Could an ACA Advisory Board Limit Care?

A controversial feature of the Patient Protection and Affordable Care Act (ACA) is the new Independent Payment Advisory Board (IPAB). This appointed panel will be tasked with cutting Medicare spending, but some of its features appear to be problematic, according to a report by Douglas Holtz of the American Action Forum. IPAB appears to be barred from recommending rationing health care, raising revenue or premiums, increasing cost sharing, or restricting benefits and eligibility. But it may bring Medicare dangerously close to a rationed system. It will become more difficult to make appointments with providers of all sorts, thereby restricting care. On top of which, a provider will not offer a poorly reimbursed, but effective, treatment unless there does not appear to be a therapeutic alternative. Rationing will occur in complex and often subtle ways, and patients may never know that they could have received a more effective treatment, according to Holtz.

The board is prohibited from recommending changes that would reduce payments to certain providers before 2020, especially hospitals. Because of directives and restrictions written into the law, reductions achieved by IPAB between 2013 and 2020 are likely to be limited primarily to Medicare Advantage (23% of total Medicare expenditures), to the Part D prescription drug program (11%), and to skilled nursing facility services (5%). That means that reductions will have to come from segments that together represent less than half of overall Medicare spending.

The law makes it almost impossible for Congress to reject or modify IPAB’s decisions, even if those decisions override existing laws and protections that Congress passed. As a result, it is not in fact an advisory body, despite its name. The system is set up so that IPAB makes policy choices about Medicare.

Finally, IPAB’s time horizon is too short. IPAB’s cuts have to be achieved in one-year periods, which rules out long term quality improvements or preventive programs. Instead, IPAB will be forced to focus on reducing reimbursements to providers due to their short-term nature.

He warns that IPAB will be an agent for reimbursement cuts in Medicare. This has two potentially damaging effects on Medicare and health care in the United States. First, IPAB’s actions may stifle U.S. led medical innovation in the medical device, pharmaceutical, biotechnology, and mobile health industries. As noted above, by statute, IPAB cannot directly alter Medicare benefits. Instead, the more likely threat to patients is that IPAB will be forced to limit or deny payments for medical services. In the process, it will effectively determine that patients should have coverage for one particular treatment option but not another, or must pay much more out of pocket for one of the treatment options. This is especially troubling because it may choose to disproportionately make cuts to expensive new treatments, he said. New medicines for conditions like Alzheimer’s or Parkinson’s will likely have rapid cost growth,

Because about one-half of spending is off limits until after 2020, there will be a disproportionate and uneven application of IPAB’s scrutiny and payment initiatives. IPAB creates a level of uncertainty that will have a detrimental impact on venture capital investment in start-up firms and research and development investments from established firms.

If Medicare’s provider reimbursements are reduced drastically, providers will have three options: close up shop, refuse to treat Medicare patients, or shift the costs onto the other patients. None of these options help our healthcare system operate more effectively or more efficiently, he said. To get the full report, visithttp://americanactionforum.org.

Last Updated 8/2/2017

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