COA Accuses Government of 'Ongoing Constitutional Violations' in Lawsuit

The Community Oncology Alliance (COA) has filed a lawsuit to stop the long-running sequester cut that affects Medicare payment for Part B drugs.¹The cut was renewed this year through the Bipartisan Budget Act of 2018.

The Community Oncology Alliance (COA) has filed a lawsuit to stop the long-running sequester cut that affects Medicare payment for Part B drugs.¹The cut was renewed this year through the Bipartisan Budget Act of 2018.

COA argues in the lawsuit that the sequester cut, which lowered Medicare payments for drugs provided at physicians’ offices and in outpatient settings, such as intravenous chemotherapy, has decimated the independent community cancer care system, harmed patients, and cost taxpayers—especially seniors—billions of dollars in added healthcare costs. The claim addresses “ongoing constitutional violations” that date back to 2013, when the sequester cut was established. The renewal through the Bipartisan Budget Act of 2018 extends the sequestration, which imposes an across-the-board cut to Part B payments, for at least the next 2 years. The lawsuit seeks injunctive relief to specifically stop the Centers for Medicare & Medicaid Services from applying the sequester cut to Part B drug payment.

COA argues that such cuts are illegal and unconstitutional because Part B payment was established by Congress in the Medicare Modernization Act (MMA) of 2003 and, by applying the sequester cut to Part B payment, the Trump administration has bypassed Congress and the law. The MMA fixed a Part B drug payment rate of 6% plus average sales price (ASP). Because of the cut and other factors, providers currently receive a lower payment rate of ASP plus 4.3%, COA contends.

“We had hindsight back in 2013 that this was truly unconstitutional,” Ted Okon, executive director of COA, said. “We [now] realize that there is a good legal case as to why [the administration] can’t change drug payment, which is specifically defined in the law.”

According to the2018 Community Oncology Alliance Practice Impact Report, the number of community cancer clinics has been on a sharp decline since the sequester cut was enacted.²Dating back to 2013, 135 clinic locations, as opposed to practices, have closed and 189 practices have been acquired by hospitals.

“More than 60% of [patients with] cancer in the United States rely solely on Medicare, and prior to the sequestration, more than 80% of [patients with] cancer overall were treated in community-based settings,” COA said in its lawsuit. With the ongoing sequester cut, COA contends that patients are being forced to change their primary treatment center from local and independent practices to more expensive hospital settings.

Okon said that this paradigm shift continues to threaten an already-strained Medicare payment system. A study for COA by the actuarial firm Milliman estimated that the mergers and closures of independent oncology practices are transferring infused chemotherapy to more expensive outpatient hospital settings. Medicare could have saved $500 million to $2 billion in 2014 if this had not been occurring, COA contends.³

Adding to COA’s concern about the sequester, the Trump administration has introduced a plan to alleviate the high cost of prescription drugs that COA contends will have the reverse effect. Trump’s “HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs” could end up costing patients even more, with added consequences, COA said.

“We are dismayed that the administration did not consult with community oncologists to understand what is, and is not, working with the payment for cancer drugs and services before making grand pronouncements,” COA stated in a letter addressed to Alex M. Azar, the secretary of the US Department of Health & Human Services (HHS).

Trump’s plan would consolidate Part B payments under Medicare Part D, within which payers and others negotiate with drug companies for discounted prices. “It shows a total lack of understanding of Part B. It puts us at odds, when we are trying to work with the administration. This is disappointing, especially from a new HHS secretary,” Okon said.

COA predicted that pharmacy benefit managers and other middlemen would realize a huge profit from the administration’s plan and that Medicare would face higher costs, along with its senior beneficiaries. Additionally, COA foresees delays and other hurdles associated with chemotherapy and other cancer treatments.

Trump has expressed confidence that his plan would lower pharmacy prices for drugs, enable CMS to negotiate with pharma for lower drug prices, and improve competition, thereby bringing drug prices down further.

COA said it has filed the lawsuit as a “last resort” following many failed efforts made to collaborate with the administration.

References:

1. COA files lawsuit against federal government to stop sequester cut to cancer drug reimbursement [news release]. Washington, DC: Community Oncology Alliance; May 31, 2018. communityoncology.org/2018/05/30/may-31-coa-files-sequester-lawsuit/. Accessed June 13, 2018.
2. Community Oncology Alliance. 2018 community oncology alliance practice impact report. communityoncology.org/downloads/pir/COA-Practice-Impact-Report-2018-FINAL.pdf. Accessed June 1, 2018.
3. Milliman. Cost drivers of cancer care: a retrospective analysis of Medicare and commercially insured population claim data 2004-2014. milliman.com/uploadedFiles/insight/2016/trends-in-cancer-care.pdf. Published April 2016. Accessed June 1, 2018.