Cancer Clinics Sequestration: Obama Administration Tells Congress It Can't Stop The Cuts

WASHINGTON -- The federal government does not have the power to stop federal budget sequestration cuts to cancer treatments for certain Medicare patients, the Centers for Medicare and Medicaid Services has told Congress.

The declaration, in a June 3 letter from the federal agency to Congress and obtained by The Huffington Post, is a setback to lawmakers hoping the Department of Health and Human Services could use budgetary authority to ease one of the harshest effects of sequestration. It also forces Congress to give renewed consideration to a bill to replace those specific cuts or to broader legislation to replace the sequester's across-the-board budget reductions.

Since the passage of sequestration in March, numerous cancer clinics have begun turning away Medicare patients because of the prohibitive cost of administering chemotherapy drugs. Those patients have been left to find treatment at local hospitals or to travel long distances for care.

At issue is the reimbursement policy for drugs covered under Medicare Part B. Before sequestration, Medicare reimbursed clinics the cost for those drugs at their average sales price, with a 6 percent additional fee for administrative services. Sequestration cuts are being applied to the drugs as well as the services, reducing the administrative fee to 4.3 percent. The end result is the equivalent of a 28 percent cut in Medicare reimbursement.

On April 19, Rep. Pete Sessions (R-Texas) along with 123 other members of Congress, wrote the acting administrator at the Center for Medicare and Medicaid Services asking whether it was violating the law by making such a reduction. The letter also pleaded with the agency to use “any available flexibility” to “direct the cuts away from patients.”

CMS responded on June 3 in a letter from that acting administrator Marilyn Tavenner.

The Department of Health and Human Services assessed whether the law allows discretion to administer the sequestration reductions in a manner that is different from the across the board approach that has been used to implement it.

We do not believe that we have the authority under the Budget Control Act of 2011 to exempt Medicare payment for Part B drugs. Exemptions from the sequestration are specified in 2 U.S.C. sections 905(g) and (h) and 906(d)(7), which do not encompass payment for Medicare Part B drugs. The Office of Management and Budget memorandums M-13-03 and M-13-06 referenced in your letter pertain to any flexibility regarding the agency's budgetary resources for internal operations such as the hiring of new employees. This is separate from the agency's administration of Medicare payments, which are subject to the sequestration reductions, as noted above.


Medicare had already said that it didn’t believe it had the authority to duck the sequester ax. This is a fuller, more complete, response.

The end result is the same. Congress must either now come up with a fix or the cuts to cancer treatments will continue, at least until a broader budget agreement is reached. Legislation has been introduced by Rep. Renee Ellmers (R-N.C.), that would exempt chemotherapy drugs from the budget cuts.


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