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CMS Says It Lacks Authority to Roll Back Sequestration Cuts to Medicare Payments for Part B Cancer Drugs

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Key Points

  • The Centers for Medicare and Medicaid Services told members of Congress it has no authority under the Budget Control Act of 2011 to reverse the 2% cut to Medicare payments to physicians and hospitals for Part B drugs that went into effect on April 1.
  • Many cancer clinics and community oncology practices nationwide are sending Medicare patients to hospitals for chemotherapy treatment. The additional cut to Medicare reimbursements is threatening to shutter the doors of cancer clinics and community practices.

According to a June 3 letter from the Centers for Medicare and Medicaid Services (CMS), there will be no reprieve in the 2% ($11.08 billion) reduction to Medicare providers and hospitals mandated by the federal budget sequestration. The letter by CMS Acting Administrator Marilyn Tavenner was in response to a letter from Representative Pete Sessions (R-Texas), and co-signed by 123 members of Congress, asking whether CMS had the authority to make the 2% reduction, which imposes new cuts on reimbursement for Medicare Part B drugs, and the 6% administrative fee for costs associated with procuring and storing the agent, inventory, waste, and disposal, or had flexibility “to minimize impact on the agency’s core mission in service of the American people.”

Because chemotherapy drugs are administered by a physician, they are paid for under Part B and subject to the across-the-board sequester cut. The reduction does not affect reimbursements to Medicaid and the Veterans Health Administration.

“The Department of Health and Human Services assessed whether the law allows discretion to administer the sequestration reductions in a manner that is different from the across the board approach that has been used to implement it,” wrote Ms. Tavenner. “We do not believe that we have the authority under the Budget Control Act of 2011 to exempt Medicare payment for Part B drugs. Exemptions from the sequestration are specified in 2 U.S.C. sections 905(g) and (h) and 906(d)(7), which do not encompass payment for Medicare Part B drugs. The Office of Management and Budget memorandums M-13-03 and M-13-06 referenced in your letter pertain to any flexibility regarding the agency’s budgetary resources for internal operations such as the hiring of new employees. This is separate from the agency’s administration of Medicare payments, which are subject to the sequestration reductions, as noted above.”

Cancer Patients Turn to Hospitals for Care

The additional cut to Part B drug reimbursement, implemented on April 1, has already resulted in cancer clinics nationwide turning away Medicare patients and is threatening the financial solvency of community oncology practices, potentially further limiting access to cancer care if practices have to shutter their doors completely.

“While the 2% cut for services seems relatively small, on the drug side it has a profound financial effect. So it is really not surprising that some community oncology practices won’t be able to treat their patients in their offices or clinics. Patients will have to be treated at the hospital instead,” said Ted Okon, Executive Director of the Community Oncology Alliance (COA), in an interview with The ASCO Post.

The content in this post has not been reviewed by the American Society of Clinical Oncology, Inc. (ASCO®) and does not necessarily reflect the ideas and opinions of ASCO®.


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