CMS Releases Proposed Medicare Payment Updates for FY 27 with Implications for Biotherapies

The Centers for Medicare and Medicaid Services (CMS) released a proposed rule on April 14 that would update Medicare hospital inpatient payment policies for fiscal year 2027. CMS also released a fact sheet that summarizes key provisions.

CMS proposes a 2.4% net increase in inpatient operating payment rates for acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting Program and are electronic health record users.

CMS proposes several payment updates relevant to AABB members, particularly those involved in biotherapies:  

• CAR T-Cell Payment Methodology: CMS proposes to continue refining how it pays for chimeric antigen receptor (CAR) T-cell therapies under MS-DRG 018, the diagnosis-related group used for most CAR T-cell cases. This evolving area of Medicare payment policy directly impacts hospitals offering these therapies, and AABB members are encouraged to monitor how these methodological changes impact their reimbursement.
  
  
• Overhead Cost Allocation for CAR T-Cell Products: As part of a general proposal to codify cost allocation principles, CMS instructs hospitals on how they should account for CAR T-cell costs on their Medicare cost reports. The proposal and instructions related to CAR T-cell products are highly technical but have the potential to be financially significant.
  
  

  CMS specifies that when hospitals purchase CAR T-cell products, the purchase price includes the costs for the complete process of extracting and preparing the therapy for infusion. CMS indicates that hospitals should exclude these costs from the formula used to allocate administrative and general (A&G) overhead costs across departments. 

  The agency’s position is that layering hospital overhead costs on top of a purchase price that already reflects the manufacturer’s full costs would result in an inflated and improper allocation. AABB members with CAR T-cell programs are encouraged to share the proposed rule with their finance teams to assess its potential impact. 

• New Technology Add-On Payments: CMS is soliciting comments on its assessment of whether the following cell and gene therapy products meet the criteria for new technology add-on payments, which are extra payments made on top of the standard MS-DRG payment for certain newly approved medical technologies used in the hospital inpatient setting:
  
  
  • Orca-T (Orca Bio), an allogeneic stem cell and T-cell immunotherapy derived from a human leukocyte antigen (HLA)-matched donor; used to treat adults with acute myeloid leukemia, acute lymphoblastic leukemia, high-risk myelodysplastic syndrome, and mixed-phenotype acute leukemia.
  • Etuvetidigene autotemcel (Waskyra, Fondazione Telethon ETS), a cell-based autologous gene therapy indicated for the treatment of pediatric patients aged 6 months or older and adults with Wiskott-Aldrich Syndrome who have a mutation in the WAS gene for whom hematopoietic stem cell transplantation is appropriate and no suitable HLA-matched related stem cell donor is available.
  • Prademagene zamikeracel (Zevaskyn, Abeona Therapeutics), an autologous cell sheet-based gene therapy that contains functional copies of the collagen type VII alpha 1 chain (COL7A1) transgene for the treatment of adult and pediatric patients with recessive dystrophic epidermolysis bullosa.

AABB is continuing to evaluate the impact of the proposed rule on the blood and biotherapies community. The agency is accepting comments on the proposed rule through June 9.