Policy Summit

States Innovating on Gene Therapy Medicaid Reimbursement

ASGCT Staff - November 12, 2019

During the November 5 program at the ASGCT Policy Summit in Washington, D.C., state Medicaid experts shared their perspectives on developing coverage for these innovative new treatments.

One-time, potentially curative gene therapies with higher upfront costs have posed challenges to both state Medicaid programs and to providers seeking reimbursement under current mechanisms. During the November 5 program at the ASGCT Policy Summit in Washington, D.C., state Medicaid experts shared their perspectives on developing coverage for these innovative new treatments.

Most States Lack Gene Therapy Reimbursement Policies

Ross Margulies, J.D., an associate at law firm Foley Hoag, noted that, historically, state Medicaid programs have sought to include the cost of drugs and therapies in the bundled payments made to treatment centers, so these centers are not separately reimbursed for therapies they provide to their patients. This strategy often leaves large gaps in reimbursement to treatment centers for acquiring the therapeutic products, which affects patient access because some providers may decide they are unable to risk such losses.

Margulies further indicated that few states have gene therapy reimbursement policies in place. For example, only eight states have in place a fee-for-service CAR-T reimbursement policy. However, several states have recently experimented with payment systems that do attempt to more adequately reimburse for such therapies.

In Massachusetts, Medicaid Program Carves Out CAR T-cell Therapies

Massachusetts’ MassHealth was the first state Medicaid program to announce a specific payment policy for cell and gene therapies, based on access concerns from academic medical centers.

In 2018, MassHealth carved out CAR T-cell therapies from the inpatient and outpatient bundle, to be paid separately. The goal of the carve out is to ensure access to needed therapies for MassHealth patients, to avoid underpayment for providersand overpayment for MassHealth, according to Kaha Hizanishvili, chief of the Office of Provider & Pharmacy Programs at MassHealth.. New York, California, Indiana, and Washington also now use carve-outs from bundled payments for CAR T-cell therapies, when provided on an inpatient basis.

MassHealth policy additionally indicates that treatment centers must make “every effort” to enter into an “efficacy-, outcome-, or performance-based guarantee (or similar arrangement).” Among other barriers to the use of value-based payment models, according to Mark McClellan, M.D., Ph.D., founding director of the Margolis Center for Health Policy at Duke University), Medicaid has limited authority to alter how it pays for medical products. However, states are able to request changes to their State Plan Amendment in order to pay for outcomes using Supplemental Rebate Agreements (that do not implicate Medicaid Best Price). Oklahoma, Michigan, and Colorado are engaging in targeted outcomes-based contracting.

“Outcomes-based payments, value-based payments are key,” said Margulies. “I think that’s where our federal partners could step in and provide—even if it’s not a regulatory change or statutory change—clarity to allow [Medicaid programs] the flexibility to do that.”

“How Do You Proceed When the FDA Approval is Broader than the Published Clinical Evidence?”

Chethan Bachireddy, M.D., chief medical officer, Virginia Department of Medical Assistance Services, stated that high-cost breakthrough therapies, such as gene therapies, require attention and innovation from a clinical, as well as a financial, perspective.

From a clinical perspective, he indicated that state programs may face difficulty in determining coverage criteria when the FDA approval is broader than the published clinical evidence, such as is the case for Zolgensma. Virginia obtained guidance on that issue from managed care organizations, specialists involved in clinical trials, medical ethicists, and the Drug Utilization Review Board. McClellan indicated this issue is likely to persist because FDA approvals beyond trial data are not uncommon, especially for gene therapies in which rare populations challenge clinical trial design and the treatment results are impressive.

“My wish then is that for the next breakthrough therapies that come out that we don’t have to wait for outcomes-based agreements, that some of those details are already figured out, that there’s an infrastructure in place that we can plug and play,” said Bachireddy. “My call to action is that, let’s be ready then for the next one.”


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