Are you one of the many Medicare Beneficiaries affected by cancer? Local oncology clinics have run into the “fiscal cliff:” of sequester budget cuts and it is cancer patients who rely on Medicare who are being hurt. Cancer patients visit oncology clinics for the infusion of chemotherapy drugs. These medications are often extremely expensive, sometimes costing as much as $80,000 to $100,000 for a year’s treatment of one patient. Medicare typically covers these treatments.

The sequester cuts, which went into effect April 1, do not affect most prescription drug payments. Most prescriptions are covered by Medicare Part D, run by private insurance companies, and not subject to the across the board cuts in federal spending. But because chemotherapy drugs must be administered by a doctor they are among a small number of drugs which are covered by Medicare Part B, which pays for doctor visits and is subject to a 2% cut. This means Medicare will pay oncology clinics 2% less for each chemotherapy treatment administered.

Medicare typically pays oncology clinics the average sales price of the chemotherapy drug, plus 6% to cover the cost of administering and storing the medication. It is from that 6% that a clinic pays its staff and makes its profit. Because the clinic has no control over the cost of the medication, it is also from that 6% that the Medicare reduction must come. That means a clinic will see almost a third less income for each Medicare patient, enough to make each treatment a financial loss for the clinic. No business can continue to operate at a loss for long. While some clinics are trying to continue treating their patients in the hope that Congress will resolve the problem, others are already turning patients away unless they have a secondary source for payment.

As local clinics turn away Medicare cancer patients, these patients can get their chemotherapy treatments at hospitals. That usually means the patients have further to travel and pay more out-of-pocket. Chemotherapy delivered in a hospital costs more than that delivered by clinics, and at least part of that extra cost will trickle down to the patient. But Medicare will likely end up paying more for the hospital care as well. There will likely be no overall cost savings for the government.

Assuming that hospitals have the capacity to take on the treatment of patients turned away by local oncology clinics, they may be better able to deal with the sequester cuts than the clinics. There is a separate federal program, known as 340B, that requires drug companies to give double-digit discounts to non-profit hospitals that treat low-income and uninsured patients.

In addition to clinics, hospitals, and patients, others are likely to be caught in the ripple effect of this seemingly small piece of the sequester story. Clinics which have turned away patients will likely also lay off staff. They will be purchasing fewer supplies from local distributors, whose profit will be reduced. Thus, the attempt to save a little in the federal budget may well end up costing the government, as well as many businesses and individuals more than the anticipated savings. The big losers, however, are the patients who expected to continue with the care they need at the place they know, can most easily access, and can best afford.

If you are affected by cancer and need more information on if your Medicare Health Plan covers any cancer treatment or assistance, please contact a licensed insurance agent at Medicare Pathways for a free no-obligation benefit review. Give us a call at 866-466-9118 now.