- A group representing over 5,000 independent, community-based oncologists is suing HHS over the implementation of a two percent sequester cut to Medicare reimbursement for Part B cancer drugs.
The Community Oncology Alliance (COA) is arguing that the Medicare reimbursement reduction implemented in April 2013 and extended by the Bipartisan Budget Act of 2018 is unconstitutional.
“Simply put, applying the sequester cut to Part B drug payments impermissibly bypasses Congress and attempts to amend the Medicare Part B reimbursement rate set forth in statute the Medicare Modernization Act of 2003 (MMA) as average sales price (ASP) plus six percent,” the group explained in a letter to HHS.
“Today, Part B providers are not being reimbursed by the Centers for Medicare & Medicaid Services (CMS) at ASP plus 6 percent as mandated by the MMA, but instead at ASP plus 4.3 percent due to CMS’ wrongful application of the sequester cut to Part B drug payments.”
The lower Medicare reimbursement for Part B drugs has negatively affected independent oncology practices, the COA added.
Since CMS applied the sequester cut to Part B cancer drugs, 135 cancer treatment clinics have closed through February 2018, representing a 46.9 percent increase in treatment site closings, the COA 2018 Practice Impact Report showed.
Another 189 independent community cancer clinics have also merged with hospitals, accounting for a 40.3 percent boost in healthcare consolidation since the sequester cut took effect.
As cancer treatment clinics closed and hospital acquisitions increased, cancer care shifted to the more expensive hospital outpatient setting, the group contended. A 2016 Milliman study revealed that independent community cancer clinics delivered 84 percent of cancer care in 2004. But that percentage fell to a little over 50 percent by 2014.
That shift to the hospital outpatient setting from 2004 to 2014 cost Medicare about $2 billion more in just 2014 alone.
Medicare beneficiaries also ended up paying more when they received cancer care in the hospital setting. In 2014, the shift of cancer care from independent practices cost beneficiaries about $500 million because of their 20 percent coinsurance under Medicare, the Milliman study found.
“We are filing this lawsuit on behalf of the millions of Americans who face cancer and should be able to get high-quality, affordable, cancer care close to home. The sequester has been one of the biggest reasons why they can’t do that, and it is time for this to stop,” stated Jeff Vacirca, MD, FACP, COA President and NY Cancer Specialists CEO.
“I see the impact of the sequester cut to Part B drug reimbursement to patients and practices on a daily basis. Because of it, our country is left with less access to cancer care in communities – particularly in rural and underserved regions – as well as unnecessarily high spending to receive it in hospitals.”
In the letter to HHS, COA also took issue with the Trump Administration’s recent proposals to modify Medicare Part B.
President Trump introduced his administration’s blueprint to lower drug and out-of-pocket costs in May 2018. The blueprint included proposals to merge Part B drugs into the Part D program and restart the competitive acquisition program for Part B drugs.
“It is an understatement to say that we are alarmed with conceptual proposals to ‘move’ Medicare Part B under Part D and to revive the Competitive Acquisition Program (CAP). We say that because both involve increasing the power and prevalence of middlemen to ‘negotiate’ drug prices,” the group wrote in the letter to HHS.
By moving Part B cancer drugs to the Part D program, insurers and pharmacy benefit managers (PBM) would be able to negotiate discounted prices with drug manufacturers. However, allowing these middlemen to interfere with Part B cancer drugs would drive up costs, the group argued.
“Examining what is now happening with Part D, as well as with private insurer pharmacy benefit plans being implemented by PBMs and other middlemen, will show you the end result of these proposals: PBMs and other middlemen involved will profit; costs will increase for Medicare and its senior beneficiaries; and patients will face high hurdles in getting their chemotherapy and other cancer therapies.”
Medicare spending on Part D drugs continues to increase, according to a recent Office of the Inspector General report. The HHS watchdog reported that Medicare spent over $380 billion on brand-name drugs between 2011 and 2015, accounting for a 77 percent increase.
Spending on brand-name Part D drugs also rose despite the number of prescriptions decreasing 17 percent during that period.
COA contended that PBMs are to blame for the increase in Medicare spending.
“Because in large part, PBMs now control an estimated 85 percent of all prescription drugs and have a vested interest in high list drug prices due to percentage-based rebates they receive from drug manufacturers and direct and indirect remuneration fees (DIR Fees) they extract from pharmacy providers,” the group wrote.
“DIR Fees are based on a percentage of drug list prices — the higher the list price, the higher the DIR Fee to the PBM. Giving PBMs and other middlemen more power, especially by allowing them to ‘negotiate’ drug prices, will accrue only to their benefit. History teaches that drug prices will only continue to increase until the PBMs are stopped.”
Applying these Part D practices to Part B cancer drugs would be “catastrophic” for cancer care, the group added. “With few real therapeutic and generic-to-brand substitutes in cancer treatment, giving middlemen the power to ‘negotiate’ means that middlemen will be dictating treatment decisions or, at best, restricting treatment choices for oncologists and their patients, especially if cancer is eliminated as a ‘protected class.’”
Rather than implement the proposed Part B modifications, the COA advised policymakers to bolster competition as a means to lower drug costs and out-of-pocket spending.
“Competition is the first step to reducing drug prices, relating to therapeutically equivalent brand name drugs, as well as generics and biosimilars,” the group suggested. “In cancer treatment, there are currently very few situations where there are lower-priced therapeutic brand name or generic-to-brand substitutes, where there are no side effect considerations or other issues that dictate drug choice.”
“Decreasing research and FDA filing costs, time, regulations, and other impediments, including roadblocks by brand name drug manufacturers, in getting competitive brand name, generic, and biosimilar competitors to market, is a necessary first step to lowering drug prices.”
The organization also recommended that policymakers encourage greater biosimilar use, reduce the scope and magnitude of 340B discounts and PBM-related rebates, implement site-neutral reimbursement, and create a new reimbursement mechanism for new immunotherapies.
Developing a universal payment model for cancer care based on the Oncology Care Model (OCM) would also lower drug costs, COA pointed out. The Medicare OCM model is a bundled payment arrangement for chemotherapy services.
COA proposed the OCM 2.0 model, which “will inject value-based payments into cancer treatment for both services and drugs.” The model would include value-based purchasing for drugs and services using a value-based insurance design.