Section 3403 of the Senate Bill-affectionately known as the “death panel”…take a closer look

16 Mar



Much has been written about the so-called death panels under the health care reform legislation. The Internet is full of e-mails about the new Medicare Advisory Board and its new power over seniors enrolled in Medicare.  Let’s clear the air on this one.

Yes, there is such a panel and as you can see below the stated purpose is to make recommendations to reduce costs when the Medicare actuary determines that the growth rate for Medicare costs will exceed the target growth rate. In other words, if we are over budget what can be done to get back on budget.  To some people this screams, “Rationing.”

‘‘SEC. 1899A. (a) ESTABLISHMENT.—There is established an independent board to be known as the ‘Independent Medicare Advisory Board’.

‘‘(b) PURPOSE.—It is the purpose of this section to, in accordance with the following provisions of this section, reduce the per capita rate of growth in Medicare spending—

‘‘(1) by requiring the Chief Actuary of the Centers for Medicare & Medicaid Services to determine in each year to which this section applies (in this section referred to as ‘a determination year’) the projected per capita growth rate under Medicare for the second year following the determination year (in this section referred to as ‘an implementation year’);(2) if the projection for the implementation year exceeds the target growth rate for that year, by requiring the Board to develop and submit during the first year following the determination year (in this section referred to as ‘a proposal year’) a proposal containing recommendations to reduce the Medicare per capita growth rate to the extent required by this section; and (3) by requiring the Secretary to implement such proposals unless Congress enacts legislation pursuant to this section. 

However, even though the Board is to make recommendations, it is not permitted to make recommendations that do any of the following: 

‘‘(ii) The proposal shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums under section 1818, 1818A, or 1839, increase Medicare beneficiary cost sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria. 

If you are concerned about rationing or paying more for your Medicare coverage, the above language seems to eliminate that concern.  On the other hand, it is questionable how any costs can be saved or even avoided if these types of changes are off the table.  The fact is that generous benefits and unfettered use of those benefits is going to continue to be expensive and grow at what we all call unacceptable rates. 

As you can see below, the Board does not have the power for the next eight years to reduce payments to providers.  Even though the current law contains a formula to reduce the fee payments to health care providers under Medicare, Congress has consistently stopped such cuts from going into effect, including in 2010.  Here again, there is more reason to think that the cost of Medicare will continue to rise largely unchecked. 

(iii) In the case of proposals submitted prior to December 31, 2018, the proposal shall not include any recommendation that would reduce payment rates for items and services furnished, prior to December 31, 2019, by providers of services (as defined in section 1861(u)) and suppliers (as defined in section 1861(d)) scheduled, pursuant to the amendments made by section 3401 of the Patient Protection and Affordable Care Act,to receive a reduction to the inflationary payment updates of such providers of services and suppliers in excess of a reduction due to productivity in a year in which such recommendations would take effect. 

The flowing section of the law does cause some concern for Medicare beneficiaries who are enrolled in Part C or Part D the prescription program.  If the Board recommends cuts in payments under these two parts of Medicare, it probably means higher costs and or lower benefits for Americans covered under these plans.  Actually, the current pending legislation requires significant cuts in Medicare payments to Part C providers and thus higher out of pocket costs for the eleven million Medicare beneficiaries enrolled in a Medicare Advantage Plan. 

(iv) As appropriate, the proposal shall include recommendations to reduce Medicare payments under parts C and D, such as reductions in direct subsidy payments to Medicare Advantage and prescription drug plans specified under paragraph (1) and (2) of section 1860D–15(a) that are related to administrative expenses (including profits) for basic coverage, denying high bids or removing high bids for prescription drug coverage from the calculation of the national average monthly bid amount under section 1860D–13(a)(4),

and reductions in payments to Medicare Advantage plans under clauses (i) and (ii) of section 1853(a)(1)(B) that are related to administrative expenses (including profits) and performance bonuses for Medicare Advantage plans under section 1853(n). Any such recommendation shall not affect the base beneficiary premium percentage specified under 1860D–13(a). 

The legislation also requires the following of the Board and its recommendations:

‘’(i) give priority to recommendations that extend Medicare solvency;‘(ii) include recommendations that—‘(I) improve the health care delivery system and health outcomes, including by promoting integrated care, care coordination, prevention and wellness, and quality and efficiency improvement; 

None of the above is bad, however, a careful reading of the words may mean “promote managed care and more control over how the patient interacts with the physician and the health care system.”  As I said that is not necessarily bad, but it may mean less freedom in receiving health care when and where you want it.  On the other hand, if we have any hope of managing the cost of health care and especially Medicare these are the types of changes that will be required. 

(iii) START-UP PERIOD.—The Board may not submit a proposal under clause (i) prior to January 15, 2014. 

Finally, there has been talk that the legislation contains language that prevents Congress from changing the law with regard to the Board.  That is not correct.  The Bill does provide limits on changes by Congress to recommendations made by the Board, it outlines strict time limits and procedures for debates, requires passage of the changes by Congress and the President and it also provides that Congress can eliminate the Board if it does so by 2017. 

Some critics of the overall legislation may see the Board as a threat and as an entry into government control of the health care one receives.  While I am a critic of the legislation (because it does nothing to control health care costs for the vast majority of Americans), I do not view the Board in a negative light.  The truth is that some drastic steps are needed to control Medicare costs in the future.  No one is going to like those changes, but we cannot afford to go forward with business as usual.  I am more concerned that the Board is prohibited from making recommendations of any substantial nature as to the fundamental design of Medicare.

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3 Responses to “Section 3403 of the Senate Bill-affectionately known as the “death panel”…take a closer look”

  1. peter cistaro March 17, 2010 at 2:35 PM #

    I agree that some reforms are necessary. It appears that more emphasis should be on the abuses of both doctors and patients: Those cases where we have so called “Medicare Mills” shere every possible test is performed, needed or not; and those individuals who cheat and take payments for treatments not provided.
    Let’s concentrate on those aspects under the current laws.



  1. Independent Medicare Advisory Board- unemployed employee benefit managers wanted « quinnscommentary - March 31, 2010

    [...] Leanr more about the Board here. [...]

  2. Taxation without Representation | The American Jingoist - March 18, 2010

    [...] Nancy Pelosi told Congress that they had to vote for the Healthcare bill so they could find out what was in it, while at the same time the DNC is running television commercials claiming that the bill will provide an assortment of freedoms. If we tried to do that with Congress we would be indicted for contempt. The Life portion of our declaration will be deleted in the Healthcare bill through the formation of the so-called death panels, the Independent Medicare Advisory Boards called for in section 3403 of HR3200. The text of that section can be found here. [...]

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