Medicare cuts are too deep

Thanks to continued fiscal fights in Congress, Louisiana seniors have a new reason to worry about access to health care.

Right now, lawmakers are considering cuts to Medicare Part B, the seniors’ healthcare program that covers drug treatments administered in doctors’ offices for serious illnesses like arthritis and cancer. Already under pressure from sequester cuts, doctors who provide Part B drug treatments could be forced to shutter their doors if additional cuts are implemented as part of a budget deal.

Under Medicare Part B, physicians are responsible for purchasing certain types of medicines and then billing Medicare after they administer these injected and infused medications to patients. The program reimburses physicians based on the “average sales price” (ASP) for each drug, plus an add-on fee to cover administrative and overhead expenses such as shipping costs, wages, and supplies. The add-on is set at six percent of the ASP.

But in April, across-the-board sequester’s cuts essentially downsized the Medicare Part B drug reimbursement rate to ASP plus four percent. Now, as Congress continues to search for a budget compromise, it is likely that Part B drugs will be targeted for additional cuts.

This would be problematic for Louisiana doctors and patients. Acquisition and administrative costs vary from physician to physician. Additional cuts will make treating Medicare patients financially challenging for more and more doctors—especially if these physicians belong to small practices who may have higher costs for acquiring Part B drugs.

Doctors could be forced to restrict who they treat, and patients could see their options for care dwindle. Rural clinics in Louisiana will be hit even harder, where income and employment are already lower than in cities.

Cancer patients may be especially hard hit. Community-based oncology practices already face financial difficulties. The Community Oncology Alliance found that 400 cancer clinics are struggling to stay afloat. In the past five years, nearly 240 have already closed their doors. Further cuts will put even more at risk.

What’s more, these reforms don’t even make budgetary sense. The Congressional Budget Office found that the current Medicare Part B reimbursement system — ASP plus six percent — drives down costs, estimating that it would save almost $16 billion over 10 years. The new cuts are estimated to save far less and in reality may not achieve savings at all because such cuts could force patients into more costly venues to receive care, undermining the very savings Congress hopes to achieve.

For example, according to one study, total costs of Medicare chemotherapy patients treated in the hospital setting were 14 percent more than costs for Medicare chemotherapy patients treated in a doctor’s office.

Medicare Part B has worked under ASP plus 6 percent. Louisiana is lucky that it has three medical doctors in its congressional delegation, and truthfully, Congressmen Charles Boustany of Lake Charles and Bill Cassidy have been leaders in working out a solution, and hopefully all members will follow their lead!

Reducing the ASP reimbursement rate would be a bad deal for seniors, doctors, and taxpayers alike. These misguided cuts likely would restrict patient access to treatment while doing little to solve our budget problems.

This article originally published in the June 24, 2013 print edition of The Louisiana Weekly newspaper.