The Independent Payment Advisory Board and Medicare Spending: New Research Suggests a Change in Our Medical Culture

Launch of the ACA’s controversial Independent Advisory Board– a  panel charged with  recommending ways to curb Medicare inflation — has been delayed until 2016. Does this means that the IPAB’s critics have won?

No. IPAB was, from the beginning, only meant to serve as a backstop. The law says that the board will be asked to recommend places where we could pare Medicare spending if—and only if—Medicare inflation begins to outstrip inflation in the rest of the consumer economy.

But over the past three years Medicare spending has decelerated; it is no longer growing faster than the economy as a whole. This is why Medicare’s chief actuary has decided to put IPAB on hold.

Some observers argue that as the economy recovers from the Great Recession, the nation’s health care bill is bound to climb. I disagree. Particularly in the case of Medicare, I don’t think that the economic downturn explains most of the slowdown. 

 I believe that reform is already having  an effect on health care inflation:  Four years of debate over the Affordable Care Act has made us more aware of the waste in our health care system. Patients are asking more questions, and providers know that they are going to be held accountable for that waste.

                                 We Still Need IPAB as a Backstop

That said, in the future, spending could pick up–and we may need IPAB. This is why President Obama has made it clear that he will veto any attempt to eliminate the Board.

It is important to know that IPAB exists, as a reminder to drug companies, device makers, nursing homes and others that, one way or another, we can no longer afford a system that is wasting $1 out of $3 of our health care dollars on over-priced, unnecessary tests and treatments that, too often, put patients at risk without benefits.

If, and when, IPAB is asked to recommend cuts it will use medical evidence to decide where to trim. IPAB is likely to recommend lower payments for certain services and products that medical research tells us are now “overvalued”–based, not on cost-benefit analysis, but on patient outcomes. If patients who fit a particular medical profile are not helped, Medicare should not cover the treatment for those patients.

As I have explained in the past, IPAB is not the panel of bean counting bureaucrats that Obamacare’s opponents suggest.  IPAB will not “ration” care; it is charged with making care more rational by letting Science–rather than lobbyists– decide what Medicare should cover.  Moreover, Congress can veto IPAB’s recommendations, if legislators can agree on  ways to achieve equal savings– without rationing care, or shifting costs to seniors.

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