For FY 2024, inpatient stays with CAR-T treatment are currently assigned to MS-DRG 018, which has a base reimbursement rate of $257,958. Outlier payments are available to hospitals to cover extremely costly cases when the costs exceed the total of the MS-DRG payment, the NTAP amount (if applicable), and the current fixed-loss threshold of $42,750. Even with these adjustments, Medicare reimbursement for CAR-T cases today sometimes fails to cover total hospital costs, which could negatively impact provider uptake and patient access.<\/p>\n
For FY 2025, CMS proposed several policies that would impact provider reimbursement for CAR-T and other cell and gene therapies (CGTs).<\/p>\n
Payment Changes for CAR-T Cases<\/h2>\n
As a result of an increase to the base operating and capital rates for all IPPS payments and an increase in the proposed relative weight for MS-DRG 018, the proposed base payment for CAR-T cases in FY 2025 would increase by 6.4% to $274,413.<\/p>\n
High-Cost Outlier Payments<\/h2>\n
The proposed fixed-loss threshold for FY2025 is $49,237, a 15% increase over the current threshold. For CAR-T cases, which are more likely than other inpatient stays to qualify for outlier payments, this would require hospitals to incur more losses before qualifying for an outlier payment. However, the higher overall MS-DRG base rate may mitigate some negative impacts.<\/p>\n
Adjustment for Clinical Trial Cases<\/h2>\n
CMS reimburses CAR-T clinical trial cases, which do not incur drug costs, at a lower rate than non-clinical trial cases. Using its standard approach to analyze the latest update of the 2023 Medicare Provider Analysis and Review data, CMS found that clinical trial cases for CAR-T treatment incur 34% of the costs of non-clinical trial cases. Therefore, the agency proposes an adjustment factor of 0.34 to the relative weight of MS-DRG 018 for these cases (an increase over the current adjustment factor of 0.27). This would result in a base rate for clinical trial cases of $93,300, an increase of 34% over FY 2024.<\/p>\n
Product NTAP Assessments<\/h2>\n
CMS is evaluating several CGT products for potential NTAP status in FY 2025. However, none of these products are anticipated to map to MS-DRG 018:<\/p>\n
- \n
- Exa-cel (CasgevyTM<\/sup>) for the treatment of sickle cell disease (SCD)<\/li>\n
- Lovo-cel (LyfgeniaTM<\/sup>) for the treatment of SCD<\/li>\n
- Donislecel-jujn (LantidraTM<\/sup>) for the treatment of type 1 diabetes<\/li>\n
- Lifileucel (AMTAGVITM<\/sup>) for the treatment of melanoma<\/li>\n<\/ul>\n
NTAP Eligibility Changes<\/h2>\n
CMS proposed several changes related to NTAP eligibility and payment, which could impact future NTAP submissions and products being considered for NTAP in FY 2025:<\/p>\n
- \n
- Starting in FY 2026, CMS proposes to revise the newness period assessment of products receiving NTAP based on an October 1 cutoff rather than April 1, broadening the window in which products are deemed to still be in their newness period.<\/li>\n
- CMS proposes a change to its rule that requires applicants to have a \u201ccomplete and active\u201d FDA market authorization request prior to applying for NTAP to no longer consider \u201chold status\u201d to be an inactive status for the purposes of eligibility in FY 2026.<\/li>\n<\/ul>\n
NTAP Maximum Payments<\/h2>\n
CMS proposes to increase the maximum NTAP payment for gene therapies treating sickle cell disease (SCD) from 65% to 75% of product costs. Currently, the only other products subject to the 75% maximum are Qualified Infectious Disease Products or products approved under the Food and Drug Administration\u2019s Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD).<\/p>\n
Figure 1. Hospital Reimbursement Example for CAR-T Cases Under IPPS: Proposed FY 2025 vs. Final FY 2024<\/h2>\n
![\"\"](\"https:\/\/advisory.avalerehealth.com\/wp-content\/uploads\/2024\/04\/ipps2.png\")
<\/p>\nFR: Final Rule; PR: Proposed Rule. <\/em><\/span>
\nAssumptions: <\/em><\/span>
\n\u2022 Hospital charges for CAR-T episode are kept constant across all examples, consistent with the geometric mean charges included in the FY 2025 Proposed Rule after outliers removed (AOR) file ($1,557,682)<\/em><\/span>
\n\u2022 Hospital has an average operating and capital cost-to-charge ratio of 0.3, which influences CMS calculations of hospital costs.<\/em><\/span>
\n\u2022 Hospital receives add-on payments that stem from payments for indirect medical education adjustment (IME) and disproportionate share hospital (DSH) adjustments, which are calculated as a percentage of the base MS-DRG. In this figure, there is an assumed IME factor of 0.2 and DSH adjustment of 0.05<\/em><\/span>
\n\u2022 Hospital area wage index is 1.0, meaning no adjustment is made to the labor-related share of the standardized amount.<\/em><\/span>
\n\u2022 Hospital received outlier payment, which is only made once hospital losses exceed the fixed-loss amount. Outlier payments provide 80% of excess costs beyond this threshold.<\/em><\/span><\/p>\nKey Considerations<\/h2>\n
Stakeholders should consider several implications stemming from proposed FY 2025 changes for existing assets and for future cell and gene therapies.<\/p>\n
- \n
- Stability of MS-DRG 018: <\/strong>While the proposed FY 2025 base rate for MS-DRG 018 would represent an increase over FY 2024<\/a>, continued growth in the proposed fixed-loss threshold may reduce benefits for inpatient stays that incur an outlier payment. Total reimbursement will vary by hospital and case, with adequate reimbursement in some cases but potential financial risk for hospitals on significantly costly cases. The number of cases represented in the data to set the base rate increased this year (to 1,099), reflecting more on-market products and increased utilization. In the future, inclusion of additional immunotherapies may lead to fluctuations in the base rate and may lead CMS to consider splitting the MS-DRG depending on the number of cases and differences in resource costs. In this proposed rule, CMS did note that a request to rename MS-DRG 018 to recognize the use of \u201cother autologous gene and cell therapies,\u201d CMS did not propose any revisions and is current proposing continued use of its broader \u201cOther Immunotherapies\u201d language. With a robust pipeline<\/a> of cell and gene therapies, CMS may have to confront reimbursement challenges or consider alternative approaches.<\/li>\n
- NTAP Eligibility: <\/strong>Several significant changes for NTAP eligibility are proposed in this rule. The proposal to move the newness period cutoff to October 1 would increase the time that providers may benefit from NTAP payments, which may help to support uptake of these products. Additionally, the proposal to make an exception for products with \u201chold status\u201d when assessing whether a product has an \u201cactive\u201d marketing authorization request would likely benefit manufacturers and recognizes that a hold status may be brief and therefore may not preclude a product from NTAP consideration.<\/li>\n
- Gene Therapy Payment Considerations:\u00a0<\/strong>A proposal to increase the maximum NTAP payment for SCD gene therapies may set a precedent for how gene therapies are addressed under inpatient payment methodologies. A proposed increase is notable, but the change would not fully address gaps that providers may encounter in payment, especially since list prices of SCD products currently being considered for NTAP have a per-treatment price between $2.2-3.1 million. The MS-DRGs that SCD gene therapies map to (016 and 017) have base rates that fall far below the costs of each product (i.e., ~$43,000). The specific focus on SCD in this proposed rule aligns with broader efforts of the administration, including the CGT Access Model<\/a> currently being implemented by the CMS Innovation Center<\/a> (CMMI) that would allow for CMS to negotiate outcomes-based agreements<\/a> on behalf of states for SCD gene therapies in the Medicaid program. CMMI may also consider alternative reimbursement approaches in Medicare fee-for-service for CGTs, such as bundled payments or site-neutral payment. However, no models or additional details have been released to date.<\/li>\n
- Site-of-Care Shifts:<\/strong> Differences in Medicare reimbursement methodology for the inpatient versus outpatient setting can sometimes result in higher reimbursement for CAR-T in the outpatient setting, where CAR-Ts are typically separately paid at average sales price plus 6%. However, assuming that a CAR-T therapy can be safely administered in an outpatient setting, shifts toward outpatient care may increase focus on Medicare\u2019s outpatient drug payment methodology, as the 6% add-on payment could be significant given pricing of CAR-T products.<\/li>\n<\/ul>\n
- NTAP Eligibility: <\/strong>Several significant changes for NTAP eligibility are proposed in this rule. The proposal to move the newness period cutoff to October 1 would increase the time that providers may benefit from NTAP payments, which may help to support uptake of these products. Additionally, the proposal to make an exception for products with \u201chold status\u201d when assessing whether a product has an \u201cactive\u201d marketing authorization request would likely benefit manufacturers and recognizes that a hold status may be brief and therefore may not preclude a product from NTAP consideration.<\/li>\n
- Stability of MS-DRG 018: <\/strong>While the proposed FY 2025 base rate for MS-DRG 018 would represent an increase over FY 2024<\/a>, continued growth in the proposed fixed-loss threshold may reduce benefits for inpatient stays that incur an outlier payment. Total reimbursement will vary by hospital and case, with adequate reimbursement in some cases but potential financial risk for hospitals on significantly costly cases. The number of cases represented in the data to set the base rate increased this year (to 1,099), reflecting more on-market products and increased utilization. In the future, inclusion of additional immunotherapies may lead to fluctuations in the base rate and may lead CMS to consider splitting the MS-DRG depending on the number of cases and differences in resource costs. In this proposed rule, CMS did note that a request to rename MS-DRG 018 to recognize the use of \u201cother autologous gene and cell therapies,\u201d CMS did not propose any revisions and is current proposing continued use of its broader \u201cOther Immunotherapies\u201d language. With a robust pipeline<\/a> of cell and gene therapies, CMS may have to confront reimbursement challenges or consider alternative approaches.<\/li>\n
- Lovo-cel (LyfgeniaTM<\/sup>) for the treatment of SCD<\/li>\n