Capitol Hill Report: Who Should Determine Your Payment Rates?

July 25, 2011


By Mike Amery, Legislative Counsel, Federal Affairs, (202) 506-7468,

IPAB — Not What it Could Be

Instead of having Congress make health care decisions based on the politics of the day, wouldn't it be great if experts determined how physician and other parts of the health care system were paid for their services?

That was the idea behind the creation of a new Independent Payment Advisory Board (IPAB) in last year's health care reform law. I detailed some of IPAB's features in my June 5 issue of Capitol Hill Report.

The IPAB is a 15-member board of experts appointed by the president and confirmed by the Senate that will make recommendations to Congress on Medicare spending policies. Congress can accept or reject (with a super majority vote) their recommendations. This structure makes it very unlikely that Congress would ever overturn the IPAB's recommendations.

After the last several years of congressional gridlock this may sound like a pretty good idea. Perhaps IPAB could come up with some proposals to fairly streamline delivery systems, cut waste, and ultimately benefit the health system from hospitals to physicians to patients?

But unfortunately the task given to IPAB isn't to set fair rates and make fair decisions. Its sole task is to reduce Medicare spending.

Even that might be palatable if everyone in the health system was included for review by the IPAB. But the board is specifically prohibited from recommending any policies that ration care, raise taxes, increase premiums or cost-sharing, restrict benefits, or modify who is eligible for Medicare. It even exempts hospitals and hospice for the first four years. Who is left? Physicians and just a few others are the only possible targets for controlling spending, which the non-partisan Congressional Budget Office predicted would save $15.5 billion between 2015 and 2019.

The Academy sent out an action alert recently asking members to contact their members of Congress to support the repeal of IPAB through bipartisan legislation that has been introduced in both the House and Senate. In response, more than 500 AAN members sent more than 1,500 messages to Congress.

Surprisingly though, almost 20 AAN members responded back to us stating that they were in favor of IPAB, citing Congress's inability to make tough choices when it comes to health care. If you share that view, I hope that this Capitol Hill Report helps shed some light on this issue and the rationale behind the Academy's position. I also hope that you will read a more detailed list from the AMA of reasons for opposing IPAB in its current form.

The AAN understands that these are difficult financial times and that the Medicare program will be looked to for savings. A board like IPAB might eventually be a good idea to alleviate congressional gridlock, however, we can't support IPAB in its current form as it can lead only to reductions in physician services and, ultimately, access to care. If you haven't contacted your members of Congress yet on this issue, please do so now.

10-year Fix of SGR on the Table…

There is a 10-year fix of the SGR in a recent proposal by the "Gang of Six," a bipartisan group senators looking for a deal to tie an increase in the debt ceiling to deficit reduction. The Gang of Six members are Sens. Chambliss (R-GA), Coburn (R-OK), Crapo (R-ID), Conrad (D-ND), Durbin (D-IL), and Warner (D-VA).

The plan includes several dramatic health care policy proposals, most notably:

  • A 10-year fix to the flawed Sustainable Growth Rate (SGR) formula
  • Elimination of the long-term care insurance program known as the CLASS Act
  • Spending cuts to Medicare and Medicaid
  • Enacting medical malpractice reform

Overall, the bill would cut the deficit by $3.7 trillion over 10 years and raise the government's current debt limit of $14.3 trillion to avoid defaulting on financial obligations on August 2. The Gang of Six proposal's details haven't been released but there have been hints about where cuts could come from in the health system.

…But Cuts Are Coming

I have been talking with members and staff across Capitol Hill and they are all saying the same thing. "We are going to fix the SGR but there will be cuts to Medicare and Medicaid." A meeting with the staff of the Senate Finance Committee ranking member Orrin Hatch (R-UT) was telling. "Take a look at the cuts suggested by the Simpson/Bowles Debt Commission and you will see where a lot of agreement is between both sides." He was referring to the recommendations made last year by the National Commission on Fiscal Responsibility and Reform, chaired by former Republican Sen. Alan Simpson and former Clinton Chief of Staff Erskine Bowles.

House Majority Leader Eric Cantor's (R-VA) released a list very similar to the Debt Commission's (link). $350 billion cuts to several programs including advanced imaging, medical education, and co-pay increases that are presumed to be agreed to by both sides.

There are few details at this writing, but the AAN will be sure to weigh in as they do as well as on other proposals.

AAN Quality Measures Included

CMS has released the proposed Physician Fee Schedule rule which includes some good news for the AAN. Quality measures the Academy has petitioned CMS to add, including those for Parkinson's disease, epilepsy, and dementia, to the Physician Quality Reporting System are in the proposed rule, which means their eventual adoption is likely, though not assured.

Among several changes, the Fee Schedule also includes yet another proposed cut to imaging with little justification. CMS is proposing to cut the professional component of the imaging service by 50 percent for the second and subsequent body parts scanned. CMS justifies this cut by noting that there are "efficiencies" gained when a physician reads the second scan of a different body part from the same patient in the same session, as opposed to doing it on two separate days.

The Academy is preparing comments that are due August 30.

Please visit the AAN Advocacy Community to let us know your thoughts.