Tuesday, September 1, 2020

Ins and Outs: Medicare’s Proposal for Breakthrough Coverage and Other Changes

On Monday, August 31, CMS released a detailed 13-page proposal, which would  provide four years of coverage (avoiding LCD/NCD decisions) for all FDA breakthrough devices.  Getting less attention, but importantly, it would make some additional  substantial changes to the Medicare coverage rulebook.   See my initial blog here, which includes background back to 2016, as well as several news article links from this week.  See a Ropes & Gray article on MCIT, here.  See a Wilson Sonsini article here.

  • The CMS policymaking is here.  85 FR 54327, 9/1/2020.
  • The CMS press release is here.   
  • The CMS Fact Sheet is here.

1. What is the impact for Breakthrough FDA Devices?

CMS creates a new coverage pathway, Medicare Coverage of Innovative Technology, MCIT.  

FDA breakthrough devices will be covered for 4 years, without requiring an NCD or LCD.  (An NCD could override the otherwise immediate coverage for a breakthrough device).  

"Breakthrough Devices" are a product of the 21st Century Cures Act in December 2016.  Read about this program at FDA here.  See more at [FN1].

2. When will this happen?

The sixty day comment period runs to  November 2.  

It's unlikely CMS would finalize the rule before January, or it could take much longer, or it might never be finalized.  CMS proposed rules have a 3 year life as proposals, and then sunset if not finalized yet.  When a rule is finalized, it generally becomes effective 60 days later.

The rule would apply to devices that are breakthrough devices approved not more than 2 years before the date that the rule becomes effective.  That is, anything covered under this rule will have at least half of its four-year breakthrough period to run.  For example, if the rule is finalized in May 2021, the oldest device would be a breakthrough approval in May 2019, which is covered til May 2023 (4 years from FDA date).

3. Does this apply to diagnostics?

The various documents are confusing.   

The actual regulation at 42 CFR 405.601 through 405.607 are for "FDA breakthrough devices," and FDA definitely views the term "device" here as applying to med/surg devices as well as diagnostics (in vitro diagnostics).    And in the Fact Sheet, CMS says that "The proposed MCIT pathway would  be available for FDA-designated breakthrough devices (which includes some diagnostic tests) that have subsequently been market-authorized," the latter term meant to encompass all three authorization modes, being PMA, 510(k), or de novo.

However, in the body of the rule, the CMS author asks stakeholders if the MCIT should be broadened to include diagnostic devices and drugs.  This implies the author thought that "FDA breakthrough devices" referred only to med/surg devices.   The author remarks also that CMS wasn't intending to include diagnostics, because diagnostics didn't have the coverage problems of "devices."  "Stakeholders [told CMS] there is more concern for coverage of devices than for other items and services (for example, diagnostics, drugs, biologicals.)" (p. 54334).

Update: See more on this point on October 28, here.

4. What's the financial scale of the MCIT for breakthrough devices?

CMS isn't sure.  In the financials section at the end, CMS stated that the cost could be 0, if all breakthrough devices would be covered anyway.   Or, there would be no additive costs since costs may be bundled in DRGs, or coded and priced in existing APCs or CPT codes where the new device replaces a prior device type.   Or the cost of the breakthough rule could be the same as the average price and average utilization of NTAP devices ($2044 x 2,322 uses per year).  Or it could be the same as the maximum utilization of the maximum-cost NTAP devices ($22,425 x 6,500 uses per year).   These gave budget estimates x 4 years between about $0 (low) and $120M (medium) and $3B (high). (Table 2).

5. What are new MCIT devices priced at?

They don't say.  Existing rules apply.

Some devices are bundled into inpatient hospital payments and others are bundled into hospital outpatient payments.   

Physician's services often don't get new CPT codes for a year or two or three, and Category I codes are usually priced by CMS before released for use.  Some brand new services fit under an existing code, until that code is narrowed and split into new codes, while other brand new services are billable only under unlisted codes.

No question, the device could be FDA approved a couple years before it has enough use to get an AMA Category I code, meaning there would be a lot of use of unlisted codes that are carrier priced (sometimes really harshly or badly) starting on Day 1 of their FDA breakthrough approval.  Category III codes are also carrier-priced.    The dollar value of locally set MAC prices could easily vary by 2X or 3X.

6.  FDA Indications versus Coverage Policies: Not Necessarily a Clean Match.

Often, devices have vague indications, at least vague, compared to coverage policies.   For example, a surgical device is indicated for making incisions, or an MRI scanner is indicated for imaging the human body.  A device might have an indication for prostate surgery, but elsewhere in labeling state it is for prostates up to a certain size (e.g. 150 cc).   It's not clear if CMS would consider only the literal indication or the collection of indications, warnings, limitations, and sometimes clinical trial exclusion rules. [FN2]  In addition, FDA indications for devices don't often express frequency (e.g. label for an MRI scanner) but frequency is a key feature of coverage decisions.

7. What's the impact of other parts of this rule - unrelated to "breakthrough" topics?

CMS makes two changes.  

One, CMS puts longstanding (decades-old) policy manual instructions into a regulation.   That is, today the policy manual for MACs says that reasonable and necessary (R&N) means that something is appropriate in duration and frequency, furnished with appropriate standards of medical practice, furnished in an appropriate setting, by appropriate personnel, and meets but doesn't exceed the patient's need, and is as beneficial as an appropriate alternative.  This becomes a regulation by way of defining R&N at 405.201.   

However, there's a twist, and CMS lets devices EITHER meet those verbal rules, OR ELSE show the device is just "covered by commercial insurers."

click to enlarge

8. What does "covered by commercial insurers" mean?

The rule is really simple - "covered by commercial insurers," four words.  I guess that means it's at least two insurers.  CMS asks for public input on whether this phrase should mean 1 insurer, several, half of insurers, all insurers, or some other definition.  This is actually a bigger deal than the breakthrough section, because it is a general proposal applying to all devices (or indeed, also all Medicare services, procedures, drugs).  As a legal definition of all uses of the Medicare term R&N, it would also apply in medico-legal audits of whether prior payments were R&N. 

9. What does standard of medical practice mean?

This one could be a little dangerous.  The full phrase is, "Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient’s condition."   A grumpy Medicare medical director could use this language to achieve denial of any new product or service, since anything brand-new couldn't be the standard of medical practice.  (And, does becoming a "standard" of practice mean 20% use, 50% use, or 80% use?).   

10.  How often do the documents refer to President Trump?

The rule does not name President Trump, although it cites his executive orders.  The press release cites President Trump three times.   "Today, under President Trump’s leadership, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that unleashes innovative technology so Medicare beneficiaries have access to the latest, most cutting-edge devices."  The Fact Sheet cites President Trump twice.   "This proposed rule delivers on President Trump’s order by creating an unfettered path to coverage beginning on the same day as FDA market authorization for breakthrough devices."


[FN1] My understanding is the Breakthrough refers not so much to the final product, as to the initial classification and review process.  The disease must be irreversible or life threatening.  The product must meet ONE of the following:  (a) breakthrough tech, (b) no FDA alternative, (c) significant advantage, or (d) [accelerated] device availability is in the interest of patients.  They assign breakthrough review track early on; I don't think they withdraw it if the device looks more mundane when all the data is in.   FDA announces approvals, but companies announce they have been assigned breakthrough track, not FDA (FDA doesn't discuss products in review).   For example, Roche has an amyloid IVD test under breakthrough status for over 2 years (here).  

[FN2] There is also the notorious labeling difference between "intended use" and "indication for use."  See Google and here and here.


See a 12/2020 article by a physician who works with RAC auditors about the definition of medical necessity; makes comment re: the MCIT rule "defining medical necessity." Here.