The Impact of the Medicare Sequester on Community Oncology

Sydney Abbott, JD
Policy Coordinator, Association of Community Cancer Centers

Because of failed debt negotiation talks back in 2011, on April 1, 2013, an automatic 2% reduction in payment took place across the board on all claims submitted for Medicare reimbursement. The “sequester,” as it has become known, impacts Medicare providers by reducing all of the payments submitted to Medicare by 2%, and, in combination with other cuts and reductions in Medicare reimbursement, further decreases providers’ ability to cover the cost of providing care to Medicare patients. This is not about making a profit; many providers are already losing money by caring for Medicare patients. Rather, this payment reduction could even further reduce the number of Medicare patients a cancer center is able to treat.

Because of how Part B drugs are reimbursed, the 2% sequester disproportionately reduces the payments for critical cancer drugs. Provider reimbursement should be at average sales price (ASP) plus 6%. However, after accounting for the patient copay component, the sequester actually makes provider reimbursement ASP plus 4.3%. This translates to a 28% reduction for Part B drugs. The president’s budget for 2014 proposes to reduce Medicare reimbursement to ASP plus 3%. Both the Centers for Medicare & Medicaid Services and the Department of Health and Human Services have declared that they have no power to adjust the sequester cuts.

The Sequester Is Felt in Community Cancer Care
The Association of Community Cancer Centers (ACCC) is currently surveying its members on the impact of the Medicare sequester. While the results are not yet final, a snapshot of the results submitted to date show that responses are split almost evenly among hospital-based cancer centers and private physician oncology practices. Nearly 60% of the respondents have made changes as a result of the 2% across-the-board sequester cuts on Medicare reimbursement. Of those providers that are making changes, more than 80% have reduced their general operating expenses, including making reductions in staff.

In fact, some facilities are freezing wages, postponing large capital purchases, and canceling travel and meetings to offset some of the sequester cuts. According to the survey results so far, all service areas have been impacted, including survivorship, patient navigation, clinical trials, and nutrition services. However, it is chemotherapy infusion that has been hit the hardest, with nearly 75% of the respondents saying it has been impacted.

Of the 40% of private practices and hospitals that stated that they have not yet made changes as a result of the sequester, 66% plan to make changes within the next 6 months. Of the results compiled so far, less than 15% do not plan to make any changes as a result of the 2% Medicare sequester. Again, the survey is not yet complete, and ACCC encourages all members to submit their responses. We will have a full report once the survey is closed and the data are reviewed.
In general, ACCC members are trying to make responsible changes that allow them to continue to care for all of their patients in the same way as they have in the past. However, the sequester’s impact is taking its toll, and many members are barely breaking even—or worse yet, are now under water—on their Medicare reimbursement.

One way to alleviate the pain of the sequester is to eliminate the cost of cancer drugs from the 2% cut in reimbursement. US Representative Renee Ellmers, R-NC, recently introduced a bill that would do just this. ACCC supports H.R. 1416: Cancer Patient Protection Act of 2013, which is legislation that would eliminate the 2% sequester from Part B drugs. This legislation does not remove the sequester cuts from services provided to cancer patients, only the fixed costs that are associated with Part B drugs. Support for this bill is growing, and there are currently 75 cosponsors in the House of Representatives.

ACCC will continue to push for a reasonable solution to the Medicare sequester. As always, we will keep members up to date on changes to this important issue.

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