In November 2021, the Centers for Medicare & Medicaid Services (CMS) rescinded a short-lived program to expedite national Medicare coverage for innovative devices amid safety concerns for Medicare patients. CMS has strived since then to develop a replacement coverage pathway that better reconciles speed and safety. On June 22, 2023, CMS announced a proposed Transitional Coverage for Emerging Technologies (TCET) pathway for certain U.S. Food and Drug Administration (FDA)-designated Breakthrough Devices. The proposal outlines a new expedited process for CMS’s reimbursement of Breakthrough Devices, and in doing so, CMS is signaling that innovators addressing the patient need criteria for Breakthrough Devices designation could be rewarded with a speedy national coverage determination (NCD). Along with its announcement and the procedural notice, CMS also issued a fact sheet on the TCET pathway, and updated guidance documents. Stakeholders will have until August 26, 2023, to submit comments on the TCET procedural notice and proposed guidance documents.
Different Agencies with Different Agendas
This TCET program requires collaboration between two agencies within the Department of Health and Human Services that operate under different statutory authorities and according to different standards. For individuals covered by Medicare Part A or Part B, Congress has charged CMS with determining whether items and services are reasonable and necessary to diagnose or treat an illness or injury, or “to improve the functioning of a malformed body member.” Meanwhile, the FDA is responsible for determining whether the item or service—including drugs, biologics, and medical devices—is safe and effective for the intended population. Currently, it takes CMS approximately nine to 12 months to deliver a national coverage determination (NCD) that would determine whether Medicare covers the provision of a medical device. Absent an NCD, Medicare contractors and other health insurance administrators are more likely to use their own evidence-based guidelines to develop medical coverage policies and independently decide whether a device—including those with Breakthrough designation—will be covered.
What is a Breakthrough Device?
The Breakthrough Devices Program—Section 515B of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 360e-3)—was established in 2015 and is a voluntary program for certain medical devices and device-led combination products that provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions. To qualify for Breakthrough Device status, a sponsor must demonstrate that the device provides for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions and meets at least one of the following criteria: 1) represents breakthrough technology; 2) no approved or cleared alternatives exist; 3) offers significant advantages over existing approved or cleared alternatives; or 4) device availability is in the best interest of patients. Breakthrough Device designation is available for devices and device-led combination products which are subject to review under a premarket approval application (PMA), premarket notification (510(k)), or De Novo classification request (“De Novo request”). The Breakthrough Devices Program is intended to help patients have more timely access to these medical devices by expediting their development, assessment, and review, while preserving the statutory standards for premarket approval, 510(k) clearance, and De Novo marketing authorization, consistent with the FDA’s mission to protect and promote public health. To date, the FDA has granted breakthrough status to 760 devices.
While the Breakthrough Devices program has worked well as an FDA pathway, CMS’s traditional NCD process has been criticized for hindering the coverage and commercialization of Breakthrough Devices. In fact, device makers have often found the process of acquiring an NCD to be complex, with no smooth or efficient way to move from FDA approval to securing coverage from health insurers. The TCET rule appears to be CMS’s attempt to bridge that gap.
Haven’t We Been Here Before?
In 2021, CMS withdrew the Medicare Coverage of Innovative Technology (MCIT) rule that had been finalized in the last days of the Trump administration that also required Medicare coverage of all breakthrough devices for four years. Under the MCIT, which we previously reported on here, Medicare would cover a device as soon as the FDA designated it as a Breakthrough Device. Specifically, MCIT would have provided coverage to devices given breakthrough designation for four years (under an NCD) to any Medicare beneficiary throughout the country.
After a tense battle between Congress, the FDA, and patient advocacy groups, CMS rescinded its MCIT final rule on November 12, 2021. When the Biden administration pulled the final rule, medical device advocates resumed their push for a speedier review process to approve coverage for potentially life-saving Breakthrough Devices. The repeal was a win for the health insurance industry, which said the MCIT pathway could lead to coverage of devices that remained unproven for Medicare populations. Medical device manufacturers, on the other hand, generally saw the fast MCIT pathway to national coverage as an incentive to take more business risks in their pursuit of innovative technologies.
The TCET Compromise Between Payors and Industry
The TCET pathway—according to CMS—supports innovation by providing an efficient, predictable, and transparent coverage review process while developing robust safeguards for the Medicare population. CMS says the new pathway provides manufacturers with opportunities for increased premarket engagement with CMS and a new and unprecedented level of flexibility to address any evidence gaps for coverage.
Like the MCIT pathway, the TCET pathway uses NCD and coverage with evidence development (CED) processes to expedite Medicare coverage of certain Breakthrough Devices. Unlike under the MCIT pathway, however, expedited Medicare coverage under TCET will not immediately accrue on FDA market authorization or clearance. Instead, CMS will be able to conduct an early evidence review in advance of FDA’s issuance of a device’s Breakthrough Device designation. CMS will also be able to discuss with device manufacturers the best available coverage options depending on the strength of the supporting evidence.
The TCET pathway will also allow manufacturers to address any evidence gaps through fit-for-purpose studies. Broadly speaking, the fit-for-purpose approach tailors study design and data collection and analysis to better generate support for specific regulatory decisions than do traditional clinical studies. CMS states that fit-for-purpose study designs will be more convenient for manufacturers because, among other things, many of these studies may use data already collected through care delivery. The manufacturer may then propose an Evidence Development Plan (EDP). As part of the EDP development process, CMS will work with manufacturers to efficiently meet both CMS evidence development and FDA postmarket requirements.
Finally, CMS said its goal is to finalize a TCET NCD for each Breakthrough Device within six months of designation. Instead of the automatic grant of four-year coverage under the MCIT NCD, the TCET NCDs will extend only as long as is needed to facilitate the timely generation of evidence that can inform patient and clinician decision making and lead to a predictable, long-term Medicare coverage determination.
Next Steps for Manufacturers
In addition to the TCET procedural notice, CMS issued a proposed updated CED guidance document and National Coverage Analysis Evidence Review guidance, which CMS says will more clearly allow fit-for-purpose study designs. Stakeholders will have until August 26, 2023, to submit comments on the TCET procedural notice and proposed CED and Evidence Review guidance documents. CMS noted in its announcement that, as part of the development of the TCET pathway, CMS solicited extensive feedback from patient groups, medical professionals, device manufacturers, innovators, and other federal agencies. CMS said it will continue to engage with stakeholders throughout the comment process to ensure a balance between the promotion of access to emerging medical technologies and protecting the health of Medicare beneficiaries.
CMS also said it will soon announce the opening of an NCD pilot program that will incorporate aspects of the new evidence development framework outlined in the TCET procedural notice and guidance documents.
