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The Independent Payment Advisory Board: Medicare’s New Turbo-Charged Payment Knife?

December 16, 2011
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Why healthcare IT leaders should anticipate growing pressure for data delivery going forward


A fascinating analysis was published online today (Dec. 15) in Health Affairs, on the subject of the Independent Payment Advisory Board (IPAB), created under the provisions of the Affordable Care Act (ACA), yet woefully under-covered and under-analyzed by the mainstream news media during the buildup, in 2009, to the passage of the ACA in March 2010, and its signing by President Obama.

But now that healthcare reform is a reality, and unless the Supreme Court completely invalidates the ACA when it reviews the legislation this spring (a rather unlikely prospect, though the individual health insurance mandate’s fate is clearly up in the air), the IPAB is here to stay, unless a Republican takes the White House in November 2012 and Republicans assume the majority in both houses of Congress. Even if all those developments were to come to pass, it is quite possible that the IPAB would survive, for the very reason that it was created—because it is profoundly difficult to make significant payment changes to Medicare—especially cuts—in the inherently political process that is congressional policy-making.

Here’s what our readers should know: as today’s Health Affairs article, authored by Jennifer Haberkorn (a staff writer for Politico specializing in healthcare reform issues) explains, “The main driver of IPAB’s work will be projections of future Medicare spending,” with the law requiring that, beginning in 2013, the chief actuary of the Centers for Medicare and Medicaid Services (CMS) to submit by April 30 a calculation of the projected Medicare growth rate; if the CMS chief actuary finds that the growth rate exceeds the target under the ACA (the target will be set at the increase in the national GDP plus one percentage point), then the IPAB will be required to recommend specific steps that will curb the rate of growth in Medicare spending.

All of this might sound a bit clerical at first blush, but consider the following: Medicare spending is expected to nearly double between 2012 and 2020—going from $566 billion to $916 billion during that time—even with some provider cuts built into the ACA.

This expected explosion in Medicare costs, driven by the aging of the population, the growth in costs of medical technology and pharmaceuticals, and an acceleration in the prevalence of chronic disease, means that healthcare providers will be put under dramatically intensifying pressure to cut costs and demonstrate value.

It is in this context, too, that such mandatory programs under Medicare created by the ACA have emerged—programs such as value-based purchasing, healthcare-acquired condition reduction, and avoidable readmissions reduction, along with voluntary programs including accountable care organization and bundled payments development, and medical home models.

And while all these programs play out at the policy and strategic levels, healthcare IT leaders will absolutely be nexus leaders within their organizations, as they develop the data warehouses, data reporting systems, business intelligence and clinical analytics tools, and other tools and systems to facilitate all the reporting that will be required to support all these programs.

And as Medicare costs continue to grow, healthcare IT leadership will become more, not less, vital to the survival of patient care organizations going forward. Indeed, in the end, even political developments ultimately push the Independent Payment Advisory Board out of existence, the cost dynamics that created it will only continue to intensify, forcing provider organizations, more and more, to justify their delivery of, and charges for, patient care.