Kaiser Family Foundation Analysis

The Independent Payment Advisory Board: A New Approach To Controlling Medicare Spending. The 2010 health reform law (the Patient Protection and Affordable Care Act1, also referred to as the ACA) establishes a new Independent Payment Advisory Board (IPAB) with authority to issue recommendations to reduce the growth in Medicare spending, and provides for the Board’s recommendations to be considered by Congress and implemented by the Administration on a fast-track basis. IPAB has been heralded by some as a cornerstone of efforts to slow the growth in health care spending, beginning with enforceable savings targets for Medicare to help limit the growth in program spending. Some, including the President’s National Commission on Fiscal Responsibility and Reform, have advocated strengthening the role of IPAB. Yet others, including some in Congress, representatives of some aging organizations, and various health industry stakeholders, are opposed to IPAB and are pressing to block its implementation.2 As authorized by the health reform law, IPAB is an independent board housed in the executive branch and composed of 15 full-time members appointed by the President and confirmed by the Senate. IPAB is directed to recommend savings for Medicare if the per capita growth in Medicare spending exceeds defined target growth rates. Prior to 2020, the growth target is based on a measure of inflation, and in subsequent years, it is based on the per capita growth in the economy (gross domestic product (GDP) plus one percentage point). The recommendations made by IPAB move to the Congress for fast-track consideration. If Congress does not act in the required timeframe, the Secretary is required to implement the Board’s recommendations, also on a fast-track basis. The Board is prohibited from recommending changes that would reduce payments to certain providers before 2020, and is also prohibited from recommending changes in premiums, benefits, eligibility and taxes, or other changes that would result in rationing. This paper explains the genesis of IPAB, describes its structure, scope of authority, operational procedures, and the processes and timelines for considering, modifying, and implementing the Board’s recommendations. The paper also identifies issues that may be the subject of future policy discussions, along with policy options for consideration, including:

• Spending targets for Medicare: What specific target growth rates were established under the ACA for Medicare, and what are the implications? What are the implications of imposing spending targets for Medicare alone, and should they be applied to total public and private health care spending, rather than limited solely to Medicare?

• Magnitude and timeline for achieving Medicare savings: What level of savings is IPAB required to achieve in a year in which Medicare spending exceeds the targets? What are the implications of requiring IPAB to achieve savings in a single year, rather than over a longer period of time?

• Limits on the authority of IPAB: What constraints are imposed on the Board’s ability to make recommendations? Which providers are exempt from IPAB’s reach and for how long? Can IPAB make changes that could directly or indirectly affect beneficiaries’ out-of-pocket costs or access to care? What are the implications of exempting IPAB recommendations from judicial review? READ FULL REPORT


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