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May 4, 2018

What's driving cancer clinics to close? Cuts to 340B, Medicare Part B, oncologists say

Daily Briefing

    More than 1,200 independent oncology clinics have shut down or been acquired by a hospital since 2018, according to new data from the Community Oncology Alliance—and oncologists say Medicare's 340B drug discount program and sequester-related cuts to Medicare Part B are driving the trend, Susannah Luthi reports for Modern Healthcare.

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    Data highlight clinic closures

    The Community Oncology Alliance data show that, since 2008:

    The alliance said Florida, Michigan, and Texas have seen the highest numbers of clinic closures.

    Clinics say federal policies are to blame

    Some clinics have said federal sequester cuts to Medicare Part B reimbursements are partly to blame, noting that the cuts in certain instances have caused them to send their Medicare patients elsewhere for chemotherapy.

    In addition, the alliance said more hospitals sought to bring cancer care in-house to qualify for the 340B program's discounts. The 340B program requires drug manufacturers to provide outpatient drugs to eligible health care providers at discounts ranging from 20% to 50%. According to the Medicare Payment Advisory Commission, 45% of acute care hospitals are eligible for the program, but independent oncology clinics are not.

    According to Luthi, many oncologists say they're at risk of acquisition by 340B hospitals because of the discounts the hospitals get on cancer drugs. "The [oncology] practices are in a tough, delicate situation," said Ted Okon, president of the Community Oncology Alliance.

    In Florida and Texas, many independent oncology clinics have merged to avoid being acquired by hospitals, Luthi reports. According to Okon, oncologist consolidation was responsible for about 50 clinic closures in Florida and 43 in Texas.

    But in Michigan, cancer doctors turned to hospitals as rural independent oncology clinics closed. According to Okon, the Michigan trend might have been spurred by hospitals seeking to expand their services to include cancer treatment.  "A hospital is typically constructing some big building, and that's why they want cancer care to go to their operating sites that are losing money or just barely breaking even."

    Some clinics could fight back

    To stem closures among independent oncology clinics, Okon said lawmakers should support more robust reporting requirements for the 340B program and roll-back sequester cuts to Part B reimbursements.

    But Okon also suggested that oncology groups might take matters into their own hands and sue the federal government to restore Medicare Part B payments. "We are at the end of the rope," he said (Luthi, Modern Healthcare, 4/30).

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