The Centers for Medicare and Medicaid Services (CMS) recently announced the establishment of reimbursement rates for the chimeric antigen receptor T-cell (CAR-T) therapies axicabtagene ciloleucel (Yescarta, Kite) and tisagenlecleucel (Kymriah, Novartis) at roughly wholesale acquisition cost (WAC) + 6% for an outpatient administration. While coverage by CMS was never a question, the reimbursement rate certainly 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 whether the final infusion will occur in the outpatient or inpatient setting. The location of the 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 provides hospital coverage and Part B provides coverage for essentially all other medical services. CMS reimbursement to institutions is driven by the Hospital Prospective Payment System (HPPS), which is essentially a fixed reimbursement rate based upon the diagnosis of a patient. The “New Technology Add-On Payment” (NTAP) program is used by CMS to provide additional payment for breakthrough technologies. The patient deductible is $1340 without a 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 essentially on a fee-for-service basis, with claims billed via Healthcare Common Procedure Coding Systems (HCPCS) and 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. Patient liability consists of an initial deductible of $183, followed by a 20% coinsurance.
The inherent dilemma in this current CMS policy is 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 (ie, an institutional outpatient infusion center), all services and the CAR-T transfusion will be reimbursed based upon the CMS fee schedule, minus the patient deductible and coinsurance. The patient 20% coinsurance will be anywhere from $79,000 to $100,000 for CAR-T therapies. Clearly, the financial burden is upon the patient.
If infused in an inpatient setting, all services, supplies, and drugs will be subject to the prospective payment diagnosis-related group (DRG) rate. We can be assured that the current DRG reimbursement level will not cover the cost of the CAR-T infusion. The DRG rate also does not account for the additional and inevitable costs of supportive care, which explains the requests being made by Kite and Novartis to CMS for consideration for the NTAP adjustment. From the patient standpoint, 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.
This discussion begs the question, where should the CAR-T therapy be infused? Should it be infused in the outpatient setting – where services, supplies, and drug are covered, and the patient carries the financial burden? Or should the final infusion occur in the inpatient setting, due to the high incidence of cytokine release syndrome and neurologic toxicities, placing a significant financial burden upon the institution while minimizing the financial impact for the patient.
Soon to be determined, now that CMS has set their reimbursement rates, is what will the payers do? In most situations, payers reimburse institutions on a modified pay-per-service system and pay for outpatient services on a fee-for-services basis, similarly to CMS. I have discussed the payer reimbursement issues previously and have no doubt that payers need 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 patient, or will they allow the oncologist or facility to use their discretion as to where the infusion will take place?