CMS Proposes Increased Reimbursement for CAR T-Cell Therapy, Price Hikes for Rural Hospitals

CMS wants to increase how much it reimburses hospitals for chimeric antigen receptor (CAR) T-cell therapy for fiscal year (FY) 2020. According to a proposed rule released Tuesday, the treatment’s new technology add-on payment will increase to 65%, up from the current 50%, which would translate into a maximum add-on of $242,450, up from the current $186,500 payment for the therapy.

According to CMS, officials are also looking at changes to the formula used to determine payments for hospitals administering the therapy.

Despite the increased payments, reimbursement will still fall short of covering costs to administer the 2 approved CAR T-cell therapies. Tisagenlecleucel (Kymriah)—approved for the treatment of children and young adults with acute lymphoblastic leukemia—comes with a price tag of $475,000 while axicabtagene ciloleucel (Yescarta)—approved for the treatment of adults with relapsed or refractory large B-cell lymphoma—costs $373,000. However, it’s estimated that the total cost of treatment can run between $800,000 and $1.5 million.

Hospitals and clinics can get some reimbursement beyond the amounts they are paid for the treatment itself, but CMS has acknowledged that the current structure doesn't come close to compensating cancer centers for their costs. The agency said Tuesday it weclomes input from the public on other payment alternatives for FY 2020 for CAR T-cell therapy.

“These changes may help ensure adequate payments to hospitals administering this groundbreaking therapy while CMS continues our work to ensure that we pay for innovative therapies appropriately,” the agency said in a press release.

The reimbursement increase also comes as CMS considers requiring institutions to enroll every patient in a clinical trial or registry and be tracked for 2 years to get Medicare coverage for CAR T-cell therapy.

Under the proposed new technology add-on payment pathway, CMS is also proposing an alternative pathway for medical devices that receive FDA Breakthrough Devices designation in which the agency would waive the requirement of evidence demonstrating substantial clinical improvement in order to qualify for new technology add-on payments. As a result, the device would only need to meet the cost criterion to receive an add-on payment.

A spokesman for the Biotechnology Innovation Organization (BIO) described the proposal as a step in the right direction. "While we continue to analyze and review the proposal, we are pleased that CMS recognizes the need to create a sustainable and adequately paying MS-DRG for CAR T-cell therapies," said BIO's Daniel Seaton. "To that end, while the increases across NTAP are a step in the right direction for new innovations, we believe it is critical that CMS make further updates around items discussed in the proposal that will allow them to both ensure beneficiary access to CAR T-cell therapy and to collect sufficient and accurate data to create a new MS-DRG."

These changes were announced as part of CMS’ FY 2020 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital Prospective Payment System (LTCH-PPS) Proposed Rule and Request for Information.

The proposed rule also includes wage index hikes for rural hospitals under IPPS. Under the rule, the wage index for hospitals with a wage index value below the 25th percentile would be increased by half the difference between the wage index value of that hospital and the 25th percentile wage index across all hospitals. Meanwhile, hospitals above the 75th percentile would see decreases, which would be capped at 5%. This proposed policy would be effective for at least 4 years.

“In last year’s proposed rule, we invited comments on, and suggestions, and recommendations for changes to the Medicare wage index,” states the press release. “Many responses reflected a common concern that the current wage index system perpetuates and exacerbates the disparities between high- and low-wage index hospitals.”

This set of changes would also impact the so-called wage index “rural floor” calculation, which requires that the IPPS wage index value for an urban hospital not be lower than that of rural areas in the state. CMS also proposes to remove urban and rural reclassifications from the calculation as a result of some hospitals using urban to rural reclassifications to inappropriately influence the rural floor wage index value.

Under IPPS, CMS is estimating a total increase in IPPS payments of approximately 3.7%, which they project will increased total Medicare spending on inpatient hospital services by approximately $44.7 billion in FY 2020.

For the Hospital Readmissions Reduction Program under IPPS, CMS is proposing to adopt 8 factors that could be used to decide whether 1 of the 6 measures should be removed from the program. The proposed changes would also update the definition of dual eligible, which describes a person who meets requirements for both Medicare and Medicaid.

CMS expects LTCH-PPS payments to increase by approximately 0.9%, reflecting $37 million, in FY 2020.