Specialists defend health care law’s independent payment board

With much of Washington engulfed in debate over the 2010 Affordable Care Act -- at the U.S. Supreme Court, in Congress and on presidential campaigns -- the law’s provision to empanel an Independent Payment Advisory Board by 2015 to help reduce Medicare costs also is drawing out critics and defenders.

The House this week is expected to vote on a bill (H.R. 452) that would repeal the section of the law setting up the board of medical experts. H.R. 452’s chief sponsor, Rep. Phil Roe, R-Tenn., has called the envisioned board “both unaccountable and unworkable.”

The IPAB would “consist of a group of 15 unelected bureaucrats who will decide what constitutes `necessary care,’ and who will create a `one-size-fits-all’ solution when it comes to medical care,” Roe said in a statement. “As a physician, I can tell you firsthand how troubling this mind-set can be. In medicine, every case is unique and must be treated that way.”

Roe’s bill, which has 234 co-sponsors -- including 20 Democrats -- so far has cleared two committees, but also has drawn some complaints from fellow Republicans who see a tactical mistake in seeking to repeal only a part of President Obama’s signature health care reform.

On Monday, the Center for Budget and Policy Priorities convened three specialists -- among them Obama’s first budget director and former Congressional Budget Office director Peter R. Orszag -- to defend IPAB in a conference call with reporters.

Paul Van de Water, a senior fellow at the center, said there were many misconceptions about the planned board. IPAB, he said, would not come into play unless Medicare’s chief actuary determined that Medicare growth was exceeding spending plans. The board’s recommendations for cost-cutting would automatically take effect unless Congress passes and the president signs an alternative plan, he said. And if Congress’ substitute plan fails to save as much money as the board’s plan, it would require a three-fifth’s Senate majority, or 60 votes, to pass.

Van de Water said the independent board was designed “as a backstop to other cost-containment measures in the Affordable Care Act,” alongside such aims as reduced payments to providers and a restructuring of the payment rewards system. CBO has said it does not expect the board’s role to be triggered, he added. “Congress still has full power to make necessary decisions on Medicare policy affecting powerful interest groups -- it doesn’t need the IPAB to do it.”

The common complaint that the board’s actions would result in rationing, are equally off-base, Van de Water said, because the law specifically “prohibits rationing or cutting benefits or raising age of eligibility.” Repealing the board would be “a step backward in furthering the goal of greater systemwide control of health care costs throughout the economy,” he said, adding Medicare has outperformed the private sector in reducing costs.

Orszag, who left the Office of Management and Budget to become vice chairman of global banking at Citigroup, said the goal of the independent board would be “to make sure Congress can act or increase the odds of moving in the right direction” of getting better value from the health care system. “Inevitably, that will require some trial and error,” he added.

As an example, he noted that CBO in January evaluated four cost-savings programs in Medicare -- three in pay-for-performance and one in bundling of payments -- and the media focused on the fact that three of the four demonstrations did not result in savings. “The goal is not, as opponents present it, blunt payment reductions but to make sure examples like bundling payments get embodied in Medicare policy,” Orszag said.

He also said the past two years have seen a “deceleration” in health care spending, a fact many critics of the reform law acknowledge. Such a slowing lessens the chances the independent board’s recommendations would be invoked, he said, though the board would remain as a backstop.

He also faulted critics of the board for failing to offer an alternative, saying Medicare reform introduced a year ago by House Budget Committee Chairman Paul Ryan, R-Wis., is the only one who’s been scored by CBO and it showed a “massive increase” in health care costs for the typical 65-year-old. Premium support plans -- which call for Medicare to subsidize premiums charged by private insurers -- he added, “are falsely attractive in that they appear to reduce costs, but are like shoving dirty laundry under the bed instead of putting it in the wash.”

Uwe Reinhardt, professor of economics and public affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, said criticism of the independent board is the result of “outright lying [being] so accepted in political culture, there’s nothing you can do about it.”

He took a jab at lawmakers, saying a health insurance company could not function with a board of directors that behaved like Congress, accepting campaign money that makes for a conflict of interest, and “micromanaging” Medicare while running up “huge deficits and not meeting their fiduciary responsibilities.”

Reinhardt said the independent board would not take campaign money, and would have a highly competent technical staff that would have some teeth. He said it was “naïve to cry rationing” of health care by the government when private market plans use pricing to withhold care and some models “look to rationing as a way to keep utilization of health care in check.” He also praised a German version of the independent board as a model, saying it uses authority from the legislature to write health care regulations and has its own staff and building.

“IPAB is not perfect,” said Van de Water, adding if the country had it to do over again, he would push to “focus less on short-term savings” and expand the cost-savings approaches to the private sector. “But without IPAB, you’re opening the door to worse policies, such as blunt proposals to shift costs to beneficiaries, cut benefits or raise the age of eligibility.”

Orszag said during the next 10 years, regardless of what happens with the Obama health care law and this year’s election, “hospitals and doctors will take on more risk in the delivery of health care. So if I’m a provider, I’d want that work done pretty well, and expect the IPAB as a backstop to be helpful.”

Asked what the Health and Human Services Department is doing vis-à-vis the independent board, Van de Water said it most likely is in a wait-and-see mode since the pressure to appoint members to the board has yet to materialize. Reinhardt added, “It’s not clear what HHS could do, other than go back to business as usual.”

HHS did not respond to request for comment. But in testimony on her budget on Feb. 28, HHS Secretary Kathleen Sebelius said the point at which Congress would have to consider the IPAB’s recommendations has been delayed until 2018.