Improving Medicare Coverage Of Innovative Technologies

After advances and setbacks, policy makers have revived efforts to improve the Medicare coverage process for new medical devices. Industry groups and others have long argued that the existing process is inefficient and unpredictable, and that a streamlined pathway for coverage decision making is needed for novel technologies that address serious and life-threatening illness. However, more rapid coverage processes, with shorter review periods and greater reliance on intermediate or surrogate endpoints, often mean more uncertainty about a technology’s risks and benefits at the time of coverage. The enduring challenge is how to expedite the process to ensure that Medicare beneficiaries have appropriate, timely access to novel medical technologies, while providing robust and efficient mechanisms for evidence generation in the pre- and post-coverage period.

In January 2021, the Trump administration issued a rule, Medicare Coverage of Innovative Technology (MCIT), that would have conferred automatic coverage for medical devices that the Food and Drug Administration (FDA) granted “breakthrough” status and approved or cleared for use. The breakthrough designation is intended for devices addressing unmet needs and for which existing treatment options are inadequate. The Biden administration initially delayed MCIT’s implementation to allow for further review and then rescinded the regulation in November 2021.

Congressional and administration officials have continued to work on the issue. The Centers for Medicare and Medicaid Services (CMS) has held listening sessions with stakeholders, and a modified version of the rule termed Transitional Coverage for Emerging Technologies (TCET), is expected later this year or in early 2023. Congress is working on potential legislation, including one option to resurrect elements of MCIT and incorporate it into the Cures 2.0 Act. Interested groups have held webinars and workshops and issued white papers to inform the discussion. In this Forefront article, we examine the debate over TCET and offer options for consideration, with particular attention to how Medicare might operationalize proposed changes. This article is adapted from a more detailed white paper that is available on the Tufts-CEVR website.

Football Highlights

Advancing And Repealing MCIT

MCIT would have provided Medicare coverage for FDA-approved or cleared breakthrough devices for four years, during which time product manufacturers, at their discretion, could collect additional evidence. After the four years, CMS would determine a device’s status and whether to issue a national coverage determination or leave coverage decisions to the discretion of local contractors. The Trump administration promoted the rule as a means to improve the predictability of coverage and speed access to novel devices. Innovators and investors applauded MCIT’s automatic coverage because it eliminated concerns that breakthrough devices would face lengthy delays in Medicare coverage. In a stakeholder meeting convened by our Center for the Evaluation of Value and Risk in Health in June 2022, some participants emphasized that MCIT would have spurred the development of truly innovative technologies. They argued that this is in contrast to the current system that provides incentives for manufacturers to prioritize less risky “me-too” technologies, for which the coverage, coding, and payment pathways are well established.

However, participants also raised concerns that under MCIT, CMS would pay for devices with limited evidence about their benefits and risks in Medicare patients, who often have more comorbidities and are older than individuals enrolled in clinical trials conducted to obtain FDA approval. Some observers have argued that MCIT contained weak incentives for device companies to conduct studies once products were covered, and that the rule did not provide adequate authority for CMS to withdraw coverage of unsafe or ineffective technologies.

How Have FDA-Designated Breakthrough Devices Fared Under Medicare?

As the field considers new reforms, it is worth exploring how Medicare has covered FDA-designated breakthrough devices to date. We identified 35 breakthrough devices approved or cleared by the FDA from 2016 through 2021. Notably, most achieved Medicare reimbursement without delays attributable to coverage decision making because many technologies were folded into existing inpatient payment systems—and in several cases received new technology add-on or transitional pass-through payments. For example, the Spiration Valve System for treatment of severe emphysema was covered in an existing diagnosis-related group, and the FoundationOne Liquid CDx was automatically folded into a national coverage determination that was in place by the time the FDA approved this version of the technology. Only seven of these 35 breakthrough devices were assessed formally through Medicare’s national (n=5) or local coverage (n=2) process.

The data suggest that existing reimbursement pathways avoided delays associated with national or local coverage policies for most existing breakthrough devices. Still, questions about the adequacy of the current coverage pathway remain. For one, the vast majority of technologies granted breakthrough designation (almost 700 to date) have yet to be approved by FDA and their fate remains unclear for Medicare coverage. This backlog also raises questions about CMS’s capacity to handle such a high volume of potential applications for special consideration. Moreover, innovators and investors emphasize that a sample of FDA-designated breakthrough devices does not account for the devices that companies chose not to develop because of the perceived risks about lengthy delays and uncertain outcomes in securing Medicare reimbursement.

Options For TCET

Expedited review programs, originally implemented for HIV antiretroviral treatment in the early 1990s, reflect a judgment that patients and clinicians may be willing to accept more uncertainty about the risks and benefits of technologies in exchange for more rapid access, particularly for serious illnesses and unmet health needs. The critical challenge is to develop coverage policy mechanisms that allow for some degree of greater uncertainty as a tradeoff for faster patient access in the context of unmet health needs. We discuss several initiatives that may help achieve an acceptable balance of the benefits and risks involved.

Revisiting Parallel FDA-CMS Review

Since 2011, the FDA and CMS have offered a voluntary parallel review pathway for product manufacturers under which the two agencies simultaneously review new technologies. The idea is to speed review times by avoiding separate and sometimes conflicting advice from regulatory and reimbursement authorities. However, the program has seen limited use; only four technologies have pursued this pathway to date. Device companies seem to prefer separate regulatory and reimbursement pathways, fearing that parallel review will delay a product’s market entry because CMS may require more complex study designs (for example, such as those that involve the enrollment of patients with multiple comorbidities or longer patient follow-up times or additional outcomes). Still, the concept of parallel review is worth revisiting and could be strengthened by expanding the types of devices eligible to participate and soliciting feedback from the medical device industry about specific changes that should be considered.

Supporting The FDA’s Payer Communication Task Force

In 2016, the FDA created a Payor Communication Task Force to help ensure that device companies’ clinical studies would produce evidence suitable for both regulatory approval and payer coverage. While the FDA has conducted interviews with officials from payers and device companies and the website lists 13 payer organizations that have indicated a willingness to participate in meetings, the agency has not shared basic information on the number of meetings requested and conducted, nor information on participant views about the impact and value of the program. More clarity around the program’s use and impact is needed to ensure that it is achieving its stated objectives.

Improving Coverage With Evidence Development

In the mid-2000s, CMS created a coverage with evidence development (CED) pathway, under which Medicare provides conditional coverage for a new technology, while collecting additional evidence on the technology’s risks and benefits. While the pathway promises a more flexible coverage option for promising technologies, a recent review of the 27 CED cases to date found that the data collection periods are unpredictable and often lengthy, taking eight years on average. In addition, CED studies can be expensive and involve extensive data collection from clinicians. For example, for one ongoing CED involving a cardiovascular device registry, hospitals pay a substantial annual fee for participation and allocate multiple staff positions to support data collection. This approach may only be practical when a technology is sufficiently expensive to justify the research costs. Going forward, it may be possible to reduce such costs by leveraging data from claims, electronic health records, and patient-generated data. CED has considerable promise as a policy mechanism to promote both patient access and evidence development but would benefit from revised CED study criteria that emphasize real-world data and observational designs. As Kathryn Phillips recently noted, there is also need for greater clarity in the criteria used to determine whether and how coverage should continue, as well as a need to improve monitoring of the program including evaluation of the program’s effects on patient outcomes and costs.

Providing Early Advice To Companies On Evidence Generation

Convening early meetings among product developers, CMS, and the FDA about evidence requirements for pre- and post-coverage studies could also help to streamline and improve the approval process. While CMS has engaged in many such meetings, formalizing the process would give companies greater confidence in CMS advice about the evidence needed to secure coverage and provide Medicare officials an opportunity to raise concerns before companies launch clinical studies. Early meetings could also help CMS anticipate and develop coding and payment mechanisms for technologies that meet coverage requirements.

Outside the US, health technology assessment (HTA) organizations have extensive experience in providing early advice on evidence generation to product developers. Ting Wang and colleagues investigated 68 HTAs and reported that such advice often amended a device company’s evidence generation plans, most often the choice regarding study inclusion/exclusion criteria, the comparator arm, or primary and secondary outcomes. The authors highlighted several key findings: There is more impact when advice is from both HTA and regulators; discussions require extensive advanced preparation; and these programs include the participation of experts with significant clinical and methodological expertise and therefore require substantial time and resources. To our knowledge, there are no published reports demonstrating that early advice from HTA organizations increases the likelihood, speed, or level of reimbursement, suggesting that the impact of early advice alone on the availability of innovative technologies to Medicare patients is uncertain.

Issuing CMS Guidance On Real-World Evidence In Coverage Decisions

Medicare has substantial experience collecting and analyzing real-world evidence (RWE) in some areas, such as for the use of clinical registries for cardiovascular devices. There are also examples, including, PET scanning in oncology, in which Medicare has used claims data to supplement registry data. However, Medicare has generally relied on traditional randomized controlled clinical trials for determining whether their “reasonable and necessary” standard has been met, and it is unclear in what contexts RWE gathered through observational designs would be adequate to support national coverage.

Given the likely importance of RWE studies in the context of coverage reforms, it would be valuable for CMS to work with experts and stakeholders to develop guidance on RWE study designs that would support coverage approval. The FDA has developed a number of RWE guidance documents to help ensure that companies’ study protocols align with regulatory expectations, and these could be adapted to reflect additional evidence expectations for CMS coverage. In this instance, CMS would still review individual study protocols, similar to the way in which the FDA provides both general RWE guidance and feedback on individual proposed studies. Technical guidance from CMS on special topics, such as the use of digital biomarkers and digital technologies to collect outcomes directly from patients, would also be valuable.

Notably, the FDA’s work on RWE for regulatory decision making has taken years of effort by a large, dedicated team of experts, as well as extensive engagement with external experts and stakeholders and multiple public meetings. It is reasonable to expect that Medicare decision making will require similar effort, expertise, and resources. The field would also benefit from consideration of best practices in the use of RWE for payer decision making.

Exploring A CMS Opt-Out To The Original MCIT Approach

As noted, expanding CMS capacity to provide advice on trial design and the development of RWE guidance will require significant time and resources, and it is unclear to what extent these efforts alone will address concerns about the timeliness and predictability of the Medicare coverage process. Thus, it is also worth considering possible adaptations to the MCIT framework. One approach to consider would involve designating a specified period after FDA approval for CMS to opt-out of default automatic coverage. For example, CMS could determine within, say, three months, whether studies conducted for FDA decision making enrolled enough patients reflecting the older, sicker Medicare population, whether the studies reported clinically meaningful outcomes, and whether there remained significant uncertainty regarding a product’s safety.

For technologies with relatively minor gaps in evidence, product developers could propose one or more study designs for post-coverage studies to CMS, to be completed during a transitional coverage period. Ideally, post-coverage studies to address uncertainties would leverage real-world data, using the latest tools and methods. If CMS deems evidence gaps sufficiently large, it could determine that the product was not eligible for expedited coverage through the transitional coverage program.

Ensuring Adequate Resources For CMS

In the longer term, proposed reforms to the Medicare coverage process will require additional CMS expertise. Given the increase in novel study designs, richer data sources, and more sophisticated analytic techniques, CMS would benefit from additional staff with relevant expertise in clinical research, trial design, epidemiology, and biostatistics. Potential sources of consultative expertise to support this work include staff at the FDA, the National Institutes of Health, and the Agency for Healthcare Research and Quality (AHRQ), as well as researchers at academic medical centers. Experts from AHRQ-funded Evidence-based Practice Centers could also help draft relevant guidance document and staff early advice meetings, particularly if the number of requests increases with the number of devices obtaining breakthrough designations. A key challenge for existing and future CMS staff and consultants will be to offer analysis and advice that balances methodological rigor with the inevitable uncertainty inherent to the TCET policy goal of promoting faster access to promising, novel technologies.


TCET offers an opportunity to improve the Medicare coverage process for new technologies. A new conceptual framework, particularly for technologies covering serious illness where there is unmet need, is needed, as well as a focus on key operational changes. Implementing reforms will likely continue for several years after rulemaking is completed and will require substantial expertise and resources.

Patients want more access to promising technologies, and innovators and investors want more predictable and transparent rules to reduce reimbursement uncertainty. But these desires must be balanced against the need to ensure that technologies are supported by robust evidence. Crafting polices and program reforms that achieve an appropriate balance is an enduring challenge and should be guided by carefully evaluating past efforts with similar policy objectives.

Authors’ Note

This article is adapted from a White Paper by the authors on Medicare coverage of emerging technologies that was supported by a consortium of medical devices companies, including Medtronic, Edwards Lifesciences, and Grail. The views expressed are those of the authors and do not necessarily reflect the views of others at these organizations.