Hospitals to receive modest boost in Medicare pay for CAR-T

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Alexander Gaffney Senior Manager, Health Research Institute, PwC US August 09, 2019

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Hospitals will receive additional Medicare reimbursement for inpatient procedures involving the administration of Chimeric Antigen Receptor T-Cell (CAR-T) therapies, CMS announced in a final rule last week.

On Wednesday, the agency also announced that it will reimburse for CAR-T therapies when they are administered to Medicare beneficiaries in hospitals participating in the FDA’s risks evaluation and mitigation program for FDA-approved indications. CMS also will cover off-label uses supported by its own recommendations.

Under its final rule on payment, CMS said it would increase new technology add-on payments (NTAP) for CAR-T therapies from 50 percent to 65 percent — from $186,500 to $242,450. But, the agency said it would not create a payment category (known as a Medicare Severity Diagnosis-Related Group, or MS-DRG) that might have augmented reimbursement even more, citing a lack of clinical and cost data.

Unlike traditional cancer drugs, CAR-T therapies use the body’s immune system to attack cancer cells. Typically, T-cells are extracted from a patient and shipped to a processing facility to be modified to damage cancer cells. Modified cells are then shipped to a hospital to be administered to the patient. Throughout the process, healthcare providers are deeply involved in the treatment process, which can increase their costs to administer the treatment and care for the patient.

While hospitals will receive substantially more under the NTAP increase, hospital groups say a gap remains between what it costs for them to provide the treatment to a patient and what Medicare will pay them for it. For example, the two FDA-approved CAR-T therapies are available for list prices of $475,000 and $373,000, respectively (providers may pay lower net prices). Providers may also incur costs for caring for the patient before and after treatment.

CMS said some providers expressed concern about “significant financial losses” owing to this gap between costs and reimbursements, with some even saying they may choose not to offer the treatment if they can’t afford to do so.

And yet, CMS said, other factors can help hospitals collect additional payment for CAR-T therapies. Disproportionate Share Hospital payments and Indirect Medical Education payments could add additional payments for providers. A hospital in that situation could collect more than it spends administering CAR-T, the agency said.

HRI impact analysis

The cost of providing expensive CAR-T therapy to patients is of critical concern to academic medical centers, payers and government programs. While some groups, including the American Hospital Association, had called for CMS to provide an enhanced add-on payment of between 80 and 100 percent, the boost in payment to 65 percent may tide providers over as they await an MS-DRG for CAR-T.

CAR-T is one of several innovative therapies with price tags in the hundreds of thousands of dollars. Payers and some providers are struggling to cover them. The companies developing these treatments say their innovations can prevent years of suffering and even more expensive care. One potential model for payment could involve outcomes-based contracts, in which the payer pays if a patient achieves a desired outcome, such as cancer elimination or remission. Another option could be to spread out the cost of a treatment over several years, allowing a payer to decrease the annual cost to insurance enrollees.

Contact us

Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Alexander Gaffney

Senior Manager, Health Research Institute, PwC US

Tel: +1 (202) 836 1604

Ingrid Stiver

Senior Manager, Health Research Institute, PwC US

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