House Ways & Means Committee Issues Report on Protecting Seniors Access to Medicare Act
Excerpts of the report follow:
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 849, as ordered by the
B. Background and Need for Legislation
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C. Legislative History
BACKGROUND
H.R. 849 was introduced on
COMMITTEE HEARINGS
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COMMITTEE ACTION
II. EXPLANATION OF THE BILL
A. Protecting Seniors' Access to Medicare Act of 2017
PRESENT LAW
IPAB was created by Sections 3403 and 10320 of the ACA (P.L. 111-148). Beginning in 2014, IPAB is tasked with making recommendations to cut per capita Medicare spending if such spending exceeds certain economic growth targets. No board members have been selected to date.
By
If the Chief Actuary determines that projected Medicare spending growth exceeds the projected spending growth targets, then the Chief Actuary must establish a savings target to rein in Medicare spending in the last year of the five-year period being examined. Savings targets are capped at the lesser of a pre-determined percentage (which increases from 0.5 percent of total Medicare spending in 2015 to 1.5 percent in 2018 and beyond) or the actual difference between estimated Medicare spending growth and the spending growth target.
If Medicare per capita spending is projected to outpace the target, IPAB would then recommend Medicare cuts that, if enacted, would meet or exceed the savings target identified by the CMS Chief Actuary. IPAB is prohibited from recommending policies that would ration care (although "ration" is not defined in law), raise beneficiary premiums, increase cost sharing, or otherwise restrict benefits or eligibility.
Due to the projected growth in Medicare spending, the Trustees currently predict that IPAB will be triggered as soon as 2021, compared to the 2016 report that predicted a 2017 trigger date. The Trustees estimate that IPAB will reduce Medicare growth rates for the first time in 2023, by 0.002 percent. In addition, the Trustees project that growth rates will be reduced by similarly small amounts in 2026, 2027, 2028, 2030, 2033, and 2035. However, they project that "IPAB is not triggered beyond 2035 in current law, mostly due to the assumptions about long-range health care cost growth, which is lower than GDP growth."
IPAB operating funds are drawn from the Medicare trust funds. IPAB was scheduled to receive
IPAB's recommendations are due to the President and
IPAB's recommendations are afforded expedited procedures for consideration by the
If
In 2017,
IPAB will consist of 15 members appointed by the President and confirmed by the
Special exemptions from IPAB-recommended cuts were granted to those providers who, in the ACA, received a cut to their annual base Medicare payment adjustment and a "productivity adjustment" cut. Specifically, providers cannot be cut by the IPAB in years in which they are subject to the productivity cuts and a cut to their payment update. As such, the hospital and hospice industries are exempt from IPAB cuts until 2019, while clinical laboratories were exempt from IPAB cuts through 2015. Given that a significant sector of the health care industry is exempt from cuts (representing 37 percent of Medicare benefit payments in 2009), other providers such as physicians, nursing homes, home health agencies, Medicare Advantage, and Part D plans would likely bear the brunt of any cuts, at least until 2019.
REASONS FOR CHANGE
The Committee believes that appointing an unelected and unaccountable board to cut Medicare spending will harm beneficiary access to care and force health care providers to limit the number of beneficiaries they will treat or even stop participating in Medicare altogether.
While the statute suggests that IPAB will be prohibited from recommending policies that ration health care, the term "ration" is not defined in the statute, meaning its definition and application would be determined by IPAB members. Further, nothing would preclude IPAB from rationing care by way of driving down reimbursements for treatments and procedures to levels where no provider would provide the care.
The Committee also has significant concerns about the degree of institutional power that will be taken from
The Committee objects to IPAB's ability to conduct its proceedings outside of the public domain, as well as its exemption from judicial review. Such authority hinders consideration of beneficiary and provider input while robbing them of any recourse through the judicial system or appeal of IPAB decisions.
EXPLANATION OF PROVISIONS
H.R. 849, as amended, would repeal section 3403 and 10320 of the ACA, including the amendments made by these sections. Beginning in 2014, the IPAB is tasked with making recommendations to cut per capita Medicare spending if such spending exceeds certain economic growth targets. The Secretary of HHS is directed to implement the Board's proposals automatically unless
EFFECTIVE DATE
H.R. 849 would become effective on the date of its enactment.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of the
The Chairman's amendment in the nature of a substitute was adopted by a voice vote (with a quorum being present).
The vote on
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The vote on the amendment offered by
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H.R. 849 was ordered favorably reported to the
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IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of the
B.
In compliance with clause 3(c)(2) of rule XIII of the Rules of the
C. Cost Estimate Prepared by the
In compliance with clause 3(c)(3) of rule XIII of the Rules of the
U.S.
Congessional Budget Office,
Hon.
Chairman,
Dear Mr. Chairman: The
If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is
Sincerely,
Director.
Enclosure.
H.R. 849--Protecting Seniors' Access to Medicare Act
Summary: H.R. 849 would repeal the provisions of the Affordable Care Act (ACA) that established the
CBO estimates that enacting H.R. 849 would increase direct spending by
Pay-as-you-go procedures apply because enacting the legislation would affect direct spending. Enacting the bill would not affect revenues.
CBO estimates that enacting H.R. 849 would increase net direct spending and on-budget deficits by more than
H.R. 849 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 849 is shown in the following table. The costs of this legislation fall within budget function 570 (Medicare).
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Basis of estimate: H.R. 849 would repeal the provisions of the ACA that created IPAB. CBO estimates that enacting the bill would lead to a net increase in direct spending of
Background
Under current law, IPAB has the obligation to reduce Medicare spending--beginning in 2015--relative to what otherwise would occur if the rate of growth in spending per beneficiary is projected to exceed a target rate. For 2015 through 2019, that target rate is based on inflation; for 2020 and subsequent years, it is based on growth in the economy. Each year, the law requires the Chief Actuary of the
The rate of change in net Medicare spending per beneficiary (that is, gross Medicare spending less enrollees' payments for premiums); and
The rate of change in an economic measure--
which is the average of the CPI-U and CPI-M1 for five-year periods ending in 2015 through 2019, and GDP per capita plus 1 percentage point for five-year periods ending in 2020 and subsequent years.
1The CPI-U is the consumer price index for all urban consumers and the CPI-M is the medical care category of the CPI-U. The medical care category is one of eight major expenditure groups that make up the CPI-U (see www.bls.gov/cpi/questions-and-answers.htm#Question_7).
In general, the Chief Actuary of CMS will compare those two values, and if the spending measure is larger than the economic measure, the difference will be used to determine the IPAB's savings target for the last year of the five-year period. However, current law prohibits modifications designed to achieve the savings target in two consecutive years if the Chief Actuary determines that the rate of growth in Medicare spending per beneficiary is below the rate of growth in national health expenditures per capita. In general, CBO expects that modifications designed to achieve the savings target would not be implemented in consecutive years.
CBO's current estimates of Medicare spending and its current economic projections result in an estimated IPAB spending measure that is above the economic measure in 2023 and each subsequent year through 2027. However, because of the limitation on making modifications in consecutive years, CBO's baseline projections include the assumption that modifications to the Medicare program designed to achieve the savings target would be implemented in 2023, 2025, and 2027. In addition, CBO anticipates that some of the savings from program modifications made to hit the savings target generated by the IPAB mechanism will compound and produce savings in subsequent years. Under current law, CBO projects that actions taken to achieve the IPAB spending target will reduce Medicare spending by
2CBO's baseline projections result in a projected savings target of 0.1 percent for 2019. However, the 2017 Annual Report of the Boards of Trustees of the
Estimated effects of H.R. 849 over the 2018-2027 period
The IPAB mechanism is essentially a one-sided bet: either modifications to achieve a savings target are required (resulting in savings) or they are not (resulting in no change).3 IPAB cannot be instructed to increase spending. So, variations in those measures might lead to additional savings but could not lead to added costs. Because of the one-sided nature of the budgetary impact of variations in the spending and economic measures that determine IPAB's savings target, CBO must consider the probabilities associated with such variations when assessing the budgetary effects of possible changes in law.
3For a discussion of CBO's longstanding approach to estimating one-sided bets, see www.cbo.gov/sites/default/files/cbofiles/ftpdocs/ 15xx/doc1589/onesided.pdf.
To produce estimates for proposed legislative changes to the IPAB mechanism that take into account the probabilities of variations in the relevant measures, CBO applies that probability distribution to its point estimates of the five- year moving average of net Medicare spending per beneficiary to calculate an expected value for IPAB's savings target under both current law and under the proposal. CBO applies a de minimis rule that the target will be zero if the expected value of the savings target is less than 0.05 percent.4
4A further discussion of this methodology can be found in CBO's estimate for H.R. 452, the Medicare Decisions Accountability Act of 2011, www.cbo.gov/sites/default/files/112th-congress-2011-2012/ costestimate/hr45220120.pdf.
Under that probability-based approach, and after applying the de minimis rule (for estimated effects that round to 0.0 percent), CBO estimates that the expected value of IPAB's savings target would be zero for 2018 through 2021. For 2022 through 2028, the expected value of the savings target would be between 0.1 percent and 0.7 percent of projected net Medicare spending. As a result, CBO estimates that repealing the IPAB mechanism would increase expected Medicare spending each year from 2022 through 2027, with the expected value of the net increase in Medicare spending for benefits totaling
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in the following table. Enacting H.R. 849 would not affect revenues.
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Increase in long-term direct spending and deficits: CBO estimates that enacting H.R. 849 would increase net direct spending and on-budget deficits by more than
Intergovernmental and private-sector impact S: H.R. 849 contains no intergovernmental or private-sector mandates as defined in UMRA and would impose no costs on state, local, or tribal governments.
Estimate prepared by: Federal costs:
Estimate approved by:
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of the
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of the
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423 of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104- 4).
The Committee has determined that the bill does not contain Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental mandate on State, local, or tribal governments.
D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff Benefits
With respect to clause 9 of rule XXI of the Rules of the
E. Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules of the
F. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of
The Committee advises that the bill requires no directed rulemakings within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of the
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of the
PATIENT PROTECTION AND AFFORDABLE CARE ACT
VII. ADDITIONAL VIEWS
Under current law, the
While some
As Republican efforts to repeal the Affordable Care Act failed earlier this year, the timing of this IPAB effort appears to be a return to the
It is also important, regardless of how IPAB is viewed, to set the record straight on what IPAB does and does not do. It is not a "rationing board" as
During the markup
Despite assertions otherwise, the IPAB appointees must have no conflict of interest helping ensure that sound policy not special interests are guiding recommendations. Once the IPAB recommendations are submitted to the
In conclusion, we are concerned with the process, lack of transparency on offsets, and rhetoric surrounding this legislation.
Ranking Member.
The full text of the report is found at: https://www.congress.gov/congressional-report/115th-congress/house-report/373/1?r=4
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