August 2023 FDA Watch

Because innovation moves so much faster than coverage rules, it takes a long time for patients on Medicare to access recently approved medical technologies. In November 2021, CMS pulled the plug on a Trump administration rule—“Medicare Coverage of Innovative Technology (MCIT) and Definition of ‘Reasonable and Necessary’”—that would have required Medicare to cover medical devices in the FDA’s Breakthrough Device program for at least four years after receiving market authorization.^1,2 To allay industry disappointment, the agency also promised to develop an alternative approach to expedite access to new medical devices. On June 27, 2023, the agency made good on that promise by proposing to create a new Transitional Coverage for Emerging Technologies (TCET) pathway.³

From MCIT to TCET

The MCIT rule was criticized for effectively giving the FDA authority to make Medicare coverage decisions without regard to the “reasonable and necessary” requirement for coverage under Section 1862(a)(1)(A) of the Social Security Act.⁴ The kiss of death came in April 2021 when the influential Medicare Payment Advisory Committee (MedPAC) published a letter calling on CMS to repeal the rule. “The Medicare program, not the FDA, should adjudicate coverage and spending determinations based on the specific needs of the Medicare population,” MedPAC wrote, urging CMS to come up with an expedited coverage process for innovative new devices and services that “does not abandon evidentiary requirements that ensure that such innovations do indeed improve beneficiaries’ outcomes.”⁵

The new TCET pathway is CMS’ answer to those concerns. Under the proposal, manufacturers seeking breakthrough device designation from the FDA could pursue the TCET pathway to obtain Medicare coverage on an expedited basis for “as long as needed to facilitate the timely generation of evidence” to inform clinical decision-making. Manufacturers would have to apply for CMS approval to follow the pathway approximately 12 months before the FDA’s expected decision on their product submission. To be eligible for TCET, products must be:⁶

• part of the FDA’s Breakthrough Device program
• within a Medicare benefit category
• separately payable (not bundled)³
• not already the subject of a Medicare National Coverage Determination (NCD)
• not otherwise excluded from coverage

The New TCET Pathway

The biggest difference between MCIT and TCET is that, under TCET, devices won’t be treated as meeting “reasonable and necessary” criteria automatically upon receiving FDA marketing authorization the way they would have been under MCIT. Instead, manufacturers will have to produce clinical evidence under a TCET pathway that will unfold in three phases.

1. Premarket  

Products accepted for the TCET pathway must undergo a series of steps starting approximately 12 months before the FDA’s expected decision on the marketing authorization submission, including:

• an Evidence Preview
• an optional 60-minute meeting in which the manufacturer may discuss the Evidence Preview with CMS
• an Evidence Development Plan (EDP) created by the manufacturer to address any gaps identified in the Evidence Preview

2. Coverage Under TCET

When and if the FDA grants marketing authorization, the product will have to undergo review by specialized Medicare Administrative Contractors (MACs) following the NCD statutory timeframes.⁷ In the Fact Sheet explaining the new rule, CMS states that it expects TCET coverage to last three to five years.⁶

3. Transition to Post-TCET Coverage

TCET coverage is aimed at allowing device manufacturers time for further evidence development. Once this is complete, CMS will determine whether there is sufficient evidence to satisfy the “reasonable and necessary” standard by:

1. Performing an updated evidence review within six months of the date listed in the EDP. This involves commissioning a literature review, performing a qualitative evidence synthesis, and comparing the findings against the NCD outcome benchmarks.
2. Reviewing practice guidelines and consensus statements to assess whether the conditions of coverage remain appropriate.
3. Reconsidering the original NCD for the device.

The process has several possible outcomes: a new NCD to allow coverage with or without evidence development requirements, a non-coverage NCD, or no NCD (allowing local MACs to make coverage decisions).

Takeaway and Impact on Labs

The good news is that the new rule would provide labs and test manufacturers a new way to expedite Medicare coverage of their products. CMS acknowledges that diagnostic laboratory tests would be eligible for the TCET pathway because the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)(1)) defines them as devices, but the agency also states that “the majority of coverage diagnostic tests granted Breakthrough designation should continue to be determined by the MACs through existing pathways.”^8,6

Overall, the TCET pathway is far less favorable to industry than the MCIT plan it replaces. Instead of gaining automatic coverage, manufacturers will now have to develop and refine clinical evidence during the premarketing stage and then navigate the NCD process. By the time they complete the necessary tasks, the TCET route may not prove all that much faster than existing pathways.

Moreover, CMS expects resource constraints to limit the new pathway to no more than five candidates per year. The agency says it will prioritize devices that it believes have “the potential to benefit the greatest number of individuals with Medicare.”³

The TCET Proposal’s Timeframe

CMS has put the proposed rule on the fast track by presenting it as a Notice with Comment Period, rather than a Notice of Proposed Rulemaking. The former carries a 60-day comment period that ends August 28.

Meanwhile, there’s a chance that Congress might step in at the last minute and impose its own solution—one that the lab industry would likely welcome. In April, the House of Representatives tabled a bipartisan bill (H.R. 4043, the Ensuring Patient Access to Critical Breakthrough Products Act) that would revive the MCIT plan, including automatic four-year “transitional coverage” of new medical devices after FDA marketing authorization.^9,10

References:

1. https://www.g2intelligence.com/cms-repeals-rule-providing-expedited-medicare-coverage-for-mcit-breakthrough-devices/
2. https://s3.amazonaws.com/public-inspection.federalregister.gov/2020-19289.pdf
3. https://www.federalregister.gov/documents/2023/06/27/2023-13544/medicare-program-transitional-coverage-for-emerging-technologies
4. https://www.ssa.gov/OP_Home/ssact/title18/1862.htm
5. https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/comment-letters/04132021_mcit_medpac_comment_with_2020_letter_sec.pdf
6. https://www.cms.gov/newsroom/fact-sheets/notice-comment-transitional-coverage-emerging-technologies-cms-3421-nc
7. https://www.cms.gov/cms-guide-medical-technology-companies-and-other-interested-parties/coverage/national-coverage-determination-process-timeline
8. https://www.govinfo.gov/content/pkg/USCODE-2021-title21/pdf/USCODE-2021-title21-chap9-subchapII-sec321.pdf
9. https://www.g2intelligence.com/new-bill-would-guarantee-medicare-coverage-of-newly-approved-breakthrough-devices/
10. https://www.congress.gov/bill/117th-congress/house-bill/4043/text

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Here are the key FDA and other clearances announced in June and July 2023:

New FDA Approvals and Emergency Use Authorizations (EUAs)

New CE Marks & Global Certifications

Notable European CE certifications announced during the period: 

New Approvals in Europe

Other international clearances announced during the period: