Judicial review in the IPAB

The President of Mass BIO complained recently in the Boston Globe that the Independent Payment Advisory Board (IPAB) isn’t subject to judicial review. Quick points:

  • Many federal statutes contain similar limitations, including Medicare.
  • These limitations are entirely constitutional (Art. I, §8, cl. 9; Art. III, §§1-2).
  • The IPAB mechanism is borrowed from the successful Defense Base Realignment and Closure Commission, designed by Bush 41 and Secretary of Defense Dick Cheney.
  • The limitation on judicial review doesn’t apply to the IPAB generally, but just to “implementation by the Secretary” after congressional review.
  • Congress can amend IPAB recommendations on a “pay-as-you-go” basis.
  • Does the US Chamber of Commerce also support more public interest litigation?

Medicare is beset by special interest groups that fight for the continued flow of funds to their narrow range of CPT or DRG codes, without much real concern for the overall health of the program or population. Some Medicare cuts become a political quagmire (DME competitive bidding demonstration projects come to mind) or result in political horse-trading without a coordinated plan. Medicare is a poster child for public choice theory.

This is why Congress created the IPAB – choosing to have their hands tied like Odysseus, lest they respond to a Siren song by lobbyists. A similar process worked well since 1990 in the Defense Base Realignment and Closure Commission – actions that would have been politically impossible seriatim became tenable when de-politicized and undertaken collectively. In a recent article in the Harvard Journal of Legislation, Michael Teter call this solution to Congressional gridlock “recusal legislation.” It is another form of partial congressional delegation in the administrative state. The first report is due in January 2014, although no one has been nominated for IPAB yet, much less confirmed.

The BRAC evaluates military base requirements and makes a recommendation to the President on which ones to close. The President has a few months to review the recommendation. If the President disagrees, in whole or in part, the recommendation is sent back to the BRAC. If the President agrees with the recommendation, it goes to Congress. The Secretary of Defense is then required to follow the BRAC report unless Congress passes a joint resolution of disapproval within a limited time under pre-defined House and Senate rules (§§2903, 2908, 2914). The reports have been implemented every time.

Despite the attempt to bypass gridlock, various states sued to block the closure of local bases. Led by conservatives, the Supreme Court held that the BRAC recommendation given to the President wasn’t a “final agency action,” meaning it wasn’t reviewable under the Administrative Procedure Act. The President retained full authority to accept or reject the recommendation.  Dalton v. Specter, 511 US 462, 470-71 (1994). While exempt from judicial review under the APA, the Supreme Court held that challenges could still appropriate if the process violated another federal statute or the Constitution. Several states have followed this opening. For example, in 2005, Governor Mitt Romney sued Donald Rumsfeld, alleging that closing the Otis Air National Guard Base in Barnstable, MA and moving 15 F-15 and 15 A-10 aircraft were improper unless approved by the “commander in chief” of the Massachusetts Air National Guard – Governor Mitt Romney. The federal district court denied the request for an injunction and the case was not appealed, but a political compromise was reached to keep the base open with fewer planes.  Other states were equally creative in litigation.

With this history, we can see the IPAB judicial review rules in context. IPAB was designed with Dalton v. Specter in mind, but varies significantly from the BRAC model. Under the ACA, if Medicare costs exceed certain thresholds, the IPAB must create a report to cut spending and transmit the report to both the President and Congress.  Unlike BRAC, the President does not retain the final authority to approve or reject it. (42 USC §1395kkk(c)(3)) Congress is also free to amend the IPAB recommendation, but must meet the Medicare cost cutting targets for that year and cannot increase overall Medicare spending. Any amendments must be “paid for” by a new Medicare offset. (42 USC §1395kkk(d)) If Congress fails to act, the Secretary must implement the recommendations (42 USC §§1395kkk(b)(3), (e)). Under Dalton, it isn’t clear whether the APA will apply to IPAB recommendations adopted through this default mechanism.

Why did Congress limit judicial review of IPAB implementation? Consider the history of litigation in Medicare (and BRAC) to delay or modify cost saving proposals. Medicare examples include the long struggle over whether Stark II applied to lithotripsy, or this recent class action to block Medicare reimbursement changes in rehabilitative care. Hundreds of examples are available. Congress chose to streamline the process to prevent suits like these. It’s entirely legal under the Constitution (Art. I, §8, cl. 9; Art. III, §§1-2) and common in many federal statutes, including Medicare.

In the ACA, I count 14 provisions that limit judicial review – including many technical definitions and decisions under the law. (If there is demand, I’ll post on these separately). The IPAB language is found in 42 USC §1395kkk(e)(5):

‘‘(5) LIMITATION ON REVIEW.—There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the implementation by the Secretary under this subsection of the recommendations contained in a proposal.”

This waiver of judicial review does not cover all actions by the IPAB, but is restricted to “the implementation by the Secretary under subsection (e). Paragraph (e)(5) does not block suits over the process generally, especially since Dalton might not apply. For example, in subsection (c)(2), the ACA says:

‘‘(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 costsharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria. (42 USC 1899A(c)(2)(ii)).”

Any proposal that violates this federal statute could still be challenged in federal court, not to mention the inevitable firestorm in Congress. Unlike base closings, decisions under IPAB can be reversed in the future (h/t to Jessica Mantel) or Congress can sunset the IPAB.

I understand that Mass BIO might be worried about IPAB, since they don’t enjoy temporary protection from cuts like some other groups negotiated, but they should focus on creating outstanding products that save lives at a reasonable cost.  If so, IPAB won’t hurt them.

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