Application of 2% Sequester Cut to Medicare Part B Drug Reimbursement is Unconstitutional and Illegal; Costing Seniors and Taxpayers Billions
The Community Oncology Alliance (COA) has filed a lawsuit in the U.S. District Court for the District of Columbia to stop the United States Department of Health and Human Services (HHS) and the White House Office of Management and Budget (OMB) from applying the Medicare sequester cut to reimbursement for Part B drugs.
In the lawsuit, COA, which represents more than 5,000 independent, community-based oncologists, shows the sequester cut has harmed patients, decimated the nation’s independent community cancer care system, and cost seniors and taxpayers billions in unnecessary health care spending.
Sequestration is an automatic cut to Federal government spending triggered because Congress was unable to negotiate a balanced budget in 2011. The blunt budget cutting gimmick has been extended multiple times, with the current sequester scheduled to continue through 2027. Beginning in 2013, the Centers for Medicare & Medicaid Services (CMS) began to apply a 2% budget sequester cut to all Medicare Part B reimbursement, including for drugs. The lawsuit seeks injunctive relief to specifically stop CMS from applying the sequester cut to Part B drug reimbursement.
The application of the sequester cut to cancer drug payment set up the nation’s cancer care system for the closure or consolidation of independent community oncology practices, where the majority of Americans with cancer are treated. This has created access problems for patients as cancer care moves into the much more expensive hospital system, driving up costs for seniors with limited mobility and fixed incomes, as well as all taxpayers who fund Medicare.
As the 2018 Community Oncology Practice Impact Report notes, since the sequester started in 2013, approximately 135 independent community cancer clinics – many comprised of multiple locations – have been forced to close their doors, and approximately 190 clinics have been acquired by hospitals. Research has found that the consolidation of community cancer practices into hospitals cost Medicare and taxpayers an extra $2 billion in 2014 alone. In addition, Medicare beneficiaries responsible for the 20% coinsurance saw their bills rise by $500 million in that same year.
The lawsuit notes that application of the sequester cut to Part B drug reimbursement is both illegal and unconstitutional. This is because Part B drug reimbursement was set by Congress at average sales price (ASP) plus 6% in law in the Medicare Modernization Act of 2003. By applying the sequester cut to Part B drug reimbursement, the Administration has bypassed Congress and the law by lowering Part B drug payments to ASP plus 4.3%. As such, HHS and OMB are violating the separation-of-powers doctrine of the Constitution. Simply put, the Executive Branch cannot amend legislation passed by Congress under the guise of executing the laws.
In conjunction with the complaint, COA also sent a letter to HHS Secretary Alex Azar explaining why legal action was a last resort, providing preliminary input on why proposed Medicare Part B changes in the President’s blueprint on drug prices will be harmful to cancer patients, and outlining some of COA’s solutions to increasing cancer drug prices, as well as reiterating community oncology’s desire to work together with the Trump Administration.
“We are filing this lawsuit on behalf of the millions of Americans who face cancer and should be able to get high-quality, affordable, cancer care close to home. The sequester has been one of the biggest reasons why they can’t do that, and it is time for this to stop,” said Jeff Vacirca, MD, FACP, president of COA and CEO of NY Cancer Specialists. “I see the impact of the sequester cut to Part B drug reimbursement to patients and practices on a daily basis. Because of it, our country is left with less access to cancer care in communities – particularly in rural and underserved regions – as well as unnecessarily high spending to receive it in hospitals.”
“Filing this lawsuit was a last resort after numerous meetings, discussions, and letters to HHS and OMB that went nowhere. We had hoped that the current Administration would have fixed what is a constitutional violation that is clearly harming seniors with cancer,” said Ted Okon, executive director of COA. “Community oncologists support and want to work together with the Administration on solutions to reduce drug prices and health care spending. However, the sequester cut does not do that. It has backfired in spectacular fashion, costing seniors and Medicare billions. It is time for this madness to stop.”
Independent community oncology practices and providers are dedicated to lowering the escalating cost of cancer care. They have been pioneering oncology payment reform for years, including private payer programs based on the Oncology Medical Home, the Medicare Oncology Care Model (OCM), and working on the next-generation, improved OCM 2.0 model that includes payment for cancer drugs based on value.