MANAGED CARE Q&A

Concerns With Payment, Administration of Car-T Therapies

November 28, 2018
Authors: 

Zachary Bessette

Gary Goldstein, business manager of the Blood and Marrow Transplant Program at Stanford Health Care, discusses the changes needed for increased CAR-T administration in the outpatient setting as well as commercial and provider concerns about the latest reimbursement news.

To begin, can you tell us about your role and what you do on a day-to-day basis?

I am the business manager for the Stanford Blood & Marrow Transplant (BMT) program. That’s the adult BMT program here at Stanford Health Care, and our program is also the one that is providing CAR-T therapy through the Stanford Cancer Cellular Therapy program. I oversee the business operations of the BMT program from the hospital standpoint, and I lead a team of financial coordinators that work to ensure that treatment is covered by insurance and authorized. I also spend time with budgeting, looking at our costing, looking at insurance reimbursement, working with our business office to make sure we have proper revenue capture, and working with our managed care contractors to make sure that when they negotiate rates with insurance companies, they are doing so with language that fits with clinical practice.

Why is CAR-T therapy usually provided on an inpatient basis? What needs to happen for outpatient administration to become more commonplace?

In full disclosure, I am not a clinician, but I have been with the BMT program for over 20 years, so I certainly understand the general processes and I can provide information on what I have seen. I will say for CAR-T in particular, there are frequently toxic side effects. The two major side effects that are frequently seen are what are known as cytokine release syndrome (CRS) and neurotoxicity. Some patients have different levels of either or both of those. When those hit, patients need extensive care and in many cases get sick enough to need to go to an intensive care unit for a number of days.

Physicians have gotten better at recognizing these symptoms and providing swift treatment. They have been successful in limiting the level of toxicity in many patients. That being said, there is still a high risk that the side effects will manifest in many patients. There are currently two FDA-approved CAR-T therapies on the market and there are several others that are being used in clinical trials. Each particular CAR works in a similar, yet different way and they have different levels of toxicity. Here at Stanford, we have been using one particular FDA-approved therapy that, according to the literature, appears to have higher toxicity than some of the others. Some of the future CARs with less severe toxicities may be the answer to increased outpatient administration. If they do not have the same level of efficacy, then it will be a balancing act. 

Is there a possibility that as clinicians become more adept at recognizing the side effects in the inpatient setting, they will be able to administer the therapy in an outpatient setting?

That certainly is possible. The issue is that when there is onset, it can happen very quickly. If the patient is not going to be an inpatient, where will he or she be if not in the cancer center during the day? Will he or she be close to the hospital? Will there be someone to recognize signs of CRS or neurotoxicity to get him or her to the hospital if need be?  Those are considerations that a facility at a CAR-T therapy center will need to weigh in order to allow it in the outpatient space.

Can you expand on the issues associated with CMS and inpatient CAR-T therapy coverage?

Medicare has two different mechanisms for reimbursing hospitals for treatment. One of those is under Medicare Part A, in which they cover inpatient hospital services. They have a diagnosis-related group (DRG) system which looks at patients’ diagnosis and treatment codes that signify a flat fee for the hospital stay. There are some upward adjustments for complex cases, but in general it is a flat fee.

In the outpatient space, there is a different mechanism for payment. We would like to see the payment system be somewhat equivalent for each type of treatment in the inpatient and outpatient settings. In the outpatient space for CAR-T, Medicare has announced how much they are willing to pay; it is basically the wholesale cost of the drug or cell product plus a small percentage markup for the facility’s own expenses.

In the inpatient setting, a DRG for CAR-T was just announced for 2019, but until then there is no specific reimbursement for this inpatient treatment. When Medicare see codes for something like lymphoma, they will make a payment often very similar to that if we were to administer standard chemotherapy. Chemotherapy drugs vary in price, but they are nowhere near as expensive as CAR-T therapies. Facilities can receive as little as $15,000 to $20,000 reimbursement for a hospital stay when they are paying out $373,000 or $475,000 for the CAR T-cells themselves, not to mention all the other hospital care, including intensive care unit time and other drugs and treatments. When this treatment was first approved by the FDA in late 2017, many facilities held off on treating Medicare patients because of fear that it would not be covered or would be paid at far too low a rate.

What are some of the most plausible strategies you believe would be effective for approaching the high prices of CAR-T?

First, you have to consider whether this is an appropriate price for what the treatment provides as well as the alternatives. This treatment is currently being used as a last chance, last line of therapy for patients. One of the possibilities is the treatment may be better suited for patients earlier in the treatment plan, rather than after multiple other therapy failures. Clinical trials can show whether there is a benefit of using this therapy earlier in a patient’s treatment course. If this method proves to be sustainable, then other expensive therapies could be avoided and patients could benefit from improved outcomes with less intensive toxicities. That does not necessarily address the expensive cells for CAR-T, but it does address the overall expense being spent on any one patient’s treatment.

As far as the cells themselves, it is certainly possible that as more CAR-T products come to the market, prices will decrease. There are currently two cell products approved by the FDA to treat lymphoma. Both are less expensive than the only available product approved for acute lymphocytic leukemia. The argument can be made that more competition in the marketplace could induce a reduction in overall expense of the cells themselves. As doctors continue to administer these therapies more frequently and perhaps find CAR T-cells that are effective and less toxic, we may also see less need for longer inpatient stays and less days in the intensive care unit.

What are some of the challenges that you have experienced at Stanford Health Care in regard to CAR-T therapy?

First and foremost, the FDA approval raised the question of whether insurance companies will pay for this at all. Will Medicare pay for this at all? Medicare has a history of covering FDA-approved cancer therapies, but in some cases, they put restrictions on them. When the first therapy was approved, Medicare did not disclose what they would do. In turn, we had to go to our Medicare Administrative Contractor (MAC), which is the fiscal intermediary responsible for making those decisions in our area. Fortunately, they consider this to be covered as an FDA-approved indication as long as patients met the FDA guidelines. What they could not tell us was how much Medicare would actually pay for it. That was certainly a challenge.

From a commercial standpoint, the therapy was so new that many of the large insurance carriers did not have coverage guidelines as to whether they would cover it. Providers had to submit an authorization request and cross their fingers. Nowadays, some of the large insurance carriers have come out with coverage rules and guidelines, but still not 100% of them. Even if we know it is a covered benefit, the insurance company still has to do a patient-specific medical review to make sure that the patient meets the coverage criteria. When they do that, they need to do so quickly because these patients do not have a very long window of opportunity for treatment. Once the patient is deemed acceptable under the payment criteria, they can authorize it. But because it is a new therapy, insurance companies and providers needed to agree on payment rates that are acceptable to both parties. Without existing rates in place for this therapy, a provider may need to negotiate individual letters of agreement per patient with each insurance company. This process can also take time, and again, these patients do not have much time to give.

Another problem that we have seen is hospitals may have a difficult time finding the space for CAR-T patients. In the event of an inpatient treatment, do you have enough inpatient beds? In the event of an outpatient treatment, do you have the space in your cancer center? Space is undoubtedly an issue. When you have some facilities unwilling or unable to treat all of the patients in their area, then another facility may get a flood of patients in quickly, not just from their own area but from other areas as well. Trying to manage the flow of patients while ramping up a CAR-T program can be difficult; you want to do it carefully and plan your growth.  CAR-T is something that is so new and exciting, yet so specialized that those centers administering it could get swamped.

Are there any other important points you would like to make to add to this discussion?

My biggest concern is Medicare’s progress on determining a proper inpatient payment, or DRG. CMS very recently announced that they would use the same payment mechanism for CAR-T as with autologous stem cell transplantation. There are some serious concerns with that because these are different therapies with different treatment courses. Our inpatient autologous transplant patients are often in the hospital for 3 weeks, whereas CAR-T patients might only need to be in-house for 1 or 2 weeks. It is also worth noting that CAR-T patients are often sent to the intensive care unit, but we very rarely have an autologous transplant patient need such services. Putting two different therapies into one DRG makes it difficult to provide fair reimbursement for each treatment.

A far more serious concern is that Medicare announced that they will only reimburse the providers for less than half the cost of the cell product itself. That is a loss of over $180,000 for every Medicare patient treated. CAR-T is an amazing therapy that offers great promise for patients with life-threatening diseases, but it could be phased out if we cannot obtain insurance coverage that is fair and sustainable for facilities, insurance companies, and patients themselves. I commend all of those in the industry who are working toward this end.