Medical Device Reimbursement at a Crossroads

The FDA is a supporter. So are CMS, industry, and investors of all sizes: Every stakeholder wants Medicare reimbursement for medical devices that have neither predecessor nor efficacious equal. Stakeholders almost had their wish with MCIT – CMS’ Medicare Coverage of Innovative Technology proposal – which was drafted in the Trump years but abandoned soon after President Biden took office.¹

MCIT would have made a reimbursement designation relatively easy. FDA would bestow so-called breakthrough designation; then, if warranted, it would grant marketing approval, and in tandem, the device would earn immediate reimbursement status for four years – and then the manufacturer would have to look for reimbursement through CMS’ existing routes.²

But MCIT critics cited problems with the proposal. It did not include the necessary CMS mandates to acquire reimbursement,³ namely that the product is “reasonable and necessary.”

MCIT also didn’t require that manufacturers show how Medicare’s mainly older population would benefit from the breakthrough device. Furthermore, said Martin Culjat, PhD, SVP, global head, Digital Medicine & Regulatory Innovation, Eversana. “There were a lot of products that were not relevant to the Medicare population that were being [afforded] breakthrough designation.”

Martin Culjat, PhD, SVP, global head, Digital Medicine & Regulatory Innovation, Eversana

Over the past year, these federal agencies, medtech associations, manufacturers and even academics have been working out the steps for a predictive pathway to reimbursement that would satisfy seniors’ needs as well as the different mandates of both agencies. The roughed-out course of this pathway would get manufacturers and CMS involved in conversation with the FDA from practically the start of the breakthrough designation process. The operative words and terms throughout these conversations are voluntary, flexible, evidence-based, predictive, speedy, and reasonable and necessary.

An important unknown here is whether the CMS will require real world evidence in a product’s post-marketing study to ensure permanent reimbursement, Culjat said.

He applauds the quest for reimbursement. “We're at the stage where we need to be able to find ways for digital health products that have clinical and commercial value that are FDA cleared or approved to also be reimbursed.”

The existing data driving these conversations are significant. Once the FDA approves a new technology, it can take between 2.4 and 4.7 years – depending on type of device –before the CMS grants reimbursement status at a national level, according to a Stanford study⁴ released in January.

For many device makers, most of whom are small to middle size, that is a long time to wait for a financial payoff. The time delay doesn’t sit well with investors either, according to the Stanford study. Now, said Sandra Ruggles, PhD, assistant director, Innovation Fellowship,

Stanford Byers Center for Biodesign, Stanford University and study co-author, awaiting a reimbursement decision is the “most significant risk for a manufacturer because it is so late stage” in the marketing process. She made her remarks during a joint conference this year with Duke-Margolis Center for Health Policy.

Kevin Schulman, MD, School of Medicine, Graduate School of Business, Stanford University

It is “incredibly expensive” for an investor to spend more money while waiting for reimbursement approval, especially in an age of rising interest rates, said Kevin Schulman, MD, School of Medicine, Graduate School of Business, Stanford University and a co-author of the Stanford study, in an interview. “It will force people to make decisions about investing.”

Manufacturers like breakthrough designations because it attracts partners, said Culjat. When MCIT was still a possibility, applications flowed to the FDA. But now, he said, that “explosion of breakthrough designations” has slowed.

The medtech market for seniors, regardless of whether a device has breakthrough designation, is huge: CMS estimates that 84% of the Medicare population is older than 65 years; total enrollment, including Medicare Advantage plans, is 64 million.⁵

And, healthcare providers are using technology: at least 50,000 of them have billed Medicare for reimbursement of a remote patient monitoring code over the last four years. ^6,7

About a handful of medtech devices get approved every year for reimbursement.

Schulman said CMS is “woefully understaffed.” And while the FDA and CMS have a joint review program so each can assess an applicant’s clinical data, CMS does not have staff as experienced with clinical trials as does the FDA, Schulman said.

As of now, the Medicare statute contains no language regarding reimbursement for digital health technologies.⁸ Many breakthrough devices are covered through existing payment mechanisms, said a CMS spokesperson. In other words, Medicare coverage of digital technologies is ad hoc. As for the FDA, the 21st Century Cures Act dictated the definition of a breakthrough designation, It must meet one of four standards, none of which mention a specific population of patients that should primarily benefit from the device - and whether the device is necessary.⁹

In other words, the statutes are at cross-purposes, because each agency has a different purpose.

But statutes, said Schulman, don’t have to change for a predictable pathway to work. Academics and industry groups could review the data and provide guidance.

CMS has plans for 2023 regarding the achievement of device reimbursement. The Agency for Healthcare Research and Quality has published an Analysis of Requirements for Coverage with Evidence Developmentstudies, to be discussed at a Medicare Evidence Development and Coverage Advisory Committee in February 2023. Principles for the Transitional Coverage for Emerging Technologies (TCET) regulation is expected to be published in the Federal Register in April 2023. And, CMS intends to “initiate notice and comment rulemaking in 2023 that would speak more to specifics.”

Christine Bahls, Freelance Writer for Medical, Clinical Trials, and Pharma Information

References

1. Federal Register. Medicare Program; Medicare Coverage of Innovative Technology (MCIT) and Definition of “Reasonable and Necessary”Nov. 15, 2021 https://www.federalregister.gov/documents/2021/11/15/2021-24916/medicare-program-medicare-coverage-of-innovative-technology-mcit-and-definition-of-reasonable-and
2. Abraham B, Culjat M. CMS Adopts Automatic Medicare Coverage of Breakthrough Devices January 15, 2021. https://www.eversana.com/insights/cms-adopts-automatic-medicare-coverage-of-breakthrough-devices/
3. Conference. The Need for Transitional Coverage for Emerging Technologies. Stanford Byers Center for Biodesign & Duke-Margolis Center for Health Policy. March 28, 2022. https://healthpolicy.duke.edu/sites/default/files/2022-04/TCET%20Webinar_Slides%203.28.22.pdf
4. Ruggles SW, Perl JR, Sexton Z, Schulman K,Makower J.The Need for Accelerated Medicare Coverage of Innovative Technologies: Impact on Patient Access and the Innovation Ecosystem, Health Management, Policy and Innovation (www.HMPI.org), 7:1.
5. Press release. CMS Releases Latest Enrollment Figures for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) https://www.cms.gov/newsroom/news-alert/cms-releases-latest-enrollment-figures-medicare-medicaid-and-childrens-health-insurance-program-chip
6. Medicare Beneficiaries at a Glance 2021 Edition
7. RPM and RTM Reimbursement Implications in U.S. Private and Public Insurance - Digital Therapeutics Alliance
8. Advamed. Modernizing Mediare coverage of digital health technologies. https://www.advamed.org/wp-content/uploads/2020/09/advamed-modernizing-medicare-coverage-of-digital-health-technologies-september-2020.pdf