Hart Health Strategies provides a comprehensive policy briefing on a weekly basis. This in-depth health policy briefing is sent out at the beginning of each week. The health policy briefing recaps the previous week and previews the week ahead. It alerts clients to upcoming congressional hearings, newly introduced bills, regulatory announcements, and implementation activity related to the Patient Protection and Affordable Care Act (PPACA) and other health laws.


Trustees Report Indicates 2017 IBAP Trigger

Action from the Independent Payment Advisory Board (IPAB) could be triggered as early as 2017, based on projections included in the Trustee’s annual report on the solvency of the Medicare program issued last week. IPAB would become fully implemented if Medicare spending growth exceeds a threshold level as established by the Affordable Care Act (ACA), and the panel of appointed officials would then be required to recommend cuts to the program. If the projections in the Trustee’s report are correct, IPAB would be responsible for cutting 0.1 percent from the program. Last year’s Trustee’s Report projected that IPAB would not be triggered until 2023.The House of Representatives voted to repeal IPAB earlier this year. The report also estimates that Medicare spending per beneficiary increased by 2.3 percent in 2014, a small increase compared to historic standards but an increase from the historically low growth of the past two years. This increase could be attributed to the rising cost of outpatient care and a 10.9 percent increase in drug costs, which includes the expense of new hepatitis C breakthrough treatments. The trustees predict that per-beneficiary spending will drop back to a one percent increase in the year 2015, followed by four straight years of rising costs with a peak of a 5.3 percent increase in 2019. The Trustee’s Report indicates that the Medicare Hospital Insurance (Part A) Trust Fund will not be able to meet all obligations beginning in 2030, the same year as predicted in last year’s report, but 13 years later than was projected before the passage of the ACA. At this point in time, the payroll tax that finances Medicare revenues would be sufficient to fund 86 percent of the program’s obligations. According to the report, changing demographic trends – the aging of the baby boomer population – are the driving force behind Medicare’s insolvency problem. The program’s trust fund only pays for Medicare Part A, while the remaining parts of the program are paid for primarily through general fund revenues. Medicare Part B is expected to remain adequately funded. The Trustee’s Report also estimates that the number of beneficiaries covered by private plans has increased significantly in recent years. In 2014, 30 percent of beneficiaries opted for a Medicare Advantage (MA) plan, up from 12.8 percent 10 years earlier. This percentage will reach 35 percent by 2022. Nearly 52 million beneficiaries were covered under Medicare as of last year and total program spending reached $613.3 billion, representing 3.5 percent of the country’s gross domestic product (GDP). The trustee’s projections do not take into account changes in payment models being implemented by the U.S. Department of Health and Human Services (HHS) aimed at improving quality of care and reducing costs.

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