New Technology Add-on Payment: Impact on CAR T-cell Therapy Reimbursement

August 6, 2019

On August 2, the Centers for Medicare & Medicaid Services (CMS) released the Hospital Inpatient Prospective Payment System (IPPS) final rule for fiscal year (FY) 2020. The rule finalizes changes that will affect all U.S. hospitals, including:

  • New Technology Add-on Payments, which includes CAR T-cell therapy;
  • Updates to the calculation and application of the wage index; and
  • A continuous 90-day reporting period for Promoting Interoperability programs.

Most of the changes will be effective October 1, 2019.  The final regulations will be published in the Federal Register on August 16, 2019.  CMS has also released a fact sheet highlighting key details. ASCO’s top takeaways for the cancer care community, are outlined below.   

New Technology Add-on Payment

CMS finalized its alternative new technology add-on payment pathway for medical devices that receive Food and Drug Administration (FDA) marketing authorization and is part of the Breakthrough Devices Program (an FDA expedited program for medical devices). CMS will now consider these devices as new products. Moreover, these devices will not be subject to the substantial clinical improvement criterion traditionally required to be eligible. As such, these devices will need only to meet the cost criterion to qualify for the new technology add-on payment. This change begins with applications received for new technology add‑on payments for FY 2021.

CMS also finalized an increase to the new technology add-on payment for hospitals. Medicare currently pays up to a maximum of 50% of the estimated costs of a new technology in addition to the full diagnosis-related group (DRG) payment, up to a maximum of 50 percent of the costs of the new technology. Beginning in FY 2020, the add-on payment for most new technologies will increase to 65%; for certain new anti-microbials, the add-on payment will increase to 75%.

In FY 2020, CMS will make new technology add-on payments for 18 technologies. Among the technologies for which CMS will make new technology add-on payments are chimeric antigen receptor (CAR) T‑cell therapies used to treat cancer. By increasing the new technology add-on payment from 50 to 65%, the maximum add-on for CAR T-cell therapies increases from $186,500 to $242,450. 

Changes to Wage Index Calculations

Wage Index Adjustments
CMS finalized its proposal to increase the wage index—which adjusts Medicare reimbursement to hospitals based on wage levels across geographic regions—for hospitals with a values below the 25th percentile. Impacted hospitals (most of which are in rural areas) will have their wage index values increased by half the difference between the otherwise applicable wage index value for that hospital and the 25th percentile wage index value across all hospitals. Based on the data used for the final rule, in FY 2020, the 25th percentile wage index value across all hospitals is 0.8457. Hospitals with lower wage index values will have their wage index adjusted. This policy will be effective for at least four years.

CMS did modify how it would achieve budget neutrality for this proposal. Instead of decreasing the wage index for hospitals with values above the 75th percentile, as proposed, CMS will adjust the standardized amount that is applied across all IPPS hospitals. This change will reduce the standard reimbursement amount by 0.2013 percent for all hospitals, which helps low wage index hospitals financially without having high wage index value hospitals bear the full cost of the adjustment.

Rural Floor
CMS also finalized proposed changes to the wage index “rural floor” calculation. Under current law, the IPPS wage index value for an urban hospital cannot be less than the wage index value applicable to hospitals located in rural areas in the same state. This policy is known as the “rural floor.” In FY 2018, 366 urban hospitals (11% of hospitals) benefitted from the rural floor policy. 

According to CMS, this policy perpetuates disparities by increasing wage index values for select urban hospitals, while decreasing wage index values for all other hospitals because CMS offsets the resulting increased payments with broad budget neutrality adjustments. CMS also asserts that some states use the reclassification process to manipulate and take advantage of the rural floor policy.

To address these concerns, beginning in FY 2020 the rural floor will be calculated without including the wage data of from certain hospitals that have been reclassified as rural (from urban). Hospitals in Arizona, New Hampshire, and Massachusetts will experience the greatest consequences with Massachusetts hospitals losing approximately $100M in Medicare payments as a result of this policy.

Cap on FY 2020 Wage Index Decreases
To mitigate the impact of its changes, for FY 2020 CMS finalized a 5% cap on any decrease in a hospital’s wage index from its final wage index in FY 2019. In other words, a hospital’s final wage index in FY 2020 will not be less than 95% of its final wage index in FY 2019. CMS says this is a one-time protection.

Promoting Interoperability Programs

CMS continues to make changes to its Promoting Interoperability Programs, including:

  • Finalizing a minimum EHR reporting period of any continuous 90-day period in calendar year (CY) 2021 for new and returning participants.
  • Continuing to use the Query of Prescription Drug Monitoring Program (PDMP) measure as optional and available for bonus points in the CY 2020 EHR reporting period.
  • Converting the Query of PDMP measure from a numerator/denominator to a yes/no attestation measure beginning with the CY 2019 EHR reporting period.
  • Removing the Verify Opioid Treatment Agreement measure in CY 2020.
  • Finalizing adoption of the Safe Use of Opioids – Concurrent Prescribing CQM quality measure in CY 2021.

Hospital Inpatient Quality Reporting (IQR) Program

In the IPPS final rule for 2020, CMS is updating the Hospital IQR Program’s measure set. Changes include:

  • Removing the Claims-Based Hospital-Wide All-Cause Readmission measure (NQF #1789) beginning with the July 1, 2023 through June 30, 2024, reporting period, for the FY 2026 payment determination.
  • Replacing the Claims-Based Hospital-Wide All-Cause Readmission measure with the newly adopted Hybrid Hospital-Wide All-Cause Readmission (Hybrid HWR) Measure with Claims and Electronic Health Record Data measure (NQF #2879); with required reporting of the Hybrid HWR measure beginning with the July 1, 2023 through June 30, 2024 reporting period, for the FY 2026 payment determination.
  • Adopting the Safe Use of Opioids – Concurrent Prescribing electronic clinical quality measure (eCQM), with a clarification and update, beginning with the CY 2021 reporting period/FY 2023 payment determination. 
  • CMS did not finalize its proposal to adopt the Hospital Harm – Opioid-Related Adverse Events eCQM.

CMS also finalized proposals related to eCQM reporting requirements to align with the Performance Improvement Project’s requirements:

  • For the CY 2020 reporting period/FY 2022 payment determination, hospitals are required to submit one self-selected calendar quarter of discharge data for four self-selected eCQMs in the Hospital IQR Program measure set;
  • For the CY 2021 reporting period/FY 2023 payment determination, hospitals are required to submit one self-selected calendar quarter of discharge data for four self-selected eCQMs in the Hospital IQR Program measure set;
  • For the CY 2022 reporting period/FY 2024 payment determination, hospitals are required to report one self-selected calendar quarter of data for: three self-selected eCQMs, and the finalized Safe Use of Opioids – Concurrent Prescribing eCQM, for a total of four eCQMs.

CMS is continuing to require EHR technology be certified to all eCQMs available to report for the CY 2020 reporting period/FY 2022 payment determination and subsequent years.

Check ASCO in Action for updates on these and other cancer policy priorities.