Innovation is being rewarded under Medicare’s proposed fiscal 2021 Inpatient Prospective Payment System (IPPS) that was unveiled Monday.

For starters, the Centers for Medicare and Medicaid Services (CMS) is proposing a new Medicare-severity-diagnosis related group (MS-DRG) specifically for CAR T therapies. It also is expanding the use of its alternative new technology add-on payment (NTAP) to encourage the development of new antimicrobial drugs and is taking steps to ensure the add-on is available when an eligible antibacterial or antifungal drug is approved.

With CAR T therapies Kymriah (tisagenlecleucel, Novartis AG) and Yescarta (axicabtagene ciloleucel, Gilead Sciences Inc.) no longer qualifying after this year for Medicare’s NTAP because they will have been available for more than three years, the MS-DRG will be welcome relief for hospitals administering the therapies.

“The new payment group would help to predictably compensate hospitals for their costs in delivering necessary care to Medicare beneficiaries and provide payment flexibility for the future as new CAR T-cell therapies become available,” CMS said.

The Alliance for Regenerative Medicine agreed that the MS-DRG “is an important step to ensuring that Medicare providers are appropriately and sustainably reimbursed for administering CAR T therapies.” It noted that under the current reimbursement system, “providers can lose more than $100,000 when administering CAR T to Medicare patients.” In addition, the new MS-DRG signals that CMS is committed to providing patient access to the blood cancer therapies, the alliance said.

When CMS was drafting the IPPS for the current fiscal year, it said it received several requests for an MS-DRG for CAR T, but there weren’t enough data at the time. Now it has those data. “While we generally prefer not to create a new MS-DRG unless it would include a substantial number of cases, our clinical advisors believe that the vast discrepancy in resource consumption as reflected in the claims data analysis and the clinical differences warrant the creation of a new MS-DRG,” CMS said in the proposed rule, which is scheduled for publication in the May 29, 2020, Federal Register.

According to CMS, the benefit and the cost of Kymriah and Yescarta, which have an average sales price of about $373,000, as well as that of new CAR T therapies, are why the agency is proposing the payment group.

“Transformative therapies not only save lives, but they also provide enormous benefits to society more broadly by lowering other costly health care spending,” said Dan Durham, vice president for health policy at the Biotechnology Innovation Organization. “Ensuring patients have access to these medical breakthroughs without disruption or delay is paramount, and it begins with CMS’ recognition of the value of innovation and CAR T-cell therapies.”

Incentivizing new antimicrobials

Given continuing concerns and impacts related to drug-resistant superbugs, the proposed 2021 IPPS contains provisions to incentivize the development of new drugs to take on those bugs. One provision expands the alternative NTAP path, which was established in the 2020 IPPS, to include qualifying antimicrobial products approved under the FDA’s limited population pathway for antibacterial and antifungal drugs (LPAD).

“Under this proposal, an antimicrobial drug approved under FDA’s LPAD pathway would be considered new and not substantially similar to an existing technology and would not need to demonstrate that it meets the substantial clinical improvement criterion” required for the traditional NTAP path, CMS said.

Another provision would allow eligible antimicrobial products to begin receiving the NTAP sooner. CMS is proposing granting conditional payment approval for antimicrobials that meet the NTAP alternative pathway criteria but don’t receive FDA approval in time for consideration in the annual IPPS rule.

Under the proposal, such drugs could begin receiving the NTAP for hospital discharges the quarter after the date of FDA marketing authorization instead of having to wait until the next fiscal year – provided they receive FDA approval by July 1 of the year for which they apply for the NTAP.

Comments on the proposed 2021 IPPS rule are due by July 10. The finalized rule will become effective Oct. 1, 2020.

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