Last week, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule to repeal the Medicare Coverage of Innovative Technology (MCIT) and Definition of “Reasonable and Necessary” final rule (the “Proposed Rule”), which CMS published on January 14, 2021 in the waning days of the Trump administration (the “January Final Rule”). If it were to go into effect, the January Final Rule would be effective on December 15, 2021. In the Proposed Rule, CMS stated that it is seeking comments until October 15, 2021 on this proposed repeal of the January Final Rule and on CMS’s intent to conduct future rulemaking exploring an expedited coverage pathway that provides access to innovative beneficial technologies and defining “reasonable and necessary.”
The Proposed Rule represents a shift in CMS’s thinking between the previous and current administration. Originally, the January Final Rule established an expedited four-year Medicare coverage pathway for medical devices that the Food and Drug Administration (FDA) designated as breakthrough devices. Coverage would begin on the date of market authorization or at a date within two years thereafter, as chosen by the device manufacturer. The goal of the rulemaking was to provide Medicare beneficiaries with faster access to innovative medical devices. The January Final Rule, which finalized a proposed rule from September 1, 2020 that contained a sixty (60) day comment period, also promulgated regulations and standards to be used in identifying what items were “reasonable and necessary” for the purposes of items furnished under Medicare Parts A and B.
In January 2021, at the beginning of the Biden administration, CMS issued an Interim Final Rule, delaying the effective date of the January Final Rule by sixty (60) days, from March 2021 to May 2021. However, in response to public comments to the Interim Final Rule, CMS determined that further delay of the Final Rule was necessary and issued another final rule in May 2021, which delayed the effective date of the January Final Rule until December 15, 2021. Fast forward to the Proposed Rule, where CMS stated that, after further consideration of public comments, it has changed its position on the issue and seeks to repeal the January Final Rule.
In the Proposed Rule, CMS articulated its concerns with the January Final Rule, stating that it believes the January Final Rule is not in the best interest of Medicare beneficiaries. CMS has concerns that the January Final Rule may provide multi-year, broad, national coverage for medical devices based on breakthrough designation alone, when the breakthrough designation alone does not provide adequate evidence that such device is the reasonable and necessary treatment for a Medicare patient who has the disease or condition that the device is intended to treat or diagnose.
Additionally, CMS made particular note of the fact that FDA does not require that Medicare beneficiaries be included in clinical studies that are required for market-authorization of a medical device. The Proposed Rule hints that CMS feels this fact is a potential blind spot, particularly because the Medicare population consists of older people with comorbidities, and due to the Medicare population’s general underrepresentation in underlying clinical trials. CMS believes these facts make it difficult to assess whether the breakthrough devices are reasonable and necessary, as it is unclear whether the item/service would improve a Medicare beneficiary’s health outcome.
Based on the foregoing, while not abandoning the aims of the January Final Rule, CMS does not believe the January Final Rule, as currently drafted, is the best way to achieve the goals of the various stakeholders. We expect that, in exploring its options in future rulemakings, CMS will likely require manufacturers that participate in new coverage pathways, like MCIT, to produce evidence to demonstrate the benefit of the device within the Medicare population.
Supporters of the Rule
Supporters of the rule argued in January 2021 that FDA’s determination of a device’s safety and efficacy, allowing for the marketing of such device, should be sufficient to support Medicare’s coverage of such device. Further, in the event of a future assessment of medical device safety concerns, the January Final Rule provided for termination of MCIT coverage in instances where FDA issues a Warning Letter or if FDA revokes the market authorization for a device. In the January Final Rule, CMS articulated that it believed its policy provided a balance of ensuring rapid adoption of breakthrough devices, which, by their definition, provide for more effective treatment or diagnosis for life-threatening or debilitating conditions, while benefiting Medicare beneficiaries. Public comments to the January Final Rule echoed this sentiment, in that an MCIT coverage pathway would result in faster and more consistent access to newly authorized technologies for Medicare beneficiaries. With the potential repeal of the January Final Rule, these supporters cite patient access concerns, particularly when patients and providers have exhausted existing medical options.
Supporters of the MCIT Final Rule should keep a close look on the Cures 2.0 discussion draft (“Cures 2.0”), which codifies the MCIT pathway and requires Medicare coverage for breakthrough medical devices designated by the FDA for a four-year period. Cures 2.0 is a bipartisan effort to allow CMS to catch up with the FDA. Significantly, Cures 2.0 would move away from the “reasonable and necessary” standard for coverage decisions, potentially eliminating conflicts with the FDA’s “safe and effective” standard for device approval/clearance. If passed, Cures 2.0 would bring systematic changes to the U.S. healthcare payer system and, more importantly, provide Medicare patients timely access to innovative therapies.
CMS Seeking Comments
As stated above, CMS is seeking comments on the Proposed Rule until October 15, 2021 regarding the following topics: (1) its proposal to repeal the January Final Rule; (2) the definition of “reasonable and necessary” as used in the Social Security Act; and (3) comments on exploring other policy options and statutory authorities for coverage of devices that would better suit the needs of Medicare beneficiaries.