IPAB – it’s not a typo. IPAB stands for The Independent Payment Advisory Board and it’s a piece of the health care reform law that I’ve not yet talked about. The IPAB is a group of 15 health experts, appointed by the Obama Administration, to make sure the health care system makes a transition from fee for service to payments based on value. The IPAB is designed to function like the Federal Reserve, both the IPAB and Federal Reserve have authority outside of congress and the president and their decisions do not require approval.
One of the goals of health care reform is to shift from reimbursement based on quantity to reimbursement based on quality and that’s why bundled payments, Value Based Purchasing and Accountable Care Organizations are a part of the reform law. Each of these initiatives is intended to move Medicare from fee for service to reimbursement based on quality and efficiency and in reality, Medicare is the only payer source large enough to change the health care system as we know it.
The purpose of the IPAB is to function as a fail safe to guarantee that the quantity to quality payment shift occurs. If Congress is not able to enact and enforce laws that shifts health care away from a fee for service basis the IPAB group gets to go to work. If growth in health care costs exceed specific thresholds and Congress fails to act, the IPAB automatically gets to propose measures to decrease spending that will automatically take effect.
Given the bipartisan nature of Congress and their poor track record of compromise along with the political time bomb surrounding fundamental changes to Medicare you can see how, and why, it is likely that the IPAB will get to flex their muscle and develop health care law changes. It may be easier for Congress to do nothing, especially those looking to be re-elected, than to make controversial changes to Medicare.
Now you know what IPAB is and chances are you will hear a lot more about the group in the years to come.