The Importance of Independence: Affordable Care Act’s Independent Payment Advisory Board Key to Quality Care at Lower Cost
A year ago this week, President Barack Obama signed into law our nation’s first comprehensive health reform law, the Affordable Care Act, which not only extends health insurance protection to tens of millions of Americans but also actually reduces the deficit—in large part because of measures the law takes to responsibly slow the growth in Medicare and overall health spending. Lowering the projected growth of health care costs is a key promise of the law because these ever-escalating costs drain businesses, government coffers, and individuals’ savings. Yet many who criticize the law as a budget buster are aiming to repeal some of its key cost-containment features.
The Independent Payment Advisory Board is a case in point. The Affordable Care Act establishes this board to serve as a guarantor that the law’s cost-containment goals will actually be achieved. If the government’s main health care program for the elderly and disabled Medicare exceeds its per capita cost-growth targets under the new law, then the Independent Payment Advisory Board is empowered to recommend ways to reduce program expenditures by changing the way Medicare pays health care providers.
The secretary of health and human services must implement these recommendations unless Congress passes an alternative proposal or discontinues the cost-containment review process by the Independent Payment Advisory Board. Some legislators propose to eliminate the board. This would be a mistake.
Understanding the purpose of the board—as part of the Affordable Care Act’s cost-containment strategy overall—makes it clear that keeping and strengthening the independent board makes sense. The new health law’s cost-containment strategy includes both reducing excessive payments to providers under Medicare’s current payment mechanisms and moving Medicare—and, by example, the private sector—away from a payment system that rewards volume of services, without regard to health benefits, to payment arrangements that reward effective care, efficiently provided.
The Independent Payment Advisory Board will reinforce this twin focus on quality care at lower cost.
The Affordable Care Act holds hospitals and other institutional health care providers to productivity gains—something every other sector of our economy has achieved over the past several decades. Between 1995 and 2008 average annual productivity growth across the vast majority of U.S. businesses was 2.4 percentage points—just more than 1 percentage point higher than the previous two decades. In contrast, the health care, education, and social services sectors combined have produced average annual productivity growth rates of negative 0.2 percentage points.
The Affordable Care Act’s push for providers to produce productivity gains on par with other sectors promotes the efficiencies needed to reduce health care costs. But to assure that growth rates actually slow, the Affordable Care Act sets a target for Medicare spending growth and requires the Independent Payment Advisory Board to develop and recommend payment changes to achieve it. Both the Congressional Budget Office and the executive branch’s Centers for Medicare and Medicaid Services predict that explicit payment changes will produce most but not all of the savings needed to realize the independent board’s spending-growth targets through 2019 under the new law.
Avoiding excessive increases in the rates Medicare pays historically slows spending growth across the entire health care industry and can do so in the future. But tightening fee-for-service does nothing to improve quality or efficiency in care delivery—a critical goal of health reform. That’s why the Affordable Care Act includes multiple strategies to promote payment and delivery reform.
First, the new law stops rewarding bad behavior. The law authorizes the secretary of health and human services, without seeking congressional action, to review and alter “misvalued” fees, such as paying more for services than they’re worth, and to reduce payments for clearly undesirable behavior, such as hospital-acquired infections or conditions, inappropriate hospital readmissions, and, even more egregious, outright fraud. These new steps will deliver market-based signals to Medicare health care providers—and by example to the entire industry—that the wrong kinds of services that drive up current costs will no longer be rewarded.
Alongside what might be considered these “sticks” to change behavior come a set of essential “carrots,” or rewards to deliver more effective and efficient care. At the most basic level, these rewards are extra payments to providers for doing “good” things—say, meeting a set of efficiency standards while maintaining quality care. But more importantly, these rewards reside in alternative payment mechanisms to replace today’s fee-for-service payment system.
Among the new payment systems the new health law encourages is “bundling” separate fees into a single payment for services associated with a specific condition, such as a hip fracture, which today would include separate fees for diagnosis, surgery, and postoperative care. Another provision of the law promotes the financial and health benefits of primary care and chronic care management through newly created “medical homes,” which coordinate health care for their patients. And yet another new approach to health care promoted by the new law are so-called “accountable care organizations,” which are collaboratives of inpatient and outpatient providers who are rewarded for delivering quality care to a defined set of patients at lower-than-projected costs.
The new law sets a clear timetable for implementing some of these measures and creates the Center for Medicare and Medicaid Payment Innovation to initiate, evaluate, and broadly extend the application of these methods as part of “rapid cycle change.”
The law also recognizes that these efficiencies and the savings they can deliver will not be realized if changes in payment systems are limited to the public sector, and therefore encourages public-private partnerships. Medicare is a large payer, accounting for 20 percent of our nation’s medical bill in 2009. Private payers have historically followed Medicare payment practices. But that outcome is neither automatic nor immediate.
What’s more, inconsistent payment mechanisms across payers discourage providers from changing behavior, impede efficiency improvements, and create opportunities for offsetting one payer’s spending reductions with increases for others. Indeed, a recent study by the Medicare Payment Advisory Commission, an independent congressional agency, finds that hospitals squeezed by both Medicare and private payers changed their operations to become more efficient, yet hospitals with generous private payments ignored Medicare constraints, took losses on Medicare patients, and continued business as usual. Better quality care at lower costs requires that the public and private sectors work in tandem.
The health reform law encourages common action in different ways. The law gives preference to innovations where providers engage with private payers alongside Medicare in adopting new payment incentives Other provisions in the law further support payment reform in the private sector by extending access to Medicare provider performance data to guide private payers’ payment-reform efforts, and requiring private health plans to regularly report on those efforts. These data will inform the Independent Payment Review Board when it uses its authority to make nonbinding recommendations for private-payer reforms alongside binding recommendations for public programs.
This is a key provision of the new law. From 1970 to 2000 the private sector was less effective than Medicare in promoting efficiency, with an average annual growth rate per enrollee of 11.1 percent compared to Medicare’s rate of 9.6 percent. An effort that addresses public-sector but not private-sector health care spending risks limited access for beneficiaries as well as missed opportunities to encourage health care providers to operate more effectively and efficiently. Therefore, the broader the new board’s authority is to influence not only public but also private spending, the more effective it will be.
A focus on policy tools alone, however, obscures the most important element of the Independent Payment Review Board’s potential impact. Payment improvements in the past were stymied by legislators responding to providers’ resistance to change. Provider payment is rarely a partisan issue but it is a political issue. The new law takes the politics out of the equation by giving the independent board the authority to make Medicare payment recommendations that become law unless explicitly overridden by legislative action. This gives a major boost to policy over politics in containing health care costs.
And it’s precisely this boost that special interest groups want to prevent. Opponents of the new board complain it undermines congressional authority and removes from their control an important budgetary lever at a time when the federal budget deficit is rising at an unsustainable rate. But the real concern of many of these critics, who often are the fiercest advocates of fiscal restraint, is that the board’s authority diminishes their influence and their ability to fashion a Medicare budget that benefits the pharmaceutical industry and other special interest groups that are in a position to lose the most from the board’s future recommendations.
Other critics of the Independent Payment Advisory Board fear the Affordable Care Act did not go far enough in granting it authority, leaving too many loopholes for special interest groups to avoid payment adjustments. In making adjustments the board is prohibited from addressing payments to hospitals, skilled nursing facilities, and other health care providers who are scheduled to receive “productivity adjustments” under the Affordable Care Act. Rather than repeal the board, the more sensible option would be to close these loopholes and extend accountability for unacceptable health care cost increases.
In fact, members of Congress and policymakers in the federal government should be thinking of ways to strengthen the Independent Payment Advisory Board given the fiscal reality facing the federal government today. The new board is one of the Affordable Care Act’s most important cost-containment tools. We can’t afford to lose it.
By: Judy Feder, Senior Fellow, Center For American Progress, March 21, 2011
The Anniversary of the Affordable Care Act: A Year Later, The False Attacks Continue
Conservatives often push myths and misconceptions of the Affordable Care Act of 2010 as a way to increase opposition. During the debate in Congress in the run-up to passage of the new health reform law, conservatives pushed wild accusations that the law would be a “government takeover” and establish “death panels,” claims that were labeled “the lie of the year.” Now, a year after the Affordable Care Act was signed into law, inaccurate claims and mistruths against the law continue.
Conservatives continue to make false claims against the law as a way to repeal it, undermine consumer protections, and put insurance companies back in charge of our health system. The reason these false statements endure is clear: There are those who would rather take us back to the way our health system was before when insurance companies were in charge rather than move forward and protect our care.
This issue brief is a response to recent false attacks conservatives have made against the law. As we will demonstrate, the Affordable Care Act will create jobs, lower health care costs for families, help small businesses provide health insurance to their employees while maintaining the private sector’s key role in health insurance, and ensure we provide quality health care to all Americans at a lower cost to them and American taxpayers.
The Affordable Care Act will help create jobs
The Affordable Care Act helps our economic recovery by bringing health costs under control, freeing businesses to use that money to invest in job creation. The real threat to job creation is the conservative push to take us back to the old health system where costs were on an unsustainable path. Harvard University professor and Center for American Progress Senior Fellow David Cutler found that repealing the Affordable Care Act—and going back to the unsustainable costs—would cost up to 400,000 jobs annually over the next decade.
To push this “job destroying” argument, conservatives cite the nonpartisan Congressional Budget Office’s estimates that the law will reduce the labor supply (although conservatives dismiss CBO reports when they conclude the law will cut the deficit and reduce premiums). Yet conservatives fail to recognize that one reason for this reduction is that older workers, now forced to hold on to jobs to get health insurance, will now be able to retire—with insurance—when they choose.
The Affordable Care Act lowers premiums and costs for families
The Affordable Care Act takes steps to get our health costs under control and lowers costs for families. The real threat to costs is the conservative push to repeal the law. Cutler found that repealing the Affordable Care Act would increase total health spending by $125 billion and raise family premiums by nearly $2,000.
More small businesses are providing health coverage to their employees, thanks in part to the Affordable Care Act
Conservatives try to downplay the impact of the small business tax credits to provide health insurance to their employees. The truth is that last year, more than 4 million small businesses were eligible to receive a tax credit to make health coverage more affordable. According to the Los Angeles Times, “major insurers around the country are reporting that a growing number of small businesses are signing up to give their workers health benefits,” adding that an “important selling point” was the small business tax credits.
The Affordable Care Act keeps the employer-based health system intact
Conservatives claim the Affordable Care Act will undermine the employer-sponsored health coverage that millions of Americans enjoy when the state health insurance market exchanges become functional. This is not true. According to Mercer’s recent “National Survey of Employer-Sponsored Health Plans,” the vast majority of employers, particularly large employers, will continue to offer their employees health coverage. Indeed, the survey notes that if the Affordable Care Act follows the Massachusetts health law, “few employers of any size” will choose to drop coverage.
The Affordable Care Act ensures quality care and has flexibility for states
The Affordable Care Act provides states with considerable flexibility. Each state gets to decide how to set up their own marketplace of health options for consumers to choose which plan suits them best. States have flexibility in how they implement insurance reforms and consumer protections. The law encourages state innovation by allowing them to obtain waivers from some requirements provided the alternative proposal provides comparable coverage and affordability. President Obama recently endorsed legislation from Sens. Ron Wyden (D-OR) and Scott Brown (R-MA) that would move the start date for those waivers by three years.
At the same time, conservatives argue there is not enough flexibility in the Affordable Care Act. They criticize the Obama administration for granting too many waivers on so-called “mini med” plans that have a low annual limit. Since many of the consumer protections and mechanisms to increase patient choice—such as the state marketplaces—are not operational until 2014, the administration has in some instances granted waivers from the law’s early requirements, to avoid leaving people with nothing. CAP Senior Fellow Judy Feder told Congress that until the law is fully implemented, the goal should be to “make matters better, without making them worse.”
States can save money from the Medicaid reforms under the law
Medicaid is a federal-state health program that provides health coverage to predominantly lower-income families, elderly people, and people with disabilities. The federal government matches state funding on the program. For people made newly eligible for Medicaid by the Affordable Care Act, the federal government will pay 100 percent of costs in the early implementation of the Affordable Care Act. In the later years, states will have to pay only 10 percent.
Conservatives charge that the Affordable Care Act will increase state Medicaid spending by $118 billion. An Urban Institute study, however, found that states will save between $40.6 billion and $131.9 billion from 2014-2019 by replacing state and local spending for uncompensated care and mental health with federal Medicaid funds and by replacing federal Medicaid funding for adults with incomes over 133 percent of the federal poverty level with federal subsidies in the marketplaces.
There is no secret $105 billion hidden in the law
Conservatives such as Reps. Michele Bachmann (R-MN) and Steve King (R-IA) claim that $105 billion of mandatory funding was secretly put in the law unbeknownst to members of Congress. This is false. The Washington Post’s Fact Checker said this claim is “bordering on ridiculous” and “does not have credibility.” The truth is there was a considerable amount of transparency before the Congress approved the Affordable Care Act. In the House alone, there were: 79 bipartisan hearings, totaling 100 hours; 181 witnesses; and 239 amendments considered. The House bill was posted online 30 days before committee markup.
The law keeps Medicare solvent and cuts the deficit
Conservatives argue that the Obama administration “double counted” the Medicare savings for the law, arguing it went to save the Medicare Trust Fund and cut the deficit. The facts are these: The law cuts the deficit by $1 trillion over the next two decades and keeps Medicare solvent until 2029—12 years longer than before the law was passed. The Center on Budget and Policy Priorities explained how this works before the House Budget Committee:
There’s no double-counting involved in recognizing that Medicare savings improve the status of both the federal budget and the Medicare trust funds. In the same way, when a baseball player hits a homer, it both adds one run to his team’s score and also improves his batting average. Neither situation involves double-counting.
Conclusion
The conservative false attacks are meant to repeal the Affordable Care Act and bring our health system back to the time when insurance companies could discriminate because of a pre-existing condition. Despite these false attacks, the facts are clear: Millions of families, small business owners, and seniors are seeing the benefits of the Affordable Care Act. More than 4 million small businesses are eligible to receive tax credits to make health coverage more affordable. As many as 4 million seniors received help to make their prescription drugs more affordable. Already this year, more than 150,000 seniors with Medicare had a free wellness exam. And children with pre-existing conditions can no longer be excluded from insurance plans. We should move forward with this law and tell those who want to repeal it that we won’t go back.
By: Tony Carrk, Center For American Progress, March 21, 2011
Former Attorney General Mukasey Lobbies For U.S. Chamber To Gut Foreign Bribery Law
Bush’s attorney general (not Gonzales, the much less incompetent but equally malevolent) Michael Mukasey has a new gig in which to ply his talents: making it easier for corporations to bribe foreign governments. The Foreign Corrupt Practices Act (FPCA) is intended to stop U.S.-based multinational corporations from bribing foreign governments. Unlike the previous administration’s Department of Justice, under Mukasey, the Obama DOJ is enforcing the law.
Under Obama, the department collected more than $1 billion in fines during fiscal year 2010, the most the government has collected in the law’s 38-year history, and more than ten times the $87 million collected in 2007 by the Bush Administration.
The U.S. Chamber can’t have that, so of course, they’ve hired Mukasey to lobby Congress to amend the law.
Debevoise & Plimpton, where Mukasey is a partner, filed lobbying registration papers on his behalf this month, according to Senate records. The registration is for the Chamber’s Institute for Legal Reform and is effective back to March 3. It covers possible FCPA amendments and other issues “related to criminal law and policies affecting U.S. corporations.”The Chamber has become increasingly critical of the FCPA in recent months. It argues that the law, which allows the U.S. government to seek charges against corporations and individuals for bribes paid to local officials in other countries, is not working well and could be making U.S. companies less competitive.
In October, the Chamber released a policy paper proposing several specific changes to the law. The ideas included adding a “compliance defense,” so that a company could not be held criminally liable when an employee circumvents reasonable internal procedures….
When the Chamber released its proposals, Mukasey attended its annual legal summit and moderated a panel discussion on the FCPA. He noted the sharp rise in the Justice Department’s enforcement of the law during the past decade. “The expansion in prosecutions and investigations of course has brought a great deal of anxiety to companies in the United States,” he said, according to video of the panel.
See, the law “is not working well” when it is actaully enforced, that’s the message from Bush’s attorney general. That’s no great shock, given the Bush administration’s attitude toward the rule of law, but still pretty ironic. From an actual rule of law standpoint, the law seems to be working pretty well as enfroced. But the U.S. Chamber, and Mukasey, certainly can’t have that.
By: Joan McCarter, Daily Kos, March 18, 2011
Government by the Week: Is A Government Shutdown The End-Game For The GOP?
Parents have begun arranging alternative child care for their preschoolers, uncertain of whether their Head Start program will be there when they need it. The Social Security Administration is unable to open new hearing offices to handle a backlog of appeals. The Pentagon has had to delay equipment repairs. There is chaos throughout the federal government, as Robert Pear reported in The Times on Tuesday, because a riven Congress has forced agencies to operate on a week-by-week basis.
Yet, on Tuesday, the House passed another short-term spending bill. This one keeps things going for all of three weeks. The Senate will almost certainly join in shortly to avoid an impending shutdown on Friday, the result of the stopgap bill from two weeks ago.
These slipshod exercises in governance were choreographed by House Republicans, who knew that neither the Senate nor President Obama would ever accept their original proposal to gut nonsecurity discretionary spending with $61 billion in cuts through September, including riders to end financing for Planned Parenthood and the health care law. They had hoped to use the pressure of a potential shutdown to achieve much of their goal, but, so far, all they have accomplished is a cut of about $10 billion, mostly from earmarks or programs that the president himself proposed to cut. (The new bill cuts $6 billion.)
House Republican leaders, who say they do not want a government shutdown, have, so far, held off their more fanatical freshmen, who want to slash everything in sight. But the leadership cannot do so forever, and the evidence of that was clear on Tuesday. More than 50 Republicans refused to go along with the three-week resolution because it did not cut enough. Several specifically complained that it allowed financing for Planned Parenthood and the health care law to continue.
This is not a group that cares much for pragmatic compromise, and the three weeks are just a timeout. Representative Mike Pence of Indiana, a Republican who voted no on the new bill, spoke for many of his colleagues when he said the budget could not be resolved without a willingness to shut down government. “By giving liberals in the Senate another three weeks of negotiations,” he said, “we will only delay a confrontation that must come.”
He is absolutely right about that. If Democrats, including the president, do not draw a clear line soon, making their priorities and their limits unmistakable, they will be harried by these kinds of votes for years. Even in the unlikely case that an agreement is reached in three weeks to finance the government through September, a different vote will be necessary just a few weeks from now to raise the debt ceiling. Republicans have already vowed to vote that down — even though it could be financially disastrous — if they do not get their way. And then there is the vote for the fiscal 2012 budget, which begins Oct. 1, and then the year after that.
At some point, Mr. Pence will get his confrontation. If Republicans continue to press for cuts of tens of billions from discretionary spending, setting back the economic recovery largely for ideological purposes, Democrats will have to say no, even if that results in a short-term shutdown. The American people will be able to figure out who is at fault. Responsible governing means agreeing quickly to a deal to finish out the fiscal year, and then starting a serious talk about entitlement programs and taxes — the real causes of a soaring deficit.
By: The New York Times, Editorial, March 15, 2011
McCarthyism Revisited: Peter King’s Modern-day Witch Hunt
“There is nothing radical or un-American in holding these hearings,” Rep. Peter King (R-N.Y.) claimed Thursday as he launched his McCarthyite probe of American Muslims. He could not have been more wrong. If King is looking for threats to our freedoms and values, a mirror would be the place to start.
Here’s why. Imagine a young man, a Muslim, who changes in troubling ways. His two best friends become concerned, then alarmed, as the young man abandons Western dress, displays a newfound religiosity and begins to echo jihadist rhetoric about the decadence of American society. Both friends suspect that the young man has become radicalized and might even attempt some kind of terrorist attack.
One friend is Muslim, the other Christian. Does the Muslim friend have a greater responsibility than the Christian to contact the authorities? By the logic of King’s witch hunt, he does.
The Homeland Security Committee hearings that King has convened are billed as an inquiry into “The Extent of Radicalization in the American Muslim Community and That Community’s Response.” In other words, King suspects that the Muslim community is somehow complicit. Individuals of one faith are implicated; individuals of another faith are not.
As Rep. Keith Ellison (D-Minn.), one of two Muslims in Congress, said in his moving testimony, King’s premise assigns “collective blame” to American Muslims. “Demanding a community response . . . asserts that the entire community bears responsibility,” Ellison said.
In his pugnacious opening statement, King noted that his plan to hold these hearings had been criticized by “special-interest groups and the media,” which he said had gone into “paroxysms of rage and hysteria” at the prospect. “To back down would be a craven surrender to political correctness,” he said. In case someone missed the point, King later said it was our duty to “put aside political correctness and define who our enemy truly is.”
King asserted that “this committee cannot live in denial.” He then went straight there – into denial – by paying no heed to the witness best situated to answer the committee’s question.
Los Angeles County Sheriff Lee Baca testified in opposition to King’s premise, citing figures demonstrating that radical, extremist acts of crime are committed by non-Muslims as well, and that seven of the past 10 known terrorist plots involving al-Qaeda have been foiled in part by information provided by Muslim Americans. Baca said his officers have good, productive relationships with Muslim leaders and citizens. Law enforcement officials from other jurisdictions where there are large Muslim communities could have given similar testimony, had they been invited.
King is trying to peddle the hooey that moderate Muslims do not speak out against extremism. It took Rep. Sheila Jackson Lee (D-Tex.) to note the irony that among the committee’s witnesses were two devout Muslims – one Syrian American, the other Somali American – who were there to speak out, quite loudly, against extremism.
King, in effect, was demanding to know why he didn’t see what was taking place before his eyes. Perhaps he was distracted by the need to maintain constant vigilance for any hint of political correctness.
That’s really what King’s grandstanding is all about. The purpose of these hearings isn’t to gather information. If it were, officials of the FBI and the Department of Homeland Security would have been asked to testify. In addition to inviting Minneapolis-based Abdirizak Bihi, a Somali American whose nephew was recruited by the terrorist organization al-Shabab, King could have brought in police from the Twin Cities to testify about cooperation by the Somali immigrant community.
King’s intent is theatrical, not substantive; he’s not trying to elicit facts, he’s inviting catcalls – and cheers.
It should not be so, but Islamophobia is a powerful force in American politics. There are those who will applaud King for associating the phrase “American Muslim community” with the phrase “who our enemy truly is.”
But decency is a powerful force, too. The hearing’s indelible moment came when Ellison broke down in tears. He was telling the story of Mohammad Salman Hamdani, a young Muslim who rushed into the World Trade Center to try to rescue victims just before the towers collapsed. His remains were found in the rubble.
Hamdani was not just a Muslim, Ellison said, fighting to choke out words that no one could dismiss as politically correct. He was “an American who gave everything for his fellow Americans.”
By: Eugene Robinson, Op-Ed Columnist, The Washington Post, March 10, 2011
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