Rule2021-24916
Medicare Program; Medicare Coverage of Innovative Technology (MCIT) and Definition of “Reasonable and Necessary”
Primary source
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Published
November 15, 2021
Effective
December 15, 2021
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule repeals the "Medicare Coverage of Innovative Technology (MCIT) and Definition of "Reasonable and Necessary" final rule, which was published on January 14, 2021, and was to be effective on December 15, 2021.
Full Text
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<title>Federal Register, Volume 86 Issue 217 (Monday, November 15, 2021)</title>
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[Federal Register Volume 86, Number 217 (Monday, November 15, 2021)]
[Rules and Regulations]
[Pages 62944-62958]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-24916]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 405
[CMS-3372-F3]
RIN 0938-AT88
Medicare Program; Medicare Coverage of Innovative Technology
(MCIT) and Definition of ``Reasonable and Necessary''
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule repeals the ``Medicare Coverage of Innovative
Technology (MCIT) and Definition of ``Reasonable and Necessary'' final
rule, which was published on January 14, 2021, and was to be effective
on December 15, 2021.
DATES: This final rule is effective December 15, 2021.
FOR FURTHER INFORMATION CONTACT: Lori Ashby, (410) 786-6322 or
<a href="/cdn-cgi/l/email-protection#3e737d776a7e5d534d1056564d10595148"><span class="__cf_email__" data-cfemail="fdb0beb4a9bd9e908ed395958ed39a928b">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
A. January 14, 2021 Final Rule
In the January 14, 2021, Federal Register, we published a final
rule titled ``Medicare Program; Medicare Coverage of Innovative
Technology (MCIT) and Definition of `Reasonable and Necessary'''(86 FR
2987) (hereinafter referred to as the ``MCIT/R&N final rule''). The
MCIT/R&N final rule established a Medicare coverage pathway to provide
Medicare beneficiaries nationwide with faster access to recently market
authorized medical devices designated as breakthrough by the Food and
Drug Administration (FDA). Under the final rule, MCIT would result in 4
years of national Medicare coverage starting on the date of FDA market
authorization or a manufacturer chosen date within 2 years thereafter.
The MCIT/R&N final rule would also implement regulatory standards to be
used in making reasonable and necessary determinations under section
1862(a)(1)(A) of the Social Security Act (the Act) for items and
services that are furnished under Medicare Parts A and B.
B. March 2021 Interim Final Rule (IFC) and May 2021 Final Rule To Delay
Effective Date
In response to the January 20, 2021, memorandum from the Assistant
to the President and Chief of Staff titled ``Regulatory Freeze Pending
Review'' (``Regulatory Freeze Memorandum'') (86 FR 7424, January 28,
2021) and guidance on implementation of the memorandum issued by the
Office of Management and Budget (OMB) in Memorandum M-21-14 dated
January 20, 2021, we determined that a 60-day delay of the effective
date of the MCIT/R&N final rule was appropriate to ensure that--
<bullet> The rulemaking process was procedurally adequate;
<bullet> We properly considered all relevant facts;
<bullet> We considered statutory or other legal obligations;
<bullet> We had reasonable judgment about the legally relevant
policy considerations; and
<bullet> We adequately considered public comments objecting to
certain elements of the rule, including whether interested parties had
fair opportunities to present contrary facts and arguments.
Therefore, in an interim final rule with comment period that went
on display at the Federal Register and took effect on March 12, 2021
(hereinafter referred to as the ``March 2021 IFC''), and was published
in the March 17, 2021, Federal Register (86 FR 14542), we--(1) delayed
the MCIT/R&N final rule effective date until May 15, 2021 (that is, 60
days after the original effective date of March 15, 2021); and (2)
opened a 30-day public comment period on the facts, law, and policy
underlying the MCIT/R&N final rule.
Many commenters on the March 2021 IFC supported further delaying
the MCIT/R&N final rule. Based upon the public comments, we did not
believe that it was in the best interest of Medicare beneficiaries for
the MCIT/R&N final rule to become effective on May 15, 2021. Therefore,
in a final rule that went on display at the Federal Register and took
effect on May 14, 2021 (hereinafter referred to as the ``May 2021 final
rule''), and was published in the May 18, 2021, Federal Register (86 FR
26849), we summarized the comments on the March 2021 IFC and further
delayed the MCIT/R&N final rule effective date until December 15, 2021.
We explained that the additional delay would provide us an opportunity
to address issues raised by stakeholders, especially those related to
Medicare patient protections and evidence criteria. We announced that
during the delay, we would determine appropriate next steps that are in
the best interest of all Medicare stakeholders, and beneficiaries in
particular.
C. September 2021 Proposed Rule To Repeal the MCIT/R&N Final Rule
In the September 15, 2021, Federal Register (86 FR 51326)
(hereinafter referred to as the ``September 2021 proposed rule''), we
published a proposed rule that would repeal the January 14, 2021 final
rule. The September 2021 proposed rule included a 30-day public comment
period on the provisions of the proposed repeal.
II. Provisions of Proposed Regulations and Analysis of and Responses
We received approximately 115 timely items of correspondence in
response to the September 2021 proposed rule. Commenters included a
broad range of stakeholders, including physicians, professional
societies, manufacturers, manufacturer associations, venture capital
firms, and patient advocates. In this section of this final rule, we
present our proposal to repeal the January 2021 MCIT/R&N final rule,
our rationale for the proposal, as well as our summation of and
responses to the public comments received.
A. Proposed Repeal of Medicare Coverage of Innovative Technology Policy
CMS developed MCIT in part due to concerns that delays and
uncertainty in Medicare coverage slowed innovation and impaired
beneficiary access to important new technologies, specifically those
designated as breakthrough devices by FDA. In response to these
concerns, the rule provided 4 years of expedited coverage to FDA market
authorized Breakthrough Devices on the first day of FDA market
authorization or a select date up to 2 years after the market
authorization date as requested by the device manufacturer. While the
final rule did not require manufacturers to develop additional
scientific evidence supporting the use of the Breakthrough Devices in
the Medicare population, manufacturers were aware that, upon conclusion
of MCIT coverage, the existing coverage pathways would be available
(that is, reasonable and necessary determinations would be made via
claim-by-claim adjudication, local coverage determinations (LCDs), and
national coverage determinations (NCDs), which include the coverage
[[Page 62945]]
with evidence development pathway). The NCD and LCD development
processes include reviews of publicly available clinical evidence to
determine whether or not the items or services are reasonable and
necessary and would be covered by Medicare.
As we noted in the September 2021 proposed rule, we believe that
the finalized MCIT/R&N 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.
We have had a growing concern that the provisions that we established
in the MCIT/R&N final rule to protect Medicare patients may not have
been sufficient. We received comments on this issue again in our
subsequent rules that delayed the effective date. By repealing that
rule, we can better address those safety concerns in the future. As
commenters have noted, the agency must balance competing interests.
Although we continue to be in favor of increasing access to new
technologies, we are also mindful that sometimes those devices have
unknown or unexpected risks. The Medicare program will need to include
adequate safeguards to act in those situations.
While the rule tried to address stakeholder concerns about
accelerating coverage of new devices, concerns persist about the
availability of clinical evidence on Breakthrough Devices when used in
the Medicare population as well as the benefit or risks of these
devices with respect to use in the Medicare population upon receipt of
coverage. Based on the comments received throughout the development of
the MCIT pathway, we do not believe that the final rule as currently
drafted is the best way to achieve the goals of MCIT as outlined in the
MCIT/R&N final rule, in particular, to more precisely meet the needs
Medicare beneficiaries and other stakeholders in a timely fashion. We
believe that there are other ways to achieve our stated goals. This may
include better utilizing existing pathways or conducting future
rulemaking.
As noted in the May 2021 final rule, our prior policies permitted
the Medicare program to deny coverage for particular devices if we
learned that a particular device may be harmful to Medicare
beneficiaries. Specifically, Medicare Administrative Contractors (MACs)
could have denied claims under certain circumstances (86 FR 26851, May
18, 2021). Under the MCIT/R&N final rule, this case-specific
flexibility would have been removed. While we could remove coverage
through the NCD process, we would be able to expeditiously remove a
Breakthrough Device from the MCIT coverage pathway for only limited
reasons, such as if FDA issued a safety communication or warning letter
regarding the Breakthrough Device or removed the marketing
authorization for a device. This limitation on our authority is
impracticable as it may lead to preventable harm to Medicare
beneficiaries and it impedes Medicare's ability to make case-by-case
determinations regarding whether a device is reasonable and necessary
based on clinical evidence. After reviewing Breakthrough Devices with
FDA authorization that would be eligible for MCIT, we no longer believe
that CMS should grant full national coverage solely based on
Breakthrough Designation. While the FDA reviews a device to ensure it
meets the applicable safety and effectiveness standard, there is often
limited evidence regarding whether the device is clinically beneficial
to Medicare patients. We believe this is a key factor in determining
coverage under Medicare. The FDA's focus is the safety and
effectiveness profile of devices for the intended population, and while
these devices may improve symptoms for some patients, the risk-benefit
profile may be different for older patients. Further evidence
development is needed to better inform medical decision making
generally as well as Medicare coverage under the reasonable and
necessary standard.
While the MCIT/R&N final rule would have provided expedited
Medicare coverage following market authorization for breakthrough
designated devices, there is currently no FDA requirement that Medicare
beneficiaries must be included in clinical studies needed for market-
authorization. Because the MCIT/R&N final rule also did not require
data concerning Medicare beneficiaries to fill this gap in evidence
specific to Medicare patients, there is the potential that Medicare
would cover devices, even in the absence of data demonstrating that the
device is reasonable and necessary for Medicare patients. The FDA
definition of a medical device is broad, and includes a wide range of
products, such as surgical sutures, joint replacements, blood glucose
monitors, stents, and implanted valves. After reviewing FDA-designated
Breakthrough Devices that have FDA authorization and eligible for MCIT,
CMS has concluded that in treating all breakthrough devices similarly,
the MCIT/R&N final rule could establish insufficient beneficiary
protections for certain devices. Accordingly, we have determined that
repealing the MCIT/R&N final rule and revisiting the policy is in the
best interest of Medicare patients.
In response to the March 2021 IFC, several medical device
manufacturers suggested that, for inclusion in MCIT, FDA pivotal
studies should require inclusion of sufficient numbers of Medicare
beneficiaries (86 FR 26851, May 18, 2021). We note that a simple
proportional requirement may be insufficient, particularly for studies
with the smaller sample sizes that are typical for medical devices;
valid statistical conclusions require that clinical studies be
sufficiently powered to reliably assess risks and benefits in the
Medicare population. Certain proponents of accelerated Medicare
coverage have argued that FDA's determination that a product meets
applicable safety and effectiveness standards for marketing
authorization should be sufficient to support Medicare coverage of
Breakthrough Devices. However, after further consideration of all
public comments, we no longer agree that the FDA safety and
effectiveness standards alone are sufficient to support open-ended
Medicare coverage. FDA and CMS act under different statutes that have
different goals. The standard for Medicare coverage (that is, a
determination that a device is reasonable and necessary for the
diagnosis or treatment of illness or injury or to improve the
functioning of a malformed body member) is not synonymous with the
standards for FDA marketing authorization of devices, which are not
specific to the Medicare population. Since we issued the MCIT/R&N final
rule, we have a better understanding and a growing realization of the
consequences of incorporating FDA standards into Medicare decision
making to the degree stated in the final rule. We have fully considered
the implications, especially in terms of how this would hamper CMS'
ability to address unanticipated harms that may arise in the Medicare
population. CMS no longer believes that it is appropriate to grant all
FDA market authorized Breakthrough Devices automatic coverage solely
based on its Breakthrough Designation. While the FDA reviews devices to
ensure they meet applicable safety and effectiveness standards, there
is often limited evidence regarding whether the device is clinically
beneficial to Medicare patients. As stated earlier, this is an
[[Page 62946]]
important consideration in determining the type of coverage under
Medicare. For example, when only limited evidence on health outcomes
was studied for the Medicare population, it is unclear whether Medicare
should cover the device with evidence development or should only
provide coverage for certain patients, practitioners, or health care
facilities. Immediate, broad, unrestricted Medicare coverage under this
circumstance could lead to patient harm. Information specific to
Medicare populations is important to better inform medical decision
making generally, as well as Medicare coverage under the reasonable and
necessary standard. Among other things, FDA conducts premarket review
of certain devices to evaluate their safety and effectiveness and
determines if they meet the applicable standard to be marketed in the
United States. In doing so, FDA relies on scientific and medical
evidence that does not necessarily include patients from the Medicare
population. In general, under the Medicare statute, CMS is charged with
determining whether items and services are reasonable and necessary to
diagnose or treat an illness or injury or to improve the functioning of
a malformed body member. One consideration for CMS in making national
coverage determinations under the reasonable and necessary standard is
whether the item/service improves health outcomes for Medicare
beneficiaries. For CMS, the evidence base underlying the FDA's decision
to approve or clear a device for particular indications for use has
been crucial for determining Medicare coverage through the NCD process.
CMS looks to the evidence supporting FDA market authorization and the
device indications for use for evidence generalizable to the Medicare
population, data on improvement in health outcomes, and durability of
those outcomes. If there are no data on those elements, it is difficult
for CMS to make an evidence-based decision whether the device is
reasonable and necessary for the Medicare population.
It is important to determine whether Medicare beneficiaries' health
outcomes are improved because these individuals are often older, with
multiple comorbidities,\1\ and are often underrepresented or not
represented in many clinical studies.
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\1\ Davide L Vetrano, M.D., Katie Palmer, Ph.D., Alessandra
Marengoni, M.D., Ph.D., Emanuele Marzetti, M.D., Ph.D., Fabrizia
Lattanzio, M.D., Ph.D., Regina Roller-Wirnsberger, M.D., MME, Luz
Lopez Samaniego, Ph.D., Leocadio Rodr[iacute]guez-Ma[ntilde]as,
M.D., Ph.D., Roberto Bernabei, M.D., Graziano Onder, M.D., Ph.D.,
Frailty and Multimorbidity: A Systematic Review and Meta-analysis,
The Journals of Gerontology: Series A, Volume 74, Issue 5, May 2019,
Pages 659-666, <a href="https://doi.org/10.1093/gerona/gly110">https://doi.org/10.1093/gerona/gly110</a>.
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1. Evidence Development and Patient Safety
The Medicare national coverage determination process includes a
robust review of available clinical evidence and focuses on the
Medicare population to make reasonable and necessary determinations. In
contrast, the MCIT pathway would establish an expedited 4-year coverage
pathway for all Breakthrough Devices that fall under a Medicare benefit
category without a specific requirement that the device must
demonstrate it is reasonable and necessary for the Medicare population.
In general, Medicare patients have more comorbidities and often require
additional and higher acuity clinical treatments which may impact the
outcomes differently than the patients generally enrolled in early
clinical trials. These considerations are often not addressed in the
device development process.
When we issued the MCIT/R&N final rule on January 14, 2021, we
responded to commenters who suggested that CMS should take a different
approach. Some commenters suggested that we should require
manufacturers to provide data about Medicare outcomes before providing
coverage as reasonable and necessary. Other commenters suggested that
we provide incentives to manufacturers to include Medicare
beneficiaries in clinical studies, similar to CMS's Coverage with
Evidence Development (CED) paradigm, before coverage under section
1862(a)(1)(A) of the Act was allowed (86 FR 2990, January 14, 2021).\2\
In response to the March 2021 IFC, additional commenters supported
evidence development as part of the requirements to participate in the
MCIT pathway. Some commenters noted that some clinical trials that were
conducted to support market authorization through the Breakthrough
Devices pathway lack data on patients older than 65, patients with
disabilities, and patients with end stage renal disease (ESRD). They
asserted that the absence of this clinical information poses some
uncertainty about whether FDA's determination of safety and efficacy
could be generalized to the Medicare population (86 FR 26850 and 26851,
May 18, 2021).
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\2\ CMS, Guidance for the Public, Industry, and CMS Staff
Coverage with Evidence Development, available at <a href="https://www.cms.gov/medicare-coverage-database/details/medicare-coverage-document-details.aspx?MCDId=27">https://www.cms.gov/medicare-coverage-database/details/medicare-coverage-document-details.aspx?MCDId=27</a>.
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In response to commenters' concerns about expedited coverage
without adequate evidentiary support, CMS agrees that guaranteeing
coverage for all Breakthrough Devices receiving market authorization
for any Medicare patient could be problematic if there is insufficient
evidence demonstrating a health benefit or addressing the additional
risks for Medicare beneficiaries (86 FR 26850 and 26851, May 18, 2021).
We noted that a Breakthrough Device may only be beneficial in a subset
of the Medicare population or when used only by clinicians within a
certain specialty to ensure benefit. Without additional clinical
evidence on the device's clinical utility for the Medicare population
or appropriate providers, it is challenging to determine appropriate
Medicare coverage of newly market-authorized Breakthrough Devices (86
FR 26850 and 26851, May 18, 2021).
We recognize that the breakthrough designation may be granted by
FDA before sufficient clinical evidence is available to prove there is
a health benefit for Medicare patients. FDA has explained in guidance
that because decisions on requests for breakthrough designation will be
made prior to marketing authorization, FDA considers whether there is a
``reasonable expectation that a device could provide for more effective
treatment or diagnosis relative to the current standard of care (SOC)
in the U.S'' for purposes of the designation. This reasonable
expectation can be ``supported by literature or preliminary data
(bench, animal, or clinical)''.\3\ Without sufficient evidence
developed to show the device improves health outcomes for Medicare
beneficiaries, it may be challenging for the Medicare program to
determine the health benefit of these devices for Medicare
beneficiaries. Public comments expressed concern about how the Medicare
population is often excluded from clinical trials due to age and health
status.
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\3\ Food and Drug Administration, Breakthrough Devices Program
Guidance for Industry and Food and Drug Administration Staff, 9,
available at: <a href="https://www.fda.gov/media/108135/download">https://www.fda.gov/media/108135/download</a>.
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Previously, in the MCIT/R&N final rule, we noted that ``device
coverage under the MCIT pathway is reasonable and necessary for a
duration of time under section 1862(a)(1)(A) of the Act because the
device has met the very unique criteria of the FDA Breakthrough Devices
Program'' (86 FR 2988, January
[[Page 62947]]
14, 2021).\4\ Through further consideration of the breakthrough
designation process, we have changed our position on this issue and
determined that Breakthrough Device designation is not, by itself,
sufficient for expedited Medicare coverage purposes. Rather, as
explained previously, we understand that FDA may grant a device
breakthrough designation when the device has shown a ``reasonable
expectation'' of providing more effective treatment or diagnosis of a
life-threatening or irreversibly debilitating disease or condition
relative to the current U.S. SOC and that it meets the other criterion
for designation in section 515B(b)(2) of the Federal Food, Drug, and
Cosmetic Act (FD&C) Act (21 U.S.C. 360e-3(b)(2)). CMS acknowledges that
we have changed our position on this issue after further consideration
of public comments and after considering the full range of FDA
designated Breakthrough Devices from diagnostic laboratory tests to
implanted valves. As noted previously, we do not believe that granting
broad national coverage solely on Breakthrough Device designation alone
is in the best interest of beneficiaries or the Medicare program, as
this approach does not provide CMS with the necessary flexibility to
establish beneficiary safeguards, similar to the patient protections we
include in NCDs, specifically CED NCDs, for some of these devices that
do not have an evidence base generalizable to the Medicare population.
Under the MCIT/R&N final rule, CMS would not be able to include any
beneficiary safeguards until the conclusion of the 4-year expedited
coverage period and upon completion of an NCD. While we acknowledge
that improvements can be made to the existing coverage processes, the
inability for CMS to establish beneficiary safeguards under the MCIT/
R&N final rule is a significant limitation that can lead to potential
beneficiary harm. For these reasons we no longer believe it is in the
best interest of Medicare patients to base expedited multiyear, broad
national coverage through section 1862(a)(1)(A) of the Act on
Breakthrough Device designation alone.
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\4\ 86 FR 2988 (January 14, 2021) available at <a href="https://www.govinfo.gov/content/pkg/FR-2021-01-14/pdf/2021-00707.pdf">https://www.govinfo.gov/content/pkg/FR-2021-01-14/pdf/2021-00707.pdf</a>.
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Clinical studies that are conducted in order to gain market
authorization for FDA Breakthrough Devices are not required to include
information on patients with similar demographics and characteristics
of the Medicare population. A potential reason there may not be a
strong evidence base specific to the Medicare population could include
the desire by device manufacturers to demonstrate the safety and
effectiveness of a device as clearly as possible. To achieve this aim,
many studies impose stringent exclusion criteria that disqualify
individuals with certain characteristics, such as comorbidities and
concomitant treatment, that might make the effect of the
investigational device more difficult to determine. Consequently, the
safety and effectiveness of a device for older patients with more
comorbidities may not be well understood at the time of FDA market
authorization.
Additionally, there may be devices designated as breakthrough that
do not have adequate data on the effectiveness of the device for the
Medicare population. Without such evidence, it is possible that
Medicare would be covering and paying for devices that may have little
or no Medicare relevant clinical evidence to assist physicians and
patients in making treatment decisions. Separate from information and
evidence submitted for breakthrough designation and market
authorization, is the concept of post-market evidence development.
Without requiring any evidence development specific to Medicare
patients following market authorization, there may not be any evidence
to demonstrate whether the device is beneficial after the conclusion of
MCIT coverage after 4 years. Evidence-based coverage policy is
essential to our objective of improving health outcomes while
delivering greater value. Supportive clinical evidence that ensures a
device is both safe and effective and reasonable and necessary in the
Medicare population is crucial in order to grant coverage for a device
under section 1862(a)(1)(A) of the Act. Such evidence is used to
determine whether a new technology meets the appropriateness criteria
of the longstanding Medicare Program Integrity Manual Chapter 13
definition of reasonable and necessary.\5\ We believe that it is
important to require manufacturers participating in an innovative
coverage pathway, such as MCIT, to produce evidence that demonstrates
the health benefit of the device and the related services for patients
with demographics similar to that of the Medicare population.
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\5\ CMS, Medicare Program Integrity Manual, Chapter 13, 13.5.4,
available at <a href="https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/pim83c13.pdf">https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/pim83c13.pdf</a>
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In response to the March 2021 IFC, some commenters cited evidence
that FDA-mandated postmarket studies are not reliably completed (less
than 20 percent of required studies are completed within 3 to 5 years
after market authorization),\6\ and asserted that evidence
demonstrating a device's health benefit in Medicare beneficiaries is
essential. Commenters also recommended that CMS outline in guidance
documents the types of evidence that would be acceptable for
applications for national or local coverage determinations once the
MCIT pathway's 4 years had expired, such as real-world data or
randomized, controlled trials (86 FR 26851, May 18, 2021). By
voluntarily developing this evidence during the time a device is
covered under the MCIT pathway, the manufacturer could have the
evidence base needed for one of the other coverage pathways after the
MCIT pathway ends. The MCIT/R&N final rule did not require
manufacturers of Breakthrough Devices to develop evidence as part of
their participation requirements under MCIT. In the May 2021 final
rule, we noted that numerous commenters, including physicians with
experience in clinical research and medical specialty societies, sought
modifications to the MCIT/R&N final rule regarding evidence
development, including the addition of real-world evidence
requirements. We agree that guidance documents or similar publications
outlining the types of evidence that would be acceptable for requests
for NCD and LCDs is a good idea. We are continuing to explore
additional opportunities to more efficiently publish relevant health
outcomes for different disease treatments. CMS is working on the best
and most efficient manner to communicate what are important health
outcomes. As was noted by commenters in response to the March 2021 IFC,
early and unrestricted adoption of devices may have adverse
consequences that may not be easy to reverse. CMS expects physicians to
consider the available evidence and assess the care needs of each
patient when considering the best treatment options. However, by
guaranteeing coverage of devices based solely on breakthrough status
and FDA marketing authorization, rather than also taking into account
whether the device provides an effective, reasonable and necessary
treatment for Medicare patients, there may be an incentive for
physicians to use a device that has coverage under the MCIT pathway
rather than a device that is not covered under the MCIT pathway but is
nonetheless covered under an existing coverage pathway and that may be
more
[[Page 62948]]
beneficial to patients. We believe that providers' clinical treatment
decisions should take the individual needs of the patient into account;
therefore, we seek to avoid incentivizing the use of MCIT-covered
devices when an alternative item or service may be more appropriate.
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\6\ Rathi et al.
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While the MCIT/R&N final rule may provide beneficiaries and
manufacturers an assurance of national Medicare coverage, evidence
development under MCIT as previously finalized is voluntary and there
was no requirement that manufacturers conduct studies to generate
evidence to demonstrate clinical benefit to Medicare patients. We
acknowledge that we no longer believe that voluntary evidence
development, as provided for in the MCIT/R&N final rule, is in the best
interests of Medicare beneficiaries as we believe such evidence is key
to determining the best treatments for Medicare patients to ensure that
the benefits of treatments outweigh the potential harms. For devices
that lack evidence that is generalizable to the Medicare population, we
believe it is important for such evidence to be developed and some
public commenters suggested that we establish the coverage criteria
(for example, provider experience, site of service, availability of
supporting services) to ensure delivery of high-quality, evidence-based
care.
While we proposed to repeal the MCIT/R&N final rule, and we now
finalize the repeal of the MCIT/R&N rule, this action does not prohibit
coverage of Breakthrough Devices. As we noted in the May 2021 final
rule, even without the MCIT/R&N final rule in effect, a review of
claims data showed that Breakthrough Devices have received and are
receiving Medicare coverage when medically necessary. As more
Breakthrough Devices achieve market authorization, and as we continue
to examine claims data, we are learning that many of the eligible
Breakthrough Devices are coverable and payable through existing
mechanisms, such as bundled payments. Some Breakthrough Devices may be
addressed by an existing LCD or NCD. New items and services can also be
adjudicated on a claim-by-claim basis and be covered and paid under the
applicable Medicare payment system if the MAC determines them to be
reasonable and necessary for specific patients upon a more
individualized MAC assessment. The MACs may take into account a
beneficiary's particular clinical circumstances to determine whether a
beneficiary may benefit from the device. CMS acknowledges, among other
factors, that MCIT was developed in response to stakeholder concerns
about time lags and coverage uncertainty for devices subject to claim-
by-claim coverage determinations. While these paths provide some
coverage, it may not meet stakeholders' expectations of faster and more
predictable coverage.
2. Limitations of the MCIT Pathway
The MCIT/R&N final rule limited MCIT only to Breakthrough Devices.
In accordance with section 515B of the FD&C (21 U.S.C. 360e-3), FDA's
Breakthrough Devices Program is for certain medical devices and device-
led combination products, and can include lab tests.\7\ To be granted a
Breakthrough Device designation under the Breakthrough Devices Program,
medical devices and device-led combination products must meet two
criteria. The first criterion is that the device provides for more
effective treatment or diagnosis of life-threatening or irreversibly
debilitating human disease or conditions. The second criterion is that
the device must satisfy one of the following elements:
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\7\ Breakthrough Devices Program Guidance for Industry and Food
and Drug Administration Staff, available at <a href="https://www.fda.gov/media/108135/download">https://www.fda.gov/media/108135/download</a>.
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<bullet> It represents a breakthrough technology.
<bullet> No approved or cleared alternatives exist.
<bullet> It offers significant advantages over existing approved or
cleared alternatives.
<bullet> Device availability is in the best interest of patients
(for more information see 21 U.S.C. 360e-3(b)(2)).
Some commenters to the September 2020 MCIT/R&N proposed rule
expressed concern that the MCIT pathway could give specific
technologies an unfair advantage that would be unavailable to
subsequent market entrants, thereby decreasing innovation and market
competition (86 FR 2998 and 2999). Commenters submitted a variety of
alternative approaches to covering second-to-market and non-
breakthrough designated new technology to remedy this unintended
consequence. Some commenters supported that CMS cover iterative
refinements of the same Breakthrough Device for the duration of the
original device's MCIT term. Other commenters suggested coverage under
the MCIT pathway for subsequent similar breakthrough and non-
breakthrough designated devices of the same type and indication for the
balance of the first device's MCIT term. Yet other commenters proposed
that new market entrants that are very similar to a Breakthrough Device
should each receive the full 4 years of MCIT coverage, not tied to the
timeline of the original product.
We acknowledge that we have changed our policy position on this
issue after further consideration of all public comments received as we
have worked to develop the MCIT pathway. We carefully considered the
likelihood of reliance by stakeholders, including manufacturers and
patients on the MCIT/R&N final rule and our decision to repeal the
rule. Because the rule has never gone into effect we believe there has
been minimal, if any, reliance on the MCIT/R&N final rule. Further, we
believe we can work with stakeholders to achieve appropriate coverage
through existing mechanisms. We also agree with commenters that there
are many drawbacks to limiting coverage through the MCIT pathway only
to those devices that are part of the Breakthrough Devices Program, and
we now believe that any future alternative coverage pathway should not
include this limitation. As noted previously, the potential incentives
created by offering immediate coverage of Breakthrough Devices may
disincentivize development of innovative technologies that do not meet
the criteria for the Breakthrough Devices Program, such as some non-
breakthrough-designated second-to-market devices and subsequent
technologies of the same type. Additionally, we now believe a more
flexible coverage pathway that leverages existing statutory authorities
may be better able to provide faster coverage of new technologies to
Medicare beneficiaries while prioritizing patient health and outcomes.
3. Future Coverage Policy Rulemaking
While we proposed to repeal the MCIT/R&N final rule as it is
currently written, we considered future policies and potential
rulemaking to provide improved access to innovative and beneficial
technologies. We are committed to exploring other policy options and
statutory authorities for coverage that better suit the needs of
Medicare beneficiaries and other stakeholders when the items or
services are supported by adequate evidence. For example, we are
planning on initiating several coverage process improvements, including
engaging the Agency for Healthcare Research and Quality (AHRQ) to
explore updating the CED study criteria, as well as exploring options
of expediting the NCD process. It is our goal to address these issues
in future rulemaking and/or subregulatory guidance.
[[Page 62949]]
Comment: Commenters from multiple stakeholder groups
(manufacturers, physicians, associations, etc.) agreed with CMS'
proposal to repeal the MCIT/R&N final rule as they believe that the
MCIT pathway as originally constructed was flawed and would not achieve
the intended outcome of removing delays and uncertainty to improve
beneficiary access to innovative technologies.
Response: We appreciate commenters' support for our proposal to
repeal the MCIT/R&N final rule. We agree with commenters that while the
MCIT/R&N final rule attempted to improve timeliness and predictability
of coverage for new technologies, it was flawed in a number of ways
that would have prevented predictable, timely coverage for beneficial
devices and technologies. We agree with commenters that one of MCIT's
limitations is that the MCIT/R&N final rule would have granted up to 4
years of open-ended Medicare coverage for FDA designated Breakthrough
Devices upon market authorization, with no conditions of coverage
beyond the FDA approved or cleared indication(s) for use. Further, the
rule only granted expedited coverage for designated Breakthrough
Devices; it did not grant the same coverage to devices or technologies
that may treat the same condition but are not FDA designated as a
Breakthrough Device, or older devices/technologies that may be more
beneficial. This uneven approach to important beneficial devices was
concerning and must be addressed.
Comment: Some commenters from multiple stakeholder groups
reiterated their concerns that the provision of expedited coverage for
certain devices (that is, Breakthrough Devices) without adequate
evidence on the Medicare population and no requirement to develop the
evidence places beneficiaries at risk of significant harms. Commenters
noted that this is especially problematic since Medicare beneficiaries
often have comorbidities and may respond differently than other
populations that comprise that majority of most clinical trial
participants.
Response: We agree that the lack of requirements in the MCIT/R&N
final rule for manufacturers to continue to develop evidence
demonstrating improved health outcomes in the Medicare population was
problematic. When there is a lack of evidence specific to the Medicare
population it makes it difficult for CMS to ensure that devices are not
posing additional risks in the Medicare population. Continuing to
develop evidence generalizable to the Medicare population is important
not only to payers, but is key to patients, their caregivers and their
treating clinicians to make the most informed decisions for their
treatment. We continue to believe that it is important to require
manufacturers participating in any innovative coverage pathway, such as
MCIT, to produce evidence that demonstrates the health benefit of the
device and the related services for patients with demographics similar
to that of the Medicare population. It is our intention to address this
issue in future rulemaking and we intend to hold at least two
stakeholder public meetings in calendar year (CY) 2022 to inform our
future policy-making in this space.
Comment: Several commenters noted that CMS already has mechanisms
in place to provide coverage of Breakthrough Devices and that the
repeal of the MCIT/R&N final rule would not prohibit coverage of these
devices.
Response: We appreciate stakeholders' acknowledgement that even
without the MCIT pathway, Breakthrough Devices have received and are
able to receive Medicare coverage when medically necessary. We also
recognize that it is important that stakeholders have transparent,
predictable coverage. We are committed to working through this issue as
we explore other policy options within our statutory authorities,
including future rulemaking. As noted previously, we are planning on
initiating several coverage process improvements, including engaging
AHRQ to explore updating the CED study criteria, as well as exploring
options of expediting the NCD process, and future rulemaking.
Comment: Many commenters indicated that a multitude of revisions
would be needed to overcome MCIT's limitations and achieve its intended
goals of faster and more predictable Medicare coverage. Commenters
cited examples of revisions such as a process that would include
benefit category determination (if needed), coding, payment, timeframes
for coordinating with FDA, and clinical evidence assessment and
development.
Response: We agree that the final MCIT/R&N rule has significant
limitations and needs modifications. We will consider these issues as
we engage in future rulemaking.
Comment: Some commenters reiterated their concerns that the MCIT/
R&N final rule does not specify, nor can it require, coverage criteria
beyond the FDA approved or cleared indication(s) for use such as
patient criteria and/or provider or facility qualifications or
experience. Commenters expressed that clinical trial populations are
typically different from the Medicare population, and thus, the
evidence supporting those indication(s) for use are less germane to the
Medicare population. Without an evidence development requirement pre or
post coverage that includes Medicare patients, commenters are concerned
about the absence of generalizable clinical evidence. Without
information on Medicare patients, commenters are concerned about
providers inferring proven performance of breakthrough devices
regardless of patient characteristics or facility capabilities.
Response: We appreciate these comments. We will consider these
comments as we refine our coverage processes. It is our intention to
address this issue in future rulemaking and we intend to hold at least
two stakeholder public meetings in CY 2022 to inform our future policy-
making in this space.
Comment: There is general agreement among commenters that CMS can
address the limitations of the MCIT pathway in future rulemaking.
Several commenters recommended that CMS increase efforts to facilitate
early engagement among manufacturers, CMS and FDA to discuss suitable
trial designs, evidentiary goals, and to ensure that study populations
are representative of the Medicare population.
Response: We appreciate the support for our proposal. We will
consider all of these comments as we explore other policy options and
statutory authorities as we explore future rulemaking to provide
appropriate expedited access to innovative and beneficial technologies.
We will hold at least two public stakeholder meetings in CY 2022 as we
consider several initiatives to improve the coverage process.
Comment: Commenters offered suggestions for CMS to consider in the
future as it develops an alternative expedited coverage pathway,
including recommendations for how CMS could improve the MCIT pathway
and better leverage and improve existing coverage mechanisms, such as
parallel review, coverage with evidence development (CED) or the
investigational device exemption (IDE) process, in addition to
conducting future rulemaking. For example, commenters expressed strong
support for CMS to leverage the CED paradigm to provide Medicare
beneficiaries with access to new devices and technologies while
additional evidence is generated to document a proven benefit for
Medicare patients. These commenters noted CMS' past efforts with CED,
specifically Transcatheter Aortic Valve Replacement (TAVR), and noted
that CMS could require post market studies and data collection through
a modified CED
[[Page 62950]]
paradigm to ensure that beneficiaries are gaining appropriate access to
new technologies that improve health outcomes. Some commenters
recommended that CED be time-limited so that the access restrictions
that can sometimes accompany CED decisions do not last indefinitely
especially in instances when the evidentiary questions of interest have
been addressed. Commenters expressed the importance of collecting real
world data to fill post-market evidence gaps and encouraged CMS to
incorporate such data collection in an improved coverage pathway. These
commenters noted that these new technologies need careful monitoring in
real world populations.
Response: We appreciate all of the submitted recommendations for
CMS to consider as we develop an alternative expedited coverage
pathway. It is our intention to address this issue in future rulemaking
and we intend to hold at least two stakeholder public meetings in CY
2022 to inform our future policy-making in this space.
Additionally, we currently have a number of initiatives underway to
leverage existing coverage mechanisms and inform our efforts to
facilitate improvements in coverage pathways. For example, CMS is
engaged with the AHRQ to review the current CED study criteria and
determine whether the criteria should be revised or updated. Similar to
the last CED revision, if a revision is needed, we will use a
transparent process that will include public participation such as
public comment on any proposed revisions to the CED study criteria, and
we will provide as well for public participation in a Medicare Evidence
Development and Coverage Advisory Committee (MEDCAC) meeting which CMS
will announce a date through a Federal Register notice and on the CMS
Coverage website. For general information on MEDCAC, please see <a href="https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/MEDCAC">https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/MEDCAC</a>.
Comment: Many commenters representing a wide-range of stakeholder
groups offered additional suggestions on improvements CMS can make to
NCDs, including a recommendation that CMS should omit trial design
specifications within NCDs and that CMS should address coverage of new
indications in NCDs. Some commenters encouraged CMS to review NCD
requests and issue NCD implementation instructions within specified
timeframes. Several commenters asked that CMS prohibit concurrent NCD
and LCD processes.
Response: We appreciate these comments and helpful suggestions
offered by commenters on how CMS can improve the NCD process. We will
consider these comments as we explore other policy options and
statutory authorities to provide appropriate expedited access to
innovative and beneficial technologies.
Comment: Several commenters requested that CMS ensure equity
between fee-for-service and Medicare Advantage (MA) beneficiaries in an
alternative expedited coverage pathway. Some of these commenters noted
that MA plans often impose restrictive prior authorization requirements
or decline to cover services that are routinely covered and paid for
under fee-for-service Medicare, simply due to the absence of a LCD or
NCD.
Response: We appreciate these comments and will consider this as we
explore other policy options that may help to ensure coverage
consistency among Medicare beneficiaries regardless of whether they are
enrolled in fee-for-service or MA.
Comment: A few commenters suggested that as CMS takes future action
to provide for an alternative expedited coverage pathway, that it
provide expedited coverage for a class of devices rather than of a
single device to ensure there is not inconsistent or delayed coverage
of similar devices or technologies.
Response: We appreciate the comment and will consider this as we
explore other policy options. It is our intention to address this issue
in future rulemaking and we intend to hold at least two stakeholder
public meetings in CY 2022 to inform our future policy-making in this
space.
Comment: Some commenters reiterated their concerns that the MCIT
pathway has the unintended consequence of limiting access to
competitive devices. These commenters recommended that CMS consider
broadening the technologies eligible for an expedited coverage pathway
to replace MCIT beyond Breakthrough Devices in order to ensure a
competitive and innovative marketplace. Several commenters suggested
that such an expedited coverage pathway should not only include
Breakthrough Devices but also other medical products that are the
subject of FDA expedited programs, such as those that receive
breakthrough therapy designation or are granted accelerated approval.
Commenters specifically requested that screening tests, diagnostics,
drugs and biologicals be included.
Response: We appreciate the comments and will further consider
these comments as we explore other policy options and statutory
authorities.
Comment: As noted previously, some commenters requested that drugs
and biological products be included in an alternative expedited
coverage pathway as they believe that delayed access to innovative drug
and biologic therapies is just as detrimental as delays to innovative
devices. However, a few commenters expressed the viewpoint that drugs
and biological products not be included as inclusion may lead to
unnecessary delays and access issues.
Response: We appreciate the comments and will further consider
these comments as we explore other policy options and statutory
authorities.
Comment: Several commenters reiterated their concerns that since
the MCIT/R&N final rule was solely a coverage rule, a number of
operational issues that would inhibit the successful implementation of
the MCIT pathway still need to be addressed, including benefit category
determination, coding and payment issues. Commenters indicated that the
goals of MCIT cannot be achieved until these operational issues are
resolved. Several commenters offered suggestions as to how CMS could
remedy these issues, including modifications to existing operational
processes. For example, these commenters recommended that CMS could
adapt the processes used for the IDE, new technology add-on payment
(NTAP) and transitional passthrough (TPT) to establish codes and
payment for technologies in an expedited coverage pathway. Some
commenters requested that any future rulemaking for an alternative
expedited coverage pathway include coding and payment information.
Response: We appreciate these comments and agree we should consider
all of the operational issues as we work to develop an alternative
expedited coverage pathway. We will consider this comment as we
initiate coverage process improvements, including engaging AHRQ to
explore updating the CED criteria, as well as exploring options of
expediting the NCD process, including future rulemaking.
Comment: Several commenters that explicitly stated their opposition
to or disappointment with our proposal to repeal the MCIT/R&N final
rule provided information and examples specific to their technologies
for why an expedited coverage pathway similar to MCIT is needed. These
commenters lauded MCIT as a significant advancement in removing delays
in national coverage after FDA market authorization and uncertainty in
the timing and duration of coverage to improve beneficiary access to
innovative technologies.
[[Page 62951]]
Response: The majority of the comments citing specific examples of
how MCIT is beneficial to its specific technology would likely face the
operational challenges because after review of the commenters' devices,
it was not clear whether there was a benefit category for the devices.
At least one commenter's device would be part of a bundled payment and
not separately payable. Because the MCIT/R&N final rule did not address
BCD issues, the MCIT/R&N final rule would likely not have resulted in
the full coverage they were seeking. We are aware that there is concern
when coverage decisions are made at the MAC level, specifically when an
LCD is not applicable. This coverage uncertainty may also influence
provider decision-making because they are reluctant to submit claims
for services that may not be paid for by Medicare.
Comment: A commenter requested that CMS clarify how it intends to
approach coverage and payment for prescribed digital therapeutics
(PDTs) and include the information in the preamble to this final rule
since it had not been addressed in prior MCIT/R&N rulemaking.
Response: We appreciate this comment. However, we are not
responding to specific technology evaluations in this final rule as
they are out of scope. We will consider this comment as we initiate
several coverage process improvements.
Comment: Some commenters stated CMS should allow the MCIT/R&N final
rule to go into effect on December 15, 2021, and subsequently issue a
proposed rule with appropriate revisions to the MCIT pathway or release
subregulatory guidance that addresses the numerous concerns rather than
finalizing the repeal.
Response: We appreciate commenters sharing their belief that the
rule should go into effect, but we disagree. While we acknowledge that
some stakeholders are seeking a replacement pathway simultaneously upon
repeal, we need time to more fully evaluate the comments received on
the September 2021 proposed rule, and in particular the feedback
offered by commenters on how we can improve upon the MCIT pathway.
The final MCIT/R&N rule had major flaws that must be addressed to
ensure there is a balance between expedited coverage of devices and
patient protections. As we discussed earlier, these flaws also included
operational concerns regarding benefit category determinations, coding
and payment implementation with expedited coverage. Further,
Breakthrough Devices have not necessarily demonstrated a health benefit
in the Medicare population. Most importantly, we believe that evidence
development must be part of an expedited coverage process, as needed.
Based upon these significant concerns with the MCIT pathway, both from
the Agency and from several commenters, we believe it is important to
move forward with repealing the MCIT/R&N final rule rather than letting
it go into effect and modifying it after the fact. We believe that
letting the MCIT/R&N final rule go into effect and later modifying it
would cause disruptions in health care delivery as there would be
confusion and uncertainty among stakeholders, most importantly
beneficiaries and their treating clinicians. For example, since the
January 2021 MCIT/R&N final rule is a coverage rule only, there could
be confusion and disruption stemming from devices receiving MCIT
approval without a clear path for appropriate coding and payment. As
noted previously, under the January 2021 MCIT/R&N final rule, there is
no requirement for evidence that MCIT devices will specifically benefit
the Medicare target population. Additionally, the MCIT/R&N final rule
limits tools the CMS has to deny coverage when it becomes apparent that
a particular device can be harmful to the Medicare population. If the
January 2021 MCIT/R&N final rule were to go into effect, and a device
is later found to be harmful to Medicare recipients is approved under
the MCIT pathway, CMS would be limited in the actions it can take to
expeditiously withdraw or modify coverage to protect beneficiaries.
Finally, it is not clear that CMS has legal authority under the Allina
Supreme Court ruling to use subregulatory guidance to modify aspects of
the MCIT/R&N final rule as some commenters suggested.
Comment: Of the commenters who disagreed with the proposed rule to
repeal the MCIT/R&N rule, most acknowledged the limitations of the MCIT
pathway and indicated that modifications were needed, such as the
inclusion of coding and payment information and evidentiary standards.
A number of these same commenters expressed that while they were
disappointed with CMS' proposal to repeal MCIT, they appreciated CMS'
ongoing commitment to finding solutions, including an alternative
expedited coverage pathway.
Response: We appreciate the comment and will consider the suggested
modifications as we move forward.
Comment: Many commenters requested that if CMS were to move forward
with repealing the MCIT/R&N final rule, CMS should release a proposed
rule offering an alternative expedited coverage pathway simultaneously
or as soon as possible thereafter. These commenters requested that CMS
provide a timeline for releasing a new rule for an alternative
expedited coverage pathway. These commenters noted that an alternative
expedited coverage pathway is an urgent need to address the long-
standing concerns that Medicare coverage is often slow and
unpredictable and impedes beneficiary access to innovative
technologies. Some commenters raised concerns that following repeal,
CMS would not continue with the forward momentum to create an
alternative expedited coverage pathway.
Response: We appreciate these comments. As we move forward with
repealing the MCIT/R&N final rule, we want to reassure stakeholders
that CMS does not intend to maintain the status quo. We remain
committed to our goal of establishing an alternative expedited coverage
pathway that better achieve the goals of timely and predictable
Medicare coverage of devices while ensuring that Medicare covers items
and services on the basis of scientifically sound clinical evidence and
with appropriate safeguards. CMS acknowledges that more can be done to
address the current uncertainty surrounding Medicare coverage of new
medical technologies and while we are unable to provide a specific
timeframe for doing so, we are working expeditiously to develop an
alternative expedited coverage pathway with adequate patient safeguards
to ensure devices are safe for Medicare patients and an evidence base
that is generalizable to Medicare beneficiaries is further generated.
Comment: Some commenters stated that CMS has received sufficient
public input on potential improvements to MCIT and existing coverage
pathways over the course of three public comment periods on the MCIT
pathway, other commenters encouraged CMS to conduct town halls to
obtain further stakeholder feedback. Numerous commenters expressed
willingness to be a resource for CMS as it developed future policies.
Response: Stakeholder engagement is a vitally important component
of our efforts to develop an alternative expedited coverage pathway
that provides an appropriate balance of innovation and beneficiary
protections. We value the diverse viewpoints, perspectives, and options
offered by
[[Page 62952]]
commenters. As we move forward, we will continue to be open and
transparent and will work with stakeholders in efforts to achieve
consensus whenever possible.
Even with the repeal of the MCIT/R&N final rule, we have a number
of initiatives underway and in development within our existing
authorities. These initiatives take into account the feedback CMS has
received on the MCIT pathway to date, and we will leverage these
initiatives to inform future policy making in this space.
Further, CMS has multiple pathways to facilitate engagement such as
the Medicare Evidence Development and Coverage Advisory Committee
(MEDCAC) and the public input process through the Federal Register. We
are also receptive to informal engagement with stakeholders, including
with manufacturers who are interested in the development of a new
expedited coverage pathway. In addition, we are also exploring other
potential avenues to facilitate timely and transparent stakeholder
engagement, including listening sessions or town hall meetings, in
order to receive additional feedback from stakeholders that can help
inform CMS' development of an alternative expedited coverage pathway.
In addition, we are initiating coverage process improvements, including
engaging AHRQ to explore updating the CED study criteria, as well as
exploring options of expediting the NCD process, including future
rulemaking.
Comment: Some commenters who disagreed with CMS' proposal to repeal
the MCIT/R&N final rule asserted that the patient protections in place
in the MCIT/R&N final rule, specifically the reliance on FDA safety and
efficacy requirements to grant coverage to Breakthrough Devices under
MCIT, were sufficient to prevent beneficiary harm. Some of these
commenters stated that CMS will be endangering the patients it is
trying to protect if MCIT does not go into effect on December 15, 2021.
Some commenters also noted that the data Medicare needs to evaluate a
device has already been generated during the FDA approval process.
Response: We disagree that there are sufficient patient protections
in the MCIT/R&N final rule. After consideration of all public comments
received as we have worked to develop the MCIT pathway, and as we
indicated in the September 2021 proposed rule, we no longer believe
that FDA safety and effectiveness standards alone are sufficient to
support open-ended Medicare coverage. FDA and CMS act under different
statutes that have different goals and the standard for Medicare
coverage (that is, a determination that a device is reasonable and
necessary for the diagnosis or treatment of illness or injury or to
improve the functioning of a malformed body member) is not synonymous
with the standards for FDA marketing authorization of devices, which
are not specific to the Medicare population. CMS acknowledges that we
have changed our position on this issue after further consideration of
public comments and a review of all FDA-designated Breakthrough Devices
eligible for MCIT. As noted previously, granting all eligible FDA-
designated Breakthrough Devices national coverage, the MCIT/R&N final
rule establishes insufficient beneficiary protections for a subset of
devices and must be revised.
Further, we strongly disagree that our repeal of the MCIT/R&N final
rule will cause harm to beneficiaries. While there is no guaranteed
national coverage that does not mean a given FDA-designated
Breakthrough Device is non-covered. CMS' MACs are empowered to make
reasonable and necessary coverage determinations on any device where
there is not a nationally policy in place, including FDA-designated
Breakthrough Devices. We reviewed fee-for-service claims data for
several recent market-authorized breakthrough devices. The majority of
the FDA market authorized Breakthrough Devices that would have been
eligible for the MCIT pathway: Were already paid through an existing
mechanism, were directed to a pediatric population, were a diagnostic
lab test, were subject to an existing NCD; or had no benefit category
or an uncertain benefit category. Of those that would be separately
payable by Medicare on a claim-by-claim basis, the reviewed devices
were covered when reasonable and necessary and paid under the
applicable Medicare payment system. Further, in general, there are
typically many treatment options available in the practice of medicine
and even if one particular item is not covered, beneficiaries have
access to other treatment options.
Comment: Some commenters expressed that beneficiaries and their
physicians should be provided with more latitude to assess the
advantages and risks of a medical device to treat an individual's
specific medical condition.
Response: Patients and their treating clinicians should have
latitude to make informed treatment decisions. If we were to guarantee
coverage of devices based solely on breakthrough status and FDA
marketing authorization, rather than also consider whether the device
provides an effective, reasonable and necessary treatment for Medicare
patients, there may not be enough information for patients and their
treating clinicians to make an adequately informed decision with
respect to use of the device for Medicare beneficiaries. Further, there
may be an incentive for use of a device that has coverage under the
MCIT pathway rather than a device that is not covered under the MCIT
pathway which may be more beneficial to patients. This could adversely
impact beneficiaries if there is another item or service available to
treat the patient that has an evidence-base to suggest that it may lead
to better health outcomes for Medicare patients.
Comment: Commenters asserted that the repeal of the MCIT/R&N final
rule will undercut evidence development as innovators hold off on study
development and enrollment while waiting on CMS to conduct rulemaking
with evidentiary standards and other modifications to the MCIT pathway.
These commenters also contend that CMS' repeal of the MCIT/R&N final
rule could further stifle innovation by undercutting incentives to
encourage investment in device development.
Response: Innovation is important to CMS and we strongly encourage
innovators to develop reliable evidence to demonstrate that their
device is beneficial for Medicare patients. If one of the biggest
impediments to innovation is uncertainty, demonstrating with reliable
evidence a device's value in treating Medicare patients will largely
assist in removing that uncertainty. Ultimately, it is the
responsibility of the innovator or manufacturer to demonstrate the
value of their device. Evidence development should continue with or
without CMS support.
Final Decision: After review of the public comments received, we
are finalizing the repeal of the January 2021 MCIT/R&N final rule as
proposed in the September 2021 proposed rule without modification.
B. Definition of ``Reasonable and Necessary''
In general, section 1862(a)(1)(A) of the Act permits Medicare
payment under Part A or Part B for 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. The
definition of ``reasonable and necessary'' in the MCIT/R&N final rule
mirrored the longstanding CMS Program Integrity Manual's definition of
``reasonable and necessary'' with a modification to the appropriateness
factor to specify when and how (upon publication of guidance) we would
[[Page 62953]]
utilize commercial insurer coverage policies.
Expanding the reasonable and necessary definition to systematically
consider commercial insurer coverage presents implementation and
appeals process challenges that would likely persist. In the preamble
to the MCIT/R&N final rule, in response to commenters concerns that the
commercial insurer appropriateness criterion was vague, we stated our
intention to gather additional public input on the methodology by which
commercial insurers' policies are determined to be relevant to the
reasonable and necessary appropriateness criteria. We stated that not
later than 12 months after the effective date of the MCIT/R&N final
rule (that is, December 15, 2021), we would publish for public comment,
a draft methodology for determining when commercial insurers' policies
could be considered to meet the reasonable and necessary definition
appropriateness criterion for coverage of an item or service. Comments
received in response to the March 2021 IFC expressed concern about how
the commercial insurer policy provision would be implemented.
Commenters also expressed concerns that the R&N definition included in
the MCIT/R&N final rule, and more specifically the commercial insurance
aspects of the definition, will remove existing flexibilities and
potentially impact CMS' ability to ensure equitable health care access
for all Medicare beneficiaries. Additionally, commenters suggested that
the reasonable and necessary definition should be included in a
separate rule as MCIT and R&N are independent and distinct provisions
with different implications for Medicare policy. In light of our
proposal to repeal the R&N definition, including the commercial
insurance aspects of the MCIT/R&N final rule, we will not be issuing
subregulatory guidance by March 15, 2022, on consideration of
commercial insurer coverage polices when there is insufficient evidence
to make a national or local coverage determination.
While we proposed to fully repeal the MCIT/R&N final rule as it is
currently written, we invited comments on the R&N aspect of our
proposal. In lieu of fully repealing the R&N rule, we considered
whether the final rule should instead merely repeal the commercial
insurance aspects of the rule. We also asked if CMS does consider
future rulemaking to include defining reasonable and necessary, what
criteria should CMS consider as part of the reasonable and necessary
definition? For example, should CMS maintain the codification of the
definition of ``Reasonable and Necessary'' as found in the Chapter 13
of the CMS Program Integrity Manual (PIM) or consider different
criteria?
Comment: Most commenters supported the full repeal of the
reasonable and necessary definition in the MCIT/R&N final rule. Similar
to the past two public comment periods, many commenters requested that
CMS bifurcate MCIT and R&N into separate rules because they are
independent and distinct provisions with different implications for
Medicare policy. Commenters noted that the codification of a R&N
definition is significant because it affects all Medicare items and
services and represents a change from current practice. Commenters
reiterated their position that the definition needs more public input
and CMS should ensure it receives feedback from all interested parties,
which is a broader group than the audience with expertise and interest
in the MCIT pathway.
Response: We agree that further stakeholder engagement on the topic
is warranted; and therefore, we will finalize the repeal of the R&N
definition. Similar to what we described previously for MCIT, we are
exploring potential opportunities for obtaining additional stakeholder
feedback via listening sessions, town hall meetings, or other means. We
acknowledge the requests made by a number of commenters to bifurcate
MCIT and R&N into separate rules for the purposes of future rulemaking.
We will consider these comments as we address these issues in the
future.
Comment: The commenters cited concerns that if codified, the
definition of reasonable and necessary in the MCIT/R&N final rule would
remove flexibility and may impact CMS's ability to ensure equitable
health care. Some stated that the definition as finalized would be
problematic for lab tests.
Response: Further stakeholder engagement on the topic is warranted.
We will consider these comments as we address these issues in the
future.
Comment: Several commenters questioned whether a codified
definition is necessary as they believe that the current definition in
Chapter 13 of the CMS Program Integrity Manual is a sufficient
framework that preserves the necessary flexibility to provide
appropriate access. A significant number of commenters indicated their
support for maintaining the definition in subregulatory guidance.
Commenters noted that CMS has not provided a clear rationale for why
codification of the definition in regulation is necessary or beneficial
and that CMS should more clearly articulate the benefits and drawbacks
associated with codification as compared to the status quo.
Response: We will finalize our proposed rule to repeal the R&N
definition. As noted previously, we believe further stakeholder
engagement on the definition is warranted. We will consider these
comments as we address these issues in the future.
Comment: The majority of commenters supported the repeal of the
commercial insurer criterion in the R&N definition. Commenters
reiterated that commercial coverage policies already can (and have
been) reviewed by CMS as part of the NCD process. Commenters further
note that formalizing their inclusion could lead to an item or service
that had been covered previously becoming non-covered depending on how
a specific commercial payor may have determined coverage. Commenters
reiterated their concerns regarding implementation of commercial
insurer policy provisions, the potential of unnecessarily restricting
coverage by relying on commercial insurer policies designed for a
different population with different incentives, commercial insurer
policies' lack of transparency, and potential for fraud and abuse. A
few commenters cited a concern that some commercial plans consider
costs in their decisions which could potentially violate the Medicare
statutory prohibition regarding consideration of cost in coverage
determinations. Lastly, a commenter questioned why CMS would want to
cede this authority to other entities.
Response: We appreciate these comments. We agree with commenters
that CMS can (and has) reviewed commercial policies in recent years as
part of a national coverage analysis. After further consideration of
public comments, we no longer agree with our position in the January
2021 MCIT/R&N final rule that it is necessary to include regulatory
language to give us clear authority to review commercial insurers'
policies. Because we are finalizing the full repeal of the R&N
definition, we will not be issuing subregulatory guidance on
consideration of commercial insurer coverage polices when there is
insufficient evidence to make a national or local coverage
determination. Further, we would like to clarify that while CMS has a
long-standing position to not consider costs when making coverage
determinations, it is not because of a statutory prohibition.
Comment: Though commenters were largely opposed to the inclusion of
the commercial insurance aspects of the
[[Page 62954]]
R&N definition, some commenters offered alternative approaches for CMS
to consider in applying commercial payer policies. Specifically, some
commenters recommended commercial policies only be utilized as evidence
to support expansion of coverage on a proposed policy or asking for a
reconsideration of an existing one.
Response: We appreciate these comments. As noted previously, we can
use the private market as a source of evidence for coverage.
Comment: A few commenters disagreed with CMS' proposal to fully
repeal the definition of R&N. These commenters expressed their support
for a R&N definition in line with the definition in Chapter 13 of the
PIM. One of these commenters specifically encouraged CMS to codify the
R&N definition stating that it is a much needed step and something that
CMS has sought to do for decades.
Response: We appreciate these comments. However, after considering
the totality of the comments, we believe that the overarching issues
raised by commenters, in particular issues regarding the need for more
clarity and broader stakeholder input, warrant further consideration
and engagement before moving forward with a codified definition of R&N.
As other commenters noted, a codified definition of R&N is a
considerable change from current practice and will affect all Medicare
services. We believe it is important to provide for additional
stakeholder feedback on this topic that includes a wider group of
stakeholders than those who may have offered input during rulemaking
for the MCIT/R&N final rule. We look forward to engaging with
stakeholders in the future as we determine appropriate next steps that
are in the best interest of the Medicare program and all stakeholders.
Comment: Some commenters expressed opposition to only repealing the
commercial aspects of the R&N definition. A commenter stated that
trying to leave part of the rule in place now does not provide adequate
opportunity for comment, as stakeholders do not truly know what is
being proposed for comment.
Response: We appreciate these comments. We acknowledge that
commenters representing a wide range of stakeholder groups want more
clarity from CMS and more opportunities to provide input before we move
forward with codifying a definition of R&N. As noted previously, we
look forward to engaging with stakeholders on this topic.
Comment: Commenters provided many suggestions as to what criteria
CMS should consider as part of the R&N definition in response to our
solicitation for that information in the September 2021 proposed rule.
Specifically, a commenter noted that a definition of R&N should take
into consideration the perspective of providers and enhance the ability
of providers to use their medical judgment. Another commenter stated
that CMS should adhere to a definition that is patient-focused. Some
commenters noted that Medicare should consider the definition of
appropriateness for Medicare beneficiaries since not all beneficiaries
are aged 65 and older, and all beneficiaries should be considered. A
commenter recommended that the definition should be expanded to include
maintenance or prevention of deterioration of function as well. Some
commenters expressed concern with the inclusion of `safe and effective'
in the definition and contend that Medicare coverage should not be
dependent on meeting standards established by FDA for a different
purpose. Some commenters recommended that CMS eliminate the inclusion
of ``at least as beneficial as an existing and available medically
appropriate alternative'' in the definition. A commenter stated that it
was problematic as it as it appears to impose a comparative
effectiveness requirement for coverage.
Response: We appreciate the informative and helpful recommendations
provided by commenters. We will consider these comments for potential
future policy development. As noted previously, we intend to provide
additional opportunities for stakeholders to provide feedback on this
topic and look forward to further engagement with stakeholders.
Final Decision: After review of the public comments received, we
are finalizing the repeal of the January 2021 MCIT/R&N final rule as
proposed in the September 2021 proposed rule without modification.
C. Effect of Proposed Repeal
In the September 2021 proposed rule, we stated that if the MCIT/R&N
final rule is repealed as proposed, the revisions to part 405 of title
42 of the Code of Federal Regulations would not occur and the text
would remain unchanged. Specifically, a definition of ``reasonable and
necessary'' would not be included among the terms defined at 42 CFR
405.201(b) and the guidance that the rule would have required
(subregulatory guidance on the topic of utilization of commercial
insurer polies) would not be introduced. Additionally, subpart F, which
wholly consisted of Medicare Coverage of Innovative Technology, would
not be added, and subpart F would remain reserved for other purposes.
After review of the public comments received, we are finalizing the
repeal of the January 2021 MCIT/R&N final rule as proposed in the
September 2021 proposed rule without modification.
III. Regulatory Impact Analysis
A. Statement of Need
The purpose of this final rule is to repeal the MCIT/R&N final
rule. As stated in the preceding sections, we are repealing MCIT
because this coverage policy is not in the best interest of Medicare
beneficiaries. We are repealing the definition of R&N because further
stakeholder engagement on the topic is warranted based on stakeholder
feedback. CMS developed MCIT in part due to concerns that delays and
uncertainty in Medicare coverage slowed innovation and impaired
beneficiary access to important new technologies, specifically those
designated as breakthrough devices by FDA. We believe that the
finalized MCIT/R&N 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.
The definition of ``reasonable and necessary'' in the MCIT/R&N
final rule mirrored the longstanding CMS Program Integrity Manual's
definition of ``reasonable and necessary'' with a modification to the
appropriateness factor to specify when and how (upon publication of
guidance) we would utilize commercial insurer coverage policies. This
final rule to not codify the definition of R&N maintains the status quo
with respect to the use of the CMS Program Integrity Manual's
definition and is responsive to the numerous stakeholders who requested
that, if CMS were to develop a definition of reasonable and necessary,
that the stakeholder engagement process would require more than public
comment via rulemaking.
Through this final rule we repeal the MCIT/R&N final rule and, as
stated previously, intend to work with stakeholders to develop a
coverage policy and definition for R&N that addresses the concerns they
raised. CMS plans on hosting at least two stakeholder meetings with
several audiences, including, but not limited to,
[[Page 62955]]
manufacturers, clinicians, patients, and disability groups.
This final rule repeals the MCIT pathway and codification of the
definition of ``reasonable and necessary.'' Because the January 2021
final rule effective date was delayed until December 15, 2021, the MCIT
coverage pathway and definition of ``reasonable and necessary'' have
not been implemented, and no payments for items and services have been
made in relation to these provisions because they have not taken
effect. In the January 2021 final rule, we included a robust regulatory
impact analysis of these provisions. Because the final rule did not go
into effect, and this final rule repeals the provisions, there has not
been an impact from these provisions nor will there be an impact,
relative to current coverage practice, upon repeal; however, effects
would be non-negligible relative to the future trajectory without this
repeal.
In the September 2021 proposed rule, we examined the impact of the
repealing the MCIT/R&N final rule as required by Executive Order 12866
on Regulatory Planning and Review (September 30, 1993), Executive Order
13563 on Improving Regulation and Regulatory Review (January 18, 2011),
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4),
Executive Order 13132 on Federalism (August 4, 1999), the Congressional
Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive order.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year). The MCIT/R&N 2021 final rule reached the economic threshold and
thus was considered a major rule. Because this final rule completely
repeals the provisions, this rule also reaches the economic threshold
and its finalization is a major rule. Accordingly, we have prepared a
Regulatory Impact Analysis that to the best of our ability presents the
costs and benefits of the rulemaking. Therefore, based on our
estimates, OMB's Office of Information and Regulatory Affairs has
determined that this rulemaking is ``economically significant'' as
measured by the $100 million threshold, and hence also a major rule
under Subtitle E of the Small Business Regulatory Enforcement Fairness
Act of 1996 (also known as the Congressional Review Act).
B. Detailed Economic Analysis
1. MCIT Pathway
CMS considered alternatives to repealing the MCIT pathway and the
definition of reasonable and necessary, such as maintaining the
provisions of the MCIT/R&N final rule and further delaying the
effective date. For the reasons described in detail in section II. of
this rule such as patient safety and need for further public
engagement, we chose to repeal the provisions. We note that further
delay of the MCIT/R&N final rule would not alter the patient safety
concerns inherent in the MCIT pathway.
As described in the MCIT/R&N final rule, the impacts of the MCIT
pathway and defining ``reasonable and necessary'' were hard to quantify
without knowing the specific Breakthrough Devices that would seek MCIT
and other items and services that would be included in future NCDs and
LCDs and the criteria that CMS would use for determining which
commercial insurers will be considered.
In the MCIT/R&N final rule specifically for MCIT, we considered
regulatory alternatives to combine Medicare coverage with clinical
evidence development under section 1862(a)(1)(E) of the Act, to take no
regulatory action, or to adjust the duration of the MCIT pathway.
The impact of implementing the MCIT pathway was difficult to
determine without knowing the specific Breakthrough Devices that would
be covered. In addition, many of these devices would be eligible for
coverage in the absence of the rule, such as through a local or
national coverage determination, so the impact for certain items may be
the acceleration of coverage by just a few months. Furthermore, some of
these devices would be covered immediately if the MACs decide to pay
for them, which would result in no impact on Medicare spending for
devices approved under this pathway. However, it is possible that some
of these Breakthrough Devices would not otherwise be eligible for
coverage in the absence of the rule. Because it was not known how these
new technologies would otherwise come to market and be reimbursed, it
was not possible to develop a point estimate of the impact. In general,
we believed the MCIT coverage pathway would have ranged in impact from
having no impact on Medicare spending to a temporary cost for
innovations that are adopted under an accelerated basis.
The decision to enter the MCIT pathway would have been voluntary
for the manufacturer. Because manufacturers typically join the Medicare
coverage pathway that is most financially beneficial to them, this
could result in selection against the existing program coverage
pathways (to what degree is unknown at this point). In addition, the
past trend of new technology costing more than existing technology
could lead to a higher cost for Medicare if this trend continued for
technologies enrolling in the MCIT pathway. Nevertheless, new
technology may also mitigate ongoing chronic health issues or improve
efficiency of services thereby reducing some costs for Medicare.
To demonstrate the potential impact on Medicare spending, for MCIT
the CMS Office of the Actuary (OACT) developed three hypothetical
scenarios that illustrate the impact of implementing the MCIT pathway.
Scenarios two and three assumed that the device would not have been
eligible for coverage in the absence of MCIT (see Table 1). The
illustration used the new devices that applied for a NTAP in fiscal
year (FY) 2020 as a proxy for the new devices that would utilize the
MCIT pathway. The submitted cost and anticipated utilization for these
devices was published in the Federal Register.\8\ In addition, we
assumed that two manufacturers would elect to utilize the
[[Page 62956]]
MCIT pathway in the first year, three manufacturers in the second year,
four manufacturers in the third year, and five manufacturers in the
fourth year each year for all three scenarios. This assumption is based
on the number of medical devices that received FY 2020 NTAP and were
non-covered in at least one MAC jurisdiction by LCDs and related
articles and our impression from the FDA that the number of devices
granted breakthrough status is increasing. For the first scenario, the
no-cost scenario, we assumed that all the devices would be eligible for
coverage in the absence of MCIT. If the devices received coverage and
payment nationally and at the same time then there would be no
additional cost under this pathway. For the second scenario, the low-
cost scenario, we assumed that the new technologies would have the
average costs ($2,044) and utilization (2,322 patients) of similar
technologies included in the FY 2020 NTAP application cycle. Therefore,
to estimate the first year of MCIT, we multiplied the add-on payment
for a new device by the anticipated utilization for a new device by the
number of anticipated devices in the pathway ($2,044 x 2,322 x 2 = $
9.5 million). For the third scenario, the high-cost scenario, we
assumed the new technologies would receive the maximum add-on payment
from the FY 2020 NTAP application cycle ($22,425) and the highest
utilization of a device (6,500 patients). Therefore, to estimate for
the first year of MCIT, we estimated similarly ($22,425 x 6,500
patients x 2 = $ 291.5 million). For subsequent years, we increased the
number of anticipated devices in the pathway by three, four, and five
in the last two scenarios until 2024.\9\ In addition to not taking into
account inflation, the illustration does not reflect any offsets for
the costs of these technologies that would be utilized through existing
authorities nor the cost of other treatments (except as noted). It is
not possible to explicitly quantify these offsetting costs but they
could substantially reduce or eliminate the net program cost. However,
by assuming that only two to five manufacturers would elect MCIT
coverage, we implicitly assumed that, while more manufacturers could
potentially elect coverage under MCIT, the majority of devices would
have been covered under a different coverage pathway. Therefore, a
substantial portion of the offsetting costs are implicitly reflected.
---------------------------------------------------------------------------
\8\ FY 2020 Hospital Inpatient Prospective Payment System (IPPS)
Proposed Rule (84 FR 19640 and 19641) (May 3, 2019) available at
<a href="https://www.govinfo.gov/content/pkg/FR-2019-05-03/pdf/2019-08330.pdf">https://www.govinfo.gov/content/pkg/FR-2019-05-03/pdf/2019-08330.pdf</a>
(accessed October 17, 2019).
\9\ An indirect effect of the final rule would be decreased
distortions in the labor markets taxed to support the Medicare Trust
Fund. Such distortions are sometimes referred to as marginal excess
tax burden (METB), and Circular A-94--OMB's guidance on cost-benefit
analysis of Federal programs, available at <a href="https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A94/a094.pdf">https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A94/a094.pdf</a>--suggests that METB may be valued at roughly 25 percent of
the estimated transfer attributed to a policy change; the Circular
goes on to direct the inclusion of estimated METB change in
supplementary analyses. If secondary costs and cost savings--such as
decreased marginal excess tax burden, in the case of this final
rule--are included in regulatory impact analyses, then secondary
benefits must be as well, in order to avoid inappropriately skewing
the net benefits results, and including METB only in supplementary
analyses provides some acknowledgement of this potential imbalance.
---------------------------------------------------------------------------
Based on this analysis, there was a range of potential impacts of
MCIT as shown in Table 1. The difference between the three estimates
demonstrates how sensitive the impact is to the cost and utilization of
these unknown devices.
Because MCIT has not yet been implemented, we lack evidence with
which to update the earlier estimates, so Table 1, only differs from
the analogous table accompanying the MCIT/R&N final rule in terms of
the sign (that is, the direction) on the estimates and a shifting of
the time horizon by one year so as to avoid stating this MCIT would
have effects in the nearly-ended FY 2021.
Table 1--Illustrated Impact on the Medicare Program by MCIT Coverage Pathway
----------------------------------------------------------------------------------------------------------------
Costs (in millions)
---------------------------------------------------------------
FY 2022 FY 2023 FY 2024 FY 2025
----------------------------------------------------------------------------------------------------------------
No-cost Scenario................................ $0 $0 $0 $0
Low-cost Scenario............................... -9.5 -23.7 -42.7 -66.4
High-cost Scenario.............................. -291.5 -728.8 -1,311.9 -2,040.7
----------------------------------------------------------------------------------------------------------------
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Some hospitals and other providers and suppliers are
small entities, either by nonprofit status or by having revenues of
less than $7.5 million to $38.5 million in any 1 year. Individuals and
States are not included in the definition of a small entity. For the
MCIT/R&N final rule, we reviewed the Small Business Administration's
Table of Small Business Size Standards Matched to North American
Industry Classification System (NAICS) Codes to determine the NAICS
U.S. industry titles and size standards in millions of dollars and/or
number of employees that apply to small businesses that could be
impacted by this rule. We determined that small businesses potentially
impacted by that rule include surgical and medical instrument
manufacturers (NAICS code 339112, dollars not provided/1,000
employees), Offices of Physicians (except Mental Health Specialists)
(NAICS code 621111, $12 million/employees not provided), and
Freestanding Ambulatory Surgical and Emergency Centers (NAICS code
621493, $16.5 million/employees not provided). Because the impact of
this final rule is ultimately no change in current coverage policy, we
determined that small businesses identified would not be impacted by
this final rule. Given the nature of the breakthrough devices market
authorized thus far and the timely notification of the MCIT/R&N final
rule's delay of effective date, we do not anticipate that small
businesses would have made investment decisions or experienced a loss
of anticipated positive reimbursement as a result of the MCIT/R&N final
rule. Because MCIT has not gone into effect, and we are repealing the
rule, payments have not occurred under MCIT; therefore, the impact of
this final rule is neither an increase nor decrease in revenue for
providers. We are not preparing a further analysis for the RFA because
we have determined, and the Secretary of the Department of Health and
Human Services (the Secretary) certifies, that this final rule will not
have a significant negative economic impact on a substantial number of
small entities because small entities are not being asked to undertake
additional effort or take on additional costs outside of the ordinary
course of business.
[[Page 62957]]
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area for Medicare payment regulations and has fewer than
100 beds. We are not preparing an analysis for section 1102(b) of the
Act because we have determined, and the Secretary certifies, that this
final rule would not have a significant impact on the operations of a
substantial number of small rural hospitals because small rural
hospitals are not being asked to undertake additional effort or take on
additional costs outside of the ordinary course of business. Obtaining
Breakthrough Devices for patients is at the discretion of providers. We
are not requiring the purchase and use of Breakthrough Devices.
Providers should continue to work with their patients to choose the
best treatment. For small rural hospitals that provide Breakthrough
Devices to their patients, this final rule would not change the way
they are currently covered through the Medicare program.
2. ``Reasonable and Necessary'' Definition
In order to demonstrate the potential impact on Medicare spending
for the definition of ``reasonable and necessary'' in the MCIT/R&N
final rule we developed scenarios that illustrated the impact of
implementing the two alternatives considered (no change/not codifying a
definition and codifying a definition). One of the options was making
no change, that is not codifying the definition of ``reasonable and
necessary'' in regulations. The number of NCDs and LCDs finalized in a
given year can vary and the cost of items and services within the
coverage decisions varies. Further, while we reviewed coverage of items
and services, we did not take into account unique Medicare rules
regarding which type of providers/clinicians may furnish certain
services, place of service requirements, or payment rules. Our analysis
was based on whether Medicare covered or non-covered an item or service
and based on the numbers of NCDs and LCDs finalized in 2020 (see Table
1). In 2020, CMS and the MACs finalized 3 NCDs and 31 LCDs. (This
number represents new LCDs in 2020 and made publicly available via the
Medicare Coverage Database. If more than one MAC jurisdiction issued an
LCD on the same item or service with the same coverage decision, only 1
of the LCDs was included in the count.) Of the NCDs finalized in 2020,
all 3 resulted in expanded national Medicare coverage. Because none of
those NCDs resulted in non-coverage, we did not evaluate whether
commercial insurers would have covered the item or service. Therefore,
based on 2020 data for NCDs only, the impact would be $0.
Of the 31 LCDs, 27 provided Medicare positive coverage and 4
resulted in non-coverage. For these non-covered items and services, we
established that the possible range of the cumulative cost of covering
them could be from $0 to $3.4 billion for a single year (based on price
and approximate Medicare beneficiary utilization). Because our analysis
looked for any commercial insurer that covered the item or service, the
cost may be less when utilizing commercial insurer polices that
represent a majority of covered lives. In addition, even if a
commercial insurer covers an item or service, the final rule did not
require automatic Medicare coverage. Therefore, not all items and
services that are non-covered by Medicare but covered by commercial
insurance would be presumed covered under the MCIT/R&N final rule.
Rather, commercial insurer coverage would have been a factor that CMS
would have taken into account as part of the body of evidence in
determining coverage through the NCD and LCDs processes. Because not
all commercial insurer positive coverage will necessarily translate to
Medicare coverage and because CMS was to define which types of
commercial insurers (based on majority of covered lives) would be
relevant, we believe that commercial insurer coverage impact is likely
much smaller, closer to 15 to 25 percent of $3.4 billion, that is, $51
to $880 million.
Table 2--Illustrated Impact for the Medicare Program by Definition of
Reasonable and Necessary
------------------------------------------------------------------------
Estimated change in Medicare costs for
the alternatives considered for the MCIT/
R&N final rule
------------------------------------------
No change (not codifying Codified
a definition) definition
------------------------------------------------------------------------
Coverage Determinations (NCDs $0 $51-880 million
and LCDs).
------------------------------------------------------------------------
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2021, that
threshold was approximately $158 million. This final rule would not
impose a mandate that will result in the expenditure by State, local,
and Tribal Governments, in the aggregate, or by the private sector, of
more than $158 million in any one year.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct requirement costs on State and local governments,
preempts State law, or otherwise has federalism implications. Since
this final rule does not impose any costs on State or local
governments, the requirements of Executive Order 13132 are not
applicable.
Comment: A few commenters expressed concerns regarding the
financial impact of the MCIT/R&N final rule, including that CMS' impact
estimate of $0 to $4 billion over the first several years indicated
that CMS could not assess the potential impact given the multiple
variables involved. Another commenter asserted that the MCIT/R&N final
rule significantly underestimated anticipated spending and would
accelerate Medicare Trust Fund insolvency.
Response: We acknowledge that assessing the financial impact of
MCIT, with multiple variables and limited access to publicly available
data to derive impacts, makes it difficult to estimate precise spending
on the policy. For future rulemaking, we anticipate this estimate to
become more finely tuned as more public-facing data about Breakthrough
Devices becomes available.
[[Page 62958]]
C. Alternatives Considered
CMS considered alternatives to repealing the MCIT pathway and the
definition of reasonable and necessary, such as maintaining the
provisions of the MCIT/R&N final rule and further delaying the
effective date. For the reasons described in detail in section II. of
this final rule such as patient safety and need for further public
engagement, we chose to repeal the provisions. We described the impact
of these MCIT alternatives in Table 1. The alternative considered for
not codifying the definition of ``reasonable and necessary'' was to
codify the definition. We describe the impact of codifying the
definition in Table 2.
D. Accounting Statement and Table
We have prepared an accounting statement showing the classification
of the expenditures associated with the provisions of this final rule.
This table addresses the costs that would have been incurred through
implementing the MCIT/R&N final rule, but, due to this final rule
repealing that rule, reflects that those costs will not be incurred
under the policies.
As required by OMB Circular A-4 (available at <a href="https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf">https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf</a>), we have prepared an accounting statement in Table 3 showing the
classification of the impact associated with the provisions of this
final rule.
Table 3--Accounting Statement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unit rate
Primary Minimum Maximum ------------------------------------------------ Source citation
Category estimate estimate estimate Discount rate (RIA, preamble,
Year dollar (%) Period covered etc.)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers:
Federal Annualized monetized .............. (34.0) (1,044.1) 2022 7 2022-2025 RIA: This reflects
transfers: ``on budget'' the repeal of MCIT.
($millions/year)MCIT. We estimated a zero-
cost scenario for
each of the fiscal
years 2022-2025.
MCIT.......................... .............. (34.9) (1,071.7) 2022 3 2022-2025
Definition of ``Reasonable and .............. (51.0) (880.0) 2022 7 2022-2025 RIA: This reflects
Necessary''. .............. .............. .............. .............. .............. the repeal of the
(51.0) (880.0) 2022 3 2022-2025 reasonable and
necessary
definition.
--------------------------------------------------------------------------------------------------------------------------------------------------------
From whom to whom?................ From: Federal Government
To: Medicare Providers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Items in parentheses indicate negative numbers.
This final rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress
and the Comptroller General for review.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on November 9, 2021.
List of Subjects in 42 CFR Part 405
Administrative practice and procedure, Diseases, Health facilities,
Health professions, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR part 405 as set forth below:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
0
1. The authority for part 405 continues to read as follows:
Authority: 42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x,
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).
Sec. 405.201 [Amended]
0
2. Section 405.201 is amended in paragraph (b) by removing the
definition for ``Reasonable and necessary''.
Subpart F--[Removed and Reserved]
0
3. Remove and reserve subpart F, consisting of Sec. Sec. 405.601
through 405.607.
Dated: November 9, 2021.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-24916 Filed 11-12-21; 8:45 am]
BILLING CODE P
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