of the IPAB. Although many legislators support legislation that would repeal the board, some did not think that immediate action was required because target growth rates had not been exceeded. The report from the Medicare Trustees directly refutes that argument and reinforces the need to repeal the IPAB as soon as possible.

“The AAOS recognizes the importance of lowering healthcare costs and is committed to providing quality care that is cost-effective. But we are deeply concerned about the specific impact that IPAB-directed cuts would have on patient access to quality musculoskeletal care,” stated Thomas C. Barber, MD, chair of the AAOS Council on Advocacy. “Such a policy limits congressional authority with little accountability and precludes meaningful opportunity for stakeholder input. Further, requiring the IPAB to achieve savings in 1-year increments is simply not conducive to generating savings through long-term delivery reforms.”

Efforts to repeal the IPAB are underway. After the NOLC, Phil Roe, MD (R-Tenn.) and Linda Sanchez (D-Calif.) introduced HR 1190, the Protecting Seniors’ Access to Medicare Act of 2015. The measure has more than 220 cosponsors. The bill would eliminate the sections of the ACA creating the IPAB and repeal it before it is activated.

In May, AAOS, as well as more than 15 orthopaedic specialty and regional societies and 500 other physician groups, sent a letter to Congress urging repeal of the IPAB. In June, the House passed HR 1190. The AAOS commended members of the House for passing the legislation and urged the Senate to take action as soon as possible. The Senate companion version (S. 141) was introduced by Sen. John Cornyn (R-Texas) in January and has 41 cosponsors (as of Aug. 8, 2015).

“The prospect of an unelected board without adequate accountability being given powers to make recommendations on Medicare spending that are historically within the jurisdiction of members of Congress is irresponsible and would be devastating to the Medicare system,” stated AAOS President David D. Teuscher, MD. “The House passage of H.R. 1190 is a victory for the patients we serve.”

“We thank leaders in the House for their continued work to improve the Medicare system and urge the Senate to pass this legislation as soon as possible,” said Dr. Barber.

After the House passage of the bill, Rep. Roe issued a statement saying that the IPAB is “one of the worst parts of the president’s healthcare law.” He urged his Senate colleagues to support the measure, which would “put medical decisions back where they belong—in the hands of patients and providers.” He commented that he was proud the House passed this important legislation, emphasizing that opposition to the board is bipartisan.

“After practicing medicine for more than 30 years, I can tell you that no two patients are the same; that different approaches are required for different needs,” he stated. “IPAB is blind to this fact—and will ration seniors’ access to care through one-size-fits-all payment policies. Medicare desperately needs reform to ensure it continues to be there for current beneficiaries and the next generation, but this is not the way.”

Additional findings
In addition to the IPAB announcement, the Medicare Trustees reported the following:

  • The trust fund that finances Medicare’s hospital insurance coverage is projected to remain solvent until 2030, as it was last year, but with an improved long-term outlook.
  • Per-beneficiary costs rose by 2.3 percent in 2014, the largest increase in 3 years.
  • The increase was driven by a 10.9 percent spike in the cost of Part D drug coverage, which the trustees attributed primarily to the expense of specialty medications.

“Growth in per-Medicare enrollee costs continues to be historically low even as the economy continues to rebound. While this is good news, we cannot be complacent as the number of Medicare beneficiaries continues to grow,” said Andy Slavitt, acting administrator of the Centers for Medicare & Medicaid Services (CMS). “That’s why we must continue to transform our healthcare system into one that delivers better care and spends our dollars in a smarter way for beneficiaries so Medicare can continue to meet the needs of our beneficiaries for the next 50 years and beyond.”

For more information on the IPAB, visit the AAOS Legislative Action Center at http://advocacy.aaos.org

Elizabeth Fassbender is the communications manager in the AAOS office of government relations. Catherine Boudreaux is the senior manager, government relations.