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WASHINGTON — Penny Trentham’s hospital is missing more than a million bucks.

For about seven months, doctors at Virginia Commonwealth University Massey Cancer Center in Richmond have been treating patients with CAR-T therapy, a cutting-edge medical procedure that uses a person’s own cells to fight against their cancer. It’s a last-ditch effort that can cure patients who have run out of any other options, but it’s pricey — the medicines themselves cost hundreds of thousands of dollars, and the extended hospital stay can bring the total bill much higher.

For every patient Massey Cancer Center has treated so far, Trentham is still waiting for insurers to pay the bills. She isn’t even sure if the hospital is breaking even.


“We’ve not been paid on those, and it’s been several months,” said Trentham, vice president of managed care and payer relations for VCU Health, whose job is it to set up agreements between the hospital and insurers to make sure procedures like this get paid for. “It doesn’t mean there’s a problem, necessarily. These are very complex claims. But we have not been paid.”

And Trentham isn’t the only one — hospitals around the country, jumping at the opportunity to offer lifesaving treatment to cancer patients, are grappling with a situation full of financial uncertainty. While CAR-T therapy has been on the market for about a year and a half, Medicare is still determining how to pay for the therapy, and private insurers, many of whom follow Medicare’s lead to set their own rates, are setting up one-off arrangements in the meantime — each of which can take months to settle. Whether hospitals will recoup enough money to cover their costs is still an open question.


The ad-hoc payment landscape threatens to significantly delay the promise of the therapies. Right now, about 130 medical centers in the U.S. are even set up to offer the treatments, and it’s likely that less than 2,000 patients have been treated, based on data provided by the companies that manufacture the two CAR-T therapies approved by the Food and Drug Administration.

Massey Cancer Center is one of the two medical centers in the entire state of Virginia that offers FDA-approved CAR-T treatments.

“It’s dealing with the uncertainty … of all the contracting, exactly how much am I going to get paid, and am I going to have to provide a discount [to the insurance company] for some parts and not others, and how much is it going to be — that can take a really long time, especially when the insurers are contracting on a per-person basis,” said Rena Conti, a professor at Boston University’s business school, who is studying different ways of paying for expensive therapies like CAR-T.

Hospitals like Massey Cancer Center just don’t have the experience they need to guess at the average cost, Trentham said. The only specific dollar figure available is the list price of the medicines, which start at $373,000 apiece. The costs for the procedures and doctors can vary widely.

“It’s just really hard right now, and I think everybody’s asking for specific answers, but until we get more experience with this treatment protocol, it’s hard to say that we would be willing to accept as a defined payment term,” she told STAT. “Literally, you should do hundreds of cases before you draw a conclusion.”

“We’ve done four.”

From left, members of the Massey Cancer Center team: nurse practitioner Melissa Oldham, nurse clinician Kristen Oliver, nurse Teri Thompson, and Dr. John McCarty, who directs the center’s cellular immunotherapeutics and transplantation program. John Wallace/VCU Massey Cancer Center

Despite being poster children for the high cost of drugs, CAR-T therapies aren’t like any other prescription medicines. Each dose is custom-made — a cancer patient’s cells are shipped to one of the pharmaceutical companies, which spends two to three weeks manufacturing the treatment. The engineered cells are then sent back to the hospital where they are infused into the patient.

So far, there are two FDA-approved CAR-T therapies on the market — Gilead’s Yescarta, a lymphoma treatment for adults, and Novartis’s Kymriah, which also treats adult lymphoma as well as leukemia for children. Spokespeople for both companies declined to say exactly how many doses of the commercial products they have produced.

In order to treat patients with the therapy, hospitals need to be certified by the drug’s manufacturer — and they need to figure out for themselves how they are going to pay for all of the costs, or how they are going to deal with the potential financial losses.

Massey Cancer Center began that process shortly after Yescarta was approved in October 2017.

Dr. John McCarty, director of Massey’s cellular immunotherapeutics and transplantation program, which includes CAR-T, said that during the 10-month-long journey, the hospital developed a business plan for how to keep the program sustainable. Senior physicians and nurses trained over 500 hospital staffers from all corners of the facility so they would know how to properly carry out CAR-T treatment.

McCarty said he wasn’t sure how much it cost the hospital to conduct the training.

As part of the preparation, the hospital even went through a dry run of the procedure — on May 7, hospital staff packed a bag of colored water into a medium-sized cooler and shipped it off, as if they were sending a patient’s cells to Gilead’s California plant where it manufactures Yescarta. Later that month, Massey received a cryogenically frozen, fake packet of CAR-T cells, and let it defrost in the hospital, as if it were the real thing.

At the same time, the business plan presented its own set of challenges — while the hospital can anticipate some expenses, like the cost of routine tests or procedures that are part of CAR-T treatment, they don’t know in advance if a patient will respond well to the therapy or if the patient will spend weeks in the hospital because of dangerous side effects. That makes it difficult for the hospital to estimate how much it will cost.

“We don’t want to be underpaid if it ends up being complex, which is why we’re longing for more experience, so we can more accurately price this, and that will come with time,” Trentham said.

Massey doctors treated their first CAR-T patient with the product Yescarta in August 2018. They’ve treated three more patients since then.

As the hospital gains that experience, Trentham said, it’s working on a case-by-case basis with insurers, setting up individualized agreements for each patient depending on the specifics of his or her case.

McCarty said that once the hospital sets up an agreement with one insurance company for a particular patient, it’s easier to work with that same insurance company for different patients in the future. And each time insurers approve a new patient for treatment, the process gets a little faster, he added.

The single-case arrangements aren’t unique to CAR-T — Trentham said that the hospital sometimes uses them in other situations, like if it’s treating patients whose insurance classifies the hospital as out of network.

And so far, insurance companies have been going along — a hospital spokesperson said that every insurance company Massey has worked with so far has agreed to cover the therapy. Joanna Hiatt Kim, vice president of payment policy and analysis for the American Hospital Association, said that other hospitals are also setting up arrangements in which the insurers pay for the full cost of the drug.

That doesn’t necessarily mean the hospitals will be fully reimbursed for all of their costs, however.

These are two separate decisions that insurance companies make — whether they will cover any of the costs of a therapy for the patient, and how much money they will actually pay to the hospital.

Even when an insurer covers a procedure, that doesn’t mean it actually pays the hospital the full amount it costs to treat the patient. Hospitals and insurers negotiate back and forth to set these rates.

Trentham said she didn’t have information about how much money insurers have decided to pay the hospital under the custom arrangements for CAR-T.

“No two cases are identical,” said John Wallace, a Massey spokesperson. “Based on the potential complexities of caring for these patients, we cannot accurately estimate how much care will cost and we have not treated enough patients to provide an average cost.”

Making it even harder to calculate that average: Massey still has not been reimbursed by the participating insurers for any of the four patients it has treated.

“I don’t know [if] these claims have even been adjudicated,” Trentham said. She added, “The way we structured the single-case agreement, that was our hope, was that we would break even. Given the complexity of health care reimbursement, I would anticipate that there are going to be a lot of questions from the payer. They’re going to want additional records. It’s not going to be a simple claim that flies through.”

But Trentham said she isn’t worried.

“It’s not uncommon for a complex claim to be slower to pay,” Trentham said. “I would not conclude that there’s any problem.”

For patients covered by Medicare, there may be more cause for concern. Right now, Medicare might not pay hospitals enough to cover the full costs associated with the therapy, medical professionals told STAT, which could discourage hospitals from offering the treatment, especially if they’re not affiliated with large academic medical centers that have access to other source of funds.

In a recent speech, CMS Administrator Seema Verma acknowledged that Medicare’s payment system for CAR-T isn’t working.

“The CAR-T story is an example of how government programs often fail to keep pace with innovation,” Verma said on March 4.

And that failure is threatening the ability of hospitals to offer the treatment, because they have to take a huge loss on each Medicare patient.

“Each case, hypothetically, lose[s] a quarter million dollars to half a million dollars,” said Dr. Henry Fung, who runs the CAR-T program at Fox Chase Cancer Center in Philadelphia. “How can you have this [be] sustainable? And then all the community hospitals will never open a CAR-T program. Never.”

The losses will only be magnified over time. The CAR-T treatments that are commercially available aren’t actually useful for that many Medicare patients — CMS estimated that 373 patients will have been or will be treated inpatient with CAR-T products between October 2018 and September 2019. But companies are working on developing CAR-T therapies that could help more people with different cancers, which will increase the number of patients who can benefit from the drugs — and the amount of money hospitals might need to spend overall.

“One of our biggest concerns is not necessarily this CAR-T, it’s all the ones coming down the pike that we see, because sustaining a loss on 10 patients a year is doable, [but] sustaining a massive loss on thousands of patients a year is not, quite frankly,” Hiatt Kim said.

What’s more, private insurers often take guidance from Medicare, so whatever decision the government comes to will have ripple effects across the entire health care system.

The federal government is still working through two decisions in parallel. First, it must determine under what circumstances Medicare plans will cover CAR-T; second, it will have to decide how much the plans will actually pay hospitals for the treatment.

In the interim, for patients who receive the therapy at a hospital, which is more common because of the dangerous side effects, Medicare is paying hospitals based on the average cost of care for a similar cancer therapy, a bone-marrow transplant. Medicare is also paying up to $186,500 to offset the cost of the drug, and hospitals can be eligible for some other additional payments.

But that might not fully cover the cost of the drugs, which start at $373,000, and the entirety of the treatment, which can run much higher.

“How can a program stay afloat financially for any length of time if they’re having that kind of deficit for any Medicare patient?” Trentham said.

In response to the concerns raised by the doctors, a CMS spokesperson said that the agency “is working within our statutory authority on payment approaches for CAR-T therapy to ensure access to care.”

It’s still an open question whether, in the future, Medicare will pay hospitals based on the average cost of CAR-T therapy. That would involve creating a new billing code, something Medicare has so far declined to do.

It’s unclear exactly how much money Medicare is paying hospitals, now, in total. A CMS spokesperson told STAT the data will be released this spring.

For patients who receive CAR-T as an outpatient procedure — perhaps at an infusion center that might provide other treatments like chemotherapy — Medicare’s payments are more generous. They fully cover the cost of the drug and pay an extra 6 percent on top of that.

Dr. David Porter, director of cell therapy and transplant at the University of Pennsylvania’s Abramson Cancer Center, said that nearly all of the patients treated at his hospital with Kymriah, a lymphoma CAR-T treatment manufactured by Novartis, are done on an outpatient basis. But he’s in a unique place — Porter helped develop Kymriah, so his hospital has a wealth of experience treating patients with it.

“Not lots of people are doing it that way, but again, we have years of experience with this,” Porter said.

Despite the complicated payment landscape, patients and their family members are largely insulated from the back and forth between hospitals and insurers over the details of how their therapy will be paid for.

Multiple patients and families told STAT that they didn’t have in-depth conversations with their doctors about the payment details, though they did have to get prior approval from their insurance companies. Two families said that once they did so, their insurer picked up most of the tab.

Spokespeople for Aetna, Anthem, Cigna, and UnitedHealthcare told STAT they do cover the procedure and declined to say how how much money they paid hospitals and how many courses of treatment they have covered.

For Caitlin Buchanan, a 32-year-old Californian, it all went smoothly. She was diagnosed with primary mediastinal diffuse large B-cell non-Hodgkin’s lymphoma in January 2017. The doctors tried chemotherapy and other drugs, but they weren’t enough.

“The chemotherapy had done nothing to the mass,” Buchanan recalled. She added, “The only thing I had available to me was the CAR-T treatment.”

Her insurer, Anthem, approved the therapy in two or three weeks, only slightly longer than it had taken to get some imaging scans approved.

“It was almost unbelievable,” Buchanan said. “We thought it was going to take a lot longer.”

Buchanan said that her insurance covered all of the costs beyond her deductible, which was about $4,500.

In Virginia, the CAR-T program is off to a slow but steady start. McCarty is building the program from the ground up, training hospital staff, and also traveling around the state to give more than a dozen talks to doctors about the therapy so they can refer their patients to him. But he didn’t want to be flooded with patients at the beginning before the hospital was able to treat them properly.

“We didn’t want to get five patients all at once and get completely overwhelmed and inadvertently deliver care that was less optimal than we wanted to give,” McCarty said.

McCarty said that he anticipates a ramp-up and aims to treat one or two patients a month with CAR-T therapies over the coming year. He’s hoping to soon get certification to offer Kymriah, and maybe participate in other clinical trials.

In the meantime, he’s taking a conservative approach.

“It’s not like I have a billboard out on I-95 or [I-64] saying, ‘Come get your CAR-T at Massey,’” McCarty said.

    • Sean Thompson you are only 1/2 correct. The approval in Canada is for Peds to young adult. The FDA, EU & UK have approved CAR T for Peds and Adults who meet criteria. Canada will only approve treatment for adults as part of a clinical trial.

    • Sean Thompson you are only 1/2 correct. A deeper dive beyond a Google surface level inquiry will indicate the approval for Kymriah in Canada is for Peds to age 25 only who qualify with a condition of Acute Lymphoblastic Leukemia (ALL). Kymriah and Yescarta are not commercially approved in Canada to treat qualifying patients for non-Hodgkin Lymphoma (DLBCL).

  • It almost seems like it would be more cost-effective to limit the places of treatment, and transfer patients to those centers. Not sure how ready for travel the patients are, but it seems like it may be worth a look.

    • For bone marrow or stem cell transplants, patients need to have a lymphoma that is responding to chemotherapy. At this time, these CARt agents are used for patients whose disease has stopped responding to conventional chemotherapy. This cellular therapy genetically reprograms the patient’s own immune system cells to recognize and attack the cancer more effectively that it was able to do so before. In lymphoma, in round numbers, patients who have stopped responding to other therapies, 50-60% will respond, and between 30-40% of those will remain in remission (24 month followup for these studies I am quoting from). Some will obtain a partial remission , and go on to achieve a CR over then next 3 months.
      An allogeneic transplant (from someone else) also is a form of immune therapy, but the energizing of the new immune system is more generalized and not focused on the cancer at hand. Likewise, this generalized immune activation can lead to autoimmune complications.
      We are in early days of CARt. Right now, they supplement what we currently use in transplant and other immunotherapies. The future improvements of this will be in learning how to harness the effectiveness, mitigating the side effects, and discovering the best way to partner and sequence these therapies with what we now have and with what’s to come .

  • Car-T guy, EU and US regulatory approvals happened at different times. I think we all want rapid access to innovative therapies for as many patients as possible around the globe, please leave the impolite golf chants at the Ryder Cup.

    • Steve Bates, I am aware of the approval timelines and where you should stand corrected, and agree with your sentiment about access to care. In the spirt of golf tournaments and warmer weather, good day and a Bobba Bouey to you sir!

  • Medicare’s comment that “government programs often fail to keep pace with innovation” in March 2019 isn’t right. In 2018, Medicare reviewed several methods of paying for CAR-T in hospitals, and could have chosen one with full payment, but decided to use the one with half-payment. It was a choice by CMS staff, not forced by law.

  • It’s a shame this article doesn’t look beyond the USA. The UK’s single payer system allows this innovation to be introduced into the NHS without many of these challenges and its experience is worth a look – especially the role played by the uk cell and gene therapy catapult in educating the broader healthcare system on practical adoption on these technologies

    • You assumption is incorrect Steve Bates. The EU and UK were slower to adopt and implement CAR T coverage than almost all health plans and CMS in the U.S. There was a tremendous amount of push back on the acquisition costs overseas. In Canada, CAR T is only approved in clinical trial. USA! USA!

    • The UK and other single payer systems are able to reduce cost on such drugs because the U.S. bares over 80% of the drugs cost. Healthcare is a zero-sum game, and sadly the UK benefits at our expense. As an FYI, you do not want to be a cancer patient under NHS. The NHS system and other single payer systems base payments off an formal; Medical Benefits – cost / population size. I.e. is you have a drug such as CAR-T there are huge medical benefits but subtract that by cost and the subpopulation you’ll end up with a negative number, thus NHS will not approve CAR-T for their populations. You will be lucky to have a charity pick up your treatments in the UK.

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