A June 3, 2013 letter from CMS Administrator Marilyn Tavenner to Rep. Pete Sessions (R-Tex.) states that the agency does not believe it has any discretion under the Budget Control Act of 2011 to exempt Part B cancer drug reimbursement from the two-percent sequestration cuts.  Part B drugs are otherwise reimbursed at 106 percent of the drug’s average sales price (ASP).  The letter notes that the sequestration is applied only to “the Medicare payment portion” and that beneficiary cost-sharing obligations are exempt.  In the case of a Part B cancer drug otherwise reimbursed at $1,000, for example, the letter states that the net effect of sequestration is that physicians are reimbursed for the drug at 104.3 percent of ASP after beneficiary cost-sharing, rather than the usual 106 percent.

Many members of Congress have expressed concern that the sequestration cuts have caused some freestanding cancer clinics to turn away Medicare patients, and have requested that CMS intervene to prevent the cuts.  Rep. Renee Ellmers (R-N.C.) has since introduced H.R. 1416 to require CMS to exempt Part B drugs from sequestration, and to retroactively restore full payment for those drugs previously reimbursed at less than 106 percent of ASP.

The CMS letter is available here.  

The text of H.R. 1416 is available here.

Reporter, Christopher Kenny, Washington, D.C., + 1 202 626 9253, ckenny@kslaw.com.