{"id":34426,"date":"2025-05-02T09:30:51","date_gmt":"2025-05-02T13:30:51","guid":{"rendered":"https:\/\/advisory.avalerehealth.com\/?p=34426"},"modified":"2025-05-08T11:54:01","modified_gmt":"2025-05-08T15:54:01","slug":"cms-proposes-pay-bump-for-car-t-in-fy-2026","status":"publish","type":"post","link":"https:\/\/advisory.avalerehealth.com\/insights\/cms-proposes-pay-bump-for-car-t-in-fy-2026","title":{"rendered":"CMS Proposes Pay Bump for CAR-T in FY 2026"},"content":{"rendered":"

The Centers for Medicare & Medicaid Services (CMS) proposed to continue using its Medicare Severity Diagnosis-Related Group (MS-DRG) for chimeric antigen receptor T-cell (CAR-T) treatment stays in fiscal year (FY) 2026, but with a 17% increase in the base rate. CMS also proposed to continue providing differential reimbursement based on whether a drug was provided as part of a clinical trial, with a parallel increase proposed. The financial impact of changes in the FY 2026 Inpatient Prospective Payment System (IPPS) proposed rule would vary by hospital, and even if the payment increase is finalized, reimbursement could continue to fall short of fully recognizing provider costs of treatment in some cases.<\/p>\n

Background<\/span><\/h3>\n

Since the first Food & Drug Administration (FDA) approval of a CAR-T product in 2017, concerns have persisted over how the Medicare program would reimburse for these products, which are commonly administered in the inpatient setting and have a significant cost for providers (e.g., average sales prices exceeding $450,000). Hospital inpatient reimbursement is calculated on a case-by-case basis using an MS-DRG base payment rate that is adjusted for factors such as hospital geography, diagnosis, case severity, and discharge status. Additional reimbursement can be provided through\u00a0new technology add-on payments<\/a>\u00a0(NTAPs) and outlier payments.<\/p>\n

For FY 2025, inpatient stays with CAR-T treatment are currently assigned to MS-DRG 018, which has a base reimbursement rate of $269,139. 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 $46,147. Even with these adjustments, Medicare reimbursement for CAR-T cases today sometimes fails to cover total hospital costs, which can negatively impact provider uptake and patient access.<\/p>\n

For FY 2026, 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\u00a0<\/span><\/h3>\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 16.7%, to $314,176.<\/span><\/p>\n

High-Cost Outlier Payments<\/span><\/h3>\n

The proposed fixed-loss threshold for FY 2026 is $44,305, a 4% decrease over the current threshold. A decrease in the threshold goes against the prevailing trends of steady increases; the outlier threshold increased by 74% from FY 2020 to FY 2025. \u00a0For CAR-T cases, which are more likely than other inpatient stays to qualify for outlier payments, fluctuations in the threshold are particularly important, as they dictate the losses hospitals must incur before qualifying for an outlier payment. The combination of an increased base rate for CAR-T cases and a lower outlier threshold would increase provider reimbursement (see Figure 1).<\/span><\/p>\n

Figure 1. Illustrative Example: Hospital Reimbursement for CAR-T Cases Under IPPS: Proposed FY 2026 vs. Final FY 2025<\/span><\/h3>\n

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DSH: Disproportionate Share Hospital; IME: Indirect Medical Education<\/em><\/span><\/p>\n

Assumptions:<\/p>\n