Health Law Daily CMS proposes faster breakthrough device access, defining ‘reasonable and necessary’
Tuesday, September 1, 2020

CMS proposes faster breakthrough device access, defining ‘reasonable and necessary’

By Anthony H. Nguyen, J.D.

CMS’ proposal would create new approval pathway to provide Medicare beneficiaries with faster access to FDA-designated breakthrough medical devices.

Medicare beneficiaries would have swifter access to FDA-designated breakthrough medical devices under a newly proposed rule. The proposed rule would establish the Medicare Coverage of Innovative Technology (MCIT) pathway, which would provide Medicare beneficiaries nationwide with faster access to new, innovative medical devices. Once effective, the MCIT pathway would begin national Medicare coverage on the date of FDA market authorization and would continue for four years. HHS also proposed regulatory standards for use in making reasonable and necessary determinations under Soc. Sec. Act §1862(a)(1)(A) for items and services that are furnished under Medicare Part A and Part B (Proposed rule, 85 FR 54327, September 1, 2020).

Background. Under current regulations the FDA approval of a device is followed by a potentially lengthy and costly process for Medicare coverage. The lag time between FDA approval and Medicare coverage determination has been called the "valley of death" for innovative products, with innovators spending time and resources on FDA approval, then spending additional time and money on the Medicare coverage process. According to CMS, this represents an unnecessary waste of resources for innovators, but also a significant problem for Medicare beneficiaries who are prevented access to these new technologies during the existing Medicare coverage determination process.

MCIT pathway. The MCIT proposal would eliminate the lag time by creating a new, accelerated Medicare coverage process for innovative products that the FDA deems "breakthrough." An FDA-designated breakthrough product is one in which the FDA approves on an expedited basis and may include devices with new technologies, such as implants or gene-based tests to diagnose or treat life-threatening or irreversibly debilitating diseases or conditions.

Under the proposed MCIT coverage pathway, CMS would coordinate with the FDA and manufacturers as medical devices move through the FDA regulatory process for Breakthrough Devices to ensure seamless Medicare coverage on the date of FDA market authorization, unless CMS determines those devices do not have a Medicare benefit category. Medicare would provide national coverage simultaneously with FDA approval of a breakthrough product for a period of four years. Once the time expires, CMS may reevaluate the device based on clinical and real-world evidence of improvement in health outcomes among Medicare beneficiaries. According to CMS, the initial four year term is an incentive for manufacturers to develop these "breakthrough" devices and to develop additional evidence regarding the applicability of their products to the Medicare population in order to continue Medicare coverage beyond the initial four years.

Devices are considered breakthrough once meeting two criterion: (1) the device provides for more effective treatment or diagnosis of life threatening or irreversibly debilitating human disease or conditions; and (2) the device must satisfy one of the following elements—(a) represents a breakthrough technology; (b) no approved or cleared alternatives exist; (c) it offers significant advantages over existing approved or cleared alternatives, including additional considerations outlined in the statute; or (d) device availability is in the best interest of patients.

The proposed rule would also allow Medicare to cover eligible breakthrough devices the FDA has approved for use in 2019 or 2020, giving Medicare beneficiaries immediate access to these devices.

Reasonable and necessary. Additionally, the MCIT proposed rule would clarify the standard CMS uses to determine whether Medicare should cover a product, like a drug, device, or biologic. Medicare can only pay for items or services that are "reasonable and necessary" for the Medicare population. If finalized, the MCIT proposal would clarify CMS’ definition of reasonable and necessary in regulation to give innovators a clearer understanding of CMS standards. CMS proposes to codify the Program Integrity Manual definition of ‘‘reasonable and necessary’’ into regulations at 42 C.F.R. §405.201(b), with modification.

Under the current definition, an item or service is considered ‘‘reasonable and necessary’’ if it is (1) safe and effective; (2) not experimental or investigational; and (3) appropriate, including the duration and frequency that is considered appropriate for the item or service, in terms of whether it is—(a) 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; (b) furnished in a setting appropriate to the patient’s medical needs and condition; (c) ordered and furnished by qualified personnel; (d) one that meets, but does not exceed, the patient’s medical need; and (e) at least as beneficial as an existing and available medically appropriate alternative.

In addition to codifying the manual definition for "reasonable and necessary," CMS proposes to include a separate basis under which an item or service would be appropriate, specifically one that based on commercial health insurers’ coverage policies (that is, non-governmental entities that sponsor health insurance plans). The commercial market analysis would be invoked if an item or service meets the first two criteria for "reasonable and necessary," but fails to fulfill the third.

MainStory: TopStory ProposedRules CMSNews FDCActNews CoverageNews MDeviceNews

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More

Health Law Daily: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on health legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.