The United States House of Representatives passed H.R. 849 to repeal the provision in the Affordable Care Act (“Obamacare”) that creates the Independent Payment Advisory Board (IPAB, commonly referred to as the ‘death panel.’ The IPAB is a fifteen-member death panel that meets when the chief actuary of the Centers for Medicare and Medicaid Services (CMS) determines per capita Medicare program spending exceeds a specified target to adopt cost-cutting measures to lower Medicare costs.

death panel

     The IPAB is restricted in what it can recommend for slowing the pace of Medicare spending growth. The guidelines for the IPAB does not allow it to increase Medicare recipients’ premiums, suggest tax increases, or reduce benefits, so the only option available is to reduce payments to health care providers drastically; a move that will harm patients.

     A narrative that is floated continuously by Democrats is that physicians are making an obscene amount of money, so reducing the money they make from treating Medicare patients will have no effect on them or their patients, not correct. Physicians who are “participating providers” with Medicare are not getting rich from the claims they submit for payment to their applicable carriers. In fact, your average plumber makes more money or has the potential to make more money, than physicians; let me explain.

     Suppose you are a Medicare recipient who experiences a medical event that requires hospitalization. The physician who treats you at a hospital decides your condition requires admission, so he jumps through the regulatory hoops to get you a hospital bed, and your treatment continues; the physician earns the right to submit a claim to Medicare. How much money does the admitting physician get from Medicare for treating you; the maximum he can receive is $206.01, no matter your condition and the time and effort expended, Medicare will pay from $102.79 to $206.01.

     How much does a plumber make on a routine service call? Consumers are aware that calling a plumber to request service for any plumbing issue results in an expensive bill, starting with the “trip charge” of $60 to $90 before he starts. Once a plumber completes his work on a sink that won’t drain or a toilet that won’t flush, his bill exceeds what a physician receives from Medicare for getting out of bed at 2:00 a.m. and driving to a hospital to treat a patient. When a physician who admits a patient determines that a patient requires care from a specialist, the cardiologist, pulmonologist, nephrologist, et cetera who gets the call will make $39.88 to $102.79 to show up at a hospital to treat a Medicare patient; even specialists receive very little for their work.

     What are the implications of Medicare’s fee schedule? Physicians choose not to accept Medicare patients because payments from Medicare are not equivalent to the services rendered or the extensive, cumbersome regulations physicians have to comply with to provide care. So physicians close their practices to Medicare patients, and those patients are left to search for a new physician, no easy task. When physicians choose not to accept Medicare patients, the network of physicians Medicare recipients has to choose from shrinks leaving them with few choices and in some areas no options.

     The IPAB is designed to reduce Medicare spending, and if/when the IPAB is required to convene to find solutions to reduce costs, its recommended cost-cutting measures will come in the form of lower payments to physicians, which will further harm Medicare patients. It is good news that the House passed legislation to repeal the ACA’s death panel, but the U.S. Senate has to do the same before President Trump can sign the law. 

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