CMS “Medicare Coverage of Innovative Technology” Final Rule Allows Coverage of FDA Breakthrough Devices

January 12, 2021—The Centers for Medicare & Medicaid Services (CMS) issued a final rule, the Medicare Coverage of Innovative Technology (MCIT; CMS-3372-F), that provides access for Medicare beneficiaries to the latest medical devices.

CMS noted that under current rules, FDA approval of a device is followed by an often lengthy and costly process for Medicare coverage. The lag time between the two leads to innovators first spending time and resources on FDA approval and then subsequently on the Medicare coverage process. This causes undue burden for innovators and could delay access to these potentially lifesaving technologies during the existing Medicare coverage determination process.

According to CMS, the MCIT rule will eliminate this lag time for both seniors and device manufacturers. It will create an accelerated Medicare coverage pathway for products that have been granted the FDA’s Breakthrough Device designation and reviewed for approval on an expedited basis.

Under the MCIT rule, Medicare can provide national coverage simultaneously with FDA approval for up to 4 years. After the coverage period is over, CMS will reevaluate the device based on clinical and real-world evidence of improvement in health outcomes among Medicare beneficiaries to determine more permanent coverage. This 4-year timeline may incentivize the manufacturers of these breakthrough devices to develop additional evidence regarding the applicability of their products to the Medicare population, so they might continue Medicare coverage beyond the initial 4 years, noted CMS in the announcement.

According to CMS, because the MCIT rule will provide national Medicare coverage for 4 years, it will harmonize with the local coverage determination (LCD) process, thus promoting equal access for seniors regardless of where they live. Currently, under the local coverage process, 16 Medicare Administrative Contractors (MACs) make Medicare coverage decisions on the local level, so the technology could be covered in one area of the country but not in another.

Additionally, to secure an LCD, manufacturers are required to seek separate decisions from each of the MACs. MCIT makes this step unnecessary. Under MCIT, breakthrough devices are given national coverage for 4 years as early as the date of FDA approval. This means that manufacturers no longer have to seek LCDs from each MAC and will have the option to choose when they would like coverage to begin. This will give them the flexibility to align the coverage process with their manufacturing and distribution cycles.

After the final rule takes effect, on manufacturer request, Medicare may cover MCIT-eligible breakthrough devices the FDA has approved, including breakthrough devices that received FDA marketing authorization approval within 2 calendar years before the final rule’s effective date, giving Medicare beneficiaries access to these devices.

In addition, the MCIT final rule will clarify the standard that CMS uses to determine whether Medicare should cover items and services, like devices and surgical procedures. Under the Medicare law, with relatively few exceptions, the program can only cover 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. This final rule will codify CMS’s definition of reasonable and necessary in regulation to give innovators a clearer understanding of CMS standards.

Based on public comment, the final rule included a more flexible start date for MCIT coverage. Manufacturers can choose the date coverage begins to better align with market availability. Also, as stakeholders requested, CMS will gather more information about using commercial insurer coverage policies and use them under specific circumstances.

“Government processes have slowed beneficiaries’ access to innovative treatments,” commented CMS Administrator Seema Verma in the press release. “Despite being deemed safe and effective by the FDA, Medicare beneficiaries have not had predictable, immediate access to innovative breakthrough devices. In an ever-evolving health care marketplace, CMS remains committed to transforming the health care delivery system through initiatives like MCIT that focus on results, removing government barriers to advancing innovations, fostering competition, and ensuring quicker access to the most advanced therapies for Medicare beneficiaries while providing them with better value and outcomes.”

The CMS Fact Sheet on the final rule is available on the CMS website. The final rule was published in the Federal Register.