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June 1, 2018

Are Medicare Part B drug payment cuts unconstitutional? An oncology group says yes.

Daily Briefing

    The Community Oncology Alliance on Wednesday filed a lawsuit against HHS, alleging that the 2% federal sequester cuts to Medicare Part B drug reimbursements are unconstitutional.

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    Congress in 2011 passed the Budget Control Act, which mandated a 2% cut to Medicare payments. According to Politico's "Pulse," Congress has extended the sequester cuts four times, with the most recent extension lasting through fiscal year 2027. Former President Barack Obama's administration applied the cuts to some drugs covered under Medicare Part B—a move that 124 House lawmakers in 2013 warned against, Modern Healthcare reports.

    The Community Oncology Alliance—which represents more than 5,000 independent, community-based oncologists—has repeatedly sought to fight the cuts, and in April released a report that said since 2008:

    • 658 independent oncology clinics have been acquired by or entered into contracts with hospitals;
    • 423 clinics have closed; and
    • 168 clinics have been acquired by or merged with other practices.

    The Alliance in the report said the federal sequester cuts to Medicare Part B drug reimbursements—as well as Medicare's 340B drug discount program, which is not open to independent oncology—are partly to blame for the closures.

    Lawsuit details

    In the suit, filed in a federal district court in Washington, the Alliance argues that Congress never gave HHS the authority to change the Medicare Part B reimbursement formula and that the sequester-related cuts have forced more independent cancer treatment centers to close or consolidate. As a result, the alliance argued, some patients have been forced to seek treatment at hospitals, which it said drives up the costs of care.

    The suit, which names HHS Secretary Alex Azar and White House Office of Management and Budget (OMB) Director Mick Mulvaney as defendants, asks the court for an injunction to stop CMS from applying the 2% cut.

    In a letter sent to Azar, the Alliance wrote, "We are filing to seek an injunction against [HHS] and [OMB] because we have exhausted all possibilities in stopping what is an unconstitutional application of the 2% sequester cut to Part B drug reimbursement."

    Ted Okon, head of the Alliance, called the lawsuit the last resort "after numerous meetings, discussions, and letters to HHS and OMB that went nowhere" (Luthi, Modern Healthcare, 5/31; Frieden, MedPage Today, 5/31; Beasley, Reuters, 6/1; Diamond, "Pulse," Politico, 5/31).

    Medicare 101: Cheat sheets for Parts A through D

    Through the years Medicare has grown more complicated, including private supplemental insurance and prescription drug coverage. Download our cheat sheets to learn how each of the four parts of Medicare works, and why they’re so important for provider organizations:

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