ACCCBuzz

Sequestration Happens

Posted in Across the Nation, Advocacy, Cancer Care by ACCCBuzz on April 2, 2013

by Matt Farber, MA, Director, Provider Economics and Public Policy, ACCC

Health Care Reform

Sequestration dealt cancer care another blow yesterday when all Medicare payments were reduced by two percent. These cuts to physician reimbursement are the third cuts due to the sequester that will impact cancer care. On March 1, the budgets of the National Institutes of Health (NIH) and the Food and Drug Administration (FDA) were each reduced by more than five percent. The funding reduction to NIH will have a significant impact on clinical trials, as well as other research projects. And, with a five percent lower budget for the FDA, which translates into a reduction of staff, the drug approval process will quite possibly be slowed.

The across-the-board 2% reduction of Medicare payments that kicked in on April 1 applies to all services billed to Medicare, including E&M codes, chemotherapy administration, hydration, and drugs and their overhead costs. Drug reimbursement will drop from ASP+6% to ASP+4.3%.

Why is drug reimbursement being reduced by this amount?

For example, consider a drug with an average sales price (ASP) of $100.

At ASP+6%, reimbursement = $106. The beneficiary pays 20% = $21.20 and Medicare normally pays 80% = $84.80.

Under sequestration, Medicare will pay $83.10 (98% of $84.80). Medicare’s share plus the beneficiary’s share after sequestration = $83.10 + $21.20 = $104.30, or ASP+4.3%.

With this change going into effect on April 1, practices and hospitals will begin to see these reductions by mid-April, when they start to get payments for services provided at the beginning of the month (CMS claims can often take 10 days to process).

For more information on these cuts, read “FAQs on the 2013 Sequestration,” just released by the American Medical Association (AMA).

More than 60% of cancer patients in the U.S. rely on Medicare.  If you haven’t already done so, you should be preparing your cancer center for these reductions.

ACCC is working diligently with Congress and other advocacy organizations to try to roll back these cuts. For now, however, the 2% reduction is underway.

ACCC asks its member programs to keep track of how these cuts are impacting your ability to treat your patients and let us know. Contact Matt Farber at mfarber@accc-cancer.org.

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