COA Sues HHS, OMB Over Medicare Sequester Cuts

This week, the Community Oncology Alliance (COA), which represents approximately 5000 community oncologists, announced that it has filed a lawsuit against HHS, HHS Secretary Alex Azar, the Office of Management and Budget (OMB), and the director of the OMB, Mick Mulvaney, in the District of Columbia to stop these agencies from applying the Medicare sequester cut to reimbursement for Part B drugs.

In 2011, the Federal government implanted the Budget Control Act because Congress was unable to reach a budget agreement. This automatic cut has been extended multiple times, with the current sequester scheduled to continue through 2027. As of 2013, CMS began applying a 2% budget sequester cut to all Medicare Part B reimbursement, including infused biologic drugs. COA’s lawsuit seeks injunctive relief to specifically stop CMS from applying the sequester to Part B drug reimbursement.

In the lawsuit, COA claims that the sequester cut has jeopardized “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.” Additionally, the suit went on to state, “These wrongful acts also compromise access to cancer care for patients who cannot find or afford treatment when their local community oncology practice is forced to shut down or combine with or join a more expensive hospital.”

According to COA’s 2018 Community Oncology Practice Impact report, since the sequester began in 2013, approximately 135 independent community cancer clinics, many of whom have more than 1 location, have been forced to close.

COA also alleges that the application of the sequester cut to Part B drug reimbursement is both illegal and unconstitutional, due to Part B reimbursement being set by Congress in law at average sales price (ASP) plus 6% in the Medicare Modernization Act of 2003.

Said Ted Okon, MBA, executive director of COA, in an interview with The Center for Biosimilars^®, “There’s just nothing that gives them the authority to apply [the sequester] on a reimbursement rate that’s set in law. Everything else is set by the physician, the hospital, the nursing home, all of the fee schedule...the one thing that isn’t is Medicare Part B reimbursement for physicians, which is set in law defined right in the Medicare Modernization Act.”

Concurrently with the suit, COA sent a letter addressed to HHS Secretary Azar explaining why the filing of this suit was a “last resort.” The letter also provided feedback on the President’s blueprint for lowering drug costs, offered suggestions to lower increasing cancer drug prices, and reiterated COA’s hope that it can work together with the Trump Administration.

“We’re going to fight on as we have done…we have a lot of education to do, a lot of fighting to do…it will be a shame if a court rules that, in essence, in this case that [HHS and OMB] were allowed to do this because then it could really create a constitutional precedent where the executive branch can basically run and do what it wants independent of Congress,” said Okon.