Congress Must Accept Its Responsibility

Medicare must be improved to save the program — and the country — from fiscal calamity. But Congress is abdicating its constitutional responsibility by giving a panel of 15 unelected technocrats the power to cut Medicare spending and make decisions which the Constitution vests only in the hands of elected representatives.

The first step to getting on the right track is repeal of the Independent Payment Advisory Board (IPAB). Members of the House Energy and Commerce Committee’s Subcommittee on Health voted last week to approve legislation repealing the IPAB (H.R. 452, the “Medicare Decisions Accountability Act of 2011”). The vote was 17-5 in favor of the measure, with two Democrats joining all the Republicans present in sending the measure to the full committee for consideration.

Opposition to the IPAB crosses party lines. Rep. Frank Pallone (D-NJ), the top Democrat on the Energy and Commerce Health Subcommittee, has said he has no interest in defending the board: “I’ve never supported it, and I would certainly be in favor of abolishing it.” A bill sponsored by Rep. Phil Roe (R-TN) to repeal IPAB has 19 Democratic cosponsors.

Nonetheless, President Obama is doubling down. In his proposed budget, he plans to give the IPAB even greater powers to cut Medicare spending.

In creating the IPAB, the president and Democrats in Congress wanted to take difficult decisions about cutting spending on Medicare out of the legislative process. In so doing, they gave unprecedented authority to unelected experts to make Medicare payment policy involving hundreds of billions of dollars and impacting tens of millions of seniors.

The power is unprecedented because there is to be no judicial, administrative, or realistically, congressional review over its decisions.

The government’s approach to holding down Medicare spending traditionally defaults to making deeper and deeper reductions in payment rates to providers. The IPAB will be true to form. Despite claims from its supporters that the board could encourage innovation, it must meet short-term budget targets, and its primary tool will be cutting payments to providers.

Ironically, with all of its power, the tools available to IPAB members are limited. The board cannot make structural recommendations to improve how Medicare operates. It is barred from making changes that would modernize the program’s outdated fee-for-service structure or change beneficiary incentives.

While the law says the IPAB can try innovative approaches to modernize care, the Congressional Budget Office does not count these programs as achieving any meaningful cost savings. Because the IPAB will be required to make changes that demonstrate actual savings in a one-year time frame, the only tool the board will realistically have will be to cut Medicare payment rates for those providing services and medicines to beneficiaries.

And the IPAB is even limited in the kind of spending it can cut. Between 2013 and 2020, the health law directs the IPAB to achieve its targets through payment reductions primarily in the Part D prescription drug program, Medicare Advantage, and skilled nursing facility services. Since the board is forced to reduce overall Medicare spending by focusing only on these relatively smaller segments of Medicare spending, the cuts would have to be very deep to achieve overall per capita spending reductions. Access to care inevitably will be impacted.

Even before the board’s cuts begin, Medicare is on track to pay doctors and hospitals so little that it will lead to “severe problems with beneficiary access to care,” according to Medicare actuaries.

And President Obama wants give the board authority to cut payments to doctors even more deeply and be able to sequester congressional appropriations if Congress tries to overrule its cuts.

The decisions of this unelected, stand-alone board will be virtually untouchable by Congress or the courts. Unless Congress can muster super-majority votes to come up with its own cuts to reach the same targets, the board’s dictates will carry the force of law. No judicial review of the IPAB’s decisions is allowed — a highly controversial rule that is contrary to the constitution’s system of checks and balances in government.

The IPAB clearly is not the right solution to holding down Medicare cost. Far from being strengthened, IPAB needs to be repealed. It should be replaced with market-oriented reforms that actually address the pernicious incentives now driving Medicare off a fiscal cliff.

Posted on National Journal’s Health Care Experts Blog, March 5, 2012.

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