Health Law Update: What’s Next?

The Independent Payment Advisory Board was tasked with achieving savings in Medicare but has now been gutted by Congress and may never become operational.

By Zac Haughn, Senior Associate Editor
 

Speculation over the effects of the health law is vast, with a spectrum running from pragmatism to tyranny. And there is fodder for all political persuasions with 2,700 pages of law and new regulations added at a rapid clip; a seemingly obscure line means fiscal savings to one interpretation and doctor’s pulling the plug on grandmothers to another.

There has been perhaps no better example of this disconnect than the 15-member Independent Payment Advisory Board. The IPAB is—or, perhaps was—meant to be a group of health care experts appointed by the president in consultation with Congress, charged with assuring that Medicare spending doesn’t exceed its growth caps. However, $10 million allocated to the board was cut from federal spending legislation for fiscal year 2014, leaving its future murky.

President Barack Obama called the board important, and the White House defended its creation. If the program’s actuaries, for example, had projected that spending would exceed its growth caps in a given year, the IPAB was supposed to figure out how to keep costs from expanding too quickly.1 By April 30 of each year the Centers for Medicare & Medicaid Services (CMS) Actuary’s Office was to project whether Medicare’s per-capita spending growth rate in the following two years will exceed a targeted rate.2 If Congress didn’t approve of the board’s suggestions, they could have passed alternative cuts of the same size by August. If Congress had failed to act, the secretary of health and human services was required to implement the cuts. The IPAB was due to make its first recommendations by mid-January; however, the Obama administration has yet to appoint any members.3

The board was required to recommend reductions in Medicare if spending per capita projected to exceed specific targets. From fiscal year 2015 through 2019, that target is based on inflation gauges.4 Beginning in 2020, the target is based on the growth of the gross domestic product plus one percentage point. “IPAB is meant to be a fallback if the health law doesn’t control spending as well as we think it will,” Robert Kocher, a former special assistant to Mr. Obama on health care, recently told Kaiser Health News.

Hospitals, doctors, drug companies and some patient groups came out against IPAB because they feared reductions in Medicare payments and worried they won’t have the time or ability to counter the cuts during accelerated congressional action. Doctors and drug companies have been especially worried that they’ll bear a lot of the burden, because hospitals and nursing homes aren’t subject to IPAB’s cost-cutting recommendations until fiscal 2020. Mostly Republicans lawmakers, but some Democrats as well, say that IPAB will have too much power and have pressed for an outright repeal of the provision.4

But the failure of IPAB to actually materialize may be part of President Obama’s long game. A report issued last year concluded both that health spending has slowed and that no recommendations from the IPAB would be necessary.5 That, coupled with avoiding the term “death panel” picking up steam and being hung on Democrats in an election year might have led politicians to decide that this fight is worth having another day.

PREVENTION FUND CUT AGAIN, ENROLLMENT IN HEALTH MARKETS PICKING UP

Legislators landed another blow to the ACA when they pulled $1 billion from a new prevention fund established by the legislation to support various health programs, called the Prevention and Public Health fund, an initiative derided by the opposition as a slush fund. The fund, by law, must be used “to provide for expanded and sustained national investment in prevention and public health programs to improve health and help restrain the rate of growth in private and public health care costs.” To date, its funds have spread from training more primary care physicians to supporting healthy corner stores, and are not earmarked for specific allocations.6

The PPH fund was originally a $15 billion program, but has suffered a handful of cuts since its inception and has been a primary target for House Republicans attempting to dismantle portions of the law.7 The deficit reduction package that passed in February 2012 cut $6.5 billion from 2013 to 2021, meaning that barring future cuts, 37 percent of the original allotment has already been slashed.5 The fund would be the only federal budget item dedicated to prevention and public health activities.

News for the health care law hasn’t been in complete free fall, however. Three million people have now signed up for health law marketplaces and while that doesn’t keep pace with what the administration initially estimated, it moves closer to hitting monthly sign-up expectations it set back in September.8

The Obama administration projected in September that 1.1 million people would sign up in the first month of 2014—and these new figures suggest that enrollment could very well make that number. Since the fixes to HealthCare.gov on December 1, monthly enrollment totals have inched significantly closer to the targets: Instead of getting a quarter or third of the expected sign-ups, as the White House did in October and November, the numbers are now falling in the range of expectations.

  1. Editorial: Saving money for Medicare. The Milford Daily News. January 22, 2014.
  2. American Medical Association. Independent Payment Advisory Board. http://www.ama-assn.org/ama/pub/advocacy/ topics/independent-payment-advisory-board.page?
  3. Ault, A. Practice Trends 2014 budget reduces spending for ACA, IPAB. Family Practice News. January 17, 2014.
  4. Vaida, B. Kaiser Health News. The IPAB: The Center Of A Political Clash Over How To Change Medicare. March 22, 2012.
  5. Nocera, K. Whatever Happened To The “Death Panel”? Buzzfeed.com. January 22, 2014.
  6. Kliff, S. The incredible shrinking Prevention Fund. Washington Post. April 19, 2013.
  7. Easley, J. Spending bill rolls back funding for controversial ObamaCare programs. TheHill.com. January 13, 2014.
  8. Kilff, S. Don’t look now, but Obamacare might just hit a sign-up projection. Washington Post. January 24, 2014.
  9. Pittman, D. Pay and Practice: Are Neurologists Primary Care Docs? MedPageToday, Jan. 15, 2014.
 

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