Breakthrough Device Coverage Pathway and Reasonable and Necessary Regulations Delayed Until December

On May 18, the Centers for Medicare & Medicaid Services (CMS) published in the Federal Register a final rule further delaying the effective date of the Medicare Coverage of Innovative Technology (MCIT) and Definition of “Reasonable and Necessary” (R&N) rule until December 15, 2021. In delaying the rule, CMS suggested that additional rulemaking may be forthcoming. 

The original final rule was published in the Federal Register on January 14, 2021, with a scheduled effective date of March 15, 2021, but a March 17, 2021 interim final rule with comment period had delayed the effective date until May 15, 2021.¹ In further delaying the rule, CMS stated that “we do not believe that it is in the best interest of Medicare beneficiaries for the MCIT/R&N final rule to become effective May 15, 2021.”

The original final rule established a Medicare coverage pathway for innovative technology, referencing “breakthrough devices” as designated by the Food and Drug Administration (FDA). The MCIT pathway would result in four years of Medicare coverage for qualifying medical devices that opt in to it. The final rule did not, however, address issues of coding or payment for breakthrough devices that opt in to the MCIT pathway. 

The original final rule also implemented for the first time regulatory standards for “reasonable and necessary” determinations with respect to Medicare coverage, noting that the new “reasonable and necessary” regulations would apply to all items and services covered under Medicare Part A and Part B.

In the new final rule, CMS summarized the more than 200 comments that the agency received in response to the March 2021 interim final rule. CMS noted that “[s]everal individual physicians and members of the public submitted comments supporting implementation of the [original] final rule given the promise of breakthrough devices for their specialties or disease states of concern.” CMS also noted, however, that some public comments “express[ed] significant evidentiary concerns” regarding the MCIT pathway, including the rule’s lack of any “requirement for evidence that MCIT devices will specifically benefit the Medicare target population.” CMS also stated that “early and unrestricted adoption of devices may have consequences that may not be easy to reverse” and that “[a]n additional delay in the effective date would allow time for CMS to address the evidentiary concerns raised by stakeholders and consider how to better balance the needs of all stakeholders.” Some commenters have expressed concern that the criticisms of the final rule reflect views that are inconsistent with providing Medicare beneficiaries meaningful access to breakthrough devices.

In addition, CMS summarized logistical concerns raised by a number of commenters that support improved coverage policies and increased clarity regarding the MCIT pathway, noting that “there is significant uncertainty surrounding coding and payment for new MCIT devices” that could cause “confusion” and “disruption.” CMS asserted that the additional delay “will allow CMS time to ensure the public has a clear understanding of the pathways to coverage, coding, and payment.” 

Regarding the regulatory definition of “reasonable and necessary,” CMS stated that some commenters “supported defining ‘reasonable and necessary’ in regulation, while others do not believe a codified definition is necessary.” Many commenters who criticized the definition (as finalized by CMS in the January 2021 final rule) thought it “could unnecessarily restrict coverage by relying on commercial insurer policies.” Significant issues would appear to be created under the plain language of the statute by applying commercial coverage decisions developed by private parties under standards that differ from the Medicare Act.

In the original final rule published in January 2021, CMS noted that it received “many comments requesting that the agency not finalize the reasonable and necessary definition in regulation.” In response to those comments CMS asserted—among various other points—that the agency believes “it is appropriate to establish the reasonable and necessary criteria in regulations.” CMS also suggested in the original final rule that “issuing regulations in these circumstances is consistent with the Supreme Court’s decision in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019).” In Allina, the Supreme Court held that the Medicare Act’s notice-and-comment requirements are broader than what the Administrative Procedure Act requires, and thus many agency pronouncements cannot be issued through subregulatory guidance but, instead, can only be made through notice-and-comment rulemaking. CMS did not address the possibility of navigating Allina through technology or class of technology specific regulation, as has occurred in the past.

CMS potentially may be inclined not to move forward with implementing the MCIT/R&N rule as originally issued. If CMS ultimately decides to make any changes to the previously finalized rule, CMS would need to revise or withdraw the original final rule. CMS has suggested it potentially may elect to separate the “reasonable and necessary” definition from the MCIT pathway and that it may consider pursuing two different rulemaking actions for these different topics. CMS stated that the further delay in effective date will “give[] CMS time to evaluate stakeholders’ recommendation of whether the reasonable and necessary definition should be a separate rule.”  

Although this latest final rule does not provide an opportunity for comments, which is a source of concern for stakeholders, CMS stated that “[f]uture rulemaking will provide an opportunity for us to fully consider the significant objections to the rule, and will provide another opportunity for the public to present contrary facts and arguments.”