Slow race to national coverage for breakthrough devices

As medical innovation rapidly progresses, the Medicare program has been criticized for failing to keep up. Specifically, industry and patient groups have raised concerns that Medicare beneficiaries do not have timely access to groundbreaking devices because of a lack of national coverage and variability in coverage by the regional Medicare Administrative Contractors (MACs). In response, these stakeholders have advocated for expedited national Medicare coverage for breakthrough devices.

The path to such coverage began in January 2021 when CMS published a final rule that established the MCIT pathway, which would have resulted in four years of automatic national coverage for breakthrough designated devices upon the U.S. Food and Drug Administration (FDA) granting marketing authorization, as we described at the time online here. Following the change in the Presidential administration, CMS rescinded the MCIT final rule in November 2021 over concerns “that the provisions in the final rule may not have been sufficient to protect Medicare patients” and promised to “better address” those concerns in the future.[1]

Subsequently, CMS released the TCET Notice in June 2023,[2] which described a process that would allow approximately five medical devices each year to be granted national coverage for a period of three to five years pending development of evidence to support more permanent national or local coverage; we summarized the notice at the time online here. The TCET program, as proposed, would be significantly more circumscribed than the original MCIT program, and would require substantial evidence development activities during the transitional coverage period. Its status also remains unclear.  One year after being proposed, CMS has yet to finalize the TCET pathway, leaving manufacturers and other stakeholders unclear of whether CMS would finalize the pathway and resulting in intervention by members of Congress to seek to expand coverage for breakthrough devices through H.R. 1691.

Key provisions of H.R. 1691 and distinctions from MCIT and TCET

Transitional Medicare Coverage

If enacted, H.R. 1691 would, as noted, provide four years of transitional Medicare coverage for devices that are designated as breakthrough by the Secretary of HHS.

Eligibility

There are four primary criteria for eligibility for coverage under H.R. 1691:

1. the device must have breakthrough device designation under section 515B of the Federal Food, Drug, and Cosmetic Act (FDCA);

2. the device must have marketing authorization from the FDA via the 510(k), De Novo, or Premarket Approval (PMA) pathways;

3. for devices that are cleared via the 510(k) pathway, the device must have been cleared based on clinical information from a prospective trial comparing the device intervention against a control in human subjects pursuant to the Public Health Service Act (PHSA) § 402(j), and such study must have enrolled Medicare beneficiaries; and

4. the device must not be a clinical diagnostic laboratory test.

Additionally, transitional coverage under H.R. 1691 would apply only to devices that are cleared or approved after the date that the bill is enacted.

Application process

The bill contemplates a straightforward process for requesting transitional coverage for breakthrough devices. After devices are cleared or approved, an application would be submitted to HHS, likely to be administered by CMS. CMS must determine whether the eligibility criteria above are satisfied within six months of the application being submitted. If CMS determines that a device satisfies the criteria, CMS would designate it as a breakthrough device for purposes of transitional coverage, and such coverage would apply as of the date of such designation.

If CMS declines to designate a device as a breakthrough device for transitional coverage purposes, the agency must notify the applicant and explain which criteria were not met.

Long-term Medicare coverage

When transitional Medicare coverage expires for a qualifying breakthrough device after four years, the device would be eligible for extended coverage via a National Coverage Determination (NCD), Local Coverage Determinations (LCDs) by the MACs, or on a claim-by-claim basis, as is the case today. However, if enacted, H.R. 1691 would require a more timely decision by CMS on an NCD request for a breakthrough device. Specifically, under the bill, an applicant with a device in a transitional coverage period may request an NCD for the device, and if the application is timely made (nine months before the end of the coverage period for most devices, or 12 months for devices that require assessment from an outside entity or deliberation from the Medicare Evidence Development and Coverage Advisory Committee), the Secretary would be required to make a final decision on whether to establish an NCD prior to the end of the transitional coverage period.

Safeguards for Medicare beneficiaries

Even if a device is designated as a breakthrough device for purposes of transitional coverage, if the device is not furnished in accordance with the FDA-approved labeling or if the Secretary determines, based on a review of clinical data, that the device presents an undue risk of harm that outweighs the potential clinical benefits for individuals enrolled in Medicare, the device would be excluded from coverage. This appears to be a safety measure put in place in response to comments that led to the rescission of MCIT — that Medicare beneficiaries could be harmed by coverage of devices that had not been proven safe or effective in the Medicare population.

No evidence requirement for transitional coverage

Unlike TCET, there is no explicit evidence development component to the program as set forth in the legislation. That said, the transitional coverage period is designed for manufacturers to collect the additional clinical evidence to obtain local or national coverage once the transitional coverage period expires.

Implementation

The bill provides for an 18 month delay between when it is enacted and when devices can begin applying for transitional coverage as breakthrough devices. There is no “newness” criterion, however, and because the program would apply to devices after they receive FDA marketing authorization (unlike TCET, which proposes to require the process to begin before receiving marketing authorization), there appears to be less risk of certain devices getting “boxed out," though, as noted above, the law would only apply to devices that are cleared or approved after H.R. 1691 is enacted.

Next steps

Now that CMS and Congress both are in the fray, there may soon be a pathway to quicker Medicare beneficiary access to breakthrough devices. We will be closely monitoring the legislation and CMS activities. If you have any questions about coverage for breakthrough devices, please contact the Hogan Lovells attorney with whom you regularly work, or any of the authors of this alert.

Authored by Beth Roberts, Stuart Langbein, Beth Halpern, James Huang, Victoria Wallace, and Rianna Modi