Health

Capping Medicare Part B payments will limit outpatient access to CAR-T


The revolutionary life-extending approach to treating cancer known as CAR-T is under threat from a quotidian source: policy proposals to limit Medicare reimbursement in the outpatient setting to the average sales price of the treatment plus a small addition for overhead.

Chimeric antigen receptor T-cell (CAR-T) therapies have been changing the cancer treatment landscape. These one-time customized treatments created from an individual’s own T cells represent a significant advancement in treatment. Expanding their use across care settings is essential to improving patient outcomes and quality of life.

The economic viability of CAR-T, however, could be constrained by proposals to limit Medicare reimbursement when it is administered in outpatient settings, such as hospital outpatient and specialty cancer centers, to the average sales price (ASP) of the therapy plus an amount capped at $1,000 for most drugs and up to $2,000 for immunotherapies like CAR-T.

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These add-on amounts represent a substantial reduction from what facilities are currently reimbursed for providing a patient with CAR-T. Medicare currently pays for therapies like CAR-T at the average sales price plus a margin of 4.3% to cover costs associated with delivering these therapies. Here’s an example using Yescarta, a CAR-T therapy with an acquisition cost (list price) of $373,000: under the current 4.3% rule, its add-on amount would be $16,000. Capping the add-on to $2,000 represents an 8-fold decrease.

CAR-T therapies have historically been administered in select hospitals — mostly academic centers — which limits where patients can access this therapy. Recent strides in improving the safety profiles of CAR-T therapies are making it possible for them to be delivered in outpatient settings. This shift can improve patient access and be less costly to providers, patients, and payers.

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But the initial investments required to furnish CAR-T in outpatient settings greatly exceed $1,000 to $2,000 per patient. Consequently, many practices — especially small outpatient practices — are facing insurmountable economic barriers to administering CAR-T therapies if they cannot recoup the financial risks and expenses.

Long before giving a CAR-T infusion to the first patient, putting a program in place requires considerable outlays to recruit, train, and prepare staff; to expand the facility; and to establish contracts with other providers and manufacturers. Unless Medicare underwrites these upfront investment costs and the ongoing costs of running a CAR-T program, many centers will decide not to adopt this therapy.

Changing the reimbursement policy may thus paradoxically limit access to CAR-T therapy among people covered by Medicare, the population in which cancers are most often identified.

Medicare Part B reimbursement

Medications administered in a physician’s office, such as infused or injected therapies, are reimbursed under Medicare Part B. As specified by the Medicare Modernization Act of 2003, Medicare was required to pay for Part B drugs at the average sales price plus a margin of 6% to cover overhead costs associated with furnishing and administering these therapies.

In 2011, the Budget Control Act initiated spending cuts across the federal government and reduced the add-on margin from 6% to 4.3%. Even this relatively moderate reduction in the add-on amount has been associated with closures of community oncology practices and increased consolidation in this sector. The effects of a modest reduction in the add-on amount is a harbinger of the impact the more dramatic proposal to cap the add-on for CAR-T therapy to $2,000 could have.

CAR-T: An example of high value therapy adoption costs

CAR-T represents a therapy with Part B add-on costs that significantly exceed $1,000 to $2,000.

To begin a CAR-T program, a hospital outpatient department or independent network oncology site must hire or train staff for new clinical, administrative, and reporting obligations, including the FDA’s Risk Evaluation and Mitigation Strategy (REMS) programs. REMS requirements differ by product, so a site administering various CAR-T therapies will have mandatory training of all involved personnel on multiple REMS programs.

Once up and running, the outpatient practice must collect T cells from a patient, prepare them for shipping (which may include cryopreservation), transport the product to the manufacturer, support the storage of the frozen cell product, manage thawing of the engineered T cells at the bedside, and finally reinfuse the CAR-T therapy into the recipient under close monitoring.

The practice must also coordinate and contract with a variety of stakeholders, including local oncology practices for ongoing patient care and monitoring; pharmaceutical manufacturers for purchasing the CAR-T therapy and transporting a patient’s original and re-engineered cells; and inpatient health systems and providers for managing potential toxicities.

Practices may need to expand office space and hours of operation to accommodate dedicated observation rooms. They also need to build in excess time and staff capacity for possible manufacturing delays and therapy side effects. Laboratory demands for patient testing and monitoring increase. An outpatient treatment center must also stock tocilizumab per FDA mandated rules for each treated patient, a relatively costly and in-high-demand therapy used to manage toxicity.

To quantify the costs involved in running a CAR-T program, we surveyed five experienced CAR-T providers, performed a Medicare claims analysis on the 2019 Outpatient 100% Standard Analytical Files Limited Data Set, and categorized resource use into fixed initial investments, ongoing program management, and cell preparation. Estimated mean total investment costs are shown in Table 1. Total mean investment costs for a CAR-T-cell therapy program were estimated to be $889,531, and ranged as high as $1.6 million.

Table 1. Estimated mean provider initial investment costs for an outpatient CAR-T-cell therapy program

Category Construction, Technology & Logistics New Hire FTEs Additional Hours Among Existing Employees Staff Education & Training Managing Arrangements Supportive Therapies Inventory Total Costs
Average Estimated Cost ($USD 2020) $66,640 $793,565 $5,852 $6,483 $2,991 $14,000 $889,531

We estimated that the average provider would have upfront investment costs of about $2,500 per treated patient, with ongoing program management costs in the neighborhood of $10,000 per patient, as show in Table 2. Many practices are expected to incur much higher costs.

Table 2. Estimated Initial and Ongoing Costs of a CAR-T-cell Therapy Program per Treated Patient*

Category Minimum Median Mean Maximum
Costs per treated patient
Depreciated initial investment (5 years) $295 $690 $2,534 $8,887
Ongoing program management $0 $6,689 $10,376 $34,824
Cell preparation $1,146 $3,493 $3,195 $3,493
Total investment and cell preparation costs $1,441 $10,872 $16,105 $47,204

* To estimate per patient costs, an optimistic growth assumption that providers would treat 10 CAR-T patients per month over the next 5 years, on average, was used. This assumption underestimates the costs per patient, as most providers will not treat that many patients in the near term.

In addition to these recognizable upfront costs, oncology practices incur several shadow costs for CAR-T programs, including uncertainty in resources needed for each patient and the amount, timing, and requirements for CAR-T reimbursement. Reimbursement for these high-value therapies has also been less than timely, further straining the finances of outpatient centers trying to provide CAR-T therapies.

Despite the strong improvements in survival and remission for cancer patients associated with CAR-T therapies, their uptake among those covered by Medicare has been lower than anticipated, possibly due to insufficient reimbursement in the inpatient setting. Another potential barrier is that CAR-T therapies have been offered mainly at medical centers with clinical trial or stem cell transplantation experience. With the rapidly expanding indications for these interventions, the limited number of sites with experience treating Medicare patients may not be enough to meet the demands for them.

If barriers to accessing CAR-T therapies persist, patients may face long travel distances to reach a provider. Outpatient administration has the potential to improve geographic and other demographic equity by expanding access to sites closer to where patients reside.

Policy to widen access to outpatient settings

New CAR-T and other cellular immuno-oncology therapies are coming to market with improved safety profiles. These agents could be administered in outpatient settings, as are other chemotherapy or immunotherapy agents, improving access and lowering the cost. Policies to reduce Medicare Part B reimbursement, however, would make such expansion difficult. And since private insurers often take guidance from Medicare, reimbursement decisions made for the federal program would likely have ripple effects across the health care system.

Any changes to Part B reimbursement must balance policy concerns about financial incentives while also preserving — and expanding — access to novel, transformative treatments like CAR-T in the outpatient setting.

Richard Maziarz is a hematologist and director of the Blood and Marrow Transplant and Cellular Therapy Program at Oregon Health and Science University where he is also a professor of medicine. Sophie Snyder is managing director at Qualia Bio. Maziarz reports being an advisor or consultant for AlloVir, Artiva, CRISPR Therapeutics, CytoDyn, Incyte, and Novartis; has received honoraria from Bristol-Myers Squibb/Celgene, Incyte, Intellia, Gilead/Kite, Omeros, and Orca BioSystems, and research support from BMS and Novartis; participated in data and safety monitoring boards for Athersys, Novartis, and Vor Pharmaceuticals; and has a patent with Athersys.


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