Medicare Evades Automatic Cuts for 2015, Actuary Declares

Medicare escaped another round of sequester-like cuts late Tuesday because the program grew far slower then it has in previous years.

One of the new tools to reduce costs in the Patient Protection and Affordable Care Act is the Independent Payment Advisory Board (IPAB), which every year is charged with making recommendations to Congress on ways to improve Medicare while reducing cost.

If Medicare’s growth exceeds certain established targets, the IPA B’s proposals to reduce costs are automatically enacted for the next fiscal year, unless Congress steps in and finds other ways to make the reductions.

Once a year Center for Medicare and Medicaid Services’ Office of the Actuary must look at five years of Medicare growth, both real and projected. If the average exceeds the average of the a modified version of the Consumer Price Index (CPI) over that same period, the actuary then calculates how much the IPAB must cut Medicare to make that target.. This year’s report, issued late Tuesday, was the first, and Acting Chief Actuary Paul Spitalnic announced that Medicare growth fell below the CPI target.

“The projected 5-year average growth in Medicare per capita spending is 1.15 percent, and the 5-year average growth target is 3.03 percent,” Spitalnic wrote. “Because the projected 5-year Medicare per capita growth rate does not exceed the Medicare per capita target growth rate, there is no applicable savings target for implementation year 2015 (determination year 2013).”

During the last presidential election Republican critics characterized the IPAB as a “death panel,” making it so politically charged that the Obama administration has had trouble recruiting experts to serve on it.