Hospitals would win payment category for CAR-T therapy under proposed rule

Crystal Yednak Senior Manager, Health Research Institute, PwC US May 14, 2020

Hospitals would get a new payment category for chimeric antigen receptor (CAR) T-cell therapy, under a proposed FY 2021 payment rule for Medicare’s Inpatient Prospective Payment System. The change to establish a CAR-T payment category, also known as a Medicare Severity Diagnosis Related Group (MS-DRG), creates a more sustainable payment path for hospitals, which have been losing money because they were not fully reimbursed for the cost of the expensive but potentially life-altering treatments for cancer patients (see HRI’s new report on the liquidity crisis facing many hospitals today).

Without a separate payment category for the new treatments, hospitals had been receiving the same amount as they did for bone marrow transplants, plus a temporary new technology add-on payment for cases with excessive costs, although that was slated to expire. Through CAR-T cell therapy, a patient’s T-cells are reengineered to attack cancer cells.

CMS also wants more data on price transparency, asking for hospitals’ median negotiated inpatient charges for Medicare Advantage and third-party payers, potentially to use the data to set Medicare payment rates. Comments are due by July 10.

HRI impact analysis

The proposal could provide more predictability for hospitals and academic medical centers that struggled with the strain the exorbitant costs of the treatments, in the hundreds of thousands of dollars, put on their budgets.

Provider and biotechnology industry groups had been pushing for a change, both to preserve access to the treatment for Medicare beneficiaries and to protect the centers that were treating them. Last August, CMS issued a final rule that increased new technology add-on payments for the therapies from 50% to 65%, but stopped short of creating a payment category.

While the drugs are costly, manufacturers say the innovative therapies prevent even more expensive care and years of suffering for the patients.

Hospitals also reacted strongly to the price transparency provision in the proposed rule, with the American Hospital Association describing it as “unlawful” to require hospitals “to disclose privately negotiated contract terms.”

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

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