Florida’s seniors cannot afford more cuts to Medicare
Mandatory “sequestration” recently started kicking in. About $85 billion will eventually be excised from the national budget. And about $10 billion of these cuts will fall on Medicare and the many seniors who depend on it.
Florida and its seniors will be disproportionately hurt by these steep reductions. Fully 17.6 percent of our population is eligible for Medicare — 4.3 percent more than the national average. Over the next 10 years, the sequester will reduce Medicare spending on Florida’s seniors by at least $2 billion.
These cuts will mean longer wait times for Florida seniors to see a doctor. They will lead to layoffs and result in inadequate resources for our state’s nursing homes.
Unfortunately, the sequester might be only the beginning. Lawmakers in Washington are considering additional cuts to Medicare — reductions that would hit patients who suffer from cancer, hepatitis, multiple sclerosis and rheumatoid arthritis especially hard. Specifically, they are seeking to reduce the current reimbursement rates for drug treatments covered under Medicare Part B.
Part B covers drugs that are injected or infused directly into the bloodstream, and therefore must be administered by a health-care professional at a medical office. Doctors directly purchase these treatments, and the Part B program reimburses them based on a formula using the average sales price (ASP) paid by providers.
Currently, the rate is set at ASP plus 6 percent — a rate that must cover the cost of the drug and all costs associated with administering it, from staff salaries to shipping and handling fees.
The president proposed ASP plus 3 percent cuts in his latest budget, and Congress will be considering the Part B drug cuts again this year. They must remember that the ASP plus 6 percent formula is already a reduction from the previous reimbursement mechanism. This rate already has successfully brought down costs for taxpayers and seniors.
The Medicare Payment Advisory Commission (MedPAC) found that after switching to the ASP-based formula, spending on drugs decreased in every medical specialty — in some cases by as much as 52 percent.
The reason? Reduced prices. According to MedPAC, the adoption of the ASP formula “resulted in substantial price savings for Medicare on nearly all drugs and those payment rate changes drove decreased spending.” Medicare spending on drugs dropped by almost $1 billion in the year after the formula was first implemented. Cutting the formula further would jeopardize medical care for many seniors.
Roughly two-thirds of U.S. cancer diagnoses occur in the Medicare-eligible population. Each year, more than 100,000 Floridians are diagnosed with cancer, and about 40,000 die from the disease. It’s the second-leading cause of death in the state.
Community oncology practices typically attribute between 70 percent and 85 percent of their expenses to drugs, including the specialized storage facilities and highly trained staff needed to prepare the treatments and monitor patients. Yet, Medicare only pays about 70 percent of the cost associated with administering chemotherapy — and reimburses for chemotherapy agents at artificially low rates because the ASP includes discounts that are not available to physicians.
This imbalance has left our nation’s oncology practices financially strapped. Many have already been forced to shut down. Halving the add-on to 3 percent would save roughly $3 billion to $4.5 billion over the next decade. The results would put even greater financial pressure on struggling cancer treatment centers.
With community clinics closing, seniors will be forced to go to hospitals, where studies show that the overall cost of care is higher on average than at clinics. Those savings from the add-on cut will quickly dissipate.
At HEALS, we advocate on behalf of the 3.2 million Hepatitis C patients nationwide. Hepatitis is a growing problem for Florida, which has seen annual deaths rise from 154 in the early 1990s to 613 in 2011. About two-thirds of those patients are baby boomers on Medicare now, or soon to be.
Florida’s Medicare providers and patients have already been hit hard. Our state’s representatives in Washington should tell those who want more cuts that enough is enough.
Pam Langford, president, and Miriam Altieri, vice resident, of HEALS of the South (Hepatitis Education Awareness and Liver Support), provide education and support to patients and their families.