Medicare Reverses Course On Decision To Universally Cover Breakthrough Medical Devices For 4 Years

In January 2021, in the waning days of the Trump Administration, the Centers for Medicare and Medicaid Services (CMS) finalized a rule on coverage of breakthrough medical devices. Specifically, the rule would create a new pathway, “Medicare Coverage of Innovative Technology (MCIT),” for medical devices designated as breakthrough by the Food and Drug Administration (FDA), allowing national coverage for on-label uses of devices for four years, after which CMS would determine further coverage status.

Last month, CMS reversed course, by proposing to rescind the rule due primarily to clinical evidence concerns.

The MCIT rule was proposed in response to legitimate stakeholder worries about time lags and coverage uncertainty for devices subject to claim-by-claim coverage determinations. So, CMS’s new proposed regulation to streamline the coverage pathway for medical devices would have had important implications for patient access and evidence assessment.

Former CMS Chief, Seema Verma, touted the degree to which the reforms would hasten patient access to new devices, enhance the predictability of the process, and potentially improve health outcomes.

At the same time, however, the rule raised questions regarding evidentiary standards underlying coverage decisions for medical technologies, such as breakthrough devices.

The rule as laid out in January of this year granted product manufacturers considerable leeway. CMS’s Verma stated, “We believe four years of Medicare coverage will encourage manufacturers to voluntarily develop evidence to show these treatments improve the health of Medicare patients.” But, without a requirement that companies actually conduct post-marketing studies, would such analyses actually happen?

Critics of the rule have argued that the voluntary process of post-marketing evidence generation is too laissez-faire. Some experts have maintained that in a number of instances manufacturers should be required to pursue post-marketing studies. This could entail, for example, strengthening Medicare’s existing coverage with evidence development model for certain breakthrough medical devices. Currently, for a select number of medical technologies, CMS applies coverage with evidence development, in which Medicare provides conditional coverage while the it, together with manufacturers, collects additional evidence on a technology’s safety and efficacy.

At this point, it’s unclear what the future holds for the rule. A public comment period is underway. In the meantime, breakthrough medical devices still may be covered under the traditional processes by which Medicare Administrative Contractors and Medicare Advantage Plans determine coverage and conditions of reimbursement, based on what they deem to pass the “reasonable and necessary” test. Also, CMS has retained the option of proposing “future rulemaking” on the matter.

There appears, however, to be a different set of standards CMS applies when it assesses drugs and devices. Almost all physician-administered drugs approved by the FDA get covered in the Medicare Part B space. With the exception of Medicare Advantage plans, which were recently granted authority to use a few (though not all) formulary management tools for Part B drugs, there really isn’t a formulary or the use of formulary management tools for physician-administered drugs. Nevertheless, devices and diagnostics that fall under Part B are subject to more scrutiny by payers, resulting in more variation in terms of coverage, as well as non-coverage decisions at the local level. Additionally, national coverage determinations (NCDs) are more frequently deployed for devices and diagnostics than drugs. In other words, in Medicare Part B, the evidence bar appears higher for devices than drugs

As the recent discussion surrounding the Alzheimer’s drug Aduhelm (adacanumab) revealed, it’s unusual to subject a drug to an national coverage determination (NCD). And, it’s rarer still for CMS to issue non-coverage decisions for drugs, whether at the local coverage determination (LCD) or NCD level.

Perhaps devices face more obstacles because they often lack the large, well-controlled trials that support drug decisions by the FDA. Nonetheless, one could argue that with breakthrough medical devices there is already some degree of an evidentiary standard being met, as a breakthrough designation is only granted if a product meets two criteria. The first criterion is that the device provides for “more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions.” The second criterion is that the device must offer “significant advantages over existing alternatives.” The question remains, however, whether these criteria meet the “reasonable and necessary” standard to qualify for CMS coverage.

Reasonable and necessary

The MCIT rule would also modify the “reasonable and necessary” standard which Medicare uses to determine whether evidence is sufficient to allow coverage. Specifically, according to the new rule, in judging whether a technology is reasonable and necessary, officials would consider whether a device is: 1) safe and effective; 2) non-experimental or investigational; 3) appropriate for Medicare patients; and 4) covered by commercial insurers.

Medicare has been grappling with the reasonable and necessary clause for a long time. Determining what level of care is “necessary” is contingent on the strength of the supporting clinical evidence, but such judgments are invariably nuanced. And, determining “reasonableness” is even more difficult, as it implies figuring out whether spending money on a particular medical technology is a prudent allocation of resources. The proposal’s changes to the “reasonable and necessary” criteria – points 3 and 4 above – raise questions.

While all healthcare should be “appropriate,” it’s a vague term. Neumann and Chambers argue that a better standard would reflect whether there is sufficient evidence to demonstrate that the technology improves net health outcomes.

It’s not easy to arrive at unequivocal determinations of whether a technology improves net health outcomes. But, it’s a starting point, and it’s one that ought to apply to drugs and devices alike. Specifically in the case of breakthrough medical devices they may meet this standard if “significant advantages over existing alternatives” implies improvement in net health outcomes.