No Stopping Sequestration Cancer Cuts, Says CMS

Nick Mulcahy

June 06, 2013

There is no stopping the cuts to Medicare's reimbursement of cancer drugs mandated by the federal budget sequestration, according to a June 3 letter from the Centers for Medicare and Medicaid Services (CMS) to members of the US Congress.

The cuts have infamously caused cancer clinics across the country to turn away Medicare patients.

The letter from CMS to members of Congress who had appealed for a workaround of the cancer-specific cuts was first reported yesterday by the Huffington Post.

In the letter, CMS explained to Congress that it does not have the ability to exempt the cancer drug reimbursement from the general across-the-board cuts.

The letter was prompted by a request in April from US Representative Pete Sessions (R-Texas) along with 123 other members of Congress. They asked CMS if the cancer drug payment cuts were a violation of law or if they could be eliminated by "any available flexibility," according to news reports.

The cuts are "self-defeating," said Ted Okon, MD, executive director of the Community Oncology Alliance (COA) in April. In an interview with Medscape Medical News at that time, he explained that Medicare patients who are turned away from private clinics will have to go to hospitals to seek treatment, which will result in higher Medicare costs.

The sequester cuts apply to payments for Medicare Part B drugs and the 6% administrative fee. Before the cuts, Medicare reimbursed clinics the cost for those drugs at their average sales price plus a 6% fee for administrative services. The sequester cuts reduce that services fee to 4.3%, and reduce the reimbursements for the drugs as well.

Even before the current cuts, this payment scheme failed to adequately reimburse community cancer clinics for the total costs of essential therapies, according to a press statement from the COA and other cancer organizations. There are significant operating expenses related to procuring, storing, preparing, and handling Part B drugs, the statement said.

Excerpt From the June 3 CMS Letter

"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. 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."

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