Get the Facts

What is the Independent Payment Advisory Board?

The Independent Payment Advisory Board, or IPAB, was created last year by President Obama’s health care law.  Made up of 15 unelected bureaucrats, IPAB will inject itself directly into patient-doctor relationships and begin to reduce Medicare spending in 2014 by limiting certain medical treatments, cutting payments to doctors, and even denying care.  Decisions made by IPAB immediately become law and are beyond Congressional challenge, essentially transferring power from the people’s representatives to arbitrarily appointed Washington bureaucrats.


What Does the Law Say?

Deep within the 2,700 page health care law is Section 3403, which establishes and lays out the requirements and authority of the Independent Payment Advisory Board (IPAB).

15 health care bureaucrats are to be appointed to IPAB, whose authority will be triggered should Medicare spending exceed its arbitrarily chosen growth rate for the year–which is almost a certainty; it’s happened every year since Congress set up a similar formula in 1997. The Board will then “include recommendations to reduce Medicare payments.”  These “recommendations” however, are anything but advisory.

Congress has a limited time to review the “recommendations,” and if unhappy with IPAB’s proposal, Congress must create another plan that meets the same “growth target” and muster three-fifths approval to override the Board’s recommendations.

All of this must be accomplished by August 15 each year or IPAB’s “recommendations” become law–without ANY Congressional action. Based on the level of partisanship and political posturing in Washington today, it’s tough to imagine Congress actually meeting this looming deadline year after year.

The law does prohibit IPAB from explicitly rationing care, increasing premiums, restricting eligibility, or cutting benefits, but these restrictions won’t protect the average senior as they leave the Board with a confined area in which to impose their Medicare cuts: payments to providers, device makers, and drug companies.  Since much of the health care law already heavily taxes prescription drug and device makers, IPAB’s primary target will be providers (doctors, nursing homes, and hospitals).

But, it gets worse. Hospitals are exempt from the Board’s cuts until 2020, leaving the doctors and nursing homes who treat Medicare patients to bear the brunt of the Board’s “advisory proposals.”


Why You Should Be Concerned: Payment Rates and Access to Care

Cutting provider payment rates in order to meet an arbitrary spending cap is nothing new to Medicare. Back in 1997, Congress created a formula (the Sustainable Growth Rate) that would effectively result in a similar limit on annual spending.  Of course, virtually every year since 1997, Congress has used its power to postpone these cuts in order to preserve Medicare patients’ access to care.

Under the new health law, control over these annual cuts will be transferred to a board of 15 arbitrarily chosen health care bureaucrats, who, unlike members of Congress, are completely unaccountable to the American people. IPAB is, in effect, a kind of Medicare IRS that will cut payment rates to doctors and nursing homes.  According to the American Medical Association, one in six doctors already restricts the number of Medicare patients they treat.  Further payment cuts mean Medicare patients will be denied care because fewer and fewer doctors will see them.

Democrats and Republicans, as well as health care experts acknowledge the danger:

  • The Chief Actuary of the Medicare program, Richard Foster, has put Medicare’s future in perspective, stating that the payment reductions in the law could “jeopardize access to care for beneficiaries.”  Foster “reports that ultimately, [Medicare] payment rates will be only 1/3 of what will be paid by private insurance and only 1/2 of what is being paid by Medicaid, where the poor often can’t find access to essential care.”
  • Liberal Democrat Congressman Pete Stark states, “In its effort to limit the growth of Medicare spending, the board is likely to set inadequate payment rates for health care providers, which could endanger patient care.”

Let’s Protect the Doctor-Patient Relationship

We believe decisions about your health should be between you and your doctor, and no one else. Period. The patient-doctor relationship is sacred; no politician–and certainly no arbitrarily appointed Washington bureaucrat–should be able to insert themselves into the middle of it to tell you what treatments you can get–and what hospitals and doctors must deny.

Medical professionals should protect and advance health care, not put a price tag on it.  We don’t need accountants or HMOs in charge, we need our doctors in charge.  Anytime there’s additional bureaucracy, from insurance companies or Washington, Americans lose. And when it comes to health care, losing is unacceptable.