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Independent Payment Advisory Board Review Put on Hold

Friday, February 10th, 2012 at 9:57 am, by Sara Margolis
Source: http://cblr.columbia.edu/archives/11968

On January 17, Judge Snow ordered a stay in Coons v. Geithner, an Arizona District Court case in which the constitutionality of the Independent Payment Advisory Board (IPAB) is being challenged. The IPAB is a new administrative agency, created by the recent landmark healthcare reform legislation, the Patient Protection and Affordable Care Act (PPACA). The IPAB is charged with reducing the per capita rate of growth in Medicare spending. Coons v. Geithner has been put on hold pending the Supreme Court’s decision in the upcoming health care reform case.

IPAB Structure

The IPAB is comprised of fifteen members appointed by the President with the advice and consent of the Senate. Beginning in 2013, the IPAB will be charged with making cuts to Medicare if the Medicare per-capita spending growth rate exceeds a targeted rate of spending growth. In January of each year, the IPAB will propose cuts to Congress and the President. Debate on the proposals will be limited to no more than thirty hours. If, by August, Congress does not pass legislation achieving the required reductions in Medicare spending, the IPAB recommendations will automatically go into effect. No administrative or judicial review of IPAB decisions will be permitted.

Congress has only one opportunity to repeal the IPAB: it must introduce a Joint Resolution to dissolve the IPAB by February 2017. This resolution must pass both Houses, with a three-fifths supermajority, by August 2017. If these hurdles are cleared, the IPAB would be abolished in 2020.

Constitutional Challenges to the IPAB

Republican lawmakers have consistently raised concerns about the constitutionality of the IPAB. In Coons v. Geithner, several members of the Arizona Congressional delegation have filed a complaint challenging the constitutionality of IPAB on several grounds. First, the complaint argues that the IPAB circumvents Congress’ “power and right to consider, review, debate and vote on the legislative proposals of IPAB like any other legislative proposal. . . .” Since debate on IPAB proposals is extremely limited, these legislators argue that their ability to perform their duty to debate and vet legislation is compromised.

Second, the complaint argues that the entrenchment of the IPAB exceeds Congressional power by binding future Congresses to accept this Congress’ legislation. Citing Article I § 5 of the Constitution, the complaint states, “the parliamentary rulemaking power of each House does not include the power to entrench, by statute, parliamentary rules from alteration by the Houses of future Congresses.”

Finally, the complaint argues that the lack of administrative or judicial review makes the IPAB especially problematic. The complaint states, “[e]ven where the legislative power of Congress is delegated to an executive agency with an intelligible principle to guide its exercise, judicial review must be preserved to ensure the agency stays within the bounds set by Congress.”

The attorney for the plaintiffs in Coons v. Geithner sums up the constitutional challenges to the IPAB as follows: “No possible reading of the Constitution supports the idea of an unelected, stand-alone federal board that’s untouchable by both Congress and the courts.”

However, the Supreme Court has held at least one delegation structure similar to the IPAB to be constitutional. In 1990, Congress created the Defense Base Realignment and Closure Committee (BRAC) to make recommendations to the President about military base closures. Multiple states sued, and the Court held that BRAC recommendations were not final agency action, and, therefore, not reviewable under the Administrative Procedure Act. The BRAC is still carrying out its duties. Proponents of the IPAB point to its parallels with the BRAC when defending the constitutionality of the IPAB.

Industry Concerns About the IPAB

Alongside the constitutional concerns raised by lawmakers, representatives from multiple industries have argued that the IPAB will negatively impact private sector health care providers and insurers. Last June, a coalition of 270 health care stakeholders sent a letter to Congress arguing that the IPAB will negatively impact providers. Since the IPAB is statutorily prohibited from “rationing” care, the letter argues that the bulk of spending reductions will almost certainly come from payment cuts to Medicare providers. 31% of primary care doctors have been forced to limit the number of Medicare patients served by their practice. The letter argues that IPAB reductions will exacerbate this trend.

The Medicare Advantage industry has also argued that IPAB actions could hit small Medicare Advantage plans the hardest. Medicare Advantage plans are offered by private insurers approved by Medicare and provide consumers with both hospital insurance and outpatient insurance. Again, because the IPAB may not ration benefits, one of the main targets for reduction of spending will be bulk payments to Medicare Advantage plans. This might cause small Medicare Advantage plans to retrench to urban areas, leaving rural areas with fewer (if any) Medicare Advantage options.

Stay in Coons v. Geithner

Coons v. Geithner was not filed until August 2010, months after the first cases challenging the constitutionality of the PPACA had been filed. Coons v. Geithner is the only suit challenging the constitutionality of the IPAB, and the case had not yet been heard when the Supreme Court granted certiorari on the consolidated health reform cases. Therefore, when the Supreme Court hears the consolidated health reform cases in March, it will not consider the constitutionality of the IPAB.

In March, the Court will consider whether the PPACA provision that requires nearly all individuals to purchase health insurance, called the individual mandate, is constitutional. If the Court finds the individual mandate unconstitutional, the Court must next decide whether the individual mandate is severable from the rest of the statute––that is, whether the entire PPACA would collapse without the individual mandate. If the Court finds that the individual mandate is not severable, the IPAB will be struck down along with the rest of the PPACA. Coons v. Geithner will be irrelevant.

However, if the Court decides that the individual mandate is constitutional, or that some portions of the PPACA are severable from the individual mandate, the IPAB will likely stand. In this case, Coons v. Geithner will likely progress and the Supreme Court may well be deciding on the constitutionality of the IPAB before long.