“IPAB will consist of 15 members appointed by the president and confirmed by the Senate. Each member can serve up to two consecutive six-year terms. If the Centers for Medicare and Medicaid Services determine that Medicare spending will exceed a preset growth target, then IPAB is empowered to make cost-cutting recommendations.
The Obama Administration’s newly released 2013 budget proposal actually ratchets down the target growth rate — which means that IPAB will more than likely be called upon to start slashing.
There are some limits on what IPAB can propose. The panel is not allowed to make any changes to Medicare’s fee-for-service structure or to adjust the level of benefits that seniors receive.
The Board is empowered to try some “innovative” approaches to modernizing the program. But these approaches have all been described by the Congressional Budget Office (CBO) as achieving only marginal cost savings.
Realistically, the Board has only one legitimate cost-cutting tool that can get Medicare under the targets — lowering reimbursement rates for participating doctors, nurses, and hospitals. And since IPAB has to reduce overall Medicare expenditures by focusing on just this one area, these cuts will likely be very deep.”