After the CBO’s Douglas Elmendorf suggested that the current health care bills do little to control long-term health care spending, the administration doubled down on its MedPAC-on-steroids proposal. Establish a panel of medical professionals, allow the new committee to push through MedPAC like payment reforms without too much Congressional interference and you ‘bend the cost curve,’ the administration enthusiastically argued.

But on Saturday, the CBO scored the President’s Independent Medicare Advisory Council (IMAC) proposal and identified few actual savings:

CBO estimates that enacting the proposal, as drafted, would yield savings of $2 billion over the 2010–2019 period (with all of the savings realized in fiscal years 2016 through 2019)….In CBO’s judgment, the probability is high that no savings would be realized, for reasons discussed below, but there is also a chance that substantial savings might be realized. Looking beyond the 10-year budget window, CBO expects that this proposal would generate larger but still modest savings on the same probabilistic basis.

The estimate does not come as a great shock. As Jonathan Cohn explains, as far as the CBO is concerned, “there are a few changes guaranteed to bring down costs significantly over the long run: Change the tax exclusion for group health insurance, so that employers and employees alike have less incentive to purchase generous insurance; write into the law some kind of budget limit on federal health spending, perhaps in the form of automatic spending reductions that go into effect should federal spending get too high; force changes in the way health care is delivered, by pushing doctors into group practices that pay based on salary; change Medicare so that even senior citizens with generous Medigap plans have to pay higher cost-sharing.”

Cohn then suggests that the administration can either strengthen the proposal to achieve a higher CBO score or “ignore the CBO, given the inherent uncertainty in these projections, and to push ahead with the reform plans as they are already written.” Another alternative would be for the White House to produce its own report, in which former CBO chief Peter Orszag could explain why he believes IMAC is such a “game changer” and how the CBO has “a bias toward exaggerating costs and underestimating savings.” In other words, Orszag could defend the proposal and explain how it would produce system-wide savings.

Or, alternatively, as Cohn notes, the administration can design what David Cutler and Judy Feder have called a “fail safe option” that would kick in if productivity improvements, investments in health information technology and payment system reforms fail to slow the growth of health care spending and lower costs. Here is Feder explaining the proposal on CSPAN:

A commission would monitor health care spending and, if we’re spending more than a set target on health care, the panel would work to control spending by placing limits on Medicare spending, and controlling private spending. If the “trigger” is pulled, the actions would be self-executing (unless Congress overturns them), selected by experts (whether a commission or the Secretary of HHS) from a menu of pre-determined, scorable options, and consistent with savings throughout the system (not just shifting costs from government to private payers). Some in Congress may resent the sudden loss of authority, but this kind of mechanism would free the board from the politics of the moment, score better with the CBO (since we are now using a specific target of growth) and could even provide some much needed cover to the Blue Dogs who are oh-so-concerned about deficits and out of control health care spending.

After Congressional Budget Office director Douglas Elmendorf suggested that the current reform legislation would do little to reduce the growth of health care spending, the White House doubled down on its support for establishing a MedPAC-like commission — MedPAC is an independent agency advising Congress on issues affecting the Medicare program — that would help lower future health care spending.

Every year, MedPAC publishes two reports chock full of the kind of payment reform that could truly transform the health care system from incentivizing quantity to quality and value of care and every year Congress ignores them. By giving a MedPAC-like panel the power to implement the kind of payment reforms that MedPAC has always advocated, the proposal would free the panel from the constraints of congressional politics and allow it to actually influence Medicare spending patterns. The goal is to adopt reforms that slow the growth of Medicare spending and modify payment methods — reforms that the private sector could then emulate.

As Tim Foley explains, under the White House’s proposal, every year the new panel would release a set of recommendations for how to best control Medicare expenditures. “The President could choose to submit all of MedPAC’s recommendations as a package deal. Congress would have 30 days to intervene, but they couldn’t pick and choose what proposals they’d like – they could only vote up or down on the whole package.” This kind of proposal kicks payment reform into high gear. While the current legislation already expands the use of models and allows the Center for Medicare and Medicaid Studies to implement successful variations, this proposal would more aggressively change the incentives in the system.

As Greg Poulsen, senior vice president at Intermountain Healthcare, a nonprofit system of hospitals and doctors in Salt Lake City, points out, “Unless we get the incentives right, nothing else in health reform really matters.” Poulsen is part of a group of officials at so-called “integrated” institutions that already operate using MedPAC’s many of recommendations and are generally able to provide quality care more efficiently. The group believes that “the congressional health overhaul bills, at least in their current form, would do little to reward them or encourage others to follow their lead” and is “pressing lawmakers to move much more aggressively to revamp the way Medicare pays for care to discourage unnecessary services and reward “value” over volume.”

The administration is a strong proponent of these reforms, but the challenge lies in pleasing the CBO — which finds savings by following Potter Stewart rule life: “I know it when I see it.” However, since the MedPAC-like proposal is predicated on the President accepting its recommendations and Congress not voting them down, (and MedPAC is only required to not “increase in the aggregate level of net expenditures under the Medicare program,”) the CBO — which rarely defines the criteria of savings — is unlikely to “see” savings.

During yesterday’s meeting with HELP and Senate Finance Committee members, President Obama expressed support for Sen. John Rockefeller’s (D-WV) legislation to transform MedPac — an independent agency advising Congress on issues affecting the Medicare program — into an independent executive agency. Here is how Rockefeller introduced his legislation last month:

Congress has proven itself to be inefficient and inconsistent in making decisions about provider reimbursement under Medicare. If we want serious improvements in our health care delivery system, then we need to reform MedPAC’s current authority to include fully establishing and implementing Medicare reimbursement rules. Congress should leave the reimbursement rules to the independent health care experts.

By giving MedPAC the power to implement its recommendations and revamping the board into an independent “but democratically accountable organization not unlike the Federal Reserve Board,” Rockefeller is freeing the panel from the constraints of congressional politics and allowing it to actually influence Medicare spending patterns. The goal is to adopt reforms that slow the growth of Medicare spending and modify payment methods — reforms that the private sector could then emulate.

MedPAC’s recommendations have synced well with the general tenor of cost-containment options. Here are just some of its proposals:

- Medicare change payment system incentives by basing a portion of provider payment on the quality of care they provide and recommended that the Congress establish a quality incentive for providers.

- Charge an independent entity to sponsor credible research on comparative effectiveness of health care services and disseminate this information to patients, providers, and public and private payers.

- Reducing preventable readmissions, increasing the use of bundled payments…

Over the last decade, Medicare has led the way in developing prospective payment systems — paying fixed payments on what efficient providers could be expected to do rather than on what they actually did — and bundling payments for certain conditions and treatments. Private insurers have systematically adopted Medicare’s efficiencies and Rockefeller believes that by giving MedPAC recommendations some teeth, we can first improve Medicare efficiency and also lower health care spending across the entire health care system.

Ezra Klein is reporting that the White House is also considering variant of the Rockefeller proposal. “This plan would package MedPAC’s yearly recommendation and fast track them through Congress for a simple, up-or-down vote. No filibuster. No changes to the package of recommendations. Health reform, under this scenario, would become a yearly legislative project,” Klein writes.

Both variations have merit — after all, why should we hold payment and efficiency reform hostage to the whims of politics/Congress? why not let independent experts make the decision? But as Jonathan Cohn notes, “In practice, controlling costs invites a lot political opposition. It means taking money out of somebody’s pockets–insurers, hospitals, device makers, etc. ”