CMS releases highly anticipated proposal for a Medicare coverage pathway for breakthrough devices

In June 2023, the US Centers for Medicare & Medicaid Services (CMS) released a proposed procedural notice that outlines a new process for “Transitional Coverage for Emerging Technologies” (TCET). 

The release comes a year and a half after CMS’s repeal of the “Medicare Program; Medicare Coverage of Innovative Technology (MCIT) and Definition of `Reasonable and Necessary'” rule, which established a Medicare coverage pathway (the MCIT coverage pathway) for medical devices designed as breakthrough devices by Food and Drug Administration (FDA). The MCIT coverage pathway enabled a transitional Medicare coverage period for up to four years for a breakthrough device immediately upon the date of its FDA authorization.

The MCIT rule was repealed after the Medicare Payment Advisory Commission (MedPAC) noted that Medicare coverage decisions were being effectively delegated to FDA through the FDA authorization process, among other concerns.  Since then, stakeholders have been waiting for CMS to develop a process that would provide earlier and faster Medicare coverage decisions for, at a minimum, devices with breakthrough device designation.

The new TCET pathway, as described by CMS in the notice, would provide an expedited transitional Medicare coverage pathway for certain FDA-designated breakthrough devices, but CMS expects that diagnostic products will continue to be reviewed under the specialized Medicare Administrative Contractors (MACs) (ie, the Molecular Diagnostic Program, or MolDX) and that only breakthrough devices in a Medicare coverage category that is separately payable (and not bundled) will be eligible.   

The TCET pathway relies on existing authorities, and thus CMS proposes implementation through a procedural notice with a comment period, but not with full notice and comment rulemaking.  

As more innovative medical device technologies come to market, device sponsors face a relatively lengthy timeline between securing FDA market authorization for a device and obtaining Medicare coverage. As of March 31, 2023, FDA has granted breakthrough designation to 794 devices, with only 8 being granted by the Center for Biologics Evaluation and Research (CBER) and the remaining having been granted by the Center for Devices and Radiological Health (CDRH). However, CMS anticipates that it will only receive approximately eight nominations for the TCET pathway per year, and, of those, it anticipates it will only accept five candidates. 

This coverage pathway is an approach to potentially expediting Medicare coverage decisions for subset of devices with FDA breakthrough designation. 

The TCET process

CMS outlined several criteria for appropriate candidates for the TCET pathway.  These include devices that are:

• FDA-designated breakthrough devices
• Determined to be within a Medicare benefit category, and separately payable (not bundled)
• Not already the subject of an existing Medicare NCD and
• Not otherwise excluded from coverage through law or regulation

The TCET pathway would use CMS’s existing National Coverage Determination (NCD) process and, specifically, the existing Coverage with Evidence Development (CED) process to theoretically expedite national coverage decisions for certain eligible breakthrough devices that have received FDA market authorization. The CED process is intended to enable the device sponsor to perform high-quality post-market studies that are expected to produce evidence that may lead to a later, permanent positive national coverage determination. 

The Agency for Healthcare Research and Quality (AHRQ) collaborates with CMS to define standards for the clinical research studies to address the CED questions and meet the general guidelines for these types of studies.  Coverage under a CED is available for the device on the condition that it is being furnished in the context of the approved clinical study in the CED plan.  CMS has utilized a CED coverage approach 26 times in the past 26 years, and, of those, only 3 have had the CED requirements removed and moved forward to receive national Medicare coverage. 

The TCET pathway consists of three stages, each with detailed processes, requirements, and timeframes: (a) premarket; (b) coverage under the TCET pathway; and (c) transition to post-TCET coverage.  The premarket phase begins approximately 12 months before the anticipated FDA authorization decision on a Breakthrough Device with a sponsor’s submission of a TCET “pathway nomination” to CMS.  The premarket interaction with CMS will enable coordination with FDA, evidence preview, and development of a CMS sanctioned “Evidence Development Plan” within 90 days following the FDA market authorization.  

CMS has committed to making a preliminary determination to provisionally accept or decline a “pathway nomination” within 30 business days of CMS initiating review of the nomination. Currently, only the Parallel Review process enables pre-FDA authorization coordination with CMS on Medicare coverage issues.  

During the second phase, CMS will apply the existing NCD statutory timeframes set forth in section 1862(l) of the Social Security Act (generally six to nine months).  A decision arising from this second phase will be a TCET pathway coverage determination in the form of an NCD with CED.  

Finally, in the third phase, CMS anticipates the duration of coverage under the TCET pathway (the NCD with CED) to last for a period of three to five years as evidence in the Medicare population is generated under the Evidence Development Plan within the CED. As the expiration of the TCET pathway coverage approaches, CMS explains that it intends to assess whether the device meets traditional reasonable and necessary standards to obtain a possible final NCD or other coverage determination.  

While CMS appears to imply that the timing would be consecutive from the end of the NCD with CED coverage to a more final coverage determination, such as an NCD, it remains to be seen operationally whether there could be any gaps in coverage.

Impacts

The TCET pathway may provide an opportunity to expedite Medicare coverage for devices within a CED authorized clinical study, post-FDA authorization.  

That said, as proposed, CMS will have the discretion to prioritize and accept the “pathway nominations” it determines would have the potential to benefit the greatest number of Medicare beneficiaries, and, as noted above, CMS only anticipates accepting up to five TCET candidates annually due to resource constraints.  

Sponsors of Breakthrough Devices should carefully consider the benefits of the timing advantage to access coverage under a CED in contrast to existing coverage pathways for all medical devices, including claim-by-claim coverage determinations and local coverage determinations.  In addition, commercial insurers may view a CED coverage policy unfavorably and consider the fully FDA authorized device to still be investigational under commercial coverage policies.

Thus, while opportunities do exist, Breakthrough Device sponsors should, as always, carefully consider both FDA authorization and coverage impacts throughout their development process.  

CMS is soliciting comments to the proposed notice through August 28, 2023.  

For more information about this development, please contact your DLA Piper relationship partner, the authors of this alert, or any member of our Healthcare industry group. 


Mazzen Shalaby is a summer associate in DLA Piper’s Washington, DC office.