The New Health Dialogue

via nationalreview.com

In case you missed the excitement, the House Energy and Commerce Committee held its second day of hearings on the Independent Payments Advisory Board, also known as IPAB. The board has been a source of contention since its inception, as some members of Congress have insinuated that it would reduce seniors’ access to medical care. Be sure to follow our live-tweeting of the hearing here, join the conversation with the hashtags #IPAB, and you can watch the (remarkably interesting and entertaining) webcast here.

So what is IPAB, anyway? And more importantly, will it mean I get sent off on an ice floe to die when I turn 65?

Probably not. The Independent Payments Advisory Board was created by the Affordable Care Act as a mechanism for finding cost savings in Medicare, and keeping the per capita growth rate at the levels specified by Medicare's independent actuary. Its recommendations are submitted to Congress, and become law automatically through a "fast-tracked" parliamentary procedure unless Congress achieves the required cost savings by other means.
It’s important to note that the IPAB’s authority is extremely limited in terms of the mechanisms it can use to reduce spending. The AMA (which opposes the board) said in a report:

“The IPAB is prohibited from submitting proposals that would ration care, increase revenues, change benefits, modify eligibility, increase Medicare beneficiary cost-sharing (including Parts A and B premiums), or change the beneficiary premium percentage or low-income subsidies under Part D.”

That pretty well sums up the board’s role: it’s not trying to take away medical care from seniors who need it. Rather, the primary function is to reform payment systems. Payment reforms are an indispensable part of getting a more functional delivery system, since how we pay doctors has a huge role in incentivizing treatments with only marginal clinical value.

As long as doctors are paid on a simple fee-for-service basis, we’ll be stuck paying for large volumes of drugs and services that don’t improve anyone’s health.

Secretary Sebelius commented during today’s hearing that one of the first ways payments might be reformed is to fix the overpayment of Medicare Advantage plans -- the privately run plans in Medicare that were intended to reduce spending. Medicare Advantage now costs 13% more per beneficiary than traditional Medicare. Other payment innovations might focus on increasing caregivers’ incentives to involve patients in elective medical decisions, manage chronic conditions, and coordinate patient care. All of those practices are commonly used at some of the most respected medical centers in the country, and are associated with higher patient satisfaction, lower costs, and better health outcomes.  

Medicare is also an example-setter for private insurance, and its payment reforms can drive other insurers to look at improving the way they pay for health. They can only be achieved, though, if payment systems are designed to encourage “better health” rather than “more medicine.” This is an IPABulous opportunity to do that.

For a lot more detail on IPAB, see Tim Jost’s excellent article from the New England Journal of Medicine.