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Saturday, June 22, 2013

The IPAB: Doubling down on administrative payment systems

While various elements of the Affordable Care Act are slowly being deployed, one huge piece looms six months in the future. The first IPAB recommendations were originally slated to be released by January of 2014. However, this body still has no members. Some of the pressure to constitute this body has been dissipated since the chief actuary of CMMS reported a substantially lower growth rate project for Medicare spending for 2011-15 at 1.15% annually. I have my doubts that this medical inflation rate will continue. When the ACA really kicks in and more money floods into the health care economy, the medical inflation rate will be off to the races again.

I cannot begin to conceive how this entity will work to set the prices over what may amount to close to 20% of the economy. How will fifteen wise (or perhaps not so wise)  individuals be able to know when they have set the prices for particular services too high or too low? While much has been made about the claims that the IPAB cannot explicitly ration care, by setting payments low enough they can guarantee that undervalued services will be is short supply.

The only metrics they are charged with overseeing are total dollars spent. Not surprising since the main job of the IPAB is cost control.  Never (and I mean NEVER) in the history of mankind has such an entity every succeeded in setting prices or controlling costs. There are two possibilities. We could be smarter than everyone previously or we will meet the same fate. I have NO reason to believe we are smarter.

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