CMS Changes Course by Repealing the Medicare Coverage of Innovative Technology and Definition of Reasonable and Necessary Rule Due to Insufficient Beneficiary Protections

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Foley & Lardner LLPOn November 12, 2021, the Centers for Medicare and Medicaid Services (CMS) announced that it is rescinding the Medicare Coverage of Innovative Technology and Definition of “Reasonable and Necessary” (MCIT/R&N) final rule, which would have become effective on December 15, 2021.

The MCIT/R&N final rule from the Trump administration would have granted expedited Medicare coverage for up to 4 years for certain Food and Drug Administration (FDA)-designated “breakthrough” devices having received or cleared market authorizations. Coverage would have started immediately on the date of FDA market authorization, or a manufacturer chosen date within 2 years. CMS intended the MCIT final rule to address delays and uncertainty in Medicare coverage that can slow innovation and hinder access to new, innovative technologies.

Accelerating coverage of breakthrough devices would have substantially increased availability of new breakthrough technology to Medicare beneficiaries. In a press release, CMS stated that it is rescinding the final rule, however, to address “concerns that the provisions in the final rule may have not been sufficient to protect Medicare patients.” According to the Federal Register published document repealing the MCIT/R&N final rule, CMS asserted that because this rule did not require data concerning Medicare beneficiaries, it could “establish insufficient beneficiary protections for certain devices.” Therefore, CMS determined that it would be in the best interest of Medicare patients to repeal the MCIT/R&N final rule and revisit the policy.

CMS Administrator Chiquita Brooks-LaSure states that “[a]lthough we continue to be in favor of enhancing access to new technologies, we are mindful that they may have unknown or unexpected risks and must first ensure such technologies improve health outcomes for Medicare beneficiaries.” She notes, CMS must “balance access and appropriate safeguards” when implementing policies.

In its proposal to rescind the final rule, CMS outlined key concerns regarding streamlining coverage. Following the expedited 4-year coverage in the final rule, manufacturers would have had to extend coverage through existing coverage pathways, such as claim-by-claim adjudications, local coverage determinations (LCDs), and national coverage determinations (NCDs). The LCD and NCD process involves clinical evidence reviews to determine whether items and services furnished under Medicare Parts A and B are reasonable and necessary. While the second part of the R&N final rule would have implemented regulatory standards for making these reasonable and necessary determinations, CMS demonstrated concern over inhibiting its ability to make case-by-case determinations regarding whether a device is reasonable and necessary based on clinical evidence before beginning coverage. The ability to make case-by-case determinations is of key concern for CMS because of the wide-range of FDA-approved medical devices—which can range from surgical implants to blood glucose monitoring software—all of which carry different reasonable and necessary determination considerations.

While FDA market authorization does include safety and efficacy standards, CMS remains concerned as to whether the fact that FDA determined that a device is safe and effective automatically justifies insurance coverage. Unlike pharmaceuticals where CMS is required to cover any FDA-approved drug, medical device companies must apply to insurance companies to cover their newly approved device. (Social Security Act, Section 1862(l) (2020)). Congress intended for this bifurcated system to create a barrier in which medical device manufacturers must still prove that a device will be both reasonable and necessary to justify insurance coverage. The MCIT/R&N final rule would have chipped away at this bifurcated system, a system that can be frustrating to patients and providers desperate to try out breakthrough devices. Increasing access to these devices too early, however, could welcome an influx of expensive devices that are technically safe but not necessarily effective enough to be a reasonable and necessary use of finite resources or in the best interests of the beneficiary. The MCIT/R&N final rule would have increased the FDA’s role in determining insurance coverage and, according to CMS, weakened CMS’s ability to make the best coverage decisions for their beneficiaries. Medical device coverage will always be a balancing act between these two critical issues: access and safety.

How CMS will address issues related to breakthrough device coverage remains uncertain. In rescinding the final rule, CMS will now need to determine whether (1) accelerated breakthrough device coverage remains a goal for CMS, and (2) whether accelerated coverage should come from conducting future rulemaking or making better use of existing pathways.

In the press release, CMS noted that it intends to work with “the FDA, Agency for Healthcare Research and Quality (AHRQ), medical device manufacturers, and other stakeholders to develop an expeditious process to cover innovative devices that benefit Medicare patients.” CMS further stated it plans to hold at least two stakeholder public meetings in 2022 to inform its future policy-making in this space.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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