New CMS Hospital Rule Seeks More Pay for CAR-T, Some Devices

Kerry Dooley Young

April 25, 2019

The Centers for Medicare & Medicaid Services (CMS) is proposing, through a new Medicare hospital payment rule, to provide extra money for certain newer medical products, including costly bioengineered chimeric antigen receptor T-cell (CAR-T) treatments for blood cancers.

CMS on Tuesday released the draft fiscal 2020 Inpatient Prospective Payment System rule, which would increase reimbursement for hospitals by 3.7%. The rule includes a number of changes to payment calculations, including a bid to stop what CMS officials see as gaming of the wage index "rural floor" calculation.

The hospital rule also traditionally serves as a vehicle for new technology add-on payments. CMS is seeking to increase the add-on payment for CAR-T therapy.

Medscape Medical News previously reported that the blood cancer community is struggling to balance the remarkable responses to the drugs with managing the costs of providing CAR-T therapy. Because of the complexities of administering these bioengineered treatments, hospitals face costs beyond those of the CAR-T drugs themselves. Tisagenlecleucel (Kymriah, Novartis) costs about $475,000, and axicabtagene ciloleucel (Yescarta, Gilead Sciences) costs about $373,000.

Under the draft rule, the add-on payment for CAR-T therapy would rise from 50% of the estimated costs of treatment to 65%, or from $186,500 to $242,450.

CMS at this time is weighing whether it might create a new payment classification in the future specifically for CAR-T therapy. CMS said it does not yet have the comprehensive clinical and cost data needed to create a Medicare severity diagnosis–related group (MS-DRG) for the drugs.

In a joint November 2018 letter to CMS, the American Society for Transplantation and Cellular Therapy (ASTCT) (formerly, the American Society for Blood and Marrow Transplantation) and the American Society of Hematology (ASH) said they were not seeking new MS-DRGs for CAR-T for fiscal 2020. These groups, though, do support "long-term development of MS-DRGs specific to CAR-T."

In the letter, ASTCT and ASH noted the difficulties for hospitals in managing the costs of CAR-T.

"These drugs are personalized (autologous) cell products that are manufactured for a specific patient at a specific time; they cannot be purchased in bulk, pre-stocked or re-routed to another patient," wrote John F. DiPersio, MD, PhD, who at the time the joint letter was sent was president of ASTCT, and Alexis Thompson, MD, MPH, president of ASH. "As such, providers are not currently receiving discounts and the $186,500 minimum shortfall is a true financial loss for the treatment center."

New Devices

In the fiscal 2020 hospital payment rule, CMS also is seeking to quickly align its policy for spurring use of innovative new medical devices with a sister agency's efforts to speed their approval.

The US Food and Drug Administration (FDA) in December finalized the guidance for its breakthrough program for medical devices. In the draft fiscal 2020 hospital rule, CMS proposed a workaround that could make it easier for devices approved under the new FDA program to qualify for add-on payments.

Makers of medical devices need to make a case that their products represent an innovation over therapies already in use. In the draft hospital rule, CMS proposed deeming that devices that are approved by the FDA through the new breakthrough program be "new and not substantially similar" to an existing technology for the purpose of considering add-on payments.

CMS is also proposing changes to the wage index "rural floor" calculation. Hospitals in a few states appear to have used urban-to-rural hospital reclassifications to inappropriately influence the rural floor wage index value, thus gaming the payment system, CMS said.

In response, the agency has proposed removing urban-to-rural hospital reclassifications from the calculation of the rural floor wage index value beginning in fiscal year 2020.

CMS will accept comments on the draft fiscal 2020 inpatient rule through June 24.

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