FY2027 CAR-T Medicare Outlier Payment

−$3,316 per case

For a CAR-T case whose cost clears the outlier threshold in both years, Medicare pays $3,316 less in FY2027 than in FY2026 at the same cost. That's at CMS's national illustrative rates, before any hospital-specific adjustment.

Chart data

Component	Change per case
Base payment up 6.1%	+$3,843
Outlier threshold up 22.2%	−$7,159
Net change per case	−$3,316

How the two FY2027 changes net out for one case above the threshold. National illustrative rates, same estimated cost in both years.

The question

A forecast that carries the 6.1% base increase through its Medicare line misses the second change in the same rule. The published median total cost of an academic CAR-T case, $608,100, is well above the $333,445 FY2027 DRG payment, so for CAR-T the threshold matters as much as the base.

How the payment works

Medicare pays the DRG payment. When a case's estimated cost (its charges times the hospital's cost-to-charge ratio) exceeds the DRG payment plus the fixed-loss amount, Medicare adds an outlier payment of 80% of the excess. A higher DRG payment raises the base but also raises the bar the outlier payment starts from. For a case above the bar, only 20% of a base increase reaches the hospital. Every dollar added to the fixed-loss amount takes 80 cents off the outlier payment.

The calculation

Input	FY2026	FY2027	CMS source
MS-DRG 018 relative weight	43.1828	45.1272	Table 5
Operating standardized amount (wage index 1.000 or less, quality data and meaningful EHR use)	$6,752.61	$6,848.98	Table 1B, labor plus nonlabor
Capital federal rate	$524.15	$540.03	Table 1D
DRG payment: weight x (operating + capital)	$314,231	$333,445	Calculated
Fixed-loss outlier amount	$40,397	$49,346	FY2027 final rule

The DRG payment rises by $19,214. The fixed-loss amount rises by $8,949. For a case above the threshold in both years, the change in total Medicare payment is 20% of the first minus 80% of the second: $3,843 minus $7,159, or −$3,316.

What it assumes

The same estimated cost in both years, above the outlier threshold in both.
Wage index and capital geographic adjustment factor of 1.000.
Quality data submitted and meaningful EHR use, so the full update applies.
No IME, DSH, uncompensated-care, new-technology add-on (NTAP), transfer or quality-program adjustments.
The standard 80% marginal cost factor.

What it doesn't show

A hospital's actual payment. Its wage index and add-on payments change both the DRG payment and where the threshold sits.
A margin or a loss. The cost here is Medicare's estimate from charges and the cost-to-charge ratio, not what the program spends.
Cases below the threshold. For those, FY2027 pays the full $19,214 more.
The eleven PPS-exempt cancer hospitals, which are paid under TEFRA cost-based rules with no outlier payment.
Commercial and Medicare Advantage payment, which follows contract terms, not this formula.

What it means for a program

The same rule moves CAR-T cases in opposite directions. A case below the threshold is paid $19,214 more in FY2027. A case above it in both years is paid $3,316 less. A forecast should split its Medicare cases by where they fall against the threshold before it applies the base-rate increase. Then it should check which of the remaining cases sit under commercial terms, single-case agreements or TEFRA, since none of those follow this arithmetic.

Sources

CMS, FY2027 IPPS final rule (CMS-1849-F), Federal Register document 2026-15833, Aug 4, 2026, and its Tables 1B, 1D and 5. CMS, FY2026 IPPS final rule, Tables 1B, 1D and 5. Median total cost of care: Di et al., JNCI Cancer Spectrum, Aug 2024. Calculation by HealthPulse Advisors.

FY2027: why an outlier CAR-T case is paid less