Oncologist group sues to stop sequester cuts to cancer drug reimbursement

A national nonprofit organization representing oncologists filed a lawsuit on Wednesday against the Trump administration calling for an end to "illegal" cuts that impact cancer drug reimbursement.
The Community Oncology Alliance filed the suit (PDF) in the U.S. District Court for the District of Columbia, saying the Centers for Medicare & Medicaid Services should stop applying a 2% sequester cut to Medicare Part D drug reimbursement. The application of that cut to Part B reimbursement is "illegal and unconstitutional," the COA said in a statement.

 

"What's interesting about Part B drug reimbursement, as opposed to any other Medicare reimbursement, is that Medicare Part B reimbursement to physicians is defined in law. That rate is defined in law as average sales price plus 6%," said Ted Okon, executive director of COA, in an interview with FierceHealthcare. He was referring to the Medicare Modernization Act of 2003. "It's an overreach of the executive branch in terms of basically bypassing the Congress," Okon said.

 

The U.S. Department of Health and Human Services and the White House Office of Management and Budget are both named in the lawsuit. Neither had yet returned a request for comment on Thursday morning by press time.

The automatic across-the-board sequestration cuts have been applied to the Part B program since 2013 under the Obama administration. COA said it has raised concerns about their negative impact on the nation's cancer care system since with members of Congress and representatives at both HHS and OMB under both the Obama and Trump administrations.
The cuts hurt patients in the form of less access to cancer care as treatment is pushed into higher cost hospital settings, Okon said. Since sequestration cuts began being applied in 2013, about 135 independent community cancer clinics have closed and about 190 clinics have been acquired by hospitals.

 

"It has literally been a slow drip of torture" on the bottom line of independent practices which administer these drugs and have to cover the costs associated with procuring, preparing and disposing of cancer drugs for patients, he said. "It's pushed practices toward the hospitals. The hospitals, with half of them having 340B discounts, are ready to basically take the practice. Then when the patient goes into the hospital, the billing is done by the hospital system and patients pay more," Okon said. This also drives up overall costs to Medicare. COA research estimates consolidation cost Medicare (PDF) an extra $2 billion in 2014.
Most recently, he said the group received a letter from CMS which defended the application of the sequester cut to Medicare, Okon said. "This was a last resort. We were getting nowhere and exhausted every possibility," he said about the lawsuit.
COA said it also submitted a letter (PDF) to HHS Secretary Alex Azar explaining the legal action, as well as explaining concerns about how recent proposals to change Medicare Part B under the president's blueprint on drug prices would hurt cancer patients. For example, research released by Avalere Health last week finds that Medicare out-of-pocket costs vary significantly and in 2016, the average cost to patients for Part D covered cancer therapies was $3,200, compared to $2,400 under Part B, a 33% difference. The main driver between the cost difference is common use of supplemental coverage under Part B, which is limited under Part D.
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