Medicare Program; Medicare Coverage of Innovative Technology (MCIT) and Definition of “Reasonable and Necessary”
| Published date | 01 September 2020 |
| Citation | 85 FR 54327 |
| Record Number | 2020-19289 |
| Section | Proposed rules |
| Court | Centers For Medicare & Medicaid Services |
Federal Register, Volume 85 Issue 170 (Tuesday, September 1, 2020)
[Federal Register Volume 85, Number 170 (Tuesday, September 1, 2020)]
[Proposed Rules]
[Pages 54327-54339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19289]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 405
[CMS-3372-P]
RIN 0938-AT88
Medicare Program; Medicare Coverage of Innovative Technology
(MCIT) and Definition of ``Reasonable and Necessary''
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would establish a Medicare coverage pathway
to provide Medicare beneficiaries nationwide with faster access to new,
innovative medical devices designated as breakthrough by the Food and
Drug Administration (FDA). After the final rule is effective, the
Medicare Coverage of Innovative Technology (MCIT) pathway would begin
national Medicare coverage on the date of FDA market authorization and
would continue for 4 years. We are also proposing regulatory standards
to be used in making reasonable and necessary determinations under
section
[[Page 54328]]
1862(a)(1)(A) of the Social Security Act (the Act) for items and
services that are furnished under Part A and Part B.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on November 2, 2020.
ADDRESSES: In commenting, please refer to file code CMS-3372-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (please choose only
one of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-3372-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received before
the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-3372-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Linda Gousis or JoAnna Baldwin, (410)
786-2281 or [email protected].
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following website as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that website to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
The Administration is committed to ensuring Medicare beneficiaries
have access to new cures and technologies that improve health outcomes.
Section 6 of the October 3, 2019 Executive Order 13890 (E.O. 13890)
``Executive Order on Protecting and Improving Medicare for Our Nation's
Seniors,'' \1\ directs the Secretary to ``propose regulatory and sub-
regulatory changes to the Medicare program to encourage innovation for
patients'' including by ``streamlining the approval, coverage, and
coding process''.\2\ The E.O. 13890 explicitly includes making coverage
of breakthrough medical devices ``widely available, consistent with the
principles of patient safety, market-based policies, and value for
patients.'' \3\ The E.O. also directs the Secretary to ``clarify the
application of coverage standards.'' \4\
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\1\ Executive Order on Protecting and Improving Medicare for Our
Nation's Seniors, available at https://www.whitehouse.gov/presidential-actions/executive-order-protecting-improving-medicare-nations-seniors/.
\2\ Id.
\3\ Id.
\4\ Id.
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We are responding directly to these directives by proposing a
definition of the term ``reasonable and necessary'' to clarify coverage
standards and proposing the Medicare Coverage of Innovative Technology
(MCIT) pathway to accelerate the coverage of new, innovative
breakthrough devices to Medicare beneficiaries. To date, the factors
used in making ``reasonable and necessary'' determinations based on
section 1862(a)(1)(A) of the Act have not been established in
regulations for Medicare coverage purposes. The Secretary has authority
to determine whether a particular medical item or service is
``reasonable and necessary'' under section 1862(a)(1)(A) of the Act.
(See Heckler v. Ringer, 466 U.S. 602, 617 (1984).) When making coverage
determinations, our policies have long considered whether the item or
service is safe and effective, not experimental or investigational, and
appropriate. (For more information see the January 30, 1989 notice of
proposed rulemaking (54 FR 4307)). These factors are found in Chapter
13 of the Medicare Program Integrity Manual (PIM) at section 13.5.4--
Reasonable and Necessary Provisions in LCDs as instructions for
Medicare contractors. We are proposing to codify in regulations the
Program Integrity Manual definition of ``reasonable and necessary''
with modifications, including to add a reference to Medicare patients
and a reference to commercial health insurer coverage policies. 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. We
believe this definition is a significant step in meeting the E.O.'s
directive to bring clarity to coverage standards. Stakeholders have
expressed interest in codifying a definition of ``reasonable and
necessary'' for many years. This proposed definition is familiar and
functional, can satisfy that interest and meet the E.O.'s ask, while
also aligning with the goals of MCIT by providing clarity and
predictability for innovation, including for beneficiaries and
innovators.
The proposed MCIT coverage pathway is specifically for Medicare
coverage of devices that are designated as part of the Food and Drug
Administration's (FDA) Breakthrough Devices Program (hereafter referred
to as ``breakthrough devices'') and are FDA market authorized. The MCIT
pathway would be voluntary and device manufacturers would notify CMS if
they want to utilize this coverage option.
We propose that national Medicare coverage under the MCIT pathway
would begin immediately upon the date of FDA market authorization (that
is, the
[[Page 54329]]
date the medical device receives Premarket Approval (PMA); 510(k)
clearance; or the granting of a De Novo classification request) for the
breakthrough device. This coverage would occur unless the device does
not have a Medicare benefit category or is otherwise excluded from
coverage by statute (that is, the Medicare statute does not allow for
coverage of the particular device.) This coverage pathway delivers on
the Administration's commitment to give Medicare beneficiaries access
to the newest innovations on the market, consistent with the statutory
definitions of Medicare benefits. Because Medicare is a defined benefit
program, devices that do not fit within the statutory definitions may
not be considered for MCIT. As an example, medical equipment for home
use by the beneficiary must be durable (that is, withstand repeated
use) for it to be coverable by Medicare (as defined in statutes and
regulations by the Secretary). At this time, we are limiting MCIT to
medical devices because that is a category of products explicitly
identified in E.O. 13890, and we have identified that breakthrough
devices can experience variable coverage across the nation shortly
after market authorization.
We propose this MCIT pathway because the prescribed statutory
timeframes for the National Coverage Determination (NCD) process limit
CMS' ability to institute immediate national coverage policies for new,
innovative medical devices. NCDs and Local Coverage Determinations
(LCD) take, on average, 9 to 12 months to finalize. Because of this
length of time, there may be coverage uncertainty between the period of
FDA market authorization and CMS finalization of an NCD or a Medicare
Administrative Contractor's (MACs) finalization of an LCD. During this
time period shortly after market authorization, MACs make coverage
determinations on a case-by-case (individual beneficiary) basis, but
those decisions do not usually establish agency policies for future
claims because a case-by-case decision is for a particular beneficiary
and their health circumstances.
Over the past few years, CMS has heard concerns from stakeholders
that breakthrough devices are not automatically covered nationally by
Medicare once they are FDA market authorized. Variation in coverage
from one jurisdiction to another is also a concern. To date, 16
breakthrough devices have also been market authorized. The majority of
these breakthrough devices (10 devices) experience variability in
coverage for two reasons. One reason is because the breakthrough
devices are coverable at MAC discretion, like many other item and
services, on a case-by-case basis (that is, the breakthrough device may
be covered for one patient, but not for another within the same
jurisdiction). The other reason is because breakthrough devices are
used by a hospital or other provider that operates under a bundled
payment system (such as a diagnosis related group (DRG) system), so
there may be no separate coverage policy for each item or service that
may be included in the bundled payment. Another example of variable
coverage is for one breakthrough device that is non-covered by a local
policy in Florida, but coverable at MAC discretion on a case-by-case
basis in other jurisdictions. One breakthrough device has national
coverage through an NCD. One breakthrough device has uniform coverage
because the same LCD has been adopted in all jurisdictions. There are
three breakthrough devices that do not have a Medicare benefit category
(for example, certain wearable devices); therefore, those breakthrough
devices cannot be covered by the Medicare program.
In contrast to varied local coverage, the proposed MCIT would
create a pathway for immediate national Medicare coverage of any FDA-
market authorized breakthrough device if the device meets criteria
outlined in this proposal.
A. Statutory Authority
We are also proposing to establish in regulations the factors we
have historically used in making ``reasonable and necessary''
determinations under section 1862(a)(1)(A) of the Act, with some
modification. To summarize, this section explains that Medicare payment
may be made under part A or part B for any expenses incurred for items
or services that are reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve the functioning of a
malformed body member. Thus, with some exceptions, section
1862(a)(1)(A) of the Act requires that an item or service be
``reasonable and necessary'' to be covered by Medicare. The courts have
recognized that the Secretary has significant authority to determine
whether a particular item or service is ``reasonable and necessary.''
(Heckler v. Ringer, 466 U.S. 602, 617 (1984). See also, Yale-New Haven
Hospital v. Leavitt, 470 F.3d 71, 84 (2d Cir. 2006); Kort v. Burwell,
209 F. Supp. 3d 98, 110 (D.C. 2016) (The statute vests substantial
authority in the Secretary.)) So even though section 1862(a)(1)(A) of
the Act limits the scope of Medicare coverage, the Secretary has
discretion to revise his/her interpretation of the statute in order to
ensure adequate coverage for items and services under Part A and Part
B.
This proposal would provide national Medicare coverage for
breakthrough devices that are FDA market-authorized and used consistent
with the FDA approved or cleared indication for use (also referred to
as the ``FDA-required labeling'').\5\ This device coverage under the
MCIT pathway is reasonable and necessary under section 1862(a)(1)(A) of
the Act because the device has met the unique criteria of the FDA
Breakthrough Devices Program.
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\5\ FDA Guidance for Industry, ``Medical Product Communications
That Are Consistent With the FDA-Required Labeling--Questions and
Answers,'' available at https://www.fda.gov/media/133619/download.
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B. FDA Breakthrough Devices Program
Under the proposed MCIT coverage pathway, CMS would coordinate with
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. The Breakthrough
Devices Program is an evolution of the Expedited Access Pathway Program
and the Priority Review Program (section 515B of the Federal Food,
Drug, and Cosmetic Act (FD&C Act)), 21 U.S.C. 360e-3; see also final
guidance for industry entitled, ``Breakthrough Devices Program,''
https://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM581664.pdf).
The FDA's Breakthrough Devices Program is not for all new medical
devices; rather, it is only for those that the FDA determines meet the
standards for breakthrough device designation. In accordance with
section 3051 of the 21st Century Cures Act (21 U.S.C. 360e-3),\6\ the
Breakthrough Devices Program is for medical devices and device-led
combination products that meet two criteria. The first criterion is
that the device provide for more effective treatment or diagnosis of
life-threatening or irreversibly debilitating human disease or
conditions. The second criterion is that the device must satisfy one of
the following elements: It
[[Page 54330]]
represents a breakthrough technology; no approved or cleared
alternatives exist; it offers significant advantages over existing
approved or cleared alternatives, including additional considerations
outlined in the statute; or device availability is in the best interest
of patients (for more information see 21 U.S.C. 360e-3(b)(2)). These
criteria make breakthrough designated devices unique among all other
medical devices.\7\ The parameters of the breakthrough devices program
focus on innovations for patients, in turn, MCIT, focuses on these
breakthrough devices consistent with E.O. 13890 and in order to
streamline coverage of innovative medical devices.
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\6\ 21st Century Cures Act, available at https://www.congress.gov/114/plaws/publ255/PLAW-114publ255.pdf; see FDA
Guidance for Industry and Food and Drug Administration Staff,
Breakthrough Devices Program available at https://www.fda.gov/medical-devices/how-study-and-market-your-device/breakthrough-devices-program.
\7\ FDA does not publish a list of breakthrough designated or
breakthrough designated and subsequently market authorized devices.
However if a breakthrough device gains market authorization through
a PMA only, then the summary of safety and effectiveness data (SSED)
will contain a reference for the breakthrough designation. This is
not true for De Novos which have been granted or cleared 510(k)'s.
In consideration of that approach, this notice of public rulemaking
does not contain such lists.
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C. Current Medicare Coverage Pathways
Currently, we utilize several coverage pathways for items and
services, which includes medical devices. None of the coverage pathways
described in this section offer immediate, predictable coverage
concurrently with FDA market authorization like the proposed MCIT
pathway would do. We summarize the other coverage pathways here to
provide context for MCIT.
National Coverage Determinations (NCDs): Section
1862(l)(6)(A) of the Act defines the term national coverage
determination as ``a determination by the Secretary with respect to
whether or not a particular item or service is covered nationally under
this title.'' In general, NCDs are national policy statements published
to identify the circumstances under which particular items and services
will be considered covered by Medicare. Traditionally, CMS relies
heavily on health outcomes data to make NCDs. Most NCDs have involved
determinations under section 1862(a)(1)(A) of the Act, but NCDs can be
made based on other provisions of the Act, and includes a determination
that the item or service under consideration has a Medicare benefit
category. The NCD pathway, which has statutorily prescribed timeframes,
generally takes 9 to 12 months to complete.\8\
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\8\ Section 1869(f)(4) of the Act.
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Local Coverage Determinations (LCDs): Medicare contractors
develop LCDs based on section 1862(a)(1)(A) of the Act that apply only
within their geographic jurisdictions. (Sections 1862(l)(6)(B) and
1869(f)(2)(B) of the Act.) MACs will not need to develop LCDs for
breakthrough devices when they are nationally covered through MCIT.
The MACs follow specific guidance for developing LCDs for Medicare
coverage in the CMS Program Integrity Manual, and in some instances, an
LCD can also take 9 to12 months to develop (MACs must finalize proposed
LCDs within 365 days from opening per Chapter 13--Local Coverage
Determinations of the (PIM) 13.5.1). We note that the MCIT pathway will
not alter the existing coverage standards in Chapter 13--Local Coverage
Determinations of the PIM.\9\ That chapter will continue to be used in
making determinations under section 1862(a)(1)(A) of the Act for other
items and services at the local level.
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\9\ CMS Program Integrity Manual, Chapter 13 Local Coverage
Determinations, available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/pim83c13.pdf
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Claim-by-claim Adjudication: In the absence of
an NCD or LCD, MACs would make coverage decisions under section
1862(a)(1)(A) of the Act and may cover or not cover items and services
on a claim-by-claim basis. The majority of claims are handled through
the claim adjudication process.
Clinical Trial Policy (CTP) NCD 310.1: The CTP
pathway can be used for coverage of routine care items and services
(but generally not the technology under investigation) in a clinical
study that is supported by certain Federal agencies. The CTP coverage
pathway was developed in 2000.\10\ This coverage pathway has not
generally been utilized by device manufacturers because they usually
seek coverage of the device, which is not included in this pathway.
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\10\ CMS, National Coverage Determination for Routine Costs in
Clinical Trials available at https://www.cms.gov/medicare-coverage-database/details/ncd-details.aspx?NCDId=1&fromdb=true.
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Parallel Review: Parallel Review is a mechanism
for FDA and CMS to simultaneously review the submitted clinical data to
help decrease the time between FDA's approval of a premarket
application or granting of a de novo classification and the subsequent
CMS NCD. Parallel Review has two stages: (1) FDA and CMS meet with the
manufacturer to provide feedback on the proposed pivotal clinical trial
within the FDA pre-submission process; and (2) FDA and CMS concurrently
review (``in parallel'') the clinical trial results submitted in the
PMA, or De Novo request. FDA and CMS independently review the data to
determine whether it meets their respective Agency's standards and
communicate with the manufacturer during their respective reviews. This
program is most successful for devices that have a significant amount
of clinical evidence. (Candidates for parallel review would not be
appropriate for simultaneous MCIT consideration.)
Even though CMS has multiple coverage pathways, at this time none
are readily available to provide immediate national coverage for new
breakthrough devices with a Medicare benefit category at the same time
as FDA market authorization. Further, some of these new breakthrough
devices are likely to have limited or developing bodies of clinical
evidence because of the newness of the device; therefore, the MCIT
pathway can support manufacturers that are interested in combining
coverage with their own clinical study to augment clinical evidence of
improved health outcomes, particularly for Medicare patients.
Given this summary of existing coverage pathways, we seek comment
from the public regarding if any of these existing pathways should be
modified to achieve the goals set out by E.O. 13890.
D. MCIT Pathway
We propose that the MCIT pathway would provide immediate national
coverage for breakthrough devices beginning on the date of FDA market
authorization and continue for up to 4 years, unless we determine the
device does not have a Medicare benefit category as determined by us as
part of the MCIT pathway process. The MCIT pathway is voluntary (that
is, manufacturers would affirmatively opt-in), and would be initiated
when a manufacturer notifies CMS of its intention to utilize the MCIT
pathway. (This notification process is described further in section
III. of this proposed rule.) We would subsequently coordinate with the
manufacturer regarding steps that need to be taken for MCIT
implementation purposes. The frequency of subsequent engagement will be
largely driven by whether the manufacturer has questions for CMS, or
CMS and FDA. The timing of coverage will depend upon the timing of the
FDA's market authorization decision. Engagements can take place in the
form of in-person meetings, phone calls, emails, etc. We intend to put
devices that are covered through the MCIT pathway on the CMS website so
that all stakeholders will be aware of what is covered through the MCIT
pathway. Manufacturers of breakthrough devices will not be obligated or
mandated by CMS to conduct clinical studies during
[[Page 54331]]
coverage under the proposed MCIT pathway. However, we seek comment as
to whether CMS should require or incentivize manufacturers to provide
data about outcomes or should be obligated to enter into a clinical
study similar to CMS's Coverage with Evidence Development (CED)
paradigm.\11\ We are aware some manufacturers may be required by the
FDA to conduct post market data collection as a condition of market
authorization, and nothing in this proposed rule would alter that FDA
requirement. Manufacturers are encouraged to develop the clinical
evidence base needed for one of the other coverage pathways after the
MCIT pathway ends. This evidence is encouraged not only for CMS and
private commercial health insurer coverage policies but also to better
inform the clinical community and the public generally about the risks
and benefits of treatment. CMS encourages early manufacturer
engagement, both before and after FDA market authorization, for
manufacturers to receive feedback from CMS on potential clinical study
designs and clinical endpoints that may produce the evidence needed for
a definitive coverage determination after MCIT. This feedback would not
involve CMS predicting specific coverage or non-coverage.
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\11\ CMS, Guidance for the Public, Industry, and CMS Staff
Coverage with Evidence Development, available at https://www.cms.gov/medicare-coverage-database/details/medicare-coverage-document-details.aspx?MCDId=27.
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In order to further the goals of E.O. 13890, CMS proposes to rely
on FDA's breakthrough device designation and market authorization of
those devices to define the universe of devices eligible for MCIT,
except for those particular devices CMS determines do not have a
Medicare benefit category or are statutorily excluded from coverage
under Part A or Part B. In order to provide immediate national coverage
to innovative medical devices, we propose to establish a time limit on
how long a breakthrough device can be eligible for MCIT (that is,
considered a breakthrough device for coverage purposes). MCIT has a
time limit on newness similar to our New Technology Add-on Payment
(NTAP) policy. Eligibility for the NTAP is also time limited and this
time limit applies to all new technologies, including breakthrough
devices, for which an application for additional payment is submitted.
Additionally, the time-limited characteristic of MCIT will drive some
manufacturers to leverage this period of coverage to demonstrate the
value of their device in the competitive marketplace. The 4-year
coverage period is particularly important for manufacturers of
breakthrough devices that choose to further develop the clinical
evidence basis on which the FDA granted marketing authorization. From
our experience with clinical studies conducted as part of an NCD, 4
years is approximately the amount of time it takes to complete a study.
At the end of the 4-year MCIT pathway, coverage of the breakthrough
device would be subject to one of these possible outcomes: (1) NCD
(affirmative coverage, which may include facility or patient criteria);
(2) NCD (non-coverage); or (3) MAC discretion (claim-by-claim
adjudication or LCD). Manufacturers that are interested in a NCD are
encouraged to submit a NCD request during the third year of MCIT to
allow for sufficient time for NCD development. We seek public comment
on whether CMS should open a national coverage analysis if a MAC has
not issued an LCD for a breakthrough device within 6 months of the
expiration date of the 4-year MCIT period.
In our analysis of the current coverage landscape to determine
opportunities for innovation and efficiencies, we also considered
modifying the coverage process for non-breakthrough devices (for
example, PMAs because they are also new to the market), but ultimately
determined that it was the unique characteristics of FDA designated
breakthrough devices and their ability to serve unmet needs that
resonated most with the E.O.'s direction to encourage innovation for
patients. We also considered expedited coverage of newly market
authorized and breakthrough devices when used in a clinical study.
We seek public comment on the proposed MCIT pathway, the
considerations described, whether any of the existing coverage pathways
should be modified to achieve the goals set out by the E.O., and
alternatives to these proposals. We specifically seek public comment on
whether the MCIT pathway should also include diagnostics, drugs and/or
biologics that utilize breakthrough or expedited approaches at the FDA
(for example, Breakthrough Therapy, Fast Track, Priority Review,
Accelerated Approval) \12\ or all diagnostics, drugs and/or biologics.
We seek data to support including these additional item categories in
the MCIT pathway. Also, we specifically seek manufacturer input on
whether an opt-in or opt-out approach would work best for utilizing the
MCIT pathway. We believe manufactures will welcome this new coverage
pathway. We want to preserve manufacturers' business judgment and not
assume which Medicare coverage pathway a given manufacturer of a
breakthrough device would prefer (if any). Therefore, we have proposed
an opt-in approach with an email to CMS to indicate affirmative
interest in coverage. We are interested in whether an opt-out approach
would be less burdensome for stakeholders. If so, we encourage public
comment on a process for stakeholders to opt-out of MCIT that would not
be burdensome. Also, we seek public comment on whether, once a
manufacturer has opted-out of coverage, it can subsequently opt-in to
MCIT.
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\12\ Fast Track, Breakthrough Therapy, Accelerated Approval,
Priority Review, available at https://www.fda.gov/patients/learn-about-drug-and-device-approvals/fast-track-breakthrough-therapy-accelerated-approval-priority-review.
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II. Provision of Proposed Regulations
A. Defining ``Reasonable and Necessary''
As described in section I. of this proposed rule, the Secretary has
authority to determine the meaning of ``reasonable and necessary''
under section 1862(a)(1)(A) of the Act. We are proposing to codify the
longstanding Program Integrity Manual definition of ``reasonable and
necessary'' into our regulations at 42 CFR 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--
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.
In addition to codifying the above criteria, we propose to include a
separate basis under which an item or service would be appropriate
under (3) above that is based on commercial health insurers' coverage
policies (that is, non-governmental entities that sponsor health
insurance plans). The
[[Page 54332]]
commercial market analysis would be initiated if an item/service fails
to fulfill the existing factor (3) criteria defining appropriate for
Medicare patients but fulfills (1) safe and effective and (2) not
experimental or investigational. By considering commercial health
insurer coverage policies, CMS would bring together the expertise of
private payers and CMS. For example, in a recent NCD on acupuncture for
chronic low back pain, CMS considered the technology assessments and
coverage criteria among commercial health insurer coverage
policies.\13\ We believe that this approach would be in line with E.O.
13890 that directs us to make technologies ``widely available,
consistent with the principles of patient safety, market-based
policies, and value for patients.'' Under this separate basis, we
propose that an item or service would satisfy factor (3) if it is
covered under a plan(s) coverage policy if offered in the commercial
insurance market, unless evidence supports that differences between
Medicare beneficiaries and commercially insured individuals are
clinically relevant. Under our proposal, we would exclude Medicaid
managed care, Medicare Advantage, and other government administered
healthcare coverage programs from the types of coverage CMS would
consider, as these enrollees are not in the commercial market. In the
following paragraphs, we seek comment on this proposal and on how best
to implement this mechanism.
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\13\CMS, Decision Memorandum for Acupuncture for Chronic Low
Back Pain, available at https://www.cms.gov/medicare-coverage-
database/details/nca-decision-
memo.aspx?NCAId=295#:~:text=Decision,of%20the%20Social%20Security%20A
ct.
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We solicit comments on sources of data that could be used to
implement this policy, and whether CMS should make this information
public and transparent. We seek public comment on the most appropriate
source(s) for these coverage policies and the best way to determine
which commercial plan(s) we would rely on for Medicare coverage.
We seek comment on whether beneficiaries, providers, innovators, or
others wishing to gain coverage for an item or service demonstrate that
the item or service is covered by at least one commercial insurance
plan policy. If they can provide CMS with evidence of commercial
coverage or if CMS or its MACs identify such coverage from its review
of compilations of health insurance offerings or data from other
sources, CMS would consider factor (3) to be satisfied.
We solicit comment on whether we should limit our consideration of
commercial plan offerings or covered lives to a subset of the
commercial market in the interest of simplicity, including looking at
geographic subsets, subsets based on number of enrollees, subsets based
on plan type (HMO, PPO, etc.), or other subsets of plans--including
utilizing a singular plan. We also seek comment on whether, given
considerations such the variation and distribution of coverage policies
and access to innovations, we should only cover an item or service if
it is covered for a majority, or a different proportion such as a
plurality, of covered lives amongst plans or a majority, plurality, or
some other proportion of plan offerings in the commercial market. (A
plan offering is a contract an insurer offers to its enrollees, and a
single insurance company may provide many different offerings.)
We also recognize that plan offerings may impose certain coverage
restrictions on an item or service, e.g. related to clinical criteria,
disease stage, or number and frequency of treatment. As greater access
to innovative treatments provides beneficiaries with more opportunity
to improve health and drive decisions, we would, when coverage is
afforded on the basis of commercial coverage, adopt the least
restrictive coverage policy for the item or service amongst the
offerings we examine. However, given potential unreasonable or
unnecessary utilization, we also solicit comment on whether we should
instead adopt the most restrictive coverage policy. We are further
considering, as another variation, that if coverage restrictions are
largely similar and present across the majority of offerings, CMS would
adopt these in its coverage policies. We note that such coverage
restrictions include the basic requirement for medical necessity at the
level of individual patients. Medicare will still only pay for an item
or service received by a beneficiary if it is medically necessary for
the beneficiary. We seek comment on whether, if we were to take this
approach, we should instead use a proportion other than a majority, as
low as any offering and as high as all offerings, as a sufficient
threshold. As a final variation, we could defer, in the absence of an
NCD or national policy, to the MACs to tailor the restrictions on
coverage based on what they observe in the commercial market, just as
we rely on MACs with regards to the current definition.
We further solicit comment on whether to grant coverage for an item
or service to the extent it meets the first and second factors and the
commercial coverage basis for the third factor. Under this approach, we
would only use the current definition of ``appropriate'' from the
current PIM when the exception for clinically relevant differences
between Medicare beneficiaries and commercially insured individuals
applies (or if the commercial coverage basis is determined by a
proportion like a majority and there is insufficient commercial
coverage information available). We note that referring to commercial
coverage in this way may expand or narrow the circumstances under which
we will cover a particular item or service and therefore solicit
comment on whether, under such an approach, we should grandfather our
current coverage policies for items and services. We also emphasize
that the MACs will continue to make judgements in evaluating individual
claims for reimbursement, such that a decision by CMS that an item or
service is reasonable and necessary in general does not mean that it is
reasonable and necessary in all circumstances with respect to
individual claims for reimbursement.
We seek public comment on the most appropriate source(s) for these
coverage policies. Further, under our proposal, each MAC would be
responsible for reviewing commercial offerings to inform their LCDs or
claim by claim decisions, which would include individual medical
necessity decisions. We may also allow the MACs to develop approaches
to address any or all of the considerations outlined above, parallel to
their current practice of making coverage decisions in the absence of
an NCD or national policy. We solicit comment on the best role of the
MACs, along these lines or otherwise. We also solicit comment on
whether the discretion to use the current criteria in the PIM when
there is evidence to believe Medicare beneficiaries have different
clinical needs should be exercised through the NCD process or in other
ways, as well as what quantum of evidence should be sufficient.
In sum, we are proposing to define the term ``reasonable and
necessary'' based on the factors currently found in the PIM, plus an
alternative basis for meeting factor (3) based on any coverage in the
commercial market. We are also soliciting comment on an alternative
under whether an item or service satisfies the commercial coverage
basis for factor (3) is determined by how it is treated across a
majority of covered lives amongst commercial plan offerings, as well as
an alternative whereby an item or service would be appropriate for
Medicare patients to the extent it is covered in the commercial market.
[[Page 54333]]
When evidence supports that differences between Medicare beneficiaries
and commercially insured individuals are clinically relevant, we would
rely on the criteria in the current PIM. We would continue relying on
local administration of the program by MACs (including coverage on a
claim by claim basis and LCDs) and maintain our discretion to issue
NCDs based on the final rule.
We solicit comment on this proposed definition of reasonable and
necessary, and alternatives outlined above, as well as other mechanisms
or definitions we could establish for the term ``reasonable and
necessary'', and the merits and drawbacks associated with each,
including the potential impact on Medicare program expenses or
complexity. We may finalize any variation or outgrowth of the policies
described in this proposal, or some combination of these options in
lieu of or in conjunction with our proposed definition.
B. Application of the ``Reasonable and Necessary'' Standard to the MCIT
Pathway
We are proposing that, under the proposed MCIT pathway, 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 have met the
FDA's unique breakthrough devices criteria, and they are innovations
that serve unmet needs. While other devices are still considered new to
the market, for example, PMAs and even some 510(k)s, the devices
designated by the FDA as breakthrough are representative of true
innovations in the marketplace. This application of the ``reasonable
and necessary'' standard in this way would ensure that the MCIT pathway
can provide a fast-track to Medicare coverage of innovative devices
that may more effectively treat or diagnose life-threatening or
irreversibly debilitating human disease or conditions.
MCIT would improve healthcare for Medicare beneficiaries by
providing national Medicare coverage for devices receiving the FDA
breakthrough device designation, which are FDA market-authorized and
used consistent with the FDA approved or cleared indication for use
(also referred to as the ``FDA required labeling''),\14\ so long as the
breakthrough device is described in an appropriate Medicare benefit
category under Part A or Part B and is not specifically excluded by
statute. We believe the criteria for qualification as a breakthrough
device, as defined in section 515B(b) of the Food, Drug and Cosmetic
Act (21 U.S.C. 360e-3(b)) is sufficient to satisfy the elements of the
``reasonable and necessary'' standard. The first breakthrough device
designation criterion is that a device must ``provide for more
effective treatment or diagnosis of life-threatening or irreversibly
debilitating human disease or conditions'' (21 U.S.C. 360e-3(b)(1)).
The second criterion is that the device must satisfy one of the
following elements: It represents a breakthrough technology; there are
no approved or cleared alternatives; it offers significant advantages
over existing approved or cleared alternatives, including additional
considerations outlined in the statute; or availability of the device
is in the best interest of patients (21 U.S.C. 360e-3(b)(2)). Thus,
breakthrough devices are those that HHS has determined may provide
better health outcomes for patients facing life-threatening or
irreversibly debilitating human disease or conditions. We believe that
a device meeting these criteria, once also FDA market authorized, is
``reasonable and necessary'' for purposes of Medicare coverage.
---------------------------------------------------------------------------
\14\ FDA Guidance for Industry, ``Medical Product Communications
That Are Consistent with the FDA--Required Labeling--Questions and
Answers'', available at https://www.fda.gov/media/133619/download.
---------------------------------------------------------------------------
This proposed rule recognizes that the FDA market authorization of
breakthrough devices warrants immediate coverage under the ``reasonable
and necessary'' clause in section 1862(a)(1)(A) of the Act. We
previously stated that FDA determinations were not controlling
determinations for Medicare coverage purposes under section
1862(a)(1)(A) of the Act. (For more information see the January 30,
1989 Federal Register (54 FR 4307) (``FDA approval for the marketing of
a medical device will not necessarily lead to a favorable coverage
recommendation . . . '') and the August 7, 2013 Federal Register (78 FR
48165) (``However, FDA approval or clearance alone does not entitle
that technology to Medicare coverage.'') Under the Secretary's broad
authority to interpret section 1862(a)(1)(A) of the Act (supra section
I.A.), we are revising our interpretation of the statute because of the
practical concerns that our current standards have delayed access to a
unique set of innovative devices that FDA has found to be safe and
effective, and we believe are ``reasonable and necessary'' for purposes
of Medicare coverage.
In light of E.O. 13890, the Secretary has determined that
application of the current standards for making ``reasonable and
necessary'' determinations may take too long following FDA market
authorization of breakthrough devices. More importantly, the existing
standard has not always provided Medicare beneficiaries adequate access
to certain breakthrough medical devices when needed to improve health
outcomes. We are proposing that breakthrough devices per se meet the
reasonable and necessary standard in order to increase access and to
reduce the delay from FDA market authorization to Medicare coverage.
C. MCIT Pathway
We are proposing the MCIT pathway to deliver on the
Administration's commitment to provide access to breakthrough devices
to Medicare beneficiaries. The MCIT pathway provides up to 4 years of
national coverage to newly FDA market authorized breakthrough devices.
We are aware that this coverage may also facilitate evidence
development on devices for the Medicare population because
manufacturers can gather additional data on utilization of the device
during the MCIT coverage period.
1. Definitions
In Sec. 405.601(a) we are proposing that the MCIT pathway is
voluntary. Operationally, we propose that manufacturers of breakthrough
devices notify CMS of their intention to elect MCIT shortly after
receiving notice from the FDA of being granted the breakthrough device
designation. Ideally, this notification would be sent to CMS within 2
weeks of receiving breakthrough designation. However, entities would
not be penalized for notifying CMS after that time. Alternatively,
submitting a notification to CMS shortly before or concurrently with
the date of the FDA marketing submission should also afford CMS
sufficient time to operationalize MCIT for the device. The CMS Coverage
and Analysis Group would establish an email box for these inquires.
This notification alerts CMS to offer guidance to manufacturers about
the MCIT pathway and point to resources for coding and payment, which
are key conversations to effectuate coverage upon FDA market
authorization. We intend to utilize the existing coverage
implementation processes to be prepared to offer coverage immediately
upon the FDA market authorization.
In Sec. 405.601(b), we propose the following definitions for the
purposes of 42 CFR part 405. We propose to define
[[Page 54334]]
``breakthrough device'' as a medical device that receives such
designation by the FDA (section 515B(d)(1) of the FD&C Act (21 U.S.C.
360e-3(d)(1))). We also propose to define, for the sake of clarity in
the rule, that the acronym MCIT stands for Medicare Coverage of
Innovative Technology.
2. MCIT Pathway Device Eligibility
In Sec. 405.603(a) we propose that the pathway is available to
devices that meet the definitions proposed in Sec. 405.601. Based on
the explicit mention of devices in E.O. 13890 and our interaction and
feedback from stakeholders who expressed their concern that there is
more uncertainty of coverage for devices than for other items and
services (for example, diagnostics, drugs and biologics), this proposed
policy is for devices only.
We propose in Sec. 405.603(b) that the breakthrough devices that
received FDA market authorization no more than 2 calendar years prior
to the effective date of this subpart (the date the final rule is
finalized) and thereafter will be eligible for coverage for claims
submitted on or after the effective date of this rule. Claims for
breakthrough devices with dates of service that occurred before the
effective date of this rule would not be covered through MCIT. For
example, a hypothetical breakthrough device that was FDA market
authorized on October 1, 2018, and utilized on January 1, 2020 would
not be eligible for coverage under MCIT because on January 1, 2020, the
date of service, the final MCIT rule was not yet legally in effect. In
contrast, a claim for utilization of the same hypothetical breakthrough
device with a date of service on January 1, 2021 might be eligible for
coverage if the claim occurred after the effective date of the rule
(assuming that the effective date of the rule was prior to January 1,
2021). Breakthrough devices market authorized prior to the effective
date of this rule will not be eligible for all 4 years of coverage. The
4-year period starts on the date of FDA market authorization. For
example, a breakthrough device market authorized on October 1, 2018
would have claims covered through MCIT from the effective date of the
final rule until October 1, 2022. If a manufacturer initially chooses
to not utilize the MCIT pathway, and then chooses to do so some time
after the breakthrough device's market authorization, coverage still
only lasts 4 years from the date of FDA market authorization. We seek
comment on this eligibility criterion for devices and specifically the
2 year lookback.
We propose in Sec. 405.603(c) that to be part of the MCIT pathway,
the device must be used according to its FDA approved or cleared
indication for use. We propose that the device is only covered for use
consistent with its FDA approved or cleared indication for use because
that is the indication and conditions for use that were reviewed by the
FDA and authorized for marketing. Data are unlikely to be available to
support extending beyond the FDA required labeling for breakthrough
devices on the date of marketing authorization. Use of the device for a
condition or population that is not labeled (``off-label'') will not be
covered as that use would not be FDA authorized. We specifically seek
comment on whether off-label use of breakthrough devices should be
covered and, if so, under what specific circumstances and/or
evidentiary support.
In Sec. 405.603(d) and (e), we additionally propose limitations to
what is coverable under the Act. In Sec. 405.603(e), we are proposing
that if CMS has issued an NCD on a particular breakthrough device, that
breakthrough device is not eligible for MCIT. We are proposing this
because, once the device has been reviewed by CMS for the FDA required
approved or cleared indication for use; CMS has made a coverage
determination based on the available evidence for that technology. We
believe this would happen rarely because breakthrough devices are new
technologies that are not likely to have been previously reviewed
through the NCD process. In Sec. 405.603(f), we acknowledge that
devices in the MCIT pathway may be excluded due to statute or
regulation (for example, 42 CFR 411.15, Particular services excluded
from coverage) and, like other items and services coverable by
Medicare, the device must fall within the scope of a Medicare benefit
category under section 1861 of the Act and the implementing
regulations. If the device does not fall within a Medicare benefit
category as outlined in the statute and implementing regulations, the
device is not eligible for Medicare coverage; therefore, the device
would not be eligible for the MCIT pathway.
3. General Coverage of Items and Services under the MCIT Pathway
We propose in Sec. 405.605 that devices covered under the MCIT
pathway are covered no differently from devices that are covered
outside of MCIT. In other words, provided the items and services are
otherwise coverable (that is, not specifically excluded and not found
by CMS to be outside the scope of a Medicare benefit category), covered
items and services could include the device, reasonable and necessary
surgery to implant the device, if implantable, related care and
services costs of the device (for example, replacing reasonable and
necessary parts of the device such as a battery), and coverage of any
reasonable and necessary treatments due to complications arising from
use of the device. What the MCIT pathway offers compared to other
pathways is predictable national coverage simultaneous with FDA market
authorization that will generally last for a set time period.
The proposed MCIT pathway would support and accelerate beneficiary
access to certain innovative devices. CMS encourages manufacturers that
have breakthrough devices covered under MCIT to develop additional data
for the healthcare community.
4. MCIT Pathway for Breakthrough Devices: 4 Years of Coverage
In Sec. 405.607(a), we propose that the MCIT pathway for coverage
would begin on the same date the device receives FDA market
authorization. We propose this point in time to ensure there is no gap
between Medicare coverage and FDA market authorization. This supports
the MCIT pathway's focus of ensuring beneficiaries have a predictable
access to new devices.
We propose in Sec. 405.607(b)(1) that the MCIT pathway for
breakthrough devices ends 4 years from the date the device received FDA
market authorization. We propose this 4 year time period because it
could allow manufacturers to develop clinical evidence and data
regarding the benefit of the use of their device in a real world
setting. For example, we believe 4 years would allow most manufacturers
sufficient time to complete FDA required post-approval or other real-
world data collection studies that may have been a condition of FDA
market authorization. This assumption is based upon our historical
experience with studies conducted through coverage with evidence
development (CED). Further, this time period allows Medicare to support
manufacturers that, whether required by the FDA or not, have an
interest in better understanding the health outcomes of their device in
the Medicare population, including impacts on patient-reported and
longer-term outcomes.
Further, Sec. 405.607(b) proposes reasons that the MCIT pathway
may end prior to 4 years. This includes circumstances whereby the
device becomes subject to an NCD, regulation, statute, or if the device
can no longer be lawfully marketed.
[[Page 54335]]
D. Summary
In summary, the MCIT pathway would provide immediate Medicare
coverage of newly FDA market authorized breakthrough devices for 4
years. We seek public comment on all of our proposals. In particular,
we seek feedback on whether the proposed 4 year coverage period is
sufficient. We also look to stakeholders and the public to determine
the level of interest and expected use of the proposed MCIT pathway so
the agency can begin to estimate the level of needed resources to
support successful implementation. We are also seeking public comments
on our proposal to codify in regulations the standards we have
historically used in making reasonable and necessary decisions under
Part A and Part B under section 1862(a)(1)(A) of the Act. After
considering public comments we would prepare a final rule that we
expect would be effective 60 days after publication of the final rule.
III. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of the section
3506(c)(2)(A)-required issues for the following sections of this
document that contain information collection requirements (ICRs).
To derive average costs, we used data from the U.S. Bureau of Labor
Statistics' May 2018 National Occupational Employment and Wage
Estimates for all salary estimates (https://www.bls.gov/oes/current/oes131041.htm, released May 2019). In this regard, the table that
follows presents the mean hourly wage, the cost of fringe benefits
(calculated at 100 percent of salary), and the adjusted hourly wage.
Table 1--National Occupational Employment and Wage Estimates for MCIT
----------------------------------------------------------------------------------------------------------------
Mean hourly Fringe benefit Adjusted hourly
Occupation title Occupation code wage ($/hr) ($/hr) wage ($/hr)
----------------------------------------------------------------------------------------------------------------
Compliance Officer.......................... 13-1041 34.86 34.86 69.72
----------------------------------------------------------------------------------------------------------------
As indicated, we are adjusting our employee hourly wage estimates
by a factor of 100 percent. This is necessarily a rough adjustment,
both because fringe benefits and overhead costs vary significantly from
employer to employer. Nonetheless, there is no practical alternative
and we believe that doubling the hourly wage to estimate total cost is
a reasonably accurate estimation method.
This proposed coverage pathway allows for a voluntary participation
and therefore necessitates that manufacturers of breakthrough devices
notify CMS of their intent to enter the MCIT pathway. Therefore, the
burden associated with notifying CMS is the time and effort it would
take for each of the organizations to send CMS an email or letter. We
anticipate two MCIT pathway participants in the first year based upon
the number of medical devices that received FY2020 NTAP and were non-
covered in at least one MAC jurisdiction by LCDs and related articles.
We estimate notifying CMS of intent to participate in MCIT would
involve 15 minutes at $69.72 per hour by a compliance officer. In this
regard, we estimate 15 mins per notification at a cost of $17.43 per
organization (0.25 hours x $69.72). In aggregate, we estimate 0.5 hours
(0.25 hours x 2 submissions) at $34.86 ($17.43 x 2 submissions).
After the anticipated initial 2 submitters, over the next 3 years
we expect 3 submitters in year 2, 4 submitters in year 3, and 5
submitters in year 4 to notify CMS of interested in the MCIT pathway.
We expect this increase in submitters each year to level off at this
point. In this regard, we estimate the same 0.25 hours per submission
at a cost of $17.43 per organization. Similarly, in aggregate, we
estimate, for year 2 (0.75 hours at $52.29 an hour), for year 3 (1.0
hour at $69.72 an hour), and for year 4 (1.25 hours at $87.15 an hour).
The proposed requirements and burden will be submitted to OMB under
control number 0938-NEW.
We are requesting public comments on these information collection
and recordkeeping requirements.
If you comment on these information collection and recordkeeping
requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget,
Attention: CMS Desk Officer, CMS-3372-P, Fax: (202) 395-6974; or
Email: [email protected].
Comments must be received on/by November 2, 2020.
IV. Regulatory Impact Statement
This proposed rule makes Medicare coverage policy updates pursuant
to the authority at section 1862(a)(1)(A) of the Act. We are using
regulatory action per the October 3, 2019 ``Executive Order on
Protecting and Improving Medicare for Our Nation's Seniors'' to address
the increasing need for a swift Medicare coverage mechanism to allow
beneficiaries across the nation to access breakthrough devices faster
after FDA market authorization. This proposed rule addresses that need
by establishing a coverage pathway that will allow immediate
beneficiary access to FDA market authorized breakthrough devices.
We have examined the impact of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social
Security Act, section 202 of the Unfunded Mandates Reform Act of 1995
(March 22, 1995; Pub. L. 104-4),
[[Page 54336]]
Executive Order 13132 on Federalism (August 4, 1999), the Congressional
Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing
Regulation and Controlling Regulatory Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
This proposed rule does reach the economic threshold and thus is
considered a major rule.
Regulatory alternatives to this proposed rule were to combine
Medicare coverage with clinical evidence development under section
1862(a)(1)(E) of the Act, to take no regulatory action at this time, or
to adjust the duration of the MCIT pathway. Combining coverage with
clinical evidence development would have met the E.O. 13890 overarching
goal of beneficiary access to breakthrough devices. However, this
alternative did not meet the other E.O. 13890 aims of minimizing time
between FDA market authorization and Medicare coverage and wide
availability. The timing of coverage would depend upon the manufacturer
being able to initiate a clinical study and the wide availability of
coverage could be an issue if providers did not have the infrastructure
necessary to participate in the clinical study. CMS chose to not to
pursue combining coverage with evidence development for breakthrough
devices because we wanted to meet the timing and wide availability aims
of E.O. 13890. CMS also considered taking no regulatory action and
trying to leverage the existing Medicare coverage pathways or proposing
sub-regulatory policies to achieve the streamlined coverage process
described in E.O. 13890. Taking no action would not have resulted in
the desired national coverage and access envisioned in E.O. 13890
because, as described in this preamble, the existing coverage pathways
do not consistently provide swift, national beneficiary access to
innovative devices. As discussed elsewhere in the preamble, the nature
of the problem being addressed by this proposed regulation is a
potential delay between a milestone such as FDA market authorization
and CMS coverage; as such, we request comment on a policy option of
shortening of the duration of the MCIT pathway from the proposed 4
years to 1 year.
In addition to the alternatives just discussed, there are various
possibilities regarding how to change the definition of ``reasonable
and necessary''--for example, whether to include a new aspect of the
proposed definition that focuses on commercial insurance coverage
practices. As noted earlier in the preamble, the goal of this revision
is to expand coverage. However, the nuances of the definition would
affect the magnitude of the impact and we request comment that would
facilitate quantification of effects and comparison of alternatives at
the final rule stage.
The impact of implementing the MCIT pathway is difficult to
determine without knowing the specific technologies that would be
covered. In addition, many of these technologies would be eligible for
coverage in the absence of this rule, such as through a local or
national coverage determination, so the impact for certain items may be
the acceleration of coverage or adoption by just a few months.
Furthermore, some of these devices would be covered immediately if the
MACs decide to pay for them, which would result in no impact on
Medicare spending for devices approved under this pathway. However, it
is possible that some of these innovative technologies would not
otherwise be eligible for coverage in the absence of this rule. Because
it is not known how these new technologies would otherwise come to
market and be reimbursed, it is not possible to develop a point
estimate of the impact. In general, we believe the MCIT coverage
pathway would range in impact from having no impact on Medicare
spending, to a temporary cost for innovations that are adopted under an
accelerated basis.
The decision to enter the MCIT pathway is voluntary for the
manufacturer. Because manufacturers typically join the Medicare
coverage pathway that is most beneficial to them, this would result in
selection against the existing program coverage pathways (to what
degree is unknown at this point). In addition, the past trend of new
technology costing more than existing technology could lead to a higher
cost for Medicare if this trend continued for technologies enrolling in
the MCIT pathway. Nevertheless, new technology may also mitigate
ongoing chronic health issues or improve efficiency of services thereby
reducing some costs for Medicare.
In order to demonstrate the potential impact on Medicare spending,
the CMS Office of the Actuary (OACT) developed three hypothetical
scenarios that illustrate the impact of implementing the proposed MCIT
pathway. Scenarios two and three assume that the device would not have
been eligible for coverage in the absence of this proposed rule. (See
Table 2) The illustration used the new devices that applied for a NTAP
in FY 2020 as a proxy for the new devices that would utilize the MCIT
pathway. The submitted cost and anticipated utilization for these
devices was published in the Federal Register.\15\ In addition, we
assumed that two manufacturers would elect to utilize the MCIT pathway
in the first year, three manufacturers in the second year, four
manufacturers in the third year, and five manufacturers in the fourth
year each year for all three scenarios. This assumption is based on the
number of medical devices that received FY 2020 NTAP and were non-
covered in at least one MAC jurisdiction by LCDs and related articles
and our impression from the FDA that the number of devices granted
breakthrough status is increasing. For the first scenario, the no-cost
scenario, we assumed that all the devices would be eligible for
coverage in the absence of the proposed rule. If the devices received
payment nationally and at the same time then there would be no
additional cost under this pathway. For the second scenario, the low-
cost scenario, we assumed that the new technologies would have the
average costs ($2,044) and utilization (2,322 patients) of similar
technologies included in the FY 2020 NTAP application cycle. Therefore,
to estimate the first year of MCIT, we multiplied the add-on payment
for a new device by the anticipated utilization for a new device by the
number of anticipated devices in the pathway ($2,044 x 2,322 x 2 = $
9.5 million). For the third scenario, the high-cost scenario, we
assumed the new technologies would receive the maximum add-on payment
from the FY 2020 NTAP application cycle ($22,425) and the highest
utilization of a device (6,500 patients). Therefore, to estimate for
the first year of MCIT, we estimated similarly ($22,425 x 6,500
patients x 2 = $ 291.5 million). For subsequent years, we increased the
number of anticipated devices in the pathway by three, four, and five
in the last two scenarios until 2024.\16\ In addition to
[[Page 54337]]
not taking into account inflation, the illustration does not reflect
any offsets for the costs of these technologies that would be utilized
through existing authorities nor the cost of other treatments (except
as noted). It is not possible to explicitly quantify these offsetting
costs but they could substantially reduce or eliminate the net program
cost. However, by assuming that only two to five manufacturers will
elect MCIT coverage, we have implicitly assumed that, while more
manufacturers could potentially elect coverage under MCIT, the majority
of devices would have been covered under a different coverage pathway.
Therefore, a substantial portion of the offsetting costs are implicitly
reflected.
---------------------------------------------------------------------------
\15\ FY 2020 Hospital Inpatient Prospective Payment System
(IPPS) Proposed Rule (84 FR 19640 and 19641) (May 3, 2019) available
at https://www.govinfo.gov/content/pkg/FR-2019-05-03/pdf/2019-08330.pdf (accessed October 17, 2019).
\16\ An indirect cost of the proposed rule would be increased
distortions in the labor markets taxed to support the Medicare Trust
Fund. Such distortions are sometimes referred to as marginal excess
tax burden (METB), and Circular A-94--OMB's guidance on cost-benefit
analysis of federal programs, available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A94/a094.pdf--suggests that METB may be valued at roughly 25 percent of
the estimated transfer attributed to a policy change; the Circular
goes on to direct the inclusion of estimated METB change in
supplementary analyses. If secondary costs--such as increased
marginal excess tax burden is, in the case of this proposed rule--
are included in regulatory impact analyses, then secondary benefits
must be as well, in order to avoid inappropriately skewing the net
benefits results, and including METB only in supplementary analyses
provides some acknowledgement of this potential imbalance.
---------------------------------------------------------------------------
Based on this analysis, there is a range of potential impacts of
the proposed MCIT coverage pathway as shown in Table 2. The difference
between the three estimates demonstrates how sensitive the impact is to
the cost and utilization of these unknown devices.
Table 2--Illustrated Impact on the Medicare Program by Proposed MCIT Coverage Pathway
----------------------------------------------------------------------------------------------------------------
Costs (in millions)
---------------------------------------------------------------
FY 2021 FY 2022 FY 2023 FY 2024
----------------------------------------------------------------------------------------------------------------
No-cost Scenario................................ $0 $0 $0 $0
Low-cost Scenario............................... 9.5 23.7 42.7 66.4
High-cost Scenario.............................. 291.5 728.8 1,311.9 2,040.7
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We believe the assumptions used in the three scenarios are
reasonable to show the possible wide range of impacts for implementing
this proposed pathway, in particular for a technology that would not
have otherwise been eligible for coverage.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Some hospitals and other providers and suppliers are
small entities, either by nonprofit status or by having revenues of
less than $7.5 million to $38.5 million in any 1 year. Individuals and
States are not included in the definition of a small entity. We
reviewed the Small Business Administration's Table of Small Business
Size Standards Matched to North American Industry Classification System
(NAICS) Codes to determine the NAICS U.S. industry titles and size
standards in millions of dollars and/or number of employees that apply
to small businesses that could be impacted by this rule.\17\ We
determined that small businesses potentially impacted may include
surgical and medical instrument manufacturers (NAICS code 339112,
dollars not provided/1,000 employees), Offices of Physicians (except
Mental Health Specialists) (NAICS code 621111, $12 million/employees
not provided), and Freestanding Ambulatory Surgical and Emergency
Centers (NAICS code 621493, $16.5 million/employees not provided).
During the first 4 years of MCIT, we anticipate approximately 14
surgical and medical instrument manufacturers may participate, and
based off of U.S. Census data, the majority of this businesses type are
small businesses with less than 1,000 employees (968 out of 1,093
businesses have less than 500 employees). \18\ As such, this proposed
rule would impact less than 5 percent of these businesses, and the
revenue impact, if any, would not be negative. Rather, it would be a
positive impact because MCIT would provide Medicare coverage (and
subsequent payment) to providers who purchase the devices from these
manufacturers. For Offices of Physicians (except Mental Health
Specialists) and Freestanding Ambulatory Surgical and Emergency Centers
that may be providing the breakthrough devices, the majority are small
businesses with less than 1,000 employees (4,060 out of 4,385 and 160,
367 out of 161, 286 have less than 500 employees, respectively).\19\
Given that we estimate, at most in the high-cost scenario, that 6,500
beneficiaries would utilize breakthrough devices through MCIT per year,
and even if each beneficiary were to access services at only one of
these small businesses (that is, no two beneficiaries used the same
office or center), still less than 5 percent of these small businesses
would be impacted by MCIT. As such, the revenue impact, if any, would
not be negative, rather, it would be a positive impact because MCIT
would provide Medicare coverage (and subsequent payment) to providers.
Overall, this proposed rule results in a payment, not a reduction in
revenue. We are not preparing a further analysis for the RFA because we
have determined, and the Secretary certifies, that this proposed rule
will not have a significant negative economic impact on a substantial
number of small entities because small entities are not being asked to
undertake additional effort or take on additional costs outside of the
ordinary course of business through this proposed rule. Rather, for
small entities that develop or provide breakthrough devices to
patients, this proposed rule is a means for the device to be covered
through the Medicare program, which does not detract from revenue and
could be viewed as a positive economic impact. With the limited
information we had to base this estimate, we solicit public comment on
improvements to this estimate for the final rule.
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\17\ Small Business Administration, Table of Small Business Size
Standards Matched to North American Industry Classification System
(NAICS) Codes, available at https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.
\18\ 2017 County Business Patterns and 2017 Economic Census.
Number of Firms, Number of Establishments, Employment, Annual
Payroll, and Preliminary Receipts by Enterprise Employment Size for
the United States, All Industries: 2017 (release date: May 6, 2020).
\19\ Id.
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In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital
[[Page 54338]]
as a hospital that is located outside of a Metropolitan Statistical
Area for Medicare payment regulations and has fewer than 100 beds. We
are not preparing an analysis for section 1102(b) of the Act because we
have determined, and the Secretary certifies, that this proposed rule
would not have a significant impact on the operations of a substantial
number of small rural hospitals because small rural hospitals are not
being asked to undertake additional effort or take on additional costs
outside of the ordinary course of business through this proposed rule.
Obtaining breakthrough devices for patients is at the discretion of
providers. We are not requiring the purchase and use of breakthrough
devices. Providers should continue to work with their patients to
choose the best treatment. For small rural hospitals that provide
breakthrough devices to their patients, this proposed rule is a means
for the device to be covered through the Medicare program.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2020, that
threshold was approximately $156 million. This proposed rule would have
no consequential effect on State, local, or tribal governments or on
the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
Executive Order 13771 (E.O. 13771), titled Reducing Regulation and
Controlling Regulatory Costs, was issued on January 30, 2017. This
proposed rule, if finalized as proposed, is expected to impose no more
than de minimis costs and thus be neither an E.O. 13771 regulatory
action nor an E.O. 13771 deregulatory action.
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.
V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
List of Subjects in 42 CFR Part 405
Administrative practice and procedure, Diseases, Health facilities,
Health professions, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
0
1. The authority for part 405 continues to read as follows:
Authority: 42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x,
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).
0
2. Section 405.201 is amended in paragraph (b) by adding the definition
of ``Reasonable and necessary'' in alphabetical order to read as
follows:
Sec. 405.201 Scope of subpart and definitions.
* * * * *
(b) * * *
Reasonable and necessary means that an item or service is
considered--
(1) Safe and effective;
(2) Except as set forth in Sec. 411.15(o)) of this chapter, 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 (i) Meets all of the following criteria:
(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; or
(ii) Is covered by commercial insurers, unless evidence supports
that differences between Medicare beneficiaries and commercially
insured individuals are clinically relevant.
* * * * *
0
3. Subpart F, consisting of Sec. Sec. 405.601-405.607, is added to
read as follows:
Subpart F--Medicare Coverage of Innovative Technology
Sec.
405.601 Medicare coverage of innovative technology.
405.603 Medical device eligibility.
405.605 Coverage of items and services.
405.607 Coverage period.
Subpart F--Medicare Coverage of Innovative Technology
Sec. 405.601 Medicare coverage of innovative technology.
(a) Basis and scope. Medicare coverage of innovative technology
(MCIT) is a program that provides national, time-limited coverage under
section 1862(a)(1)(A) of the Act for certain breakthrough medical
devices. Manufacturer participation in the pathway for breakthrough
device coverage is voluntary.
(b) Definitions. For the purposes of this subpart, the following
definitions are applicable:
Breakthrough device means a device that receives such designation
by the Food and Drug Administration (FDA) (section 515B(d)(1) of the
FD&C Act (21 U.S.C. 360e-3(d)(1)).
MCIT stands for Medicare coverage of innovative technology.
Sec. 405.603 Medical device eligibility.
The MCIT pathway is available only to medical devices that meet all
of the following:
(a) That are FDA-designated breakthrough devices.
(b) That are FDA market authorized at most [date 2 years prior to
effective date of final rule] and thereafter.
(c) That are used according to their FDA approved or cleared
indication for use.
(d) That are within a Medicare benefit category.
(e) That are not the subject of a Medicare national coverage
determination.
(f) That are not otherwise excluded from coverage through law or
regulation.
Sec. 405.605 Coverage of items and services.
Covered items and services furnished within the MCIT pathway may
include any of the following, if not otherwise excluded from coverage:
(a) The breakthrough device.
(b) Any reasonable and necessary procedures to implant the
breakthrough device.
[[Page 54339]]
(c) Reasonable and necessary costs to maintain the breakthrough
device.
(d) Related care and services for the breakthrough device.
(e) Reasonable and necessary services to treat complications
arising from use of the breakthrough device.
Sec. 405.607 Coverage period.
(a) Start of the period. The MCIT pathway begins on the date the
breakthrough device receives FDA market authorization.
(b) End of the period. The MCIT pathway for a breakthrough device
ends as follows:
(1) No later than 4 years from the date the breakthrough device
received FDA market authorization.
(2) Prior to 4 years if a manufacturer withdraws the breakthrough
device from the MCIT pathway.
(3) Prior to 4 years if the breakthrough device becomes the subject
of a national coverage determination or otherwise becomes noncovered
through law or regulation.
Dated: May 4, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: June 11, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-19289 Filed 8-31-20; 8:45 am]
BILLING CODE 4120-01-P
