High-cost novel cell and gene therapies: The time for action is now!
by Jugna J. Shah, MPH, CHRI
Since 2017, my team and I have been waist-deep in all things cell and gene therapy, in particular chimeric antigen receptor T-cell (CAR-T) therapy. A lot has changed around coding and billing for this rapidly-evolving field—but more changes are coming down the pike, particularly as new products are developed and brought to market. There’s a lot to do to ensure that providers are paid both fairly and accurately for CAR-T therapy.
The situation is complicated by the fact that we don’t have consistent nomenclature to describe these novel therapies. People refer to these as drugs, biologics, personalized drugs, highly complex biologics, cellular therapies, genetically modified cellular therapies, immunotherapies, in-vivo and ex-vivo gene therapies, immune effector cells, and many other terms! You may ask, “What’s in a name?” …well, everything…. How these new therapies are named (i.e., what it is) impacts coverage, the codes selected to report the clinical services for the therapy, including the product’s administration, and because codes tie to payment it also impacts reimbursement. So, it really behooves us to move toward a consistent nomenclature and/or define a new term. We need something that differs from how we’ve always described the administration of drugs and therapeutic substances beyond “chemo and non-chemo” drugs.
In fact, so much of the innovation we’ll see in the coming years extends far beyond oncology, so we really need to start thinking about these therapies differently.
The situation is also complicated by the steps involved in generating the cellular therapy product. These include cell collection and specialized lab technologists performing complex inbound and outbound cell processing services separate from the manufacturer. These are services that hospitals render and incur costs for, yet they’re largely unrecognized by CMS and considered to be part of the manufacturing process. This is where I’ve been scratching my head for years: How can these activities be part of the “manufacturing process” when the manufacturer isn’t involved in rendering these services, nor is the manufacturer paying hospitals for them?
The AMA released Category III CPT® codes to recognize these services and the National Uniform Billing Committee (NUBC) released dedicated revenue codes for these individual services. But Medicare rejects the services if they are billed on an outpatient claim. That’s right, they cover them, but reject the outpatient charges and codes. Bizarrely, Medicare accepts these very same services if they are reported on the inpatient claim with the administration date of service, either bundled with the product charge (also bizarre) or as individually reported line item charges with the unique NUBC revenue codes that have been defined for these services.
On the surface, this reporting flexibility may seem helpful. But the truth is it’s a nightmare for providers in terms of CDM set-up; decision-making around how to bill; how to track the services; visibility of what was provided, when, and where; and the problems stemming from mixing up Part A and Part B dollars. Not to mention that these services are considered covered, per the National Coverage Decision (NCD)!
I’m wondering when the tipping point will come—when hospitals can no longer absorb the cost for cell collection and cell processing. Will it be when volumes increase for existing indications as well as newly approved indications where a dramatic increase in Medicare volume is expected, such as for multiple myeloma? Or will it be when the tumor-infiltrating lymphocytes (TIL) therapy is approved, and cell collection requires an operating room to extract cells from a tumor? Is Medicare really intending to never cover hospital costs for these therapies, or do we need to raise these issues again, now that there is a new administration that might be more sympathetic to the issues that hospitals are facing?
Finally, the situation is complicated because of reimbursement. Drug and biologic payment is front and center in everyone’s minds these days because of the high prices. With cell and gene therapies’ price points at the highest amounts of all—in the hundreds of thousands, if not millions, of dollars—there is much to grapple with. So many factors have a financial impact on hospitals: the aforementioned issues of paying for cell collection and cell processing, the payment differential between Medicare inpatient and outpatient rates, 340B discounts, payment window issues, new technology add-on payments (NTAP), and provider charging practices.
The great news on the payment front is that, for fiscal year (FY) 2021, stakeholders successfully advocated for the creation of MS-DRG 018: a new, dedicated DRG for inpatient payments for CAR-T. Even more importantly, we were able to convince CMS to create the relative weight for this DRG in an unprecedented manner, resulting in a much higher relative weight than we would have seen otherwise. This was a huge win! Fortunately, the agency has proposed the same approach for FY 2022. CMS also proposes to change MS-DRG 018’s name to include “other immunotherapies.” This is intended to allow a series of additional cellular therapies with high price points to be assigned to MS-DRG 018 directly pursuant to CMS’ pre-major diagnostic category (MDC) grouping logic. What we won’t know until the final rule is released is whether CMS will grant NTAP to any of the newly approved therapies which have applied while also assigning those same therapies into MS-DRG 018, which is the highest weighted MS-DRG. It’s a question CMS is seeking input on from stakeholders.
For FY 2021 and FY 2022, MS-DRG 018 is the highest-paying MS-DRG, but without wage, disproportionate share, and indirect medical education adjustors, the weight does not cover the product cost, not to mention the patient care costs. But MS-DRG 018 won’t remain at this level, meaning it is likely to be reduced in the future even though the product costs increase, unless providers improve their pricing policies and set their charges in accordance with their cost-to-charge ratios (CCRs)—exactly what CMS told providers to do in the FY 2021 IPPS final rule.
My call to action to revenue integrity professionals is to get the word out, starting with your own hospital, and then to get the word out with your peers.
CMS has reiterated what savvy providers have always known and it’s time that everyone got on board. This will require educating people inside your institution if they do not know CMS’ rules and sitting with the discomfort of taking a $400,000 product cost and charging north of $1,600,000 (derived from dividing the product cost by the hospital CCR—in this example 0.25; each hospital should use their appropriate CCR). It will also require being ready to answer questions about your charges due to the price transparency requirements. This means having proactive conversations with patients and the press about what these gross charges really are and why hospitals have to set them in this manner to protect their current and all hospital’s future payment, but that patients will be protected from extraordinary financial liability.
This last issue, in particular, is a message that just is not being communicated. Instead, what we see is story after story about how hospitals are gouging patients with high charges. Enough is enough! CMS set the rules of the game, and the hospitals that are least likely to lose money on cell and gene therapies are those that diligently follow Medicare’s rules and know how to address the questions that come their way.
An analysis of the FY 2020 IPPS proposed rule data reveals that about two-thirds of CAR-T therapy claims did NOT generate the maximum allowed NTAP of $242,450. This means that hospitals left money on the table that they were entitled to in FY 2020. That’s because their CAR-T product charges were lower than what they should have been if the hospital set their charge correctly. If Medicare uses these claims and charges to set the MS-DRG 018 rate for FY 2022, it will be much lower than what would have been if all facilities had charged correctly.
More and more hospitals are becoming certified to provide cell and gene therapies. As they do, I wonder if they will be as uncomfortable with charging appropriately as the first wave of certified providers were. If so, we risk seeing the MS-DRG 018 relative weight plummet, and it will be hard to get CMS to be sympathetic to complaints about how the MS-DRG 018 is “too low,” when the data shows that providers left money on the table.
There is nothing new about this charging issue—it’s just that the scale is exponentially higher when we are talking about the prices we are seeing for cell and gene therapies. And, of course, even if all providers charge correctly, and new therapies are granted NTAP, there will continue to be significant short-falls for a $2,000,000 therapy with a 65% NTAP cap. So, while there are things that providers can and should do today to improve their payments, there will ultimately be a moment soon when CMS will have to grapple with the tough question of whether the MS-DRG system as it exists today can function for cell and gene therapies.
Advancements coming out of the scientific community are completely amazing—but the science is outpacing the confines of existing coding, billing, and reimbursement models. At the end of the day, what good will these amazing therapies be to patients if healthcare providers cannot afford to provide them? It’s bad enough when reimbursement and product pricing issues stymie patient access to lifesaving care—but it’s even worse when uncertainties about coding, billing, and charging practices end up limiting access.
My hope is that revenue integrity professionals will continue speaking up about these issues. We can, and should, drive the efforts to advocate for consistent and reasonable solutions for coverage, coding, billing, and reimbursement issues so that hospitals receive fair reimbursement for the services they render, and that the patients who desperately need new therapeutic—and possibly curative—options can access them.
Shah is the president of Nimitt Consulting, Inc. and a member of the NAHRI Board.