The Independent Payment Advisory Board - What is IPAB?

September 2011 - Navy
By CAPT Ike Puzon, USN (Ret)

Over the last few years, health care issues for military and veterans and their families have risen to many passionate discussions and considerations. The topic is not likely to go away during the current stalled debate over the debt ceiling crisis. In fact, over and over, military health care issues are brought up as a target as is veterans’ health care. The Affordable Care Act of 2010 (ACA) established the Independent Payment Advisory Board (IPAB) in order to oversee costs in Medicare, the federal health care program for seniors. You should remember the ACA – the 2,790+ page document that passed as National Health Care Reform with most Congressional members not knowing the contents. The following information is provided as education. All military members should consider this subject and make sure you get engaged. If you do not care about it now – you will as you age to the Medicare age, and this issue can effect innovation.

About the IPAB

n The Affordable Care Act of 2010 (ACA) established the Independent Payment Advisory Board (IPAB) in order to oversee costs in Medicare, the federal health care program for seniors.

• The IPAB is required to make cuts every year that Medicare costs increase by a certain amount.
• This 15-member advisory board will have the power to make major cost-cutting decisions about Medicare with little oversight or accountability, and no means for patients to challenge the board’s recommendations.
• Recommendations by the IPAB will automatically become law unless Congress is able to override them by acting to adopt legislation that produces equal Medicare cost savings.
• Proposals made by the IPAB will not be subject to oversight from the Federal courts, the Department of Health and Human Services or even from Congress.
• Discontinuation of the IPAB will require a joint resolution of Congress.

Impact of the IPAB on Seniors

• Seniors will be the most impacted by the drastic cuts to Medicare programs made by the IPAB.
• The IPAB has the power to cut dramatically the Medicare payments to health care providers and physicians providing services to seniors, therefore limiting seniors’ choices of necessary treatments and medications.
• The IPAB should focus on better ways of paying for and delivering care to seniors without hurting quality and access.

Impact of the IPAB on Physicians

• The IPAB could dramatically cut payments to health care providers and physicians providing services to seniors.
• The Medicare office has even expressed concern that health care providers might leave the Medicare program as a result of such extreme cuts, which would mean limited choices and lowered quality of care for seniors in Medicare.

The IPAB and Medicare Cost Growth

• Given the current structure of the board, it will likely focus cuts in areas that will achieve immediate, short-term cost-savings, regardless of whether certain treatments or services may save money and unnecessary care in the future.
• Although many health care experts and economists agree that Medicare spending must be contained, many do not believe that the IPAB is the best method of containing health care costs.
• IPAB’s target growth rate should consider longer-term savings offsets, such as the impact of medication adherence on reduced hospitalization.
• Beginning in 2014, the IPAB must propose Medicare cuts to the President and Congress each year that Medicare spending exceeds a certain amount.

The IPAB: What are the concerns?

According to some experts:

• The IPAB can make decisions that limit seniors’ choices of necessary treatments and medications, such as deciding that Medicare will not cover certain treatments or medications.
• The IPAB has the power to cut dramatically the Medicare payments to health care providers and physicians providing services to seniors.
• The IPAB is required to develop savings achieved in one-year periods. However, few quality improvements will produce savings in one-year increments.
• By targeting innovative and new treatments, the IPAB’s decisions could lead to slower investment in the research and development work for the next generation of cures.

Insufficient oversight of the IPAB

• Proposals made by the IPAB will not be subject to oversight from the Federal courts, the Department of Health and Human Services or even from Congress.
• Discontinuation of the IPAB will require a joint resolution of Congress.

The IPAB proposals will automatically become law unless Congress acts to adopt legislation that produces equal Medicare cost savings.

• This means patients will have no ability to challenge the board’s recommendations.
• In effect, the IPAB will have the power to write health care laws – or undo important protections in current law.

The IPAB and innovation

• In its current form, the IPAB could penalize longer lives and medical innovation.
• Technological advances associated with a longer lifespan and quality of life must be considered and not inappropriately penalized even if they increase costs in the short term.

What next for IPAB?

Some solutions; increase the oversight of the IPAB:

• Give patients a stronger voice and role in determining the IPAB’s recommendations.
• Increase the role of Congress in modifying or rejecting the IPAB’s recommendations.

Focus IPAB recommendations

Payment and delivery system reforms, rather than simple rate cuts or price controls:

• The IPAB should focus on better ways of paying for and delivering care to seniors without hurting quality and access.
• Require the IPAB to recognize the value of innovative treatments and medicines.
• Modify the target growth to consider longer-term savings offsets for new medical advances.

Who is most affected by IPAB?

As we know it now:

• Seniors, patients, and groups (including TRICARE for Life) that rely on Medicare will be the most impacted by the drastic cuts to Medicare programs made by the IPAB. [However, with innovation being affected.]
• The IPAB has the power to dramatically cut Medicare payments to health care providers and physicians providing services to seniors, therefore limiting seniors’ (including TRICARE for Life, and disabled veterans) choices of necessary treatments and medications.

While I agree that we all should do our part to reduce the debt, it is unclear to me and to many other, what other departments of the federal government are doing to cut their budgets in discretionary and entitlement accounts. By cutting Medicare, which may need overhaul, through an IPAB board, do we in fact gain resources and reduce the debt. If I have the facts right, we have grown in entitlements and discretionary accounts in other departments of the federal government. It should be clear to all that you cannot spend more than you take in as revenue. Therefore, Defense must operate efficiently. While some complain about AUSN and other associations trying to improve benefits, equipment, or deployments for service members or veterans benefits, it is unclear what anyone would be doing now without the direct and total commitment of service members, and veterans, to an oath to defend the Constitution of the United States against all enemies foreign and domestic. Where would we all be? We can cut equipment, units, and restructure benefits, but what will be the unintended consequences if the nation does. I urge all service members and veterans and their family members to act as citizens and speak out in support of Defense and military services, and ask your Congressional member to restructure or stop IPAB. You can use our “Contact Congress” function at our Web site www.ausn.org. Contact me at ike.puzon@ausn.org with questions.