The Patient Protection and Affordable Care Act (PPACA, P.L. 111-148 , as amended) created the Independent Payment Advisory Board (IPAB, or the Board) to "reduce the per capita rate of growth in Medicare spending." The Board's proposals will be implemented by the Secretary of Health and Human Services (the Secretary) unless Congress acts either by formulating its own proposal to achieve the same savings or by discontinuing the automatic implementation process defined in the statute. This report, which provides an overview of the Board, begins with a discussion of the rationale behind the creation of an independent Medicare board and briefly reviews prior proposals for similar boards and commissions. The report then describes the structure of the Board, the calculations and determinations required to be made by the Office of the Chief Actuary (the Chief Actuary) in the Centers for Medicare & Medicaid Services (CMS) that trigger a Board proposal, and the content of and constraints on Board proposals—including the Medicare productivity exemptions under Section 3401 of PPACA. In addition, the report reviews the expedited and other parliamentary procedures that relate to congressional consideration of Board proposals and other Board-related activities, and concludes with a description of how the Board's proposals are to be implemented and their possible impact. Appendix A details key dates for IPAB implementation and various reports required by the law, and Appendix B compares the IPAB with the Medicare Payment Advisory Commission (MedPAC). Appendix C summarizes the Medicare productivity exemptions in Section 3401 of PPACA as they relate to Section 3403. Among some proponents of health care reform, a major impetus for reform, in addition to improving quality and increasing access, has been the rising cost of the Medicare program. For the past 25 years, annual medical inflation has exceeded annual overall inflation in every year but one (see Figure 1 ). Specifically, over this time period, medical inflation has on average been roughly 2.2 percentage points higher each year than overall inflation. Moreover, Medicare spending during this same period has increased 8.5% per year, while total federal outlays during this same period increased by only 5.3% per year. While some of the growth in Medicare expenditures can be attributed to the increase in the number of Medicare beneficiaries, Medicare per enrollee expenditures rose 6.3% per year from 1985 through 2008—faster than overall medical inflation. Had spending per Medicare beneficiary increased at just the rate of overall inflation over the 1985 through 2008 period, per enrollee expenditures in 2008 would have been slightly less than $4,600 as compared to actual 2008 Medicare Part A and Part B expenditures of $9,448 per beneficiary. Again, the legislation's stated goal of the Board is to reduce the per capita growth in Medicare expenditures, not to reduce overall Medicare expenditures. The Board achieves this goal by developing proposals for the Secretary to implement that reduce the growth in Medicare expenditures. Therefore, while the Congressional Budget Office (CBO) projects that the cumulative impact of the Board's recommendations from 2015 through 2019 will reduce total spending by $15.5 billion, during the same period total Medicare expenditures are projected to be $3.9 trillion with average spending per beneficiary increasing from $13,374 in 2015 to $15,749 in 2019. These savings represent a reduction of about $60.00 per year per Medicare beneficiary over the 2015 through 2019 period. Since these historic patterns of growth in overall health care spending, and Medicare in particular, are viewed as not being sustainable, several proposals have been advanced over the years to create an independent policy-making entity that would be charged with limiting the future growth in Medicare expenditures; be insulated from special interests and lobbyists since these entities would be appointed, rather than elected, and serve for extended terms; and such officials would be able to make the so-called "hard decisions" to control rising costs. Moreover, it has been assumed that these entities would possess the specialized expertise needed to make operational decisions regarding payments and focus initiatives on beneficiary interests and the longer term financial viability of the program. For instance, in 2000 and 2001 Senators Breaux and Frist introduced reform proposals to increase CMS's budget, create separate agencies to administer parts of the program, and establish a Medicare Board to manage competition among private plans and traditional Medicare (referred to as "Breaux-Frist I," S. 1895 , and "Breaux-Frist II," S. 358 ). Interest in an independent health care entity reemerged during early discussions of what became PPACA. Former Senator Tom Daschle proposed the Federal Health Board, modeled after the Federal Reserve Board, with broad authority over both private and public health care programs, including benefit and coverage recommendations, regulation of private insurance markets, and improvements in quality of care. In June 2009, Senator Rockefeller introduced the Medicare Payment Advisory Commission (MedPAC) Reform Act of 2009 ( S. 1380 in the 111 th Congress), which would have altered MedPAC from its current 15-member advisory commission to an 11-member executive branch agency with authority to make both payment and coverage decisions (see Appendix B for a side-by-side comparison of MedPAC and IPAB). In order to achieve program savings, the Commission was directed "to implement payment policies, methodologies, and rates and coverage policies and methodologies ... estimated to reduce expenditures under this title by not less than 1.5 percent annually." In July 2009, the President submitted a draft proposal to Congress titled the Independent Medicare Advisory Council Act of 2009 (referred to as the IMAC proposal). This proposal would have established a five-member council to advise the President on Medicare payment rates for certain providers. While the council would have had authority to recommend broader policy reforms, its authority outside of Medicare payment policy was limited. Finally, during the recent health care reform deliberations, the Senate Finance Committee included a provision (§3403) to establish an independent Medicare advisory board in the now enacted PPACA. Section 10320, added by the manager's amendment, broadened the scope of the Board to make recommendations to slow the growth in nonfederal programs and changed the name of the entity to the Independent Payment Advisory Board, to reflect these additional responsibilities. The perceived merits to some of an independent board are the perceived shortcomings to others. For instance, as Medicare expenditures represent a sizable proportion of federal outlays, approximately 13% in FY2010, for some critics such a large proportion of expenditures should not be beyond the scrutiny and review of elected officials or the public. Second, there is concern that boards, such as IPAB, are singularly focused on reducing spending, that tradeoffs exist between spending and quality, and that these tradeoffs are best dealt with by elected officials. Finally, similar efforts to "automatically" control health care spending, such as the sustainable growth rate formula, used to update Medicare physician payments, potentially demonstrate that such supposedly automatic mechanisms do not effectively remove special interests or Congress from the process. For proponents, removing short-term political and public opinion, focusing on spending, and using automatic mechanisms is required to reduce the growth in expenditures and rationalize health care decision making. The explicit charge given by PPACA to the Board in Section 3403(b) is to "reduce the per capita rate of growth in Medicare expenditures." As described in more detail below, beginning in 2013, and each subsequent year, the Chief Actuary needs to calculate the Medicare per capita growth rate —the five-year average growth in Medicare program spending per enrollee and the Medicare per capita target growth rate— the rate Medicare expenditures would grow without triggering interventions under this section . If the Chief Actuary determines that projected five-year per capita growth rate in Medicare expenditures two years hence exceeds the projected per capita target growth rate, the Chief Actuary needs to establish an applicable savings target—the amount by which the Board must reduce future spending. The Chief Actuary's determination also triggers a requirement that the Board prepare a proposal to reduce Medicare expenditures by an amount at least equal to the applicable savings target. While funding for the Board is authorized beginning in FY2012 and the Chief Actuary makes its first determination in 2013, the statute does not provide a date by which the Board is to begin its operations. Below, the Board's membership, structure, and budget are described. The Board will be composed of 15 members appointed by the President with the advice and consent of the Senate. As such, the members are officers of the United States under the appointments clause of the U.S. Constitution. The Secretary of Health and Human Services, the Administrator of CMS, and the Administrator of the Health Resources and Services Administration are ex-officio nonvoting members. In selecting individuals for nomination, the President is to consult with the majority and minority leadership of the Senate and House of Representatives—each respectively, regarding the appointment of three members. The Chairperson is appointed by the President, with the advice and consent of the Senate, from among the members of the Board. The appointed members of the Board are to provide varied professional and geographic representation and possess recognized expertise in health finance and economics, actuarial science, health facility management, health plans and integrated delivery systems, and reimbursement of health facilities. In addition, the board members are to be drawn from a wide range of backgrounds, including but not limited to physicians (allopathic and osteopathic) and other health professionals, providers of health services, and related fields; experts in the area of pharmaco-economics or prescription drug benefit programs; employers; third-party payers; and individuals skilled in the conduct and interpretation of biomedical health services, and health economics research and expertise in outcomes and effectiveness research and technology assessment. Members should also include representatives of consumers and the elderly. A majority of the appointed members cannot be individuals directly involved in the provision or management of the delivery of Medicare items and services. With exceptions for initial Board members and those appointed to fill a vacancy with an unexpired term, each appointed member may serve two consecutive six-year terms.