GOP urges Obama to repeal -- not expand -- Medicare pay board
■ Republican lawmakers say the 15-member IPAB should be replaced with "serious ideas to reform our unsustainable entitlement programs."
By Charles Fiegl — Posted May 9, 2011
Washington -- Republican leaders in Congress have blasted President Obama's plans to strengthen the upcoming Medicare Independent Payment Advisory Board as a way to cut spending growth and extend the solvency of the program.
GOP lawmakers accused the president of punting difficult budget decisions on the entitlement program to the 15-member body created by the health system reform law. The board's cost-cutting recommendations would take effect automatically unless overridden by large majorities in both houses.
"We believe more strongly now than ever that the president should lead, and the best way to do that is by repealing this board that was created in the health law and replacing it with serious ideas to reform our unsustainable entitlement programs," Sens. John Cornyn (R, Texas) and Orrin Hatch (R, Utah) said in a joint statement following the release of Obama's long-term deficit reduction plan on April 13.
The IPAB's first meeting is scheduled for 2013. The board's mandate includes recommending cuts when Medicare spending exceeds projected targets, but the board has limitations on how it can accomplish this. For instance, it's prohibited from cutting patient benefits.
Its cost-cutting instructions would expand under the president's plan to reduce budget deficits. The president would alter the IPAB's mission by lowering target growth rates for Medicare to gross domestic product per capita plus 0.5%, instead of GDP per capita plus 1%. That move would make it more likely that program spending would trigger IPAB action and require deeper spending reductions from the board.
On April 20, Reps. Dave Camp (R, Mich.) and Fred Upton (R, Mich.) wrote Obama requesting more specifics about the enhanced IPAB idea. In particular, the lawmakers wanted to know how Obama's reforms would save hundreds of billions of dollars for the Medicare program.
"You referenced $340 billion in Medicare and Medicaid savings by 2021, $480 billion by 2023, and 'at least an additional $1 trillion in the subsequent decade,' but it is unclear from where or how those reductions in spending are achieved," Camp and Upton wrote.
The lawmakers asked Obama:
- Whether all health entities should be subject to IPAB-sanctioned cuts beginning in 2014. Under the health reform law, hospitals and certain other facilities are exempt from cuts and reduced payments before 2020.
- To what degree he expects the revised IPAB mission to reduce Medicare spending by 2021, 2023 and the subsequent decade.
- What he means by "giving the IPAB additional tools to improve the quality of care while reducing costs, including allowing it to promote value-based benefit designs."
White House spokesman Nicholas Papas would not comment on the lawmakers' letter. Instead, he cited an administration fact sheet outlining the deficit reduction plan. It calls for bipartisan and bicameral negotiations led by Vice President Joe Biden that would develop a legislative framework for reducing deficits.
Former Sen. Pete Domenici (R, N.M.) has praised the president for his approach, despite the fact that aspects of the plan differ from the recommendations of the Bipartisan Policy Center's Taskforce on Debt Reduction, where the former senator is a senior fellow.
"Now the parties must come together to find solutions," Domenici said. "I believe that convening a bipartisan, bicameral congressional group to lead the negotiations on a legislative framework is precisely the right thing to do. It is my hope that those negotiations will pave the way for the upcoming debate about the nation's debt ceiling."
The issue of promoting value-based purchasing, also known as pay-for-performance, would require changing the board's authorization under the health system reform law, said Tricia Neuman, director of the Medicare Policy Project at the Kaiser Family Foundation. Current law prohibits the board from cutting benefits and doing anything that could be perceived as rationing health care, she said.
The American Medical Association has opposed the IPAB as currently structured because of potential adverse impacts on patients and physicians. Medicare physician pay already is subject to the sustainable growth rate formula, which mandates annual pay decreases starting with a roughly 30% cut scheduled for Jan. 1, 2012.
"The AMA has significant concerns about IPAB, which would be another arbitrary system with the potential to make automatic across-the-board spending cuts that do not benefit Medicare patients," said AMA President Cecil B. Wilson, MD. "The AMA believes significant changes to IPAB are needed and urges Congress and the president to work together on reforms that strengthen the Medicare system."
The concerns Dr. Wilson cites also are mentioned in a Kaiser Family Foundation issue brief on the IPAB written by Neuman along with Juliette Cubanski, a principal policy analyst with the foundation, and Jack Ebeler, a former senior adviser in Congress who is now with Health Policy Alternatives, a consultants group in Washington, D.C.
"On the one hand, the SGR has imposed some constraints on Medicare spending growth and on the Congress," authors of the report wrote. "On the other hand, it has made Medicare an unreliable partner with physicians, whose participation is essential to carrying out the program's mission of assuring access to care for beneficiaries."
The health reform law instructs the IPAB to assume that Congress will freeze Medicare physician pay as the board is determining projected Medicare spending levels. But this would not solve lawmakers' problems with the SGR. Congress still would need to pass offsetting legislation to account for the costs of avoiding the SGR's deep cuts and implementing a freeze.
"As a technical matter, it is unclear what would happen if IPAB makes a statutory recommendation to enact a [physician pay] freeze for several years," the authors wrote. "From the board's perspective, this has no cost, but it clearly has a [Congressional Budget Office] scoreable cost."
Undoing cuts mandated by the SGR formula would cost about $300 billion over a decade, according to the budget office.