Sequester cuts could have far-reaching effects

Washington-Back in December, the AUA urged Senate leaders to take action to avoid the 2% across-the-board cuts in Medicare fees that were slated to be implemented March 1 under the sequestration arrangement cooked up by lawmakers last year.

That deal, which would impose reductions across virtually every government program, including defense, was then considered to be so draconian that lawmakers would not allow them to be implemented. But as this is written, there is no indication that Congress will act, although President Obama on Feb. 5 urged lawmakers to approve a small combination of spending cuts and tax changes to add a few more months to the sequestration deadline.

Nevertheless, the Office of Management and Budget released a memo warning federal agencies that furloughs and steep cutbacks may be necessary if lawmakers failed to reach a comprehensive debt-reduction deal by the March 1 deadline.

In a Dec. 10, 2012 letter to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY), the AUA and a long list of allied health care organizations warned that the cuts would endanger medical research, the medical work force, food and drug safety, graduate medical education programs, and patient access to care-in addition to imposing the reductions on health care providers.

The letter said the "arbitrary and formulaic sequestration approach" is not the appropriate way to attain long-term health care goals and that Congress should "take a targeted, more rational approach that allows careful assessment of how to fulfill its long-term commitment to seniors, uniformed service members and their families, and public health and safety priorities."

That approach, the AUA and the other organizations said, should consider the long-term need to ensure Medicare beneficiary access to health care by preserving existing Medicare financing for graduate medical education, warning that the shortage of physicians is growing and will exceed 130,000 by 2025.

Opponents of the sequester cuts also warned that slashing Medicare by 2% across the board-cuts limited to providers, not recipients-would have a devastating impact on employment across the economy.

Tripp Umbach, a Pittsburgh-based market research consulting firm retained by the American Hospital Association, estimated that the 2% sequester would result in 496,000 jobs being lost across the economy during the first year of implementation. It estimated that 92,984 jobs would be lost in the hospital industry alone and another 40,220 in the offices of physicians, dentists, and other health care practitioners.

While it was unclear at press time whether the sequestration cuts would be allowed to occur, that was not the only concern out of Washington for urologists and other physicians.

AUA supports anti-IPAB bill

The AUA in late January joined other members of the Alliance of Specialty Medicine in announcing their support of the Protecting Seniors’ Access to Medicare Act, which would repeal the Affordable Care Act-mandated Independent Payment Advisory Board (IPAB). The bill is sponsored by Reps. Phil Roe, MD (R-TN), and Allyson Schwartz (D-PA).

"The IPAB has the potential to be far reaching and have devastating effects for patients and physicians, who are already struggling under reimbursement cuts from the sustainable growth rate formula," said AUA Health Policy Chair David F. Penson, MD, MPH. "Meaningful health care reform is about more than simply cutting costs-it’s about generating savings through long-term delivery system reforms."

The AUA pointed out that the IPAB is to be composed of 15 persons tasked with developing ways to reduce Medicare spending and is slated to begin work as early as April 30. As presently structured, it cannot include any practicing physicians; is not subject to administrative or judicial review; and lacks congressional oversight requirements of hearings, debate, and opportunities for stakeholder input.

Ironically, a Jan. 28 Washington Post article suggested the administration might well have difficulty finding qualified members of the board, considering that compensation under federal pay standards is comparatively low, the political controversy is high, and the ultimate payoff is unclear.

"It is supposed to be 15 members with limited salaries who can’t do any outside work," Peter Orszag, former director of the Office of Management and Budget and a key proponent of the IPAB, told The Post. "It will be challenging to find top 15 health care experts who would want that job."

To become a member of the board, health policy experts must also face confirmation hearings, another daunting challenge for potential candidates.

According to the ACA, the board is to be composed of "individuals with national recognition for their expertise in health finance and economics, actuarial science," and other related medical fields. Members will serve a 6-year term and are barred from "any other business, vocation, or employment."

So, if The Post’s article is correct, either the IPAB’s membership will go unfulfilled or its membership may be less prestigious than was anticipated by the Obama administration when it devised the ACA. In any case, Senate hearings will be a major opportunity for IPAB opponents to block ultimate implementation-if they can generate enough support to prevent confirmation of nominees.