House passes IPAB repeal, medical liability reform bill

But the package eliminating the Medicare cost containment panel and capping medical lawsuit damages faces strong opposition from Senate Democrats and an Obama veto threat.

By Charles Fiegl amednews staff — Posted April 2, 2012

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The House on March 22 passed medical liability reform, setting caps on damages and aiming to lower liability costs for physicians, as part of a legislative package that eliminates the Medicare Independent Payment Advisory Board.

Lawmakers added the liability reforms to pay for the provision that strikes the Medicare cost control board. Both items are major priorities for the American Medical Association and other physician organizations. But because of the pairing, House Democrats who had supported IPAB repeal dropped their support for the Republican-sponsored bill, which now faces an uphill battle in the Democratic controlled Senate and a veto threat from the White House.

The health system reform law created IPAB as a cost-containment mechanism for Medicare. The board’s 15 members would recommend measures for improving quality and cutting spending when the health program exceeds certain targets for growth. Under current law, the board would not meet until 2014, and the earliest its recommendations could be implemented is 2015, although actuaries predict that cost-containment instructions would not be triggered for the first time until several years later.

The AMA strongly has opposed IPAB despite its overall support for the health reform law. The board would act when spending outpaces gross domestic product per capita plus 1%, a methodology that has drawn comparisons to the Medicare sustainable growth rate that helps determine physician pay. The SGR formula has been problematic for physicians, as it has called for Medicare rate cuts for the last decade that Congress has had to override.

The AMA applauded the House vote to eliminate IPAB. The panel would have the power to make indiscriminate cuts that would adversely affect access to care, said AMA President-elect Jeremy A. Lazarus, MD.

“This new, arbitrary system is not what we need when patients and physicians are already struggling with a looming cut of nearly 30% from the broken Medicare physician payment formula,” Dr. Lazarus said. “Ending the ongoing threat of drastic cuts from the physician payment formula and preventing new cuts from IPAB are important first steps to stabilize the Medicare system for patients.”

The AMA for years has supported the comprehensive medical liability reforms that were approved by the House, he added. “We know that these reforms are already working in states such as California and Texas, and implementing them on the federal level will help reduce costs and preserve access to physician care for all patients.”

Rep. Phil Roe, MD (R, Tenn.), had sponsored the IPAB repeal legislation. He said the board would cut Medicare dramatically and limit patient access to care through cost controls, despite a provision in the reform law explicitly prohibiting IPAB from rationing care. “The board directly inserts the government into seniors’ health care decision-making process,” he said.

Tort reform turns off Democrats

The legislation initially had about 20 House Democratic co-sponsors and support from several additional Democrats until Republicans added medical liability reform. IPAB probably will remain an issue throughout this election year, as the House package is opposed by key Democratic leaders in the Senate.

Rep. Allyson Schwartz (D, Pa.) had co-sponsored the IPAB repeal bill but voted against the final package. “Linking this bill to tort reform — an unrelated, divisive and partisan issue — is bringing what was once a bipartisan effort to a screeching halt,” she said.

The legislation would produce about $48 billion in budget savings because of the liability reforms, more than offsetting the $3 billion cost of eliminating IPAB. The final vote was 223-181, with seven Democrats voting to support the measure and 10 Republicans voting against it.

Sen. Jay Rockefeller (D, W.Va.), who was one of the authors of the IPAB provision in the reform law, defended the board before the House vote. IPAB members would be experts on health policy, and they would take the politics and lobbying out of the decision-making process and recommend changes to improve care, he said. “Can’t you agree that lawmakers are the worst possible group of people to determine how you get reimbursed?”

The White House issued a veto threat before House passage of the legislation. The Obama administration argued that Congress should give the board a chance to help reduce spending growth rates in Medicare.

Senior administration officials also have concerns about the medical liability reforms in the bill. They said in a statement that the goals of reform should include fair and prompt compensation to patients who have been harmed, reducing defensive medicine and lowering medical liability insurance premiums. “The administration opposes placing artificial caps on malpractice awards which will prevent patients and other claimants who have been wrongfully harmed from receiving just compensation.”

Trial attorneys also oppose restrictions on damages and lawyers’ fees, said American Assn. for Justice President Gary M. Paul.

“Instead of focusing on patient safety, Congress voted today to strip away the legal rights of injured patients, reduce accountability and leave Americans at risk for more injuries from negligent care,” he said.

But the reforms are needed to stop frivolous lawsuits and the increasing costs of liability insurance that every physician faces, said Rep. Phil Gingrey, MD (R, Ga.), who helped write the reform provisions.

“It provides for meaningful liability reforms that will reduce the deficit, prevent more physicians from being driven out of practice and stem the tide of spiraling health care costs,” Dr. Gingrey said. “This is an example of the type of patient-centered reforms that our health care system desperately needs.”

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House bill would limit medical lawsuits

The offset used to pay for the repeal of the Medicare Independent Payment Advisory Board would save the government money by placing limits on medical lawsuits. The Congressional Budget Office estimates that such limits would reduce deficits by nearly $49 billion over 10 years. The law would establish:

  • A $250,000 limit on noneconomic damages.
  • A limit on punitive damages of two times the amount of economic damages awarded or $250,000, whichever is greater.
  • A sliding-scale limit on attorneys fees of no more than: 40% of the first $50,000 recovered; 33.3% of the next $50,000 recovered; 25% of the next $500,000 recovered; and 15% of any amount in excess of $600,000.

Source: The Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2012 (link)

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