By Deena Beasley

(Reuters) – The U.S. Centers for Medicare and Medicaid Services will slightly increase coverage for expensive CAR-T cell therapies administered at certain large hospitals, and is considering other ways to pay more for the cancer treatments, the agency said on Tuesday.

CMS, which runs the federal government’s healthcare plan for seniors, issued a proposed rule raising its maximum “new technology add-on payment” (NTAP) from 50% of estimated costs to 65%, which would increase reimbursement to $242,450 from the current $186,500.

But that is still far short of actual costs.

Both Gilead Sciences Inc’s Yescarta therapy and Novartis AG’s Kymriah have U.S. prices for advanced lymphoma patients of $373,000. Kymriah is also approved for a type of pediatric leukemia at a price of $475,000. Cancer centers have to be certified to administer the CAR-Ts.

Gilead said it was still reviewing the CMS proposal, but was encouraged by comments regarding payment. Novartis did not immediately respond to a request for comment.

Chimeric antigen receptor T-cell therapy, known as CAR-T, involves drawing white blood cells from a patient, processing them in the lab to target cancer, and infusing the cells back into the patient.

Medicare last year said it would pay close to its standard mark-up rate for CAR-Ts given on an outpatient basis, but patients are almost always admitted to a hospital for CAR-T treatment because of the risk of life-threatening side effects. Hospital costs can bring the total cost of CAR-T treatment to more than $1 million.

In addition to the NTAP, Medicare reimburses hospitals for CAR-T therapy under an existing coverage code for bone marrow transplants, which also falls short of actual costs.

CMS said on Tuesday it was seeking public comment on the potential creation of a new billing code for CAR-T cell therapy procedures, including ways to standardize payments across different geographies.

The earliest such a code could take effect would be October.

CMS Administrator Seema Verma said on a conference call that the agency is acting due to concerns that its current CAR-T payment structure could be “inadequate and might be impacting access to care.”

(Reporting by Deena Beasley; Editing by Richard Chang)