Why it’s gonna get worse

Not since the Edsel has anything been so perfectly designed to fail as the Supercommittee. So now what? The doc fix, for one, is in big trouble. In Washington accounting, it will cost an arm and a leg to do a permanent doc fix, since the savings it is supposed to generate go on forever, or at least as long as we have Medicare. A permanent solution might have been possible under cover of a Supercommittee deal — just one more adjustment among the trillions. Now it’s out on its own. At least the final accounting is a little better than was projected: only a cut of 27.4%, not 29%. Not much comfort if you are a doctor with a big Medicare practice.

But the Affordable Care Act created another version of the sustainable growth rate, the formula that makes the doc fix necessary. It’s the much maligned IPAB — the Independent Payment Advisory Board. Here’s how IPAB works. It will make recommendations to reduce Medicare cost. Congress can adopt or ignore the recommendations. But if medicare grows faster than a preset target, either the recommendations will take effect anyway, or Congress has to come up with equivalent savings. It’s another autopilot, just like the sustainable growth rate.

IPAB is prohibited from doing most of the things that would really reduce costs. It can’t change eligibility, benefits, or beneficiary cost sharing or premiums. So all it can do is cut provider payments, and promote soft-savings initiatives like ACOs. But we already have ACOs, so what can it do? Cut payments.

It can’t touch hospital payment rates until 2020. So who is left? Doctors, that’s who. Back to the sustainable growth rate problem.

The IPAB is supposed to work like the Base Realignment and Closing Commission. The commission proposes which military bases to close, and Congress gets an up-or-down vote. It provides cover for members whose districts are going to be hurt by the closings. For any given round, that’s only a few districts. But the IPAB recommendations will affect every doctor that sees Medicare patients, in every Congressional district. And every hospital after 2020. Every member of Congress is going to hear local howls, every round. That’s a very different scenario compared to the base closing approach.

So with the Supercommittee failure, Congress has placed itself in a box where it is facing drastic defense cuts, expiration of the Bush tax cuts for all income brackets, and an election with a polarized electorate. And now, they have created another insoluable problem with the creation of the IPAB, and the restrictions they have subjected it to. They have reinvented the Edsel.