Independent Payment Advisory Board of the Affordable Care Act - Research Paper Example

Independent Payment Advisory Board of the Affordable Care Act Introduction The independent Advisory Board (IPAB) is an executive branch established by the Affordable care act for the purpose of cutting down the increasing Medicare expenses. The aim of the Board is to reduce the spending; in case the growth rates in the context of the beneficiary growth exceeds targets. Medicare refers to the federal health plan whose purpose is to offer health insurance cover to the disabled and the old-aged (Ronai 62). The Affordable care act (ACA) 2010, had authorized reductions in Medicare spending; however, spending has been rising since then. The independent nature of the board allows submission and implementation of prepositions by the congress, or the HHS secretary without unnecessary political interventions. This paper intends to describe the composition of the reform act, and the effects that arise due to the existing components of the reform. The paper will explore the reform act exposing the possible missing elements and their consequences in relation to health care (Ronai 62). The paper will offer recommendations on areas that may require improvements in order to improve Medicare. Components of the reform act In June 2012, the Supreme Court declared that the Patient protection and Affordable Care Act (ACA) are part of the constitution. The purpose of the law is to improve health care for Americans through a variety of expansions relating to health insurance (Ronai 63). The inclusion of IPAB with health care legislation was for the purpose preventing unnecessary political pressures and influences regarding healthcare budgets. The IPAB is to contain 15 appointees of the president expected to remain in service for a period not exceeding six years. The appointees are to work in accordance to the directions of the senate. The president performs consultations with majority leaders in the senate and the speaker of the House of Representatives, before making fundamental decisions regarding the selection of the appointees. The persons appointed in the Board should involve physicians and other professionals in the health care industry. However, the board is not to contain a majority of persons who have direct involvement in the provision of health care service. The board is not to constitute unemployed as part of the sitting members. The president is accountable for the creation of public disclosures by IPAB members for the purpose of preventing any financial conflicts of interests (Auerbach 2). The reform act requires that by the end of April each year, commencing 2013; the Centers for Medicare and Medicaid Services (CMS) should present an estimate termed as the projected Medicare Growth Rate (PMGR) (Auerbach 3). The enrollee calculation presented assumes that Medicare expenditures rise as more individuals join the program. The estimate thus; emphasizes on the rate of growth of the Medicare expenses (Ronai 65). The presentation of the estimates is the responsibility of the chief actuary of the CMS. The chief actuary is to present computations regarding the expected growth rate for the future. This will include years, 2014 up to 2019. The purpose of this venture will be to determine the target growth rate for a period of about 5 years, which will be the center of two extended inflation rates. There will be a consideration of the Consumer Price Index (CPI), plus the Medicare expenses option which involves the adjustments in prices encountered during the provision of health care such as drug supplies and hospital services (Auerbach 4). From the year 2020 and beyond, the goal for Medicare expenditures will have a connection with the entire growth of the economy and not the initial connection with the rise in prices. The target computation will be in relation to the Gross Domestic Product (GDP) of the country. One percent addition to the GDP will be considered, and measurements on expenditures performed against the extended growth rate. As the IPAB has a responsibility of issuing recommendations regarding savings. The Actuary will evaluate the growth rates to determine if they are beyond the targeted rates. If he finds that they exceed the targets, he will provide information containing the amounts of reductions required to ensure a balance in the provision of health care. In this case, the law requires the board to offer succinct recommendations capable of curbing the rise in Medicare expenses (Auerbach 4). The law requires submission of a draft proposal to the Department of Health Services and MedPAC. The CMs should submit a final proposal to the congress plus the present in mid January every year. IPAB is to present annual reports that contain health care costs in the entire country. Limitations of law The law limits the quantities of Medicare savings that IPAB proposes. The amounts of savings are not to go beyond 0.5 percent of the overall Medicare expenses for the year 2015. In 2016, the savings are not to exceed 1 percent and in 2017 they are not to exceed 1.25 percent. The trend continues with the interval in the percentages. The IPAB is not to suggest any recommendations that regard increase in revenues, beneficiary premiums, cost sharing or change laws for Medicare eligibility (Ronai 65). The law only accords the board the authority to participate in measures that improve access of health care in terms of delivery systems, and health outcomes to those who are eligible. The IPAB has the authority to provide prepositions for savings in any section of Medicare, with the exception of hospital payments. However, commencing 2018 they will be subject to suggestions regarding savings since; the period of the exemption provided by the Affordable Care Act (ACA) ends in 2018. The law requires the IPAB to provide recommendations in the form of legislation. The committee and the senate are to meet deadlines while making considerations for the proposal (Auerbach 2). Although the congress has the mandate of making optional legislation, the legislation must result to the same level of reduction in terms of savings. The congress is to implement the legislation failure to which the HHS secretary executes the proposal before mid August. Once the secretary performs any actions that concern the proposals from IPAB, no one, not even the courts can reverse or question the action of the secretary. The Health Care and Education Reconciliation Act The Health Care and Education Reconciliation Act 2010 is a constituent of the health care reform act 2010, which became law immediately after the signing of the Patient Protection and Affordable Health care Act (PPACA). Section 1001 of the act ensures improvements in terms of funding for premiums, and cost sharing for persons whose incomes percentage is within the federal poverty set points. Part (a) of the section is responsible for tax credits improvements which make premiums reasonably priced. Subsection (b) takes care of cost sharing emphasizing on persons with earnings under 250 percent of the poverty level set by the federal government (Auerbach 2). Section, 1003 deals with the alteration of the employer responsibility policy for eligible employers. This occurs through removal of the first 30 regular employees from the payment computation. This provision adjusts the pertinent payment quantities for entities that do not offer coverage to 2000 dollars for every regular worker. This section causes elimination of workers assessments for a certain period. This occurs as firms are subjected to the same frequency of employee responsibility obligation (Auerbach 3). Section 1004 of the Health Care and Reconciliation Act provides a definition of income in a manner that is used for the function of tax credit, qualification of subsidy plus responsibility obligation. The purpose of income definition modification is to ensure conformance of the definition to that presently contained in income tax documentations. Section 1005 is responsible for the provision of funds to the Health and human services secretary. Section 1101 involves the provision of a 250 dollars return for Medicare enrollees. The enrollees include those in part D of Medicare. This section allows a discount of about 50 percent on brand- name drugs. This is an effort to provide proper coverage of both generic and brand name drugs before year 2020. Section 1102 articulates on Medicare advantage plus payments. The section requires reduction of Medicare benefit standards in respect to the existing amounts. The act requires changes on Medicare advantage owing to the variance in benchmark in relation to Medicare expenses. The Section provides authority to CMS so that it makes necessary changes for risk scores in Medicare benefits (Rodebaugh 2). The Reconciliation act requires expenditure of about 85 percent of medical costs revenue and functions that develop the value of health care. Section 1104 of the Reconciliation act articulates on Disproportionate Share Hospital payments (DSH) requiring cut downs in the commencement of the year 2014. Section 1105 of the Reconciliation act provides information on market updates. The section requires elimination of the senate provision on basket market for hospitals. The section requirement influences various providers, for example, in patient hospitals, rehabilitation facilities, psychiatric hospitals and others. Section 1106 of the act contains information on physician ownership-referrals. The information involved is about changes to dates of ownership. However, the changes do not affect hospitals that care for a large percentage of Medicaid patients. Section 1107 responds to the CMS imaging law which commenced in 2010, setting the utilization Rate to about 75 percent to cover the expenses for advanced diagnostic services. Consequences Various consequences of the affordable care act are evident on several people. The congressional Budget office (CBO) provides estimates on the effects of the act on people depending on employment-based insurance cover. The estimates from the Joint Committee on Taxation (JCT) and CBO indicate that the number of persons acquiring insurance via their employers would reduce by 2019. The number is to reduce to about 3 million persons, and is a low number compared to the numbers in the previous legislation. A close observation on JCT and CBO suggests the absence of expectations of a huge decrease in people participating in employment-based insurance (CBO 2). This is because of the consideration that Affordable Care Act (ACA), will lead to subsidized health insurance coverage. CBO indicates that the legislation will enhance financial incentives and develop new financial incentives for firms to utilize and for persons to get health insurance from their employers (Auerbach 2). Affordable care act is likely to affect several workers including their families. The workers and their families may not qualify for Medicaid, CHIP and a variety of subsidies. Employers will possess an economic incentive used in providing health insurance to their workers. ACA creates an uncertainty in relation to how employers and workers will react to the existing incentives and other issues emanating from the legislation. The legislation further creates several uncertainties in regard to decision making by employees, future elevation rates for insurance premiums, and several individuals who will receive incomes eligible for CHIP and Medicaid. The ACA is likely to raise federal revenues. This is because of the decrease in the firm’s compensation of employees offered in the structure of health benefits (CBO 5). The federal revenues rise due to condition that the benefits are not taxable, but only the wages plus salaries. The government is liable for penalty payments emanating from government’s failure to provide employees with the health insurance. CBO and JCT indicate that the overall effect on employment-based insurance on ACA is dependent on the shares of workers plus their families who do not have the coverage, but qualify for Medicaid. The effects of the act are evident in firms, for example, if, a firm possessing a huge share of low-income employees refuses to offer insurance cover the action would result to a rise in ACA coverage stipulations. A small enterprise having a small share of low income employees, in which the enterprise decides not to offer coverage, is likely to cause problems in the federal costs of Budgets. March 2012 computations on federal cost arising from ACA are beyond 1252 billion dollars. Research on the Impacts of ACA indicates that about 9 million people, who would have evaded the insurance cover under the previous conditions of law, will receive coverage due to ACA. There is evidence of penalty impositions on employers who will fail to provide coverage to their workers (Auerbach 4). This will ensure that employers offer insurance covers even if they would have refuted the idea under the prior law. From CBOs economic plus empirical evidence, employer’s packages on compensation take place in a manner that they attract workers at a low cost. Enterprises provide wage and non wage advantages, for example, retirement advantages, and health insurance. These non wage and wage benefits target potential workers at considerable low costs. Prices and accessibility of services determine the attractiveness plus the cost of various compensation mixes. The appearance of government programs and various tax laws regarding firms and employees depict availabilities of relative prices. In addition, the characteristics of private markets influence the attractiveness. The Act will have an influence on employers who will avoid offering coverage to their workers. That is, if the employers allow workers to buy insurance covers on their own means. In this case, the law requires such employers to increase compensation to their workers so that they are in line with employers who still offer insurance cover (CBO 7). This will affect the profitability of employers owing to the high costs that emanate from workers compensation. However, despite the consequences, CBO estimates indicate that some employers will opt to avoid offering coverage to their workers based on their own assumptions. Other employers will progress with their practice of providing insurance coverage to their employees (Auerbach 5). This is because the workers are already habituated to the practice and are likely not to respond to changes. A number of enterprises will incorporate the idea of offering insurance owing to the advantages that workers and employers accrue from it. CBO and JCT estimates indicate the possibility of a rise in family incomes beyond the levels stipulated by the federal government. Their research suggests that high income workers are likely to accept work in firms offering insurance than those with low income. Missing elements in the reform act and their consequences American medical association (AMA) supports medical reforms at federal plus state levels. AMA is also in support of various reforms such HR5, a health care act responsible for various liability improvement provisions. The reform act allows unelected officials (in IPAB) to perform actions which even the courts cannot question or review (Auerbach 2). The reform should address the question on the consequences that occur after exertion of savings from Medicare. There is an argument that the savings will limit the advantages of the beneficiary’s access to care. In case, IPAB decides to enhance savings in Medicare, they will have to cut down the rise of payments to providers. This condition has affected physicians due to initiation of Medicare reimbursement reductions. This condition is likely to affect treatment of Medicare patients as reimbursements are unfavorable to the physicians. The AMA supports the reform’s actions of ensuring enough physician workforces (Rodebaugh 2). The reform does not exactly conform to AMA provisions and will, therefore, have to consider several provisions that AMA supports. The penalties that ACA imposes upon organizations failure to provide quality reports are not in conformance to the AMA requirements. The act may be subject to changes so that it is in line with AMA. Future areas of reform which must be addressed The ACA requires several adjustments in order to prevent negative influences that occur when the law is implemented. For example, ACA should address the issue of the defective Physician Medicare payment method (SGR). Inclusion of a provision to ensure elimination of SGR will improve the welfare of physicians. AMA works in conjunction with the congress for the purpose of ensuring such issues are addressed. AMAs goal is to ensure elimination of the SGR method and implementation of a better method that will empower physicians. Private contracting is an area of concern that the ACA failed to include a provision to address. Under the existing law, restrictions regarding private contracting in Medicare are evident. The AMA has made efforts in ensuring the Medicare Empowerment Act is enacted. The AMA proposal emanates from their encounters with delegates supporting the policy of private contracting (Patient Protection and Affordable Care Act (PPACA) 2010). The AMA has gathered information on the responses of physicians in regard to their perceptions on the issue of contracting. The ACA should consider making antitrust changes because they are fundamental in health care. The AMA has been working with Federal Trade Commission (FTC) and the Justice department to ensure reformation of antitrust laws. As the ACA failed to address the issue of new payment plus delivery models, AMA advocates for changes by addressing the situation with government agencies. Works cited Rodebaugh, Dale. Health official explains Affordable Care Act. The Durango Herald, 11. July. 2012. Web. 07 December 2012. Auerbach, Michael. "The Health Care Reform Act Of 2010." Health Care Reform Act Of 2010 - Research Starters Business (2010): 1-6. Web. 7 Dec. 2012. Ronai, Stephen E. "The Patient Protection And Affordable Care Act's Accountable Care Organization Program: New Healthcare Disputes And The Increased Need For ADR Services." Dispute Resolution Journal 66.3 (2011): 60-70. Web. 7 Dec. 2012. "Medicaid Expansion: States' Implementation Of The Patient Protection And Affordable Care Act." GAO Reports (2012): 1. MasterFILE Premier. Web. 7 Dec. 2012. Congressional Budget Office. CBO and JCT’s Estimates of the Effects of the Affordable Care Act on the Number of People Obtaining Employment-Based Health Insurance: effects of the ACA on employment-based health insurance. march 2012. Web. 7 Dec. 2012. Read More