Critics say new Medicare rate-setting board has too much power; former budget chief says new system requires it

Critics as diverse as Republican state Rep. Addia Wuchner and former national Democratic chairman and Vermont governor Howard Dean, a physician, are criticizing the Independent Payment Advisory Board, a panel created by the federal health-care reform law to hold down health-care costs. But a finance executive who helped create the board says the critics are off base.

Dean wrote recently in The Wall street Journal that the board "is essentially a health-care rationing body," and Wuchner said in an op-ed piece in several Kentucky newspapers that the board's recommendations "will result in reduced care access" and "would intrude and erode the physician-patient relationship."

Despite Dean's assertion, the law "specifically states that the board is not allowed to make any recommendations that would ration care," Peter Orszag wrote for Bloomberg View. Orszag is vice chairman of corporate and investment banking at Citigroup, and was President Obama's budget director after running the bipartisan Congressional Budget Office.

Orszag says Congress already sets Medicare rates, and the board is designed to "be more facile and dynamic" as the law changes the medical funding system from the current fee-for-service" model "toward paying for value in health care." He says that is already happening faster than expected, because the CBO says Medicare's net costs have risen only 2.7 percent in the current fiscal year, which ends Sept. 30. "Redesigning the payment system is a fundamentally different approach to containing costs," which requires "a process for tweaking our evolving payment system in response to incoming data and experience," Orszag argues.

Wuchner, a registered nurse bioethicist from Florence, says the board has too much power. She notes, "Unlike typical advisory-board recommendations that have to be accepted or rejected by Congress, IPAB?s recommendations become law unless Congress passes its own plan with a three-fifths majority in the Senate in relatively short order that brings comparable savings."

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