CAR T-cell Therapy Causes Heavy Financial Losses for Hospitals

Roxanne Nelson, RN, BSN

November 14, 2019

Chimeric antigen receptor (CAR) T-cell therapy has been hailed as a game changer for advanced blood cancers because the treatment has elicited responses and complete remissions in patients who have come to the end of approved treatment options. At the same time, however, these therapies have redefined the meaning of expensive.

The list prices of tisagenlecleucel (Kymriah, Novartis) and axicabtagene ciloleucel (Yescarta, Kite/Gliead) range from $373,000 to $475,000, but this is just for the product; administration of the drug often entails hospital stays and other expenses.

These new agents appear to be a losing proposition for hospitals, which may lose up to $300,000 for each CAR-T treatment administered, note experts in a commentary published online November 1 in the Journal of Clinical Oncology.

These costs are not sustainable under the current Medicare payment policy, write Christopher R. Manz, MD, of the Penn Center for Cancer Care Innovation, Abramson Cancer Center in Philadelphia, and colleagues.

Although the Centers for Medicare & Medicaid Services (CMS) announced that there will be a modest increase next year in their New Technology Add-on Payment (NTAP) for CAR-T when the therapy is administered to hospitalized patients, this "quick fix" does not go far enough, the authors comment.

Heavy Losses

The delivery of CAR T-cell therapy is similar to that of other autologous stem cell transplants in that it is a multistep process involving cell harvesting, followed by processing, then some type of conditioning chemotherapy and cell infusion. Medicare reimbursement for the various steps of autologous cell transplant depends on whether it is administered in the hospital or in an outpatient setting.

But for CAR-T, the difference in reimbursement is dramatic. "Differences on the basis of inpatient versus outpatient administration — and the implications for patients, hospitals, and payers — are stark," the authors write.

In the inpatient setting, Medicare reimbursement is complex. Essentially, the maximum NTAP payments have been determined annually to be 50% of the cost of the technology. For CAR T-cell therapy, this is $186,500. Hospitals can then apply for the so-called outlier payments that offer reimbursement for part of the remaining costs, but less than 80% of it.

Under this system, hospitals stand to lose hundreds of thousands of dollars each time they administer CAR T cells. The American Society for Transplantation and Cellular Therapy estimated that when using an NTAP rate of 50%, hospitals will lose $63,000 if they mark up their costs by 400%. If they increase their price by only 10%, the loss would be about $304,000 for each inpatient infusion.

For outpatients, Medicare reimbursement is currently about $290 for CAR T-cell infusion, but Medicare also provides separate reimbursement for the CAR-T drug under the Part B buy-and-bill system. In this system, hospitals buy medicines and then charge Medicare a rate that is 4.3% higher than the average sales price. The end result is a reimbursement of more than $16,000 above the CAR T-cell list price (ie, 4.3% of $373,000).

Needless to say, the "financial incentive for hospitals to administer CAR-T as an outpatient treatment is clear," say Manz and colleagues. But that may not be optimal for the patient, because the treatment carries risks of life-threatening complications that require immediate recognition and medical support, usually in intensive care.

Most patients do receive CAR T-cell therapy as inpatients, even though it can be administered safely as an outpatient procedure by experienced hospitals and for select patients, the authors note.

"These payment policies have strong and unintended effects," they write. "In the inpatient setting, the losses that hospitals incur providing CAR-T are unsustainable and may limit the number of hospitals that are willing to offer CAR-T, affecting patient access to these potentially life-saving therapies."

Two Solutions

In response to these reimbursement concerns, CMS plans to implement a new NTAP policy in 2020 that raises the cap on NTAP payments from 50% to 65%. This change will raise payment from $186,500 to $242,450.

Although this is a step in the right direction, the authors write, the impact may be weakened because the higher payment would be partially offset by reduced outlier payments for the facilities that receive them.

Even more important is that an NTAP increase is only a short-term solution, and the CAR-T products that are currently on the market will no longer be eligible for NTAP payments in 2021.

New financial solutions are needed, the authors emphasize, and they offer two proposals.

Their first suggestion is that CMS continue to pay costs for cell infusion under the current inpatient or outpatient protocols, but also provide a separate supplemental payment for the full cost of the CAR-T drug. This solution would effectively fix the new technology add-on payment for CAR-T at 100% for inpatients.

"The initial add-on payment could be on the basis of the average sales price of comparable CAR-T products, which places pressure on manufacturers to compete on price nationwide and is also the basis for outpatient reimbursement policy," they write.

In the outpatient setting, CMS already provides a supplemental payment through buy-and-bill reimbursement, but for high-priced items such as CAR-T, the 4.3% markup should be reduced or completely eliminated.

In their second proposal, the authors suggest that CMS bundle the cell infusion and CAR T-cell therapy costs by creating a new CAR-T–specific inpatient diagnosis-related group (DRG) or outpatient equivalent that would realistically reflect the average costs of this therapy. A new DRG may encourage price competition, they add.

However, Medicare neutrality requirements for inpatients mandate that the cost of a new DRG be offset by lower payments somewhere else, which could result in payment redistribution to specialized facilities that can administer CAR T-cell therapy. Another issue is that congressional action may be needed to implement either of these two proposals.

"As others have recently discussed, the increasing prevalence of high-priced new cancer therapies, including CAR-T, will ultimately require tough decisions about who can afford to access new technologies," Manz and colleagues conclude.

The original article contains a list of the authors' relevant financial relationships.

J Clin Oncol. Published online November 1, 2019. Full text

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