Without IRA Fix, COA Warns Community Oncology Practices Will Shut Down

A crisis is looming over community oncology practices if neither Congress nor CMS addresses parts of the Inflation Reduction (IRA) that could starve practices of revenue needed to deliver high-cost cancer drugs to patients.

That’s what the Community Oncology Alliance (COA) said Thursday in a 14-page letter to CMS Deputy Administrator Chris Klomp, who is director of the Center for Medicare, commenting on the Medicare Drug Price Negotiation Program Draft Guidance. Released May 12, 2025, the guidance addresses a key IRA milestone coming in 2028, when the law will cover price negotiations not only for drugs covered by Medicare Part D, but also in Medicare Part B, which covers many of the expensive, infused therapies used to treat cancer.

The guidance also covers how manufacturers will implement the IRA’s Maximum Fair Price (MFP) provisions for 2026-2028. MFP refers to drug prices reached through Medicare’s negotiation process.

Ted Okon, MBA | Image: Community Oncology Alliance

COA’s letter addresses 2 challenges that the group has been highlighting since the IRA passed in 2022: First, Medicare has historically reimbursed community oncology practices for drugs based on a formula of average sales price (ASP) plus a 6% add-on payment (reduced to 4.3% under sequestration); at present, oncologists are facing a new formula of MFP plus 6%, which will bring in far less revenue. Once this formula is applied to Part B drugs, COA warns the results could be catastrophic.

“As noted in the draft guidance, the supply chain and pricing dynamics of physician-administered drugs (Part B drugs) are very different than drugs typically covered under the pharmacy benefit (Part D drugs),” the letter states. “Given these differences and the ways in which Part B providers acquire, administer, and are reimbursed for Part B drugs, the Part B effectuation process has the potential to be a practice-ending event for many community oncology practices.”

Second, the IRA offers manufacturers options for implementing MFP that could add complexity and new costs for practices just as their overall revenue is dropping.

“It’s pretty serious,” said Ted Okon, MBA, executive director of COA, during an interview with The American Journal of Managed Care^® (AJMC^®). Okon said members of Congress were sympathetic to these issues when the IRA passed 3 years ago, but other priorities propelled the bill’s passage without changes.

Since then, Okon said, the financial landscape has only grown more challenging for community oncology: as many practices were still recovering from the impact of COVID-19, they faced disrupted revenue caused by the February 2024 Change Healthcare cyberattack. Then, CMS imposed a change to the 2025 Physician Fee Schedule that triggered an average pay cut of 2.93% from Medicare, which took effect January 1.

All the while, Okon noted, practices have faced reduced payments from pharmacy benefit managers (PBMs) and competition with hospitals that benefit from the 340B program, which was created to aid safety net hospitals but has expanded in scope.

As the letter states, an analysis from Avalere Health found that add-on payments to practices would fall 47.2% under the current IRA formula. By contrast, Okon said, Milliman scored a proposal to protect providers by retaining an ASP-based formula and found it would save Medicare an additional $3.3 billion over 10 years.

The letter acknowledges that the IRA was passed by Congress, so the best solution would start there. And Okon anticipates bipartisan legislation very soon to create a “carve out,” in which pharmaceutical manufacturers would pay CMS the difference between ASP and MFP; thus, providers would remain whole while Medicare would realize savings from negotiations.

Short of that, Okon said, CMS has the ability to develop a fix on its own. The letter states, “We want to ensure that the agency fully understands the negative impact of MFP-based payments on provider viability and acts within its statutory authority to mitigate that impact to the greatest extent possible.”

In addition, COA asked that CMS give providers the right to buy drugs at lower prices, instead of giving the manufacturer the option to pay a rebate later. This is critical for smaller practices, the letter states.

Otherwise, “Community oncology practices will bear a disproportionate operational and financial burden of managing MFP and non-MFP inventories, given the number of oncology drugs likely selected in the first couple of years of Part B negotiations.”

Okon, who signed the letter with Mark Thompson, MD, COA medical director of public policy, reiterated this point in the interview. “Logistically, it would be a nightmare.”

How aware are community oncologists of the threat the IRA poses? “Because this is coming in 2028, they are aware of it—certainly the large practices are aware of it,” Okon said. “But there are so many pressures impacting practices right now, it’s more, ‘I’ll get to that next.’”

Prior authorization. As payers and PBMs have come under fire for overuse of prior authorization, COA has kept tabs on specific incidents that cause delays or patient harms, which has fueled bipartisan interest in PBM reform. Many examples involve patients in Medicare Advantage plans, which now enroll more than 50% of all beneficiaries. Last week, a group of payers led by their association, AHIP, outlined a 6-point plan to curb prior authorization abuses. Yet by week’s end, CMS had announced a plan to “target wasteful, inappropriate services in original Medicare.”

The fact that the initiative was announced by the director of the Center for Medicare and Medicaid Innovation, which has powers under the Affordable Care Act to develop demonstrations of new payment models, is “disconcerting,” Okon said, although he remains generally hopeful about working with the second Trump administration.

Leading oncologists have decried both PBM prior authorization practices as well as step therapy, a practice permitted in Medicare Advantage that can prevent patients from getting a preferred drug until they relapse or “fail” on an older, less expensive drug. Bipartisan efforts at PBM reform remain a priority with Congress, Okon said.

Within CMS, he looks forward to addressing physician reimbursement and especially 340B reform. During Trump’s first term, CMS tried to reduce payments under 340B. However, regulators used figures from the Medicare Payment Advisory Commission instead of conducting a hospital survey, which was ruled out of bounds by the Supreme Court of the United States. The upcoming Medicare PFS and the Hospital Outpatient Prospective Payment System schedule will be key opportunities, he said.

“They are willing to listen,” Okon said of the current CMS team. “This is something that does not happen overnight.”