The October 3, 2019 Executive Order 13890 (“EO 13890”), entitled “Executive Order on Protecting and Improving Medicare for our Nation’s Seniors,” directs the Secretary of Health and Human Services to “propose regulatory and sub-regulatory changes to the Medicare program to encourage innovation for patients.” EO 13890 explicitly requests that the Secretary make coverage of breakthrough medical devices widely available, and clarify the application of coverage standards. In response, on September 1, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule (85 FR 54,327) that would establish an expedited Medicare coverage pathway for innovative medical devices, and codify, with some modification, the long-standing Program Integrity Manual standards to be used in making “reasonable and necessary” determinations under Section 1862(a)(1)(A) of the Social Security Act.

  1. MCIT Pathway

The proposed rule sets up the Medicare Coverage of Innovative Technology (MCIT) pathway, under which breakthrough devices, which are designated as part of the Food and Drug Administration’s (FDA) Breakthrough Devices Program, would be covered under Medicare from the moment the device receives FDA market authorization, either through receipt of FDA Premarket Approval, 510(k) clearance or the granting of a De Novo classification request. Under the MCIT proposal, an item or service that receives a breakthrough device designation from the FDA would be considered “reasonable and necessary” under section 1862(a)(1)(A) of the Act because breakthrough devices are innovative, serve unmet needs and have already met the FDA’s “unique breakthrough devices criteria.”

This coverage would continue for up to 4 years, allowing the manufacturer time to submit a National Coverage Determination (NCD) request. Currently, Medicare coverage pathways include (among other things) local coverage determinations (LCDs) or case-by-case decisions of whether a device will be covered while CMS is processing the NCD, which can take 9-12 months. The delay for NCDs and local coverage of immediately available coverage pathways under the LCDs result in inconsistent results nationwide. In contrast, the MCIT proposal would allow for immediate national Medicare coverage of any FDA-market authorized breakthrough device, subject to meeting the criteria under the program. CMS proposes to work closely with the FDA through the regulatory process for these devices to ensure immediate Medicare coverage upon market authorization. The MCIT pathway would be voluntary, requiring device manufacturers to affirmatively opt in. CMS proposes regulations codifying the MCIT pathway at 42 C.F.R. Part 405, Subpart F.

The FDA’s Breakthrough Device Program is targeted at streamlining approval of devices “that provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions.” Also, these devices must be either 1) a breakthrough technology; 2) a device for which there is no approved or cleared alternatives; 3) a device that offers significant advantages overexisting approved or cleared alternatives; or 4) a device whose availability is in the best interest of patients.

  1. Defining “Reasonable and Necessary”

EO 13890 also directs the Secretary to “clarify the application of coverage standards.” Accordingly, the proposed rule would codify the long-standing Program Integrity Manual definition of “reasonable and necessary” for items and services that are furnished under Medicare Parts A and B. CMS has the authority to determine if a particular medical product or service is “reasonable and necessary” under § 1862(a)(1)(A) of the Social Security Act. To date, there have been no formal regulations on this term, yet the Medicare Program Integrity Manual does provide instructions for Medicare contractors in this regard.

We propose that an item or service would be considered ‘‘reasonable and necessary’’ if it is—(1) safe and effective; (2) not experimental or investigational; and (3) appropriate for Medicare patients, including the duration and frequency that is considered appropriate for the item or service, in terms of whether it is—

  • Furnished in accordance with accepted standards of medical practice for the diagnosis or treatment of the patient’s condition or to improve the function of a malformed body member;
  • Furnished in a setting appropriate to the patient’s medical needs and condition;
  • Ordered and furnished by qualified personnel;
  • One that meets, but does not exceed, the patient’s medical need; and
  • At least as beneficial as an existing and available medically appropriate alternative.

We also propose that an item or service would be ‘‘appropriate for Medicare patients’’ under (3) if it is covered in the commercial insurance market, except where evidence supports that there are clinically relevant differences between Medicare beneficiaries and commercially insured individuals. An item or service deemed appropriate for Medicare coverage based on commercial coverage would be covered on that basis without also having to satisfy the bullets listed above.[1]

The comment period is open now and runs until November 2, 2020. Comments can be submitted electronically through http://www.regulations.gov or by mail. Specifically, CMS is requesting comments on whether it should require or incentivize manufacturers to provide data about outcomes or should be obligated to enter into a clinical study. Additionally, CMS wishes commenters to provide feedback on whether the MCIT should also include diagnostics, drugs and/or biologics that utilize breakthrough approaches as they are not currently included in the MCIT pathway. A fact sheet on the proposed rule can also be found on CMS’s website at https://www.cms.gov/newsroom/fact-sheets/proposed-medicare-coverage-innovative-technology-cms-3372-p.