Health Care Reform- The Independent Payment Advisory Board (IPAB) And Its Implications on Health Care Providers


(September 14, 2010): As one of the most controversial provisions in the recently enacted health care reform legislation, Congress created the IPAB – a board that is independent from Congress and the United States Department of Health and Human Services ("HHS") as a mechanism to control Medicare – and potentially all – health care expenditures. Specifically, beginning January 2015, for any year in which the Chief Actuary of the Centers for Medicare and Medicaid Services ("Chief Actuary") projects that the increase in per capita Medicare expenditures will exceed a defined target level, the IPAB is to develop a detailed proposal to scale back Medicare expenditures for that year. With limited exceptions, unlike the Medicare Payment Advisory Committee, these "recommendations" become binding unless Congress affirmatively acts in an expedited fashion and with a super majority vote to prevent them from becoming law. Additionally, the IPAB is to make non-binding recommendations on controlling expenditures for non-Federal health care programs.

The IPAB provision was developed because the administration and certain members of Congress were concerned that Congress did not have the political will to impose fiscal discipline upon itself. The IPAB has the potential to be a significant player in controlling health care costs overall. However, because some believe that it usurps Congress’ authority, it is also extremely controversial. Complicating the process is the fact that certain provider classes, such as hospitals, are exempted from cost reductions in the IPAB process during the early years, thus placing greater pressure to reduce expenditures for other provider and payor classes. This provision, coupled with a number of incentives in the health reform legislation to change the manner in which providers deliver care, will place strong incentives for the health care community to develop new methods to constrain cost increases without adversely affecting care. These include such mechanisms as coordinating care through such vehicles as Accountable Care Organizations and Medical Homes, bundling of services, and enhanced methods of disease management for high cost patients, as well the use of electronic medical records and more frequent use of email between practitioners and their patients.

Health care entities seeking advice on strategies for adapting to the new health care reform legislation should contact Michael Cook at (202) 298-8750. Also, Mr. Cook has authored a more detailed article on the IPAB and its likely impact on health care entities that is scheduled to be published in October issue of the American Health Lawyers Association Journal on Health and Life Sciences Law. Once that article is published, this website will include an abstract and a link to the article. Additionally, Mr. Cook will be presenting at the Healthcare Reform: Dealing with Hurdles and Building up Success Conference, sponsored by GTCbio, on November 8 and 9, 2010, in Washington, DC.

Questions About the IPAB? Call Michael Cook, Healthcare Attorney

Liles Parker attorneys represent health care providers in connection with a wide variety of health care projects. Michael Cook has extensive experience as a health lawyer and is a nationally-recognized attorney. For more information, please contact Mr. Cook. He can be e-mailed at: Alternatively, call Mr. Cook for a complimentary consultation at: 1 (800) 475-1906.