CMS Delays and Reopens Comment Opportunity for Breakthrough Device Coverage Rule and Regulatory Definition of “Reasonable and Necessary”

On March 17, 2021, the Centers for Medicare & Medicaid Services (CMS) published an interim final rule¹ delaying the effective date of the final rule “Medicare Program; Medicare Coverage of Innovative Technology (MCIT) and Definition of ‘Reasonable and Necessary.’ ”² In addition to delaying the final rule’s effective date for 60 days (until May 15, 2021), the interim final rule provides a new 30-day public comment period “to allow interested parties to provide comments about issues of fact, law, and policy raised by the rule.”³ In the interim final rule, CMS solicits comment on specific topics and states that the information submitted through public comments “could be considered by the agency in determining whether further actions are appropriate” for this rule, “which could include whether to revise or rescind” the final rule.⁴ Comments are due by April 16, 2021.

CMS states that the effective date delay is consistent with the “Regulatory Freeze Pending Review” memorandum that the Biden administration issued on January 20, 2021, which, among other provisions, encourages federal executive departments and agencies to consider delaying the effective date of rules published in the Federal Register under the prior administration that have not yet taken effect.

The final rule was published in the Federal Register on January 14, 2021, with a scheduled effective date of March 15, 2021. The final rule created a Medicare coverage pathway for “innovative technology.” Under the final rule, this MCIT pathway would be available on an “opt-in” basis for devices designated as “breakthrough devices” by the Food and Drug Administration (FDA) and are FDA market authorized.⁵ The MCIT pathway would result in four years of Medicare coverage for qualifying medical devices that opt into it, starting on the date of FDA market authorization or a date chosen by the manufacturer within two years after FDA market authorization.⁶ In the final rule, CMS stated that “[i]n contrast to ... other coverage pathways, MCIT is readily available to provide immediate national coverage for new breakthrough devices with a Medicare benefit category as early as the same date as FDA market authorization.”⁷

In the proposed rule, CMS had solicited comments on whether the MCIT pathway should be available more broadly, such as to diagnostics or to drugs and/or biologics that use the breakthrough or other expedited FDA pathways.⁸ Although a number of commenters supported broader application, the final rule limited the MCIT pathway to breakthrough-designated devices.

The final rule also implemented for the first time regulatory standards for “reasonable and necessary” determinations with respect to Medicare coverage, specifying that the codified “reasonable and necessary definition applies to all items and services Medicare covers under Part A and Part B.”⁹

In the interim final rule, CMS identifies a number of issues for which the agency specifically invites public comment. Those include, for example, the following:

1. Operational issues relating to the MCIT pathway, such as how to address benefit category determinations, coding, and payment levels for breakthrough devices that opt into this pathway. CMS notes that some commenters supported initiation of the MCIT pathway “only after coverage, coding, and payment had been established” — adding that CMS “underestimated the operational challenges highlighted by these comments.”¹⁰ CMS seeks comment on how it should resolve these operational issues.
2. Considerations in connection with potentially “overlapping rules,” such as rulemaking actions related to benefit category determinations and payment policies for durable medical equipment.
3. New information reflecting increased volume of breakthrough devices and potential implications for the final rule’s regulatory impact analysis.
4. Questions regarding clinical benefits and protections for Medicare beneficiaries. CMS states that “public commenters challenged CMS’ premise that the MCIT coverage could result in improved care for Medicare beneficiaries absent specific evidence that the MCIT eligible devices benefit the Medicare population.” CMS seeks public comments on whether the final rule “adequately addressed the public’s concern of clinical benefit to the Medicare population.”¹¹
5. Public requests for a more detailed proposal, particularly with respect to the “lack of clarity” noted by commenters with respect to the “reasonable and necessary” definition codified in the final rule. CMS also seeks comments on “whether the public had adequate opportunity to comment on the proposed rule” and on “whether CMS adequately responded to objections to the proposed rule.”¹²
6. Concerns about the adequacy of the rulemaking process. CMS expressly asks for public comments on (a) whether there are “any other procedural issues” pertaining to the rulemaking process for the final rule; (b) if so, what those issues are and what CMS should do to remedy them; and (c) whether the final rule should be “amended, rescinded, or further delayed pending review by the CMS or allowed to go into effect.”¹³

Stakeholders affected by this final rule or by the delay and potential further delay, modification, or rescission of the final rule should consider submitting comments that address the topics for which CMS has solicited input.

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¹ 86 Fed. Reg. 14,542 (Mar. 17, 2021).
² 86 Fed. Reg. 2987 (Jan. 14, 2021).
³ 86 Fed. Reg. at 14,542.
⁴ Id.
⁵ 86 Fed. Reg. at 2988.
⁶ 86 Fed. Reg. at 14,543.
⁷ 86 Fed. Reg. at 2990.
⁸For more information about the proposed rule, see Sidley’s summary here.
⁹ 86 Fed. Reg. at 2995.
¹⁰ 86 Fed. Reg. at 14,544.
¹¹ Id.
¹² Id.
¹³ 86 Fed. Reg. at 14,545.