The Centers for Medicare and Medicaid Services (CMS) just announced their reimbursement level for the new chimeric antigen receptor T-cell (CAR-T) products. While it is in line with their standard reimbursement methodology for medications on an outpatient basis, it creates a dilemma for the institution and the patient. Depending on the site of service, financial implications are significant, impacting the feasibility of providing access to this breakthrough medication.
CMS recently announced the establishment of reimbursement rates for the CAR-T therapies Yescarta (axicabtagene ciloleucel) and Kymriah (tisagenlecleucel) at roughly wholesale acquisition cost (WAC) plus 6% for an outpatient administration.1 While coverage by CMS was never a question, the reimbursement rate was. The 6% markup represents roughly $22,000 for Yescarta, and $25,000 for Kymriah.
Unfortunately, the CMS decision leads to additional questions, such as, “Will the final infusion occur on outpatient or inpatient basis?” The location of the actual infusion will have significant financial ramifications for the stakeholders.
To understand the dilemma, one needs to understand the differences between CMS Part A and Part B coverage. CMS Part A covers hospital, skilled-nursing, home, and hospice care, while Part B provides coverage for essentially all other medical services.2,3 CMS reimbursement to institutions is driven by the inpatient prospective payment system (IPPS), which is essentially a fixed reimbursement rate based upon the diagnosis of the patient.4 The new technology add-on payment (NTAP) program is used by CMS to provide additional payment for breakthrough technologies.5 The member deductible is $1340 and $0 copayment for the first 60 days of hospitalization annually, with increasing per diem copayments for greater than 60 days of hospitalization. Under Part B, reimbursement is basically on a fee-for-service basis, with claims billed via Healthcare Common Procedure Coding Systems (HCPCS) and current procedures terminology (CPT) codes. Drugs are billed under the HCPCS subset, referred to as J-codes. CMS establishes the reimbursement amounts assigned to each HCPCS and CPT code. Member liability consists of an initial deductible of $183 followed by a 20% coinsurance.
The dilemma that the current CMS policy causes is in determining where the final infusion should occur. CMS has established the Part B reimbursement level at WAC + 6%, which is consistent with their current policy. Hence, when infused in an outpatient setting, eg, an institutional outpatient infusion center, all services and the CAR-T therapy will be reimbursed based on the CMS fee schedule minus the member deductible and coinsurance. The member 20% coinsurance will be between $79 to $100,000 for CAR-T therapies. Clearly, the financial burden is upon the member.
If CAR T-cells are infused on an inpatient basis, all services, supplies, and drugs will be subject to the IPPS diagnostic-related group (DRG) rate. We can be assured and confident that the current DRG reimbursement level will not cover the cost of the CAR-T therapy. Reimbursement also does not account for the additional costs for supportive care, which inevitably will occur, hence the requests being made by Kite and Novartis Pharmaceuticals to CMS for consideration for the NTAP adjustment.6 From the member standpoint, their liability is capped at $1340. Hence, in this scenario, the financial burden is reversed where the institution is at risk, with no patient assistance program to cover their costs.
So where should the CAR T-cells be infused? Should they be infused in the outpatient setting where services, supplies, and drugs are covered, and the member carries the financial burden? Or should the final infusion occur in inpatient care due to the high incidence of cytokine release syndrome and neurologic toxicities, placing significant financial burden upon the institution while minimizing the financial impact to the patient?
Now that CMS has set their reimbursement rates, we will soon see how payers will respond. In most situations, payers reimburse institutions on a modified prospective payment system and pay for outpatient services on a fee-for-service basis, similar to CMS. I have discussed the payer reimbursement issues previously. I have no doubt that payers will have to engage with the certified facilities for “one-off” contracts specific to the CAR-T therapies. However, given the high incidence of adverse effects and the need for immediate supportive care, will payers push for services to be provided on an outpatient basis, thus placing financial burden upon the member? Or will they allow the oncologist or facility to use their discretion as to where the infusion will take place?
Read the Counterpoint to this article here.
References
1. Gallegos A. Medicare sets outpatient CAR T-cell therapy rates. Hematology News. https://www.mdedge.com/hematologynews/article/164403/business-medicine/medicare-sets-outpatient-car-t-cell-therapy-rates. Published April 27, 2018.
Accessed July 11, 2018.
2. Centers for Medicare and Medicaid Services. What Part A covers. Medicare.gov website. https://www.medicare.gov/what-medicare-covers/part-a/what-part-a-covers.html. Accessed July 11, 2018.
3. Centers for Medicare and Medicaid Services. What Part B covers. Medicare.gov website. https://www.medicare.gov/what-medicare-covers/part-b/what-medicare-part-b-covers.html . Accessed July 11, 2018.
4. Centers for Medicare and Medicaid Services. Acute inpatient PPS. cms.gov website. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Updated August 2, 2017. Accessed July 11, 2018.
5. Centers for Medicare and Medicaid Services. cms.gov website. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html. Updated February 15, 2018. Accessed July 11, 2018.
6. Barlas S. Medicare quietly forces changes to federal formulary requirements. P&T. 2018;43(7):400-402, 428.
