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From the article:

Legislators meant to partially shield Medicare from the automatic budget cuts triggered by the sequester, limiting the program to a 2 percent reduction — a fraction of the cuts seen by other federal programs.

But oncologists say the cut is unexpectedly damaging for cancer patients because of the way those treatments are covered.

Medications for seniors are usually covered under the optional Medicare Part D, which includes private insurance. But because cancer drugs must be administered by a physician, they are among a handful of pharmaceuticals paid for by Part B, which covers doctor visits and is subject to the sequester cut.

The federal government typically pays community oncologists for the average sales price of a chemotherapy drug, plus 6 percent to cover the cost of storing and administering the medication.

Since oncologists cannot change the drug prices, they argue that the entire 2 percent cut will have to come out of that 6 percent overhead. That would make it more akin to a double-digit pay cut.

What people don't realize is that Medicare reimbursement for drugs for the community oncologist is based upon the average sales price for a given drug. The price that some oncologists have to pay is way above average, as it is based upon volume. It is like comparing Wal Mart acquisition costs to a mom and pop store. Which one gets the better price? The 6% above the average sales price barely covers (and in many cases, doesn't) the costs of nurses to administer the chemo, pharmacists to mix it, the IV tubing, equipment, rent, electricity, insurance, taxes, etc. A 2% cut in reimbursement for drugs may well either put some solo oncologists out of business, or force them to send patients to a hospital setting for chemo, which ultimately is more expensive to the Medicare system.