CMS Proposes Transitional Coverage for Emerging Technologies

The Centers for Medicare & Medicaid Services (CMS) recently issued a long-awaited Notice with Comment Period outlining a proposed Transitional Coverage for Emerging Technologies (TCET) pathway under Medicare that would be available for certain devices designated as "breakthrough devices" by the Food and Drug Administration (FDA). According to CMS, the proposed TCET pathway "aims to coordinate benefit category determination, coding, and payment reviews and to allow any evidence gaps to be addressed through fit-for-purpose studies." CMS further states that the agency "is committed to establishing an alternative coverage pathway that better balances the needs of beneficiaries, patient groups, medical professionals and societies, medical device manufacturers, and others involved in developing innovative medical devices."

CMS has made additional information on the TCET pathway available in a program fact sheet and a blog post.

CMS also issued three guidance documents as a companion to the Notice with Comment Period: 

1. Updated Coverage with Evidence Development (CED) guidance document
2. National Coverage Analysis Evidence Review
3. Clinical Endpoints Guidance: Knee Osteoarthritis

Transitional Coverage for Emerging Technologies

The TCET notice follows a Medicare Coverage of Innovative Technology (MCIT) rule introduced in January 2021. The MCIT rule would have automatically provided four years of Medicare coverage of devices receiving FDA breakthrough device designation. The aim was to address the current gap of nine to 12 months between FDA approval and Medicare National Coverage Determinations (NCDs) and the inconsistent coverage by local Medicare Administrative Contractors (MACs). However, due to concerns regarding evidence standards for devices that were previously awarded breakthrough device designation, the rule was repealed in November 2021. CMS said at the time that the kinds of clinical studies needed for FDA market authorization might not consider the differences in clinical profiles, complexities of medical conditions or associated treatments of the diverse population of Medicare patients.

In the new Notice with Comment Period, CMS outlines a different proposed Medicare coverage pathway for certain breakthrough devices. CMS states that it "has [now] conducted additional opportunities to engage with the public and stakeholders" and has "incorporated that input, along with input gathered in MCIT rulemaking, into [CMS'] plans to improve the Medicare coverage process when making decisions on emerging technologies at the national level." Of note, CMS issued this proposal as a Notice with Comment Period, not as a Notice of Proposed Rulemaking. CMS states its view that "establishing TCET through a procedural notice rather than rulemaking has the advantages that it is faster to implement and can be more easily modified as we gain experience with the approach."

TCET Self-Nomination, Eligibility and CMS Consideration 

CMS proposes that medical device manufacturers voluntarily self-nominate to participate in the TCET pathway. Manufacturers should submit TCET nominations to CMS at TCET@cms.hhs.gov approximately 12 months prior to the anticipated FDA decision on a submission as determined by the manufacturer. CMS' consideration of nominations will include a meeting with the manufacturer to discuss the technology and answer any questions on the process. CMS will meet with the FDA to learn more information about the technology and receive preliminary information on the device and potential review timing.

CMS expects only a limited number of devices to be nominated and approved for TCET each year. CMS expects to receive approximately eight nominations per year and approve at most five candidates based on resource constraints. CMS will prioritize innovative medical devices that have the potential to benefit the greatest number of Medicare beneficiaries. CMS will make a preliminary decision to provisionally accept or decline a nomination within 30 business days following confirmation that the nomination has been received. Determining whether a technology falls within a benefit category may take longer and, in those instances, CMS will communicate a final decision when the benefit category review is complete.

Appropriate candidates for the TCET pathway would include devices that are:

• FDA-designated breakthrough devices that receive market authorization for one or more indications for use covered by the designation
• determined to be within a Medicare benefit category
• not already the subject of an existing Medicare NCD 
• not otherwise excluded from coverage through law or regulation 

CMS acknowledges that diagnostic tests, as devices, would be eligible for the TCET pathway. CMS states, however, that coverage determinations for most diagnostic laboratory tests granted breakthrough designation should continue to be made by the MACs through existing pathways instead of leveraging the new pathway.

Notably, as digital therapeutics are a relatively new invention and do not fall under an existing Medicare benefit category, they would be excluded from the TCET pathway. 

TCET Pathway Procedures

The TCET pathway would include three stages: 1) premarket, 2) coverage under the TCET pathway and 3) transition to post-TCET coverage. 

Premarket

For products that CMS accepts into the proposed TCET pathway, CMS proposes that a series of additional premarket steps would follow, including 1) an Evidence Preview, 2) an optional Evidence Preview Meeting and an opportunity for the manufacturer to provide feedback on the Evidence Preview and 3) if the manufacturer decides to continue with the TCET pathway, an Evidence Development Plan (EDP), which the manufacturer would develop to address any evidence gaps identified in the Evidence Preview.

Coverage Under the TCET Pathway

For devices that CMS accepts into the TCET pathway and receive FDA marketing authorization, CMS proposes initiating the NCD process "following the NCD statutory timeframes" for that process and providing opportunities for public comment. At this stage, manufacturers would have the option to request to withdraw from the TCET pathway, and CMS would not pursue an NCD. CMS states that the duration of coverage under the TCET pathway would be tied to the EDP but anticipates a TCET coverage period of three to five years, as evidence is generated. Although the coverage period could exceed five years, CMS makes clear that it may reconsider an NCD at any time.

CMS also states that, in cases where CMS determines that "further evidence development (that is, CED) is the best coverage pathway, CMS will work with manufacturers to reduce the burden on manufacturers, clinicians, and patients while maintaining rigorous evidence requirements" and work to ensure that CMS is "not requiring duplicative or conflicting evidence development with any FDA post-market requirements for the device." The Notice also references the new proposed CED and Evidence Review guidance documents that CMS issued on the same date as the TCET Notice, which are linked above. 

Transition to Post-TCET Coverage

After the evidence development under the coverage stage concludes, CMS would assess whether there is sufficient evidence to satisfy the reasonable and necessary standard by:

• conducting an updated evidence review (within six months of the review date specified in the EDP) based on a renewed, systematic literature review and qualified evidence synthesis and comparing findings against the NCD outcome benchmarks
• reviewing applicable practice guidelines and consensus statements to assess whether conditions of coverage remain appropriate
• collaborating with the Agency for Healthcare Research and Quality (AHRQ) and the FDA, as appropriate, on the updated review

CMS would then initiate a reconsideration of the original NCD for the breakthrough device, which may result in any one of the following outcomes: an NCD (with coverage or non-coverage), an NCD with CED, or coverage per Medicare contractor discretion (local coverage policies or claim-by-claim adjudication).

Conclusion and Takeaways

Notably, the Notice does not explicitly make the Medicare coverage process easier and likely will not revolutionize it for emerging technology. The proposal does not change the underlying "benefit category" requirement, which excludes many innovative device types from eligibility for Medicare coverage. Its most apparent impact seems to be accelerating the coverage determination process and making it more transparent.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.