"Fiscal Cliff" Deal Averts Severe Cuts to Medicare and Cancer Research

After wrangling between Democrats and Republicans pushed a decision beyond a year-end deadline, the federal government passed the American Taxpayer Relief Act of 2012 and averted the “fiscal cliff,” a package of tax increases and spending cuts that would have restricted cancer research and care.

The US Senate passed the measure just after 2 AM on New Year’s Day, and the House of Representatives approved it the same day at around 10:45 PM. President Barack Obama signed the bill on January 2.

The measure will prevent, at least for the first two months of 2013, $110 billion in across-the-board federal funding cuts that would have reduced the budgets of several agencies that support cancer research and treatment, including the National Institutes of Health (NIH). The deal does, however, include a smaller $12 billion package of cuts to government agencies and programs.

Under the Budget Control Act of 2011 (BCA), the “fiscal cliff” spending cuts were scheduled to take effect January 2 unless Congress had agreed on an alternative plan to reduce America’s budget deficit.

The bill will also prevent the slashing of physician reimbursements under Medicare by more than 27%. All but 2% of those cuts would have occurred due to a Sustainable Growth Rate (SGR) formula designed to control costs associated with the subsidized insurance program.

Obama supported the bill as “the right thing to do for our country,” but advised Americans to watch for “more deficit reduction as Congress decides what to do about the automatic spending cuts that we have now delayed for two months.”

Some of those cuts may affect Medicare, he added.

“I agree with Democrats and Republicans that the aging population and the rising cost of healthcare makes Medicare the biggest contributor to our deficit,” the president said. “I believe we’ve got to find ways to reform that program without hurting seniors who count on it to survive.”

Janis L. Abkowitz, MD

Janis L. Abkowitz, MD, president of the American Society of Hematology (ASH), said the agreement means that “Our members’ work to develop cures for some of America’s most deadly diseases will not be interrupted today.”

But she expressed concern about potential future cuts to the NIH budget and the lack of a “permanent solution for the flawed physician payment formula” under Medicare.

“This end-of-year crisis management once again demonstrates the critical need for fundamental reform of the Medicare reimbursement system,” agreed Clifford A. Hudis, MD, president-elect of the American Society of Clinical Oncology (ASCO).

The two said their organizations will continue to advocate for the protection of funding to the NIH, Medicare, and the FDA.

ASH “will educate Congress about the value of biomedical research so that all members of the new 113th Congress understand that this is not the time to defund science, and that discoveries made possible by investments in the NIH generate incredible returns in the form of lives and jobs and, importantly, help secure America’s position as a global economic force,” Abkowitz said.

proposed cuts

According to the American Society of Clinical Oncology (ASCO), the would have reduced the budget of the NIH by $2.5 billion, or 8.2%; cut the FDA’s budget by $318 million, also 8.2%; and slashed Medicare payments to physicians by more than $11 billion, or 2%. The 27% cut to physician payments under the SGR would have represented an additional cut.

Despite the year-end deadline, Democratic and Republican leaders in Washington, DC, continued to wrestle over deficit reduction, tax policies, and spending priorities as 2012 became 2013. The Senate passed the bill by a margin of 89-9. While some members of the House argued that the measure should have included additional spending cuts, representatives finally voted 257-167 to support it.

Prior to the vote, groups concerned with cancer research and care worked to persuade Congress to preserve funding for oncology needs.

A webpage created by ASH to highlight its “Fight for Hematology” campaign stated that the NIH’s 2012 budget was 20% lower than it had been 9 years earlier, and couldn’t withstand further cuts without seriously detracting from the progress of oncology research. The cuts were expected to eliminate an estimated 2,400 extramural grants and slow momentum for the development of new treatments, or even cures, for seriously ill patients with deadly diseases, ASH wrote in a statement.

“Currently, when we submit grants, they have to be rated in the 7th to 9th percentile among all proposals to get funding—it’s a really stringent set of guidelines and a very highly competitive atmosphere,” Smita Bhatia, MD, MPH, chair of the Department of Population Sciences at City of Hope in Duarte, California, said during ASH’s 54th Annual Meeting and Exposition. “If this budget cut comes about, I envision we’ll have not only a reduction in the amount of funding we’ll receive, but also that fewer investigators will get funding, and only those who are more established. Junior investigators will be at a tremendous risk of not receiving funding, becoming disheartened, and deciding not to join the academic track. As a result, we could lose a whole generation of our scientists.”

ASCO spoke out against the implementation of the SGR, asking the government for a one-year financial “patch” to avoid the slashes. Ultimately, the organization stated, the government should repeal SGR and, instead, pay oncologists “directly and fairly for all of the services involved in treating Medicare patients.”

ASCO wrote in a position statement that since 2003, the SGR has resulted in doctors being reimbursed for only about half of their costs for providing care to the Medicare population, while temporary government “patches” to delay cutting the program’s budget have led to a cumulative $300 billion overrun.

The coalition One Voice Against Cancer, in a letter to the House and Senate, also protested the cuts that had been planned for the start of 2013, noting that a proposed budget slash of $464 million for the Centers for Disease Control and Prevention, called for under the BCA, might have resulted in fewer cancer screenings.

The group, whose members include the Oncology Nursing Society, added that “the Health Resources and Services Administration [HRSA], which funds the Title VIII nursing programs, would [have been] cut by more than $500 million” under the BCA.

“HRSA’s nurse training programs are critical to addressing the current shortage of nurses,” the letter stated, “and ensuring that we continue to have oncology nurses providing quality cancer care and contributing significantly to cancer research.”