Reimbursement

Biden Pulls Plug on Automatic Medicare Coverage for MCIT “Breakthrough” Devices

In a reminder of why politics and presidential elections matter so much, the Biden administration announced that it’s scrapping a Trump regulation that would have automatically provided initial Medicare coverage for new medical products cleared by the U.S. Food and Drug Administration (FDA) as breakthrough devices under Section 510(k). The new rule and elimination of the expedited breakthrough device pathway that the Centers for Medicare & Medicaid Services (CMS) proposed on Sept. 13, 2021, is a victory for the insurance industry but a setback for makers of novel medical devices.

The Significance of the Decision

There was a lot on the line for both diagnostics makers, patients and payors. The rule that was finalized in the last days of the previous regime provided that newly approved breakthrough devices would be deemed to meet the “reasonable and necessary” standard set out in Section 1862((a)(1)(A) of the Social Security Act for purposes of Medicare coverage. This initial determination would have stood over a four-year period starting on the date of FDA market authorization. Once the initial period ended, CMS would have had to perform a new “reasonable and necessary” evaluation of the device based on clinical and real-world evidence of improved health outcomes.

Technically, the rule applies only to devices that pass through the Medicare Coverage of Innovative Technology (MCIT) pathway, which doesn’t include laboratory developed tests (LDTs). However, the larger idea of deferring to the FDA and not keeping Medicare beneficiaries waiting for innovative medical technology would have translated equally well to LDTs. In fact, CMS had sent clear signals that it regarded the MCIT rule as a template that could have been extended to breakthrough diagnostics, drugs and/or biologics that aren’t currently in the MCIT pathway, including LDTs.

The Biden Regulatory Freeze

The breakthrough device coverage rule was one of the many 11th hour Trump rules that the incoming Biden regime put in the freezer literally within hours of taking office. The initial freeze was due to expire in March before CMS extended it again until December. But now CMS hasn’t simply frozen the rule but officially withdrawn it.

Opponents of the rule, including the bipartisan Medicare Payment Advisory Committee (MedPAC) contended that FDA breakthrough device authorization and Medicare “reasonable and necessary” coverage approval is an apples-to-oranges comparison requiring different forms of medical evidence. Forcing CMS to cover new devices just because they get 510(k) certification would strip the agency of its scientific review responsibilities and expose Medicare patients to new technologies of unproven effectiveness and safety, they argued.

The CMS new proposed rule echoes these sentiments. The agency expressed “significant concerns” about whether breakthrough devices are proven enough to use on the Medicare population. “We recognize that the breakthrough designation may be granted by FDA before sufficient clinical evidence is available to prove there is a health benefit for Medicare patients,” according to the new rule.

“FDA and CMS act under different statutes that have different goals,” the rule explains. Moreover, FDA sometimes relies on clinical data of a device that don’t “necessarily include patients from the Medicare population.” Consequently, a product that meets the FDA’s standards isn’t necessarily safe or necessary for Medicare’s patient population in accordance with CMS’ “reasonable and necessary” standards for Medicare coverage.

The insurance industry took a similar position to argue against the coverage rule. In comments to the original proposed rule, industry advocacy group America’s Health Insurance Plans warned that the new MCIT pathway could “potentially result in premature coverage of unproven devices.”

Takeaway

In addition to lab and device industry backing, the now defunct breakthrough rule enjoyed bipartisan support in Congress. The proposal was the culmination of a decade’s worth of political and scientific cooperation. On May 4, 37 Democratic members of Congress wrote a letter urging acting CMS Liz Richter administrator to “move forward with implementation as soon as possible.” Four of the authors also penned a letter to CMS back in February urging the agency to stick with the original March 15, 2021 implementation. Hoping the new letter will have a more potent impact, they persuaded 33 of their colleagues to join them in signing the May missive.

Assurance of Medicare coverage would have gone a long way toward breaking down barriers to research and development and incentivizing investment in novel diagnostics. Ultimately, that approach would have likely extended beyond MCIT devices to LDTs.

Of even greater encouragement to industry was the possibility of broadening the rule to include a “lookback” window covering devices approved within the two-year period before the rule took effect. Some even urged CMS to extend the “lookback” window beyond two years to cover all breakthrough devices approved by the FDA so far.

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