new tech 201904

Inside CMS - 04/25/2019

CMS Proposes Add-On Pay Path For Breakthrough Devices

April 23, 2019

CMS proposes raising the add-on pay for new technology and providing a path for breakthrough devices approved by the FDA to access add-on payments as part of the proposed fiscal 2020 hospital inpatient pay rule released Tuesday (April 23) -- a move the medical device lobby praised for including several of the industry’s suggestions.

“Transformative technologies are coming to the private market, but Medicare’s antiquated payment systems have not contemplated these technologies,” CMS Administrator Seema Verma says in a press release on the proposed rule. “I am particularly concerned about cases that have been reported to the agency in which Medicare’s inadequate payment has led hospitals to curtail access to needed therapies. We must continually update our policies in response to the rapid pace of advancement in medical science.”

The agency proposes to increase the new technology add-on payment, as CMS believes setting the maximum add-on pay percentage at 50 percent for certain technologies may not be adequate. The agency proposes to increase the add on-pay, starting in fiscal 2020, to 65 percent.

“It is challenging to determine empirically a precise payment percentage between the current 50 percent and 100 percent payment that would be the most appropriate. We believe that 65 percent is an incremental increase that would reasonably balance the need to maintain the incentives inherent to the prospective payment system while also encouraging the development and use of new technologies,” the proposed rule says.

To qualify for an add-on payment for new services and technologies under the inpatient pay system, devices and services must be new; “be costly such that the DRG rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate;” and demonstrate a substantial clinical improvement over existing services or technologies, according to CMS.

In the proposed rule, the agency proposes an alternative new technology add-on payment pathway for medical devices that receive FDA marketing authorization and are part of an FDA expedited program for medical devices -- currently the Breakthrough Devices Program. If a device was approved as part of that program, the agency would consider the product new and not substantially similar to an existing technology, meaning that it would only need to meet the cost criterion to receive the add-on pay, CMS says in a fact sheet. The change would begin with applications for fiscal 2021 add-on payments.

The agency says in its press release that real-world data on outcomes for breakthrough devices are often limited when they are approved, and “it can be challenging for innovators to meet the requirement for evidence demonstrating ‘substantial clinical improvement’ in order to qualify for new technology add-on payments.”

“Therefore, CMS is proposing to waive for two years the requirement for evidence that these devices represent a ‘substantial clinical improvement,’” CMS’ press release says. “Waiving this requirement would provide additional Medicare payment for the technologies for a period of time while real-world evidence is emerging, so Medicare beneficiaries do not have to wait for access to the latest innovations.”

The proposed rule notes that CMS is not proposing a similar alternative path for drugs at this time.

The medical device lobby praised CMS for adopting several of the industry’s proposals.

“We are pleased that this rule reflects several of AdvaMed’s priorities, including increasing funding for new technology add-on payments (NTAP), and making it easier for breakthrough technologies to access the Medicare program. This will help ensure that hospitals and patients have access to breakthrough innovations and care, and further incentivize transformational technologies,” Advanced Medical Technology Association President and CEO Scott Whitaker said in a statement. “We look forward to reviewing the proposed rule in more detail, and working closely with CMS on additional ways to facilitate greater efficiencies in the coverage and payment process.”

CMS also says stakeholders have indicated more guidance on what constitutes a substantial clinical improvement would be helpful. The agency says it is considering potential changes to the substantial clinical improvement criterion under the new technology add-on payment policy and the outpatient pay system transitional pass-through pay policy for devices. The agency wants feedback on the kind of detail and guidance stakeholders would find useful, and says it plans to use that feedback to inform future rulemaking.

The agency also seeks comments on changes or clarifications to the substantial clinical improvement criterion CMS could consider including in the final rule “to provide greater clarity and predictability.”

The proposed rule includes 17 new applications for the new technology add-on payment in fiscal 2020 and the agency proposes to continue payments for 10 of the technologies currently receiving the add-on pay. Three other technologies currently getting add-on pay will no longer be within their three-year newness period come fiscal 2020. -- Michelle M. Stein (mstein@iwpnews.com)