Medicare: Cost-Cutters on Hold

By David Pittman, Washington Correspondent, MedPage Today, Published: May 03, 2013

WASHINGTON — A Medicare cost-cutting board created by the Affordable Care Act (ACA) — the subject of much criticism from the medical community and supporters of the law as a whole — won’t have an impact on the program until at least 2016, a top Medicare official said this week.

The Independent Payment Advisory Board (IPAB) was to form later this year or early next to recommend ways to scale back Medicare spending beginning in 2015.

However, the trigger for its formation — the growth of Medicare spending topping the growth of overall inflation and inflation on medical goods and services — failed to hit that target, Paul Spitalnic, acting chief actuary for the Centers for Medicare and Medicaid Services (CMS), wrote in a letter dated Tuesday.

Spitalnic pegged the 5-year average of Medicare spending at 1.15% — well below its trigger target of 3.03%. That means the first possible year IPAB could impact healthcare is 2016. The 1.15% figure is the average growth from 2011 to 2015.

The ACA created the IPAB as a back-stop to curbing federal spending on Medicare. If spending topped a pre-specified target, the 15-member board would draft ways to cut spending. The savings would equal however much it would take to fall below the spending target. Read More

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