Oncologists sue HHS over Medicare Part B sequester cuts
Oncologists sued HHS Thursday over the continued 2% cuts to Medicare Part B drug reimbursements packed in the budget sequester, claiming Congress never gave HHS authority to change the reimbursement formula.
In the lawsuit filed in federal district court in Washington, the Community Oncology Alliance argued the sequester accelerated independent cancer treatment centers' closures and consolidations, ultimately driving up the cost of care as patients head to hospitals rather than oncology practices for treatment. The trade group based its case on the claim that Congress never granted the executive branch explicit statutory authority to apply the cuts to Part B drugs.
HHS Secretary Alex Azar and Mick Mulvaney, director of the White House Office Management and Budget, are named in the suit. The oncologists asked the court for an injunction to stop the CMS from applying the 2% cut.
Hospitals and physicians alike have lobbied against the sequester since Congress authorized it through the Balanced Budget Act in 2011 as a fallback for failed budget negotiations. Over the past year, lawmakers wrangled over where to direct the sequester's savings before finally agreeing to the recent $1.3 trillion spending omnibus. A disagreement over where lawmakers should allocate the savings accrued through another extension contributed to the agreement's long delay. This latest extension will carry the sequester through 2027.
But while provider groups lobbied Congress long and hard to end the sequester, oncologists decided to sue after the Trump administration's drug pricing blueprint failed to address the issue.
Cancer treatment clinics feel financial pressure from the sequester because their drugs are so expensive. Ted Okon, who helms the Community Oncology Alliance, called the lawsuit the last resort "after numerous meetings, discussions and letters to HHS and OMB that went nowhere."
The lawsuit followed a report from the oncologists' trade group in April that blamed the sequester and the growth of the 340B drug discount program for the increased rate of closures and consolidation of community cancer clinics from 2013 to 2018.
In 2013, 124 House lawmakers including future HHS secretary and then-Rep. Tom Price (R-Ga.) and Mulvaney, who was then a sitting legislator, sent a letter to President Barack Obama's acting CMS administrator, Marilyn Tavenner, to push back against applying the sequester to Part B drug reimbursement.
Since 2013—when the sequester officially took effect—about 135 independent cancer clinics have closed. About 190 additional clinics have been acquired by hospitals.
Along with the sequester, the alliance's report blamed 340B expansion for creating a potential incentive for hospitals to buy up cancer clinics in order to secure the hefty discounts on cancer drugs.
On Wednesday, the Community Oncology Alliance's leadership sent a letter to Azar criticizing the Trump administration's drug pricing proposal for moving Medicare Part B drugs to Part D. The group claimed this will give pharmacy benefit managers negotiating authority for Part B drugs, and could lead to another separation of powers issue by changing reimbursement formulas without congressional action.
"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')," the group wrote. "We say that because both involve increasing the power and prevalence of middlemen to 'negotiate' drug prices."
An edited version of this story can also be found in Modern Healthcare's June 4 print edition.
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