Sunday, May 16, 2010

A Death Squad By Any Other Name . . .

When is a death squad not a death squad?

When it is an Independent Payment Advisory Board.

What is the IPAB?

A stealth, 15 member panel appointed by the king, I mean president, to make sure Medicare doesn't spend too much money on health care.

Beginning in 2015, Medicare spending is now supposed to be limited, on a per capita basis, to a fixed growth rate, initially set at a mix of general inflation in the economy and inflation in the health sector. Starting in 2018, the upper limit is set permanently at per capita gross domestic product growth plus one percentage point.

Look at what happens in 2018. Total spending on Medicare will be limited to the GDP rate plus 1%.

What would the cap be if the IPAB had been in place since 2007?

In 2007 the GDP grew at a rate of 2.53%. In 2008 is was a negative 1.83 (-1.83) and in 2009 it was .18.

That means the death panel, I mean IPAB, would have limited total Medicare spending to 3.53%, -.83% and 1.18% for each of those years.

To hit its budgetary targets, the IPAB is strictly limited in what it can recommend and implement. It can’t change cost-sharing for covered Medicare services. Indeed, it can’t change the nature of the Medicare entitlement at all, or any aspect of the beneficiary’s relationship to the program. The only thing it can do is cut Medicare payment rates for those providing services to the beneficiaries.

That means your Medicare doc agrees to take a pay cut.

How well do you think that is going to work?

Like it or not, managed care in the private sector works very well to control costs. In addition to saving money, medical providers that don't meet quality control criteria are voted off the managed care island.

But the government doesn't operate that way. Medicare and other health care entitlement programs will allow anyone into their program.

The federal government has never shown any capacity to exclude otherwise qualified suppliers of services from Medicare. Indeed, the whole point of the fee-for-service model which Congress has so jealously protected over the years is that beneficiaries get to see any licensed provider of their choosing, to whom Medicare pays a fixed reimbursement rate, no questions asked.

Well that's comforting.

But no fear. Going forward CMS can still allow anyone who is willing to work for less to treat Medicare patients.

Isn't that special?
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