CAR-T Reimbursement Updated in FY 2024 IPPS Final Rule

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Medicare CAR-T payment remains stable, but changes to outlier payments and NTAP eligibility may create challenges.

The Centers for Medicare & Medicaid Services (CMS) will continue to use its Medicare Severity Diagnosis-Related Group (MS-DRG) for chimeric antigen receptor T-cell (CAR-T) treatment stays. Differential reimbursement will be provided based on whether the product was provided as part of a clinical trial, with a significant overall increase finalized this year. The financial impact of changes in the fiscal year (FY) 2024 Inpatient Prospective Payment System (IPPS) final rule will vary by hospital, and reimbursement may continue to fall short of fully recognizing provider costs of treatment in some cases. Substantial changes to eligibility periods for New Technology Add-on Payment (NTAP) are finalized in this rule with implications for manufacturers preparing applications and for providers seeking additional reimbursement.


Since the first Food & Drug Administration (FDA) approval of a CAR-T product in 2017, concerns have persisted over how the Medicare program would reimburse for these products, which are commonly administered in the inpatient setting and have a significant cost for providers (e.g., average sales prices exceeding $400,000). Hospital inpatient reimbursement is calculated on a case basis using an MS-DRG base payment rate that is adjusted for factors such as hospital geography, diagnosis, case severity, and discharge status. Additional reimbursement can be provided through NTAP and outlier payments.

For FY 2023, inpatient stays with CAR-T treatment are currently assigned to MS-DRG 018, which has a base reimbursement rate of $247,939. Hospitals currently receive additional payments for three products with NTAP status: TecartusTM (brexucabtagene autoleucel), Abecma® (idecabtagene vicleucel), and CarvyktiTM (ciltacabtagene autoleucel); however, the NTAP is limited to a maximum of 65% of the product cost and varies based on the hospital’s case cost compared to MS-DRG payment. Outlier payments are available to hospitals to cover extremely costly cases when the costs exceed the total of the MS-DRG payment, the NTAP amount (if applicable), and the current fixed-loss threshold of $38,788. Even with these adjustments, Medicare reimbursement for CAR-T cases today sometimes fails to cover total hospital costs, which could negatively impact provider uptake and patient access.

Policy Changes for FY 2024

For FY 2024, CMS finalized several policies that will impact provider reimbursement for CAR-T.

Payment Changes for CAR-T Cases

As a result of an increase to the base operating and capital rates for all IPPS payments and an increase in the relative weight for MS-DRG 018, the finalized base payment for CAR-T cases in FY 2024 will increase by 4.0% to $257,958. This is slightly lower than the proposed 6.4% increase.

High-Cost Outlier Payments

For FY 2024, CMS finalized a proposal to return to its historical method of establishing the fixed-loss threshold in a way that does not adjust for COVID-19 cases (as was done in FY 2023). The fixed-loss threshold for FY 2024 will be $42,750, a 10.2% increase. This is a larger adjustment than the proposed 5% increase. For CAR-T cases, which are more likely than other inpatient stays to qualify for outlier payments, this will require hospitals to incur more losses before qualifying for an outlier payment.

Adjustment for Clinical Trial Cases

CMS reimburses CAR-T clinical trial cases, which do not incur drug costs, at a lower rate than non-clinical trial cases. Using its standard approach to analyze the latest update of the 2022 Medicare Provider Analysis and Review data, CMS found that clinical trial cases for CAR-T treatment incur 27% of the costs of non-clinical trial cases. The agency, therefore, finalized an adjustment factor of 0.27 to the relative weight of MS-DRG 018 for these cases (an increase over the FY 2023 adjustment factor of 0.21). The finalized adjustment factor is slightly lower than the proposed factor of 0.28. The base rate for clinical trial cases mapped to DRG-018 will be $69,649, an increase of 34%. Additionally, CMS finalized changes to its method for identifying CAR-T clinical trial cases on claims for the purposes of rate setting for MS-DRG 018. Its calculation will leverage a combination of diagnosis and condition codes and remove a proxy threshold for drug charges that would exclude certain cases.

Product NTAP Decisions

In this rulemaking cycle, CMS did not evaluate any new CAR-T products. NTAP payments will expire in FY 2024 for 3 CAR-T products: Abecma, Tecartus, and Carvykti.

NTAP Eligibility Changes

CMS finalized two changes related to NTAP eligibility, which will impact future NTAP submissions for CAR-T products seeking payment in FY 2025:

  • CMS will require that applicants have a “complete and active” FDA market authorization request prior to applying for NTAP.
  • CMS moved the FDA authorization deadline from July 1 to May 1.
Figure 1. Hospital Reimbursement Example for CAR-T Cases Under IPPS: Final FY 2024 vs. Proposed FY 2024 and Final FY 2023
Figure 1. Hospital Reimbursement Example for CAR-T Cases Under IPPS: Final FY 2024 vs. Proposed FY 2024 and Final FY 2023

FR: Final Rule; PR: Proposed Rule. Figures not to scale.


  • Hospital charges for CAR‑T episode are kept constant across all examples, consistent with the geometric mean charges included in the FY 2023 Final Rule after outliers removed (AOR)/before outliers removed (BOR) file ($1,404,657)
  • Hospital has an average operating and capital cost-to-charge ratio of 0.3​
  • Hospital has an indirect medical education adjustment factor of 0.2 and disproportionate share hospital adjustment of 0.05​
  • Hospital area wage index is 1.0

Key Considerations

Stakeholders should consider several implications stemming from final FY 2024 changes for existing assets and for future cell and gene therapies.

  • Stability of MS-DRG 018: While the finalized FY 2024 base rate for MS-DRG 018 represents an increase over FY 2023, increases to the fixed-loss threshold may diminish any benefits for cases that incur outlier payment. Total reimbursement will vary by hospital and case, with adequate reimbursement in some cases but potential financial risk for hospitals on significantly costly cases. The number of cases represented in the data to set the base rate doubled this year (403 to 812), reflecting a larger number of on-market products and increases in utilization. In the future, inclusion of additional immunotherapies, such as allogeneic CAR-Ts that could be mapped to MS-DRG 018, may lead to fluctuations in the base rate. This may lead CMS to consider splitting the MS-DRG, depending on the number of cases and differences in resource costs. With a robust pipeline of cell and gene therapies, CMS may have to confront reimbursement challenges or consider alternative approaches.
  • NTAP Eligibility: Adjusting the newness criterion to move the FDA approval deadline up by two months, from July 1 to May 1, could negatively impact reimbursement adequacy for providers and have downstream implications for patient access. These changes mean that products launched after May 1 will not have an opportunity for NTAP payment until October of the following year. Additionally, the change significantly narrows the window for products to qualify for a full 3 years of NTAP payment. Under current policies, products approved between April 1 and July 1 can benefit from 3 years of NTAP eligibility, as products that reach their 3-year anniversary of market availability prior to April 1 of the fiscal year will not qualify for continued NTAP payment. After this change, only products approved between April 1 and May 1 will be eligible for 3 years of NTAP payment. The changes will impact NTAP application strategy and timing for manufacturers to improve likelihood of NTAP availability.
  • Alternative Payment and Value-Based Arrangements: Since initial market availability, value-based arrangements for CAR-T products have been considered given their high costs and therapeutic promise. However, regulatory and operational barriers have limited progress in establishing these arrangements across payer markets. In February 2023, HHS directed the Centers for Medicare and Medicaid Innovation (CMMI) to advance a voluntary model aimed at cell and gene therapies (CGTs) in Medicaid that would allow CMS to negotiate and administer outcomes-based agreements on behalf of states in certain therapeutic areas. Model details are expected in 2024 and 2025, with a model launch expected as soon as 2026. CMMI is also instructed to consider alternative reimbursement approaches in Medicare fee-for-service (FFS) for CGTs, such as bundled payments or site-neutral payment. This would represent a significant shift in the Medicare FFS space, though no timeline for implementation has been provided.
  • Potential for Shifts in Site of Care: Differences in Medicare reimbursement methodology in the inpatient versus outpatient setting generally result in more adequate reimbursement for CAR-T in the outpatient setting where CAR-Ts are typically separately paid at average sales price plus 6%. However, assuming that a CAR-T therapy can be safely administered in an outpatient setting, shifts toward the outpatient setting may increase scrutiny on Medicare’s outpatient drug payment methodology, as the 6% add-on payment could be significant given pricing of CAR-T products.

Carefully monitoring reimbursement for these innovative products will allow CGT manufacturers, providers, and payers to engage other stakeholders based on anticipated developments. To discuss how Avalere can support your business on issues related to commercialization, NTAP proposal submissions, provider reimbursement, or policy developments, connect with us.

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