Payers help ensure effective treatments are available to improve patient outcomes, while balancing the financial risk of reimbursing these treatments. Payers will not be equally affected by cell and gene therapies (CGTs). US payers differ in the number of covered lives (size), types of lives covered (children, elderly, mixed), funding sources (self-funded, premiums, taxes), and the coverage and reimbursement rules that they must follow. Details on differing payer impacts may be in the FoCUS research brief Payer segmentation for precision financing and by viewing the Payer Pipeline worksheet.

Payers need to:

• Define coverage policies and processes: The same practices for developing traditional product policies and processes will be required for CGT products, but with additional considerations. Policies may require alignment with coverage terms of secondary insurers. Processes may require changes in payer or provider treatment authorization authority and/or communications to financial teams regarding potential therapy claims of substantial costs.
• Secure access to qualified providers: Payers must ensure provider networks and reimbursement are in place to support patient access to treatments. Payers will need to be determined if existing providers have clinical expertise or if additional providers or centers of excellence will be required. Payers should review contracts with providers for appropriate reimbursement terms as well.
• Eliminate plan design barriers: Plan designs may impact patients initially with out-of-pocket costs for product administration. Afterward, outcome metrics collection becomes important to potential payer financial agreements but may be costly to the patient responsible for deductibles, coinsurance, or copays. Plan benefit designs with patient out-of-pocket costs cannot act as a barrier to treatment or to the follow-up appointments necessary for outcome data collection. The FoCUS research brief State Insurance Regulations Regarding Benefit Design (Deductible and Co-Pay Waivers), describes regulatory considerations regarding plan designs.
• Assess financial risks: The magnitude of financial impact of a new CGT will depend upon payer size, demographics of covered individuals, and costs of product and product administration. Further details on risk assessment and strategies to address the risk can be found in the Selecting a Precision Financing Solution section of this website.
• Work with third parties: After a payer assesses its organizational resources, the payer may recognize a need for external resources for patient coordination, provider contracting, establishing financial strategies, or collecting patient outcomes.

FoCUS stakeholders have assessed how financing CGTs differs between payer types. We concluded that all payers face the same three issues in planning and paying for these therapies:

An inability to manage these risks creates significant downstream challenges to those individuals covered by the payer’s benefits.

• The potential downstream impact for a health plan includes:
• Increased premiums
• Increased cost shifting to members
• Decrease in services (customer or healthcare coordination) offered
• Slower payment to providers, potentially leading to network disruption
• Exit from the market

The potential downstream impact for the self-insured employer includes:

• Increased employee premium contribution
• Decrease in coverage benefits
• Actions to maintain business viability

FoCUS has surveyed payers in 2017, 2019 and 2022.  Our research has shown that health plans appear particularly interested in contracts to manage product performance risk by paying for what works. Self-insured employers expect they may need to enter larger insurance pools to better manage their actuarial risk. Some of these solutions are being tested today while FoCUS stakeholders are continuing to explore other solutions to address challenges of government pricing and other regulations as currently written. Our most recent survey results are published here and summarized here.

In practice, the importance of each challenge will vary by therapy and by payer. For example, from a therapy perspective, payer mix can vary by disease. Medicare payers will likely pay for more oncology cell therapies. Medicaid plans will see a larger share of treatments to address genetic conditions that manifest in childhood.

Financial impacts will also vary by patient volume, estimated by incidence or prevalence. The incident population is actuarially unknown and may require a financial strategy for addressing unanticipated high costs. The prevalent population of individuals living with the target condition is statistically known. The Individual indication workbook estimate of the prevalent population for a payer size and type provides insights into the potential number of individuals to be treated. A further assessment of this volume may be completed by reviewing existing claims for individuals with the target condition. If a high volume of prevalent patients seek treatment, the situation may require payers to use a financial strategy to address the impact.

From a plan perspective, size matters. Large plans may see multiple patients with a particular condition treated by CGT. Small plans may not have any patients seeking CGT, but if they do, they may have greater difficulty paying for the therapy. Given their size, large plans that can spread their risk across a larger number of patients are expected to handle the cost of CGTs and better predict their actuarial risk. Large payers may also see greater alignment between paying for a treatment and benefiting from reduced costs later. A large payer that invests in treating a patient—who then leaves their plan—will likely receive other incoming patients whose treatment may have been paid for by another payer. FoCUS has developed tools to help payers assess the potential impact of these therapies on their populations in the pipeline and individual indication workbooks. These tools are available in this toolkit here.