October 1, 2020

On September 1st, the Centers for Medicare & Medicaid Services (CMS) proposed a rule offering medical device manufacturers Medicare coverage upon FDA clearance or approval when their products have been designated by the U.S. Food & Drug Administration (FDA) as “breakthrough” technologies (CMS-3372-P).  Dubbed the Medicare Coverage of Innovative Technology or MCIT pathway, this proposal represents a significant and creative step forward to facilitate patient access to an important subset of medical devices that provide innovative patient care.  

Intended to complement and supplement other existing Medicare coverage pathways, the MCIT pathway would provide immediate national coverage for medical devices designated as breakthrough technologies by the FDA for a four year period upon that agency’s clearance or approval of those devices.  Although the proposed rule is silent on reimbursement structures and amounts to be paid for these breakthrough technologies, CMS’ intention appears to align with its previous rulemaking related to transitional pass-through payments for medical devices in both the inpatient and outpatient settings.  Companies interested in pursuing the MCIT pathway and obtaining separate additional payment above and beyond the DRG or APC payments in the inpatient and outpatient settings, respectively, must coordinate the timing of FDA clearance or approval with their applications for pass-through status to maximize the opportunity to have the additional payment in place upon FDA clearance or approval.

In the first instance, it is important to understand what qualifies as a “breakthrough” technology and what that status affords a medical device manufacturer at the FDA outside the scope of this proposed CMS rule.  When the 21st Century Cures Act was passed by Congress and signed into law in December 2016, the FDA’s Breakthrough Devices Program was established.  Notably, that Program is not intended for all new medical devices.  To qualify for the Program, a medical device or a medical device-led combination product, i.e., where the device component provides the primary mode of action, must meet two criteria:

  • The device provides for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions (relative to what is currently available); and
  • The device must satisfy one of the following elements:
  • Represents a breakthrough technology;
  • Is it a novel technology or a novel application of an existing technology;
  • Potential to lead to a clinical improvement in the diagnosis, treatment, cure, mitigation or prevention of life-threatening or irreversibly debilitating disease or condition [authors’ note: yes, the guidance is repetitious]
  • No approved or cleared alternatives exist;
  • It offers significant advantages over existing approved or cleared alternatives; or
  • Device availability in the best interest of patients.
Collectively, these criteria are commonly understood to reflect that a medical device must meet an unmet medical need to qualify for the FDA’s Breakthrough Program.  A device manufacturer interested in obtaining breakthrough status should apply through the FDA’s Q-Sub process to do so.  If accepted into the program, a device manufacturer is afforded the opportunity to collaborate much more closely and frequently with the FDA than it otherwise would and it gets priority review on future regulatory submissions, including other Q-Subs, investigational device exemption applications, and marketing submissions, e.g., PMAs or de novo applications.  Although not excluded by the Program, given the essential nature of claiming substantial equivalence to a predicate, medical devices eligible for a 510(k) clearance may find it more challenging to qualify for the program.
Given the fast-track nature of the FDA’s Breakthrough Devices Program, it was apparent to the medical device industry that while getting through the FDA on a priority basis was advantageous, the advantage was undermined without appropriate coverage and payment available once the FDA completed its work.  With a high percentage of our nation’s health care spend focused on the elderly, Medicare coverage and payment play a significant role in achieving patient access and market success.  In turn, many private insurers often (but not always) look to Medicare to establish their own coverage and payment rules.
With persistent advocacy on this point from the medical device industry over the past several years, the Administration issued Executive Order (EO) 13890 on October 3, 2019, Executive Order on Protecting and Improving Medicare for Our Nation’s Seniors.  This EO expressly includes making coverage of medical devices “widely available, consistent with the principles of patient safety, market-based policies, and value for patients.”  Relying on the EO to develop this Proposed Rule, CMS has excluded drugs and biologics from the MCIT opportunity.  As reflected in its Proposed Rule, the agency has also excluded diagnostics from consideration; the basis for this exclusion is not clear.  Given that the exclusion is not repeated in the text of the rule, however, preliminary thoughts are that the preamble reference is in error.  Regardless, we expect to see stakeholders commenting on this detail, requesting CMS to clarify that medical device diagnostics are to be included.
CMS and the FDA are also creating new divisions within their respective agencies to help with the new pathway.  At CMS, within the Center for Medicare, a new Technology Coding and Pricing Group was announced in September 2020; while the scope of work of that division is uncertain, it is understood that its formation will be to work in part on the new coverage pathway.  In addition, in late September 2020, the FDA announced a new Digital Health Center of Excellence within the Center for Devices and Radiological Health.  That Center’s purview will be to advance digital health technology, much of which may be considered breakthrough technology.
Comments on CMS’ MCIT pathway proposal are due before 5 pm ET on November 2, 2020.