By Jacob Graham, Kathryne Kirk, Anna Catalanotto, and Jason Lam, Guidehouse
In the Inpatient Prospective Payment System (IPPS) Final Rule released in August 2021, the Centers for Medicare and Medicaid Services (CMS) expanded the chimeric antigen receptor T-cell (CAR-T) diagnosis-related group (DRG) to include other immunotherapies. While industry generally views this change as a positive development and applauds CMS’ proactivity, significant uncertainties remain as to the specific immunotherapies included and how payment will change over time. To prepare for such uncertainties, manufacturers should anticipate fluidity and plan to adjust their launch strategies as more immunotherapies reach market and claims volume increases.
This article provides an overview of how CMS arrived at this classification and shares four strategies for launching new immunotherapy products into inpatient hospitals.
When the first CAR-Ts launched in 2017, they were mapped to the bone marrow transplant DRG (016) at just $43,094.1 As a result, reimbursement fell significantly short of the cost of treatment for Medicare fee-for-service (FFS) patients, which in turn made it difficult for hospitals to onboard these disruptive therapies. Over the years that followed, manufacturers and advocacy groups lobbied for more equitable payment, which CMS addressed in 2020 by establishing DRG 018 specifically for the CAR-T therapies. This development marked a monumental step toward balancing payment for CAR-T.
In August 2021, CMS expanded the CAR-T DRG to include “other immunotherapies.” The term’s ambiguity introduced some controversy over which therapies map to this category. When CMS is considering what qualifies as an immunotherapy for mapping purposes, it is considering attributes such as illness severity, treatment difficulty, service complexity, and required resources for the diagnosis and/or treatment of the condition.
In alignment with the intent of a prospective payment system (PPS), a single payment category now exists for the variety of complex inpatient-administered cell and gene immunotherapies, including allogeneic and autologous products. Pipeline immunotherapy manufacturers are joining a better payment environment at launch than the original CAR-Ts, in part due to the work and advocacy of the pioneering CAR-T products. Starting in 2022, CMS will reimburse immunotherapies assigned to this DRG 018 at $246,958,2 plus other temporary adjustments such as New Technology Add-On Payments (NTAP) and outlier payments. Medicare payment will likely evolve in the coming years as new immunotherapies map to DRG 018 and introduce more variability related to drug pricing, hospital resources, and charge behavior. While immunotherapies priced below the DRG may benefit from this assignment and others priced above the DRG payment may be disadvantaged, CMS is now in a better position to predict potential payment variability and adjust as needed with the newly dedicated classification.
Prepare For Future Uncertainty
While CMS has indicated it will continue to use the current process for classifying products, the organization also has demonstrated an openness to modifying the DRG system as new immunotherapies come to market. Manufacturers should evaluate pricing and policy strategies in anticipation of the likely volatility and future uncertainty in this class. To launch new therapies into these uncharted DRGs, cell and gene immunotherapy manufacturers will need comprehensive and tightly integrated pricing, reimbursement policies, and customer support strategies that should consider the following:
The recent creation and changes to DRG 018 represent a willingness by CMS to adapt to the needs of innovative immunotherapies. As new cell and gene therapies come to market, CMS will continue to evaluate DRG structures and payments based on clinical and cost homogeneity. While mechanisms like NTAP can help provide relief during the initial few years, they are not a permanent solution. Manufacturers of high-cost inpatient immunotherapies must assess the fluidity of the DRG system when designing pricing and policy strategies, take appropriate steps to mitigate risks, and be prepared to advocate for long-lasting structural change.
Read the full article in Cell & Gene
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