Why IPAB is a good idea


Category : Medical Rants

IPAB – the independent payment advisory board is a key feature of the ACA. This board will do what many countries already do – have an independent expert panel to assess the effectiveness of procedures, imaging studies, pharmaceuticals, etc.

Why do we need this board? We need careful assessments of new trends in medicine. Let me suggest two situations.

We have read much about increasing colonoscopy costs. We have a controversy about anesthesia – conscious sedation versus a more standard anesthesia with propofol. The former only requires the gastroenterologist; the latter adds an anesthesiologist, and therefore another huge bill. What should Medicare pay for colonoscopy, and should they pay for the anesthesia?

A new drug is developed for lung cancer. It costs 10 times standard therapy. Oncologists and the pharmaceutical company both make more money from using this drug. How do we determine its worth? This question is hypothetical but very similar to situations that we see for many pharmaceuticals.

Here is a quick list of issues I would want advice on:

Routine screening for aortic aneurysm at age ??
Colonoscopy for colorectal cancer screening after 2 normal colonoscopies
Interval for repeat echocardiograms
Criteria for starting home oxygen in COPD or restrictive lung disease (Medicare uses < 89% oxygen saturation, VA uses < 92%) First line antibiotics for MRSA Firm criteria for artificial joints What is your list? Note that the IPAB can recommend payment decisions, but that Congress can overrule. This board will create some controversies, but we must contain costs. We can only do that through choosing wisely about health care expenditures. We need a group of independent experts to provide such decisions and the rationale for those decisions. IPAB is a good idea.

Comments (12)

Move away from the 90 day office visit. My soon to be 83 year old father is a VA patient and only visits the VA every six months and this works fine. He is encouraged to call if he has a problem.

The 90 day visit in private practice for the stable patient is just a cost driver for the system and patient.

Steve LucasGWM4

As Dr. Rich has so appropriately pointed out at his health care rationing blog, the true purpose of the IPAB is to limiti individual prerogatives in a progressive health care system. “Complete central control is necessary not only to assure the societal perfection promised by the Progressive Program. Central control is also the method by which Progressives propose to manage America’s healthcare spending. Which is to say, controlling all healthcare expenditures is essential for the purpose of covert rationing.”

“Allowing individuals to spend their own money fundamentally undermines a Progressive healthcare system. It implies that the Central Authority is actually not supplying all useful healthcare services (when, by definition, it is), and thus implies that the government is holding back, and indeed, may be engaging in some kind of rationing. Such an implication cannot be permitted.”

“To say it another way, when individuals are allowed to purchase “extra” healthcare, that’s a graphic admission to the unwashed masses that there is extra healthcare to be had. The real problem is that this behavior raises expectations for everybody, and these higher expectations make it that much more difficult for the Central Authority to ration covertly.”

We cannot afford to pay for everything in health care. Thus, we should make rational decisions about health care spending. We have de facto rationing based upon ability to pay. Should we not support a system that provides objective assessments of value? Can we afford to continue paying for every new drug/imaging test/surgery regardless of effectiveness?

Your faith in the wisdom in an “independent” expert panel who presumably would be immune to the usual regulatory capture issues and political pressures is much greater than mine. Look at the crony capitalism exhibited in the provisions of ACA and the players who move in and out of government and into the companies that profit from the details of the legislation they help craft and pass. Consider the uproar that occur ed after an expert panmel made certain age based recommendations regarding mammograms.
Who is this “we” who cannot afford everything? Do you really believe there is an “objective assessment of value”. Economists in the late 1800s realized that value is subjective,an evaluation made by individuals,subject to variation in time and place based on their specific situation not some statistical aggregate.Further at the bottom or the end of the all cost effectiveness or cost benefit analysis is subjective opinion made by someone. At some point some “objective assessor” or group of them will make the call, is the benefit greater than the cost.At this point it is not objective. The issue is should individual patients with the advice of their physician,who hopefully acts in her best interest and not in some nebulous statistical good of the group,make the decision or should some panel ultimately make a subjective judgment call cloaked in the misleading rhetoric of cost benefit analysis.

A fundamental issue is should the proclamations of a governmental panel make decisions binding on everyone or just on those covered by CMS programs, which is what ACA had made the law of the land. Some policy wonks have suggested the rules on IPAB should ultimately do the former at least when the political climate would allow it. The following is a quote from Dr. Robert Berenson:

“we ought to consider setting all payer-rates for providers.” He continues “but the country’s antigovernment mood renders such a discussion unlikely,at least for now”.

Arnold Kling ,one of my favorite economists, sums up at least part of my argument with his ” Loose the “we” “.

Giving Congress the ability to override IPAB recommendations allows political considerations. IPAB should not have political considerations.

We have too many expensive therapies and diagnostic tests that do not perform better than less expensive alternatives. The only real alternative, in my mind, is to make charges transparent. Let the patient decide and give him/her the data. However, we know that we influence most patients to do what we think is best. We should consider cost, but too often we do not.

Our “system” does not allow true economic decision making. Thus, IPAB is necessary unless we change our system dramatically.

IPAB “should not” have political considerations but my fear is they will.A politically appointed board whose decisions will have a huge impact on medical expenditures will be the target of efforts by all the special interest groups to control the agenda and the recommendations not to mention who will be appointed. Having been impressed by the Public Choice considerations of James Buchanan and Gordon Tullock I admit I am very pessimistic about solutions that are born of complicated pieces of legislation because of all the special interests inputs to the legislation itself. That included the crafting of the details of IPAB.

What good is money if one cannot spend it however one wishes? If the IPAB tramples individual choice and individual freedom then we have a real problem. Who really believes any bureaucrat, such as Dr. Berenson for example, or any bureaucratic organization, such as IPAB, has all the answers?

I have always felt that the ACA would fail due to the economics. HealthCare.gov is only a symptom of a failure of leadership in managing the concept. Moving forward the issue becomes how can we salvage the good ideas of the ACA while finding agreement between both political parties.

I view the IPAB as having the potential of functioning similar to the NHS’s NICE. One over riding problem with the ACA is cost control and a NICE type system would go along way towards beginning the cost control process in this country.

Remember that in the UK it is possible to buy private insurance to assure any service at any speed. This type of add on would give people the choice they desire in selecting treatment alternatives.

Our system has to change. Spending twice what other countries do per person and then expecting to add even more spending will only cripple out economy. Allowing people and doctors to simply repeat test and scans over and over in an attempt to find some slight change in the outcome combined with treatments and medications with no financially definable advantage over another less costly treatment or medication has to stop.

Steve Lucas

I oppose the ACA and I oppose the IPAB. The same person who is going to appoint the panel had the worse website ever. I dont like the government making decisions on health care. Than is all. The ACA is not functional

Mickey Kaus – More Cowbell

Igor Volsky: If you like IPAB (Obamacare’s Independent Payment Advisory Board), you’ll love Obama’s proposed Medicare cuts! Problem: We hate IPAB. …

Why? IPAB’s an intentionally anti-democratic board of “experts” tasked with cutting a fixed amount of costs from Medicare (an amount Obama’s latest deficit plan would increase). We are of course assured that the IPAB board would only cut useless treatments–the famous “red pill” vs. the “blue pill”– but under cost pressure it’s pretty clear they’ll quickly move on to denying or penalizing what they consider cost-ineffective treatments–including treatments that are expensive but only seem to help a little bit or help only some of the time (even though new research on effectiveness often proves authoritative earlier conclusions wrong). After that, it’s on to cutting treatments that help people who are only going to die soon anyway. …

Why is this progression obvious? Because Obama telegraphed it himself, at the beginning of his term, by illustrating IPAB’s purpose with an anecdote about his grandmother, who received a hip operation after being told ”maybe you have three months, maybe you have six months, maybe you have nine months to live.” Hip replacements aren’t useless. They work. They aren’t cost-ineffective. The only reason to deny one to Obama’s grandma is that she was near the end of her life (though denying her the operation could have meant she lived her remaining months in pain).


Dr. Dean gives us a second opinion on IPAB –

One major problem is the so-called Independent Payment Advisory Board. The IPAB is essentially a health-care rationing body. By setting doctor reimbursement rates for Medicare and determining which procedures and drugs will be covered and at what price, the IPAB will be able to stop certain treatments its members do not favor by simply setting rates to levels where no doctor or hospital will perform them. There does have to be control of costs in our health-care system. However, rate setting—the essential mechanism of the IPAB—has a 40-year track record of failure. What ends up happening in these schemes (which many states including my home state of Vermont have implemented with virtually no long-term effect on costs) is that patients and physicians get aggravated because bureaucrats in either the private or public sector are making medical decisions without knowing the patients. Most important, once again, these kinds of schemes do not control costs. The medical system simply becomes more bureaucratic. The nonpartisan Congressional Budget Office has indicated that the IPAB, in its current form, won’t save a single dime before 2021. As everyone in Washington knows, but less frequently admits, CBO projections of any kind—past five years or so—are really just speculation. I believe the IPAB will never control costs based on the long record of previous attempts in many of the states, including my own state of Vermont.


One of the many things lost in the ACA is trust. We have all been dealing with the most political administration ever, even more political than Richard Nixon’s. A Blue Dog Senator we ho did not vote for the ACA in a recent interview stated he has been trying to address the obvious problems and reach a consensus on common ground only to find those in his leadership defending the act with no changes possible, while those on the other side want to start all over from scratch.

Reform of our health system is necessary and agreed upon by both political parties, the question now is how do we achieve that goal and return trust to our political system.

Steve Lucas

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