COA files lawsuit over budget sequestration


The Community Oncology Alliance (COA) is legally challenging the sequestration of Medicare Part B drug reimbursement payments.

Part B drugs administered in the physician’s office are generally reimbursed at average sales price (ASP) plus 6%, a rate set in statute by the Medicare Modernization Act of 2003 (MMA). However, the Budget Control Act of 2011 put a 2% sequestration on the federal budget, effective April 1, 2013, and extended numerous times after, most recently in the Bipartisan Budget Act of 2018. This has the effect of lowering Part B drug reimbursement to ASP + 4.3%.

Pills and capsules atop a spread of $100 bills Kenishirotie/Thinkstock
COA filed a lawsuit in the United States District Court for the District of Columbia seeking a permanent injunction against the 2% budget sequestration as it is applied to Part B drugs.

“We are filing to see an injunction against the United States Department of Health and Human Services and the Office of Management and Budget [OMB] because we have exhausted all possibilities in stopping what is an unconstitutional application of the 2% sequester cut to Part B drug reimbursement,” COA President Jeff Vacirca, MD, and Executive Director Ted Okon said in a May 30 letter to HHS Secretary Alex Azar alerting him to the legal action, which was filed on May 31.

Dr. Vacirca and Mr. Okon noted that they have met with “numerous HHS and OMB officials” to explain why they believe the sequestration is unconstitutional. In the court filing, they argue that the sequestration has “invaded the legislative sphere by effectively amending the MMA” and COA argues that the executive branch “cannot alter duly enacted legislation under the guise of executing the laws.

“Putting that aside, the Balanced Budget Act provides the ability for the Executive Branch to sequester up to 2% of funds for a [Budget Control Act] sequestration for Medicare Part B ‘services’ but it does not provide the same authority for Part B drugs and does not contain any express language indicating an intent that a sequestration can be applied to alter the MMA’s statutory formula.”

Despite raising this objection, “the response we have received at HHS and OMB reflects more on the current Administration’s views on the policy of Medicare Part B drug reimbursement and not on correcting the prior Administration’s unconstitutional application of the sequester,” the letter states. “As a result, we are left with no other option but to pursue legal action, something we have clearly communicated to both HHS and OMB on several occasions, as a last resort.”

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