Death to IPAB and the device tax? Obamacare 2? National VC group predicts the future

The National Venture Capital Association thinks the payment board and the medical device tax might go down in a blaze of bipartisan glory. The son of Obamacare is a possibility too.

The National Venture Capital Association thinks there there are two elements of the Affordable Care Act that might have enough enemies in both parties to achieve a repeal:

  • The Independent Payment Advisory Board
  • Medical device tax

The association published its 2012 Election Report last week and the biggest section was “Full-Steam Ahead with ACA Implementation.” The report hopes for bipartisan efforts against these two unpopular elements of the ACA because “Republicans have supported some of the policies in the ACA in the past including promoting value-based purchasing, innovative, efficient delivery models and applying quality-based payments.”
Here is the report’s take on both issues.

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IPAB: The IPAB is one of the most contentious provisions of the ACA. The board will consist of a 15-member panel that, starting in 2014, would recommend quality improvements to Medicare and cuts if spending grows too quickly—cuts that Congress can either accept or replace with similar reductions elsewhere in the program. Prescription drugs and biologics are likely to be first on the chopping block, since other areas of spending cuts are off-limits. President Obama wants IPAB to go even further by adding more enforcement and allow the IPAB to sequester funds as a “backstop” should Congress overrule its decisions. NVCA has strongly opposed the IPAB and believes it would be extremely harmful to the advancement of medical innovation.

Medical Device Tax – The medical device tax has continued to come under bipartisan criticism from Congressional members. The 2.3 percent tax on the sale of any taxable medical device, regardless of whether the underlying company is profitable, is set to take effect in January 2013. The House passed legislation to repeal the tax this Congress but the Senate Democratic leadership has been reluctant to debate any provisions to the ACA. With the election over, the Senate Democratic leadership might be willing to debate the issue in the context of overall tax reform. While there’s a possibility that this could be addressed during the lame duck session, no one has yet tackled the other part of the debate: how to find a $30 million “pay for” for repeal. If the industry is unsuccessful in getting an outright repeal, there could be an appetite to provide at least small company relief as a last case scenario.

Preparing for another healthcare bill?

The ACA’s focus is expanding access to healthcare and ACOs are beginning the shift away from fee for service. But neither effort is enough to control healthcare spending, particularly in the short term. The NVCA report speculates that President Obama could tackle payment reform in his second term:

Recently a group of former Obama health care policy officials released an outline that the President could use as a blueprint for a comprehensive plan to stem the rise in spending. At the heart of the plan, the traditional fee-forservice model would be replaced by the privately negotiated bundled payments that would cover a patient’s entire course of treatment. Those bundled payments would have to adhere to a “global spending target” for each state that would grow no faster than the average increase in wages. This type of approach could gain some bipartisan support in the new Congress.

The NVCA is happy FDA Commissioner Margaret Hamburg will probably stay on in Obama’s second term and that one of her 2013 priorities is developing a national strategy for biomedical and medical innovation.

The report also discusses the sequestration’s impact on the FDA and the President’s Council of Advisors on Science and Technology report “Report to the President on Propelling Innovation in Drug Discovery, Development, and Evaluation.”
Download the report here.
[Image from flickr user scottnj]