Under the new move, known as a national coverage decision, hospitals will know they can get Medicare and Medicaid reimbursement for at least 65% of the costs of the drug and related treatment. Hospitals can ask for even more reimbursement if they encounter additional costs.
Hospitals will have to wait, however, for CMS to figure out the full cost of CAR-T treatment that it will pay and to issue a billing code for the care.
CAR-T is a new kind of drug, which takes a patient’s own cells and engineers them to fight cancers. So far, the Food and Drug Administration has approved two: Kymriah from Novartis AG NVS 2.74% and Yescarta from Gilead Sciences Inc. GILD 1.47% for certain lymphomas and leukemias.
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The treatments provide new options for the cancer patients. Yet their use has been limited, in part because hospitals aren’t always sure they could get reimbursed for both the cost of the drugs and the lengthy hospital stays for side effects and other care that are often required.
The problem was that health-insurance payments aren’t structured for treatments like a CAR-T, which trigger not just the price of the drug itself but related care costs that can reach hundreds of thousands of dollars. Novartis listed Kymriah for $475,000, while Gilead priced Yescarta at $373,000.
Until the latest move, hospitals weren’t sure they could get paid beyond the cost of the drugs and if they did, how much the payment would be.
CMS said last week that it would pay at least 65% of a hospital’s costs, but the announcement left coverage decisions to private regional contractors hired by the agency to administer claims. The contractors will grant reimbursement so long as certain criteria are satisfied, such as the hospital gives the drug for a use that the FDA approved or that is outlined in medical guidelines approved by CMS.
Ms. Verma described CMS’s newest move as an interim step, while the agency gathers more information about how much CAR-T treatment costs in order to develop a payment rate and accompanying billing code.
“There will be more to come from the agency on CAR-T,” Ms. Verma said. She added that the agency still faces the issue of how to pay for such expensive new treatments over the long term.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com