CMS Proposes to Repeal Device Coverage Pathway and “Reasonable and Necessary” Regulations

On September 15, 2021, the Centers for Medicare & Medicaid Services (CMS) published a proposal (Proposed Rule) in the Federal Register that would repeal the Medicare Coverage of Innovative Technology (MCIT) pathway and “reasonable and necessary” final rule published January 14, 2020 (Final Rule). The Final Rule has an effective date of December 15, 2021. In its Proposed Rule proposing to repeal the Final Rule and seeking comments on that proposal, CMS expresses concerns about the adequacy of evidence needed to demonstrate that a device subject to the MCIT pathway is “reasonable and necessary” for purposes of Medicare coverage as well as operational challenges with the “reasonable and necessary” regulations. 

Comments on this Proposed Rule are due by October 15. In setting the comment deadline, CMS invoked an exception to the Medicare Act, which otherwise requires a 60-day comment period. Medical device and other stakeholders should consider commenting on this Proposed Rule, including with respect to the proposed repeal of the MCIT pathway.

Background on MCIT Pathway

The MCIT pathway would establish a Medicare coverage pathway for medical devices designated as breakthrough by the Food and Drug Administration (FDA). Under the Final Rule, MCIT would result in four years of national Medicare coverage of a breakthrough device starting on the date of FDA market authorization or a manufacturer chosen date within two years thereafter. In the proposed repeal, CMS argues that the Final Rule “is not in the best interest of Medicare beneficiaries because the rule may provide coverage without adequate evidence that the Breakthrough Device would be a reasonable and necessary treatment for the Medicare patients that have the particular disease or condition that the device is intended to treat or diagnose.” CMS asserts that “significant concerns persist about the availability of clinical evidence” for these breakthrough devices, particularly with respect to the Medicare population. CMS appears to want to evaluate the clinical evidence applicable to a given device before determining whether Medicare coverage is appropriate.
For more information about these rulemakings, please see our Sidley Updates here, here, and here.  

New Developments

In the new Proposed Rule, CMS attempts to address its change of position by stating that “after further consideration of all public comments,” CMS “no longer agree[s] that the FDA safety and effectiveness standards alone are sufficient to support open-ended Medicare coverage.” CMS also argues that “FDA and CMS act under different statutes that have different goals.” 

In discussing its proposed repeal of the MCIT pathway, CMS expresses the following concerns:

• Evidence Development and Patient Safety. CMS states that the typical Medicare national coverage determination process involves a “robust review” of clinical evidence and its applicability to the Medicare population, which has more comorbidities and may have different outcomes than other populations. CMS further states in the Proposed Rule that CMS recognizes that the agency has “changed [its] position” but contends that guaranteeing coverage under the MCIT pathway could be problematic if there is no evidence demonstrating a health benefit or addressing risks specific to Medicare beneficiaries.
• Limitations of the MCIT Pathway. CMS expresses concerns about certain limitations of the pathway, stating that “there are many drawbacks to limiting coverage through the MCIT pathway only to those devices that are part of the Breakthrough Devices Program.” CMS notes that other, nonbreakthrough devices could be disadvantaged and that development could be stifled.

The Final Rule also established regulatory standards for “reasonable and necessary” determinations for items and services that are furnished under Medicare Parts A and B. Among other considerations, those standards under the Final Rule addressed the use of commercial insurer coverage policies in Medicare determinations. Specifically, CMS stated that it would, in part, consider coverage to the extent the items or services are covered by a majority of commercial insurers in determining whether an item or service is appropriate for Medicare patients. In the Proposed Rule, CMS recognizes that “challenges” persist in operationalizing when commercial insurer coverage policies may be considered. While CMS proposes to repeal the Final Rule in its entirety, including the reasonable and necessary regulations, CMS seeks comments on whether, alternatively, to repeal only the commercial insurance portions of the Final Rule or to consider different criteria as part of a future codification of the definition of “reasonable and necessary.” The issue of potential codification of standards for “reasonable and necessary” determinations in regulations raises important questions under Azar v. Allina Health Services, 139 S. Ct. 1804 (2019), as CMS and its contractors currently rely on subregulatory guidance in making such determinations. 

Despite the proposed repeal, CMS states that it recognizes the value of providing access to innovative, beneficial technologies. Nevertheless, CMS expresses the position in the Proposed Rule that “there are other ways to achieve our stated goals,” which “may include better utilizing existing pathways or conducting future rulemaking.” CMS fails to offer any specifics, however, or to make any commitments. CMS also states that the agency is “considering future policies and potential rulemaking to provide improved access to innovative and beneficial technologies.”

CMS acknowledges in the Proposed Rule that under Section 1871(a) of the Social Security Act, certain rulemaking and other actions affecting Medicare coverage and payment standards generally require a comment period of not fewer than 60 days unless there is a statutory exception. CMS invokes the “good cause” exception in this Proposed Rule, stating that the agency “find[s] good cause to reduce the public comment period to 30 days with respect to the proposed repeal of the [Final Rule],” which otherwise would become effective on December 15, 2021. In addition, CMS suggests that it plans to provide only a “30-day notice” before its proposed repeal of the Final Rule, if finalized, would become effective — such that the repeal would take effect before December 15. Notably, however, the Congressional Review Act requires that agencies must delay the effective date of major rules such as this one by at least 60 days.

Stakeholders affected by the proposed repeal of this Final Rule should consider submitting comments by the October 15 deadline.