America's heartland depends on Medicare Part B

Over 49 million Americans currently depend on the Medicare Part B program for health care. Congress must think very carefully about whether Medicare cost-cutting proposals unfairly hurt America's seniors today in the hopes of saving money in the future.

For this reason, the National Grange -- which has been fighting to protect the residents of America's agricultural heartland for 147 years -- is very concerned that any additional cuts to Medicare Part B will unjustly hurt rural Americans.

Medicare Part B is the part of Medicare program that covers the drugs that are purchased and administered by doctors. These are drugs that are injected or otherwise involve careful patient monitoring by qualified medical personnel in order to be administered properly. Part B pays for chemotherapy, certain treatments for diabetes, multiple sclerosis, rheumatoid arthritis and numerous other diseases.


Under Part B, doctors are reimbursed directly by the government for the cost of these drugs. They are paid by a set formula of the market-based Average Sales Price (ASP) of the drug plus an additional 6 percent. This system has done a remarkable job of saving money -- with projected savings of $16 billion for the first 10 years when the legislation was enacted -- and has kept cost-growth below medical inflation and other Medicare spending areas.

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For example, one study found that ASP plus 6 percent reduced Part B drug spending by 7.3 percent in the first year and had a limited average annual growth rate of 2.4 percent compared to 10.9 percent annually for overall Medicare expenditures in the same timeframe.  In short, the system has worked well.

In the ASP plus 6 reimbursement formula, that additional 6 percent helps to cover costs related to supplies used in handling and preparing the products for use, storage costs, time required for medical staff to monitor and educate patients, time spent ordering the drugs and negotiating prices, and shipping fees. It also covers differences in acquisition costs as by definition ASP represents an average.

Since the ASP reform went into effect, Medicare Part B has provided thin margins on drug reimbursement, but lately, financial pressures have been pushing doctors who provide these critical patient services to the brink. The sequester cut Medicare provider payments by 2 percent across the board, including payments for Part B drugs.

Even before the sequester resulted in Part B reimbursement cuts, some doctors who relied on Part B reimbursements found it hard to make ends meet and this has been reducing health care options in rural America. The Community Oncology Alliance reports that 241 community cancer clinics went out of business between 2007 and 2012, and 442 more clinics were struggling financially.

Without access to clinics in their local communities, rural residents often have to travel to the nearest city to get treated. "When cancer care providers shift from the community to more urban settings, this often represents an  access to care challenge for patients constituted by added travel costs and lodging requirements that many patients simply cannot afford, especially those patients residing in rural communities," says Nancy Davenport-Ennis, CEO of the National Patient Advocate Foundation (NPAF).

Aside from putting financial burdens on patients, the lack of community clinics also raises the cost of health care overall. As clinics shut down, more and more cancer treatments could be shifted to hospitals. A recent study by the Milliman Company found that the total costs for Medicare recipients who receive chemotherapy in hospitals were 14 percent higher than Medicare patients receiving chemotherapy in physician-run clinics.

At the National Grange, we applaud and encourage congressional attempts to get Medicare spending under control. However, many of America's most needy and vulnerable Medicare patients are already at risk. Further cuts to the Medicare Part B program raises fears about the safety and availability of care in rural America.  Cutting Medicare Part B now could well end up making the program more expensive in the future.

For the sake of protecting America's heartland, lawmakers should stand up for rural seniors and take a stand against further cuts to Medicare Part B.

Boatright is the legislative director for the National Grange, an organization that advocates for rural America.