Another Acronym, Another Headache

The Patient Protection and Affordable Care Act (PPACA) or Obamacare is a topic that Doctor Parking Only will continue to discuss as Congress and the Administration debate whether that law should be implemented as enacted or scrapped entirely.  PPACA has many controversial provisions but the IPAB – the Independent Payment Advisory Board – may well become the most controversial and argued over section of the new health law (other than the individual mandate).

IPAB, when fully operational in 2014, will consist of a 15-member, presidentially appointed body with significant authority – and a legislative mandate – to cut Medicare expenditures.  IPAB is required to submit a detailed list of spending cuts in any year in which the Medicare per capita growth rate exceeds a target growth rate.  The panels submissions become law unless Congress passes an alternative proposal that achieves equal or greater levels of budgetary savings.  In short, IPAB has virtually unchecked power to cut overall Medicare expenditures.  Subject to some limitations (e.g., hospitals are exempt until 2020), IPAB will recommend spending reductions affecting all providers and suppliers, as well as Medicare Advantage and prescription drug plans.  Additionally, every two years the IPAB will make recommendations on slowing the growth of private health expenditures.  If commercial payers follow IPAB much like they currently follow Medicare reimbursement rates, then you can bet fees will be cut in the private sector as well.

What do professional medical societies think of IPAB?  Not much.  The AMA, ACP, ACS and AAFP all have serious reservations, while a coalition of surgical sub-specialties has prioritized IPAB’s demise above even a long term fix to the flawed Medicare physician fee schedule payment methodology.  Why?  Because physician reimbursement – particularly for highly compensated sub-specialists and surgeons – is a prime target for cost cutting.  The pharmaceutical industry is also opposed, since high-cost, branded drugs are the lowest of the low-hanging fruit.

But without IPAB or something similar, how can we reduce costs in our health care system?  Proponents argue that IPAB is the best way, since it actually gives Congress cover, much like the military base-closing commission of the 1980-90’s; Congress and the President won’t have to make the tough choices and pay the political consequences with beneficiaries and providers.  Opponents argue that IPAB’s cuts will threaten access by driving physicians and hospitals out of Medicare, and stifle drug and device innovation by drastically reducing revenue in those sectors.

Have things gotten so out of alignment and costs escalated so much that only IPAB or some similar mechanism reign in Medicare costs?  We welcome your thoughts.

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About Bill Cadigan

WILLIAM J. CADIGAN is principal in the Law Office of William J. Cadigan, P.C. located in Chicago, Illinois. Before starting his own firm, Bill Cadigan was a member of the Health Industry Group of the law firm of Akin, Gump, Strauss, Hauer & Feld L.L.P.
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