Incorporating New Treatments & Technologies: Can Your Program Afford It? Can You Afford Not To?

1. Incorporating New Treatments & Technologies: Can Your Program Afford It? Can You Afford Not To? Gary A. Goldstein Financial Coordinator Stanford Blood & Marrow Transplant Program

2. Case Studies • Kepivance (palifermin) • Mozobil (plerixafor) • Isolex (cell sorter) • Defibrotide (anticoagulant)

3. Payor Mix & Reimbursement Strategies • Commercial Insurance & HMO’s • Fee For Service • Case Rates • Medicare • Medicaid

4. Commercial • Fee for service (% discount) • Case rate structure

5. Medicare • Inpatient DRG • Outpatient Fee Schedule • Professional Fees

6. Medicaid (Medi-Cal) • Inpatient per diems • Outpatient fee schedules • Professional Fees

7. Transplant Case Rate Contracting • When does the case rate start? • Is mobilization included? • Is cell collection included? • How is the preparative regimen defined?

8. Case #1 - Kepivance (palifermin) • Indicated “…to decrease the incidence and duration of severe oral mucositis in patients with hematologic malignancies receiving myelotoxic therapy requiring hematopoietic stem cell support.”

9. Case #1 - Kepivance (cont) 3 doses should be administered prior to myelotoxic therapy, with the third dose 24 to 48 hours before myelotoxic therapy. 3 doses should be administered post myelotoxic therapy, starting after, but on the same day of hematopoietic stem cell infusion.

10. Schema – Stanford Autologous HCT for Multiple Myeloma Day -7: Kepivance Day -6: Kepivance Day -5: Kepivance Day -4: BCNU Day -3: Rest Day -2: Melphalan Day -1: Rest

11. Schema – Stanford Autologous HCT for Multiple Myeloma (cont) Day 0: Autologous hematopoietic cell infusion & palifermin Day +1: Palifermin Day +2: Palifermin

12. Dollars & Cents • Cost, charge & reimbursement figures discussed today are generalizations and used for example purposes only. Actual figures may be proprietary. • Assumption – Cost of Kepivance may be offset by 1 or 2 less inpatient days due to mucositis.

13. Reimbursement modeling – Commercial Insurance • Fee for service, Medicare & Medicaid • Is mark-up greater than or equal to discount provided? • Case rates • What is the case rate starting point? • Is Palifermin part of the preparative regimen? • When does the case rate end? • Are post-discharge days included in the case rate?

14. Palifermin – The Stanford Experience • Drug was administered at the Transplant Center • Decision was made to consider this part of the transplant’s preparative regimen (therefore included in most case rates) • Minimal reduction in post-transplant inpatient LOS. • Patients had trouble coming to the transplant center several days early • Local housing, caregiver, & childcare were all issues

15. Case #2 – Mozobil (plerixafor) Indicated “…in combination with G-CSF to mobilize hematopoietic stem cells to the peripheral blood for collection and subsequent autologous transplantation in patients with NHL and multiple myeloma.”

16. Mozobil (plerixafor) • Once a patient is identified as a poor mobilizer, plerixafor injections are administered SQ/QD for 1 to 4 days, starting 11 hours prior to apheresis. • It is discontinued when adequate cells have been collected.

17. Cost & Reimbursement Factors • Will patients self-inject or will patients receive the injection at the Transplant Center? • How soon can patients be identified as poor collectors (Mozobil candidates)? • Assumption – Cost of 1-2 doses equals that of a bone marrow harvest.

18. Reimbursement modeling – Commercial Insurance • Fee for service (% discount) • Is mark-up greater than or equal to discount provided? • Case rates • Is mobilization included in the case rate? • Can patient get Mozobil through their prescription drug plan?

19. Mozobil – The Stanford Experience • Drug is administered at the Transplant Center • Considered part of Mobilization phase (in some case rates, not in others) • Planned for 1-2 doses, but some patients have needed up to 4 injections. • All patients have collected adequate cell doses for transplant

20. Mozobil – The Stanford Experience (cont) • All poor collectors have had higher than average charges. • Some Mozobil patients have been cost-neutral vs. those that went on to marrow harvest, but others had increased costs. • Over all, a slight negative impact on cost but clinically successful. The program is willing & able to accept additional costs in some cases.

21. Case #3 – Isolex Cell Sorter • Used for positive cell selection • AKA Miltenyi device • No FDA approval in USA due to Baxter Isolex patent • FDA approval given to as an investigational device • Being used in haploidentical transplant trial

22. Cost & Reimbursement Factors Significant cost factors include: • Initial capital investment for the device • Sorting kit (individual use) • Lab tech time

23. Reimbursement modeling – Commercial Insurance • Charge is for the process (cell selection) and not for the device • Considered part of allogeneic cell collection • Related donor cell collection is usually within a case rate • Added charges but no cost offset

24. Isolex – The Stanford Experience • Major capital outlay • Use cost is billed but doesn’t always increase revenue • Allows significant new protocols including allogeneic HCT using haploidentical donors • Increased patient numbers • Differentiates our program from the crowd • Could be a key to separate Graft vs Malignancy from GvHD • Dollar-based stop loss avoids major negative impact on bottom line

25. Case #4 – Defibrotide • Anticoagulant used to treat or prevent a failure of normal blood flow (Veno-occlusive disease, VOD) in the liver of patients who have had HCT. • Used outside of the USA, but not FDA approved for open use within the USA. • FDA gave orphan drug designation in 2007. • Gentium is sponsoring research in the USA.

26. Cost & Reimbursement Factors • Drug was provided at no cost by maker, but they will now start charging Transplant Centers. • Typically administered during inpatient hospital stays, often soon post-transplant. • Assumption – Cost will be significant, but VOD is a costly and deadly complication

27. Reimbursement modeling – Commercial Insurance • Can a transplant provider charge for a non-FDA-approved medication? • Charges will almost always be within the BMT case rate. • Clinical need is tremendous. • Patients with VOD can turn into catastrophic cases that are major charge outliers.

28. Defibrotide – The Stanford Experience • Clinically the drug appears very useful. • We are working with our Compliance Officers to see how this drug can be added to our Charge Master. • We must educate insurance companies in order to obtain authorizations when needed and avoid claim denials.

29. Lessons learned • Medicare & Medical have rigid reimbursement schedules that may not cover costs. • Payor mix is extremely important. Nonmyeloablative allogeneic HCT has led to a significant increase in the percentage of Medicare patients. • Can Transplant Centers influence Medicare reimbursement? Yes, but it’s not easy.

30. Commercial Ins Contract Structures • Case rate contracts are the norm • What’s in a case rate can vary widely • Auto HCT • Should mobilization be included? • Should G-CSF (& Mozobil) be included? • Should apheresis or BMT harvest be included? • How long post-transplant should the case rate go?

31. Case rate contracting • Should a Transplant Center negotiate carve-outs for new drugs & technologies? • A well-designed case rate structure can help with adoption of new treatments/technologies • Dollar-based stop-loss?

32. In Closing • Failure to adopt new treatments & technologies and take advantage of new medicines (including biopharmaceuticals) will drag your program down clinically. HCT must move forward. • Failure to adequately structure contracts can leave a center financially unprotected. Programs can’t make clinical strides while going broke. At least not for long.