BioCentury
ARTICLE | Politics & Policy

BIO, cancer groups attack 'flawed' payment formula

March 23, 2013 12:20 AM UTC

A "flaw" in the way Medicare pays for cancer drugs, exacerbated by a 2% cut in provider payments under budget sequestration, could cause numerous community cancer clinics to close or curtail treatment, according to a letter the Biotechnology Industry Organization (BIO), cancer care providers and physician and patient organizations sent to Congress. According to the letter, the formula used to determine Medicare's reimbursement of cancer drugs delivered in hospitals and outpatient settings "mistakenly includes prompt pay discounts that pharmaceutical manufacturers extend to distributors for timely payment."

The discounts can artificially lower the Medicare payment rate for the drugs, which leads to reimbursement that is below the costs for cancer clinics. The letter warns that without a "correction" to the Medicare payment formula, "numerous additional cancer clinics will limit services or close altogether, restricting access to care or forcing cancer patients to more costly providers of care." According to the letter, 241 community cancer clinics have closed over the past four and a half years. ...