In Memorium: the IPAB

In the May/June 2013 Edition of the Physician Executive Journal (PEJ) [pdf] I wrote about the IPAB, ending with this:

If political forces successfully strip the ACA of all cost-saving measures, America will have created a paper tiger. That may be the reader’s goal or the reader’s fear, but both should be watching the future of the IPAB as the political canary in the cave of health care reform.

Well, the IPAB just got killed in a dark corner of the incredibly complex $400 Billion budget deal passed on February 9th.

What is (was) the IPAB, why was it killed, and why should you care?

The IPAB and Medicare Spending

Health care does not respond to supply and demand like other industries. Market forces are especially irrelevant for Medicare, which is run by Congress through The Centers for Medicare & Medicaid Services (CMS) within the U.S. Department of Health and Human Services (HHS).

The Medicare Menu of reimbursable treatment options is not an entirely open trough. To be covered by Medicare a health service must be deemed “Medically Necessary” and meet “Coverage Determinations” through CMS.

However, without spending caps or other controls, Medicare decision making, particularly determining what treatments, drugs, and equipment taxpayer money will pay for, has been historically prone to lobbying efforts by providers, medical equipment companies, and the pharmaceutical industry. The focus of those lobbying efforts is Congress, such as the $2.3 Billion the pharmaceutical lobbying arm (PhRMA) spent on Capitol Hill in the last decade.

There is a non-binding, independent advisory body for Congress (the Medicare Payment Advisory Board or MedPAC) but Congress is free to ignore MedPAC’s cost-cutting recommendations and has largely done so since creating it in 1997.

Truthfully, there is very little standing between a member of Congress and their argument for including their district businesses and/or financial contributors in choices available for Medicare coverage and reimbursement.

As a result, even when a new procedure, drug or medical device offers no outcome advantage over older and cheaper options it can still become available for Medicare beneficiaries. In some cases, the Medicare-reimbursable new (and more expensive) medical treatment has worse results than the older, cheaper alternative.

It was the laxness of oversight requiring both efficacy and cost-effectiveness for a treatment, drug or procedure to be included on the Medicare Menu that led to the inclusion of the Independent Payment Advisory Board (IPAB) in the Affordable Care Act (ACA or “Obamacare”).

Like the Base Realignment and Closing Commissions (BRAC), the IPAB was created to make difficult, concrete decisions on spending beyond political influence.

But it was precisely that possibility- an objective body free from lobbying pressures making spending decisions for Medicare- that made the IPAB one of the most hated and targeted portions of the Affordable Care Act.

And this is why the IPAB has been of special interest to me these last years. The fury over the mere threat of non-political, favor-free, cost control for Medicare started smelling like a rat.

The Structure & Purpose of the IPAB

As designed, the IPAB was a board within the Executive branch of the Federal government, comprised of 15 full-time members with expertise in medicine and the financial and policy realms of the health care system. An additional 10-member board, representing patients, was to advise the IPAB. (Kaiser)

Membership was through President appointment with Congressional input on 12 members; the Senate Majority Leader, Senate Minority Leader, Speaker of the House, and House Minority Leader each had 3 seats for their consultation. All were subject to Senate confirmation.

Under a complicated formula, the IPAB was to remain inactive unless triggered by the per-capita growth of Medicare spending exceeding the “targeted growth rate.” Once triggered, however, the IPAB was given authority (with some limitations) to cut Medicare costs, and Congress was to be bound by their cuts. No lobbying, no favors, no appeals.*

That is a brief look at a Board that not only died February 9th; it was never born.

It never came to fruition because in 2013 the GOP made it clear they had no intention of ever nominating members to fill their slots on the IPAB. (Given the mechanism was never triggered after it became law in 2010- due to other cost-reductions attributed to the ACA- the intransigence of the GOP had little effect.)

And that may be the best IPAB joke of all. It was a body that existed only on paper for a purpose that was not necessary (yet?).

But still, it remained a target of multiple efforts- from both sides of the aisle- for repeal.

And Then There is Also Sarah Palin

In 2012 Sarah Palin posted on Facebook pointing to the IPAB as the “Death Panel” she had warned about three years earlier.

The America I know and love is not one in which my parents or my baby with Down Syndrome will have to stand in front of Obama’s “death panel” so his bureaucrats can decide, based on a subjective judgment of their “level of productivity in society,” whether they are worthy of health care. Such a system is downright evil.

Not to make too fine a point here, but she used this same quote in 2009 to create turmoil about “Death Panels” but it was in reference to a completely different part of the ACA, the section that would pay physicians for the time they spent discussing end-of-life care with their patients to understand their preferences (the topic of Fontenotes No 3). Calling the opportunity for elderly Americans to plan their end-of-life care with their physician “Death Panels” won Sarah Palin Politifact’s “Lie of the Year” in 2009.

Without a doubt, Sarah Palin misunderstood, or at least misrepresented, the operation of the IPAB which was prohibited by law from raising the cost of Medicare to beneficiaries, restricting benefits, modifying eligibility criteria or any health rationing.

Even more to her claim, the IPAB was never going to weigh in on an individual patient’s case, particularly not for a baby that would be 60 odd years shy of Medicare eligibility.

That is all I am going to say about Sarah Palin.

Killing the IPAB

There have been two arms of opposition to the IPAB, the first from health care providers and their lobbyists, the second from members of Congress.

The health care industry has been tireless in its efforts to get rid of the IPAB, arguing that reducing Medicare Menu options would limit patient choice and physician discretion. That is an attractive argument, perhaps, but remembering that the point was to rid Medicare of treatment options that were not better than less expensive options, I think what has always driven this arm of the attack was money. Case in point: in 2015 more than 500 groups signed a letter demanding that Congress repeal the IPAB which, if triggered, could result in payment cuts to providers.

Call it quality or call it cost- that will always be the rub when addressing the unsustainable expense of Medicare. Any cut, cost-saving measure, or reduction in reimbursement will raise the rage and political forces from those affected by the cut.

But it is not the provider push-back that raises my ire- It is the politicians.

For the past 7 years I have watched numerous bills introduced in the House and Senate to repeal the IPAB- often with bipartisan support.

And all that time I have not been able to forget the amount of money those same legislators have absorbed- such as the $2.3 Billion from the pharmaceutical industry- which is only one of the many pockets that have been opened to defeat the IPAB.

The final death of the IPAB happened just as the forecast for government expenditure on Medicare shows accelerated growth with an expected average of 7.1% extending through to 2025; national government spending for health, on the whole, is anticipated to increase to 19.9% of the GDP by 2025.

And Congress just killed the one isolated, non-political, influence-free vehicle we had to control that rise.

Remember that the next time one of your Members of Congress tells you with solemn eyes that they are trying hard to be responsible with your taxpayer dollars- and to rein in Medicare so it can survive to keep its promise for future generations.

Want to Know More?

Due to the length of this format, I did not include many details about the restrictions on the IPAB and the rights of Congress to act against the body.

If you want to know more about these aspects my Physician Executive Journal IPAB article is significantly more detailed and formal with many additional resources. You can access it here.