Impact of the Medicare Sequester on Community Oncology

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

Oncology providers repeatedly face cuts to reimbursement because of policy decisions made by Congress. The sustainable growth rate formula is fundamentally flawed and leaves providers unable to plan for the future; in addition to other policies that constantly threaten provider reimbursement, the prompt-pay discount prohibits appropriate reimbursement, and not all care that is provided to patients is fully captured by current reimbursement models.

The newest cut to provider reimbursement comes from the 2% across-the-board reduction on Medicare claims. The “sequester” went into effect on April 1, 2013 and cancer care providers most likely began seeing reduced payments as early as mid-April.

Because of the way Part B drugs are reimbursed, the 2% sequester disproportionately reduces payments for critical cancer drugs. Provider reimbursement should be at average sales price (ASP) + 6%. However, after accounting for the patient copay component, the sequester actually makes provider reimbursement ASP + 4.3%. While initial discussions indicated that the sequester would be a short-term congressional budget tool, it has become clear that Congress will not reverse it easily.

To get a more complete picture of the impact of the sequester on community oncology, the Association of Community Cancer Centers (ACCC) recently surveyed its membership. ACCC’s survey opened on May 23, 2013, and results were compiled on June 11, 2013, with 200 respondents fairly evenly split between hospital-based cancer centers and private physician oncology practices, with about 50% of all the patients treated being covered by Medicare. The results conclude that the 2% reduction to Medicare payments as a result of the federally mandated sequester is adversely affecting a majority of cancer patients and providers.

More than 58% of the sites of care surveyed are feeling the sequester’s impact. Of those, 78% have reduced their operating expenses, including reductions in staff, and more than 33% of the facilities have been forced to refer patients to another site of service. In addition, 64% said that chemotherapy infusion service had been impacted, and frighteningly, 13% responded that patient treatments had been delayed as a direct result of the cut. Other types of services have been affected more greatly; survivorship and nutrition services as well as clinical trials all have been negatively impacted by 30% or more.

To understand the sequester’s effect on patients, ACCC asked members if their patients had seen any changes in their care. While 32% of respondents in the physician setting have not changed patient care as a result of the across-the-board cuts, 35% reported more inconvenience for patients, including increased travel for treatment, delays in treatment, and less continuity of care. In the hospital outpatient setting, 55% said the sequester has not yet impacted patient care directly, while 7% admit at least some delays in care. In addition, 15% of hospital outpatient departments have seen an increase in patient referrals to their facilities.

The results of this survey confirm that the sequester has already begun to negatively impact patient care in community oncology. To paint a more complete picture of the sequester’s effect on cancer patients and providers, ACCC will conduct a follow-up survey this fall after the cuts have remained in effect. ACCC will continue to work with its membership to educate members of Congress on the impact that these cuts are having on cancer patients and providers. For more information on the survey, or for information on ACCC’s advocacy efforts, please visit

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