Oncologist organization sues HOA, OMB over sequester cuts

June 11, 2018

The Community Oncology Alliance (COA) filed a lawsuit May 31 against the U.S. Department of Health and Human Services (HHS) and Office of Management and Budget (OMB) over the implementation of a 2% sequester cut to Medicare reimbursement for Part B cancer drugs.

The reimbursement reduction was first implemented by CMS in 2013, and recently renewed until 2027 under the Bipartisan Budget Act of 2018. COA argues that the sequester cut is unconstitutional because it amends the Medicare Part B reimbursement rate set forth in the Medicare Modernization Act of 2003 (MMA).

The lawsuit states that Part B providers are not being reimbursed by CMS at average sales price (ASP) plus 6%, as mandated by the MMA. Instead, providers are being reimbursed at ASP plus 4.3% due to CMS’s sequester cut on Part B drug payments.

According to the COA, the sequester cut has negatively impacted independent oncology practices.

Per the COA’s 2018 Practice Impact Report, since the sequester went into effect, there has been a 46.9% increase in the number of cancer treatment clinics that have closed and a 40.3% increase in the number of cancer clinics acquired by hospitals.  

The sequester cut jeopardizes “cancer patients, as well as their community oncology healthcare providers, because these patients are being forced to receive their treatment in more expensive hospital settings rather than in more affordable independent community oncology practices,” states COA in the lawsuit.  

In a letter to addressed to HHS Secretary Alex Azar sent concurrently with the lawsuit, COA explains that after expressing its concerns to HHS and seeing no efforts made to “[correct] the prior Administration’s unconstitutional application of the sequester,” the filing of the lawsuit came as a last resort.

The letter also addresses concerns about President Trump’s blueprint for lowering drug costs, which would move Part B cancer drugs to the Part D program, allowing insurers and pharmacy benefit managers to negotiate discounted prices with drug manufacturers.