A Summary of Key Provisions Within CMS’ Final MCIT Rule

On Jan. 12, the Centers for Medicare and Medicaid Services (CMS) released the final rule for Medicare Coverage of Innovative Technology (MCIT) and the definition of “Reasonable and Necessary.” The rule implements a major change in how Medicare treats breakthrough devices by providing automatic coverage for four years. MCIT is available not only for new breakthrough devices but also for products that received this designation within the last two years. To pursue coverage under the new MCIT pathway, companies must opt in by notifying CMS through a yet-to-be announced email box, which should be available when the rule takes effect.

The rule was originally intended to become effective on March 15, but the Biden administration placed a hold on all regulations that had not been implemented before Jan. 20. The hold is supposed to last 60 days to give federal agencies an opportunity to review the pending statutes and determine whether they should be implemented, revised, or studied further. If MCIT moves forward, it could still take effect within its original time frame, but the actual timing for implementation is still uncertain (as of press time). Four Democratic representatives sent a letter to CMS on Feb. 24 urging that MCIT proceed with the March 15 implementation date, affirming bipartisan support for this new Medicare pathway.

The MCIT pathway will provide innovators with a greater certainty of initial Medicare coverage. A summary of key medical device-related provisions of MCIT follows.

MCIT aims to provide Medicare coverage only to medtech products that receive breakthrough device designation by the U.S. Food and Drug Administration (FDA). The agency is not expanding the rule beyond products with this designation, and the breakthrough product cannot already be covered by a Medicare national coverage determination (NCD).

Covered items and services include the device itself; “reasonable and necessary” surgery to implant the device (if, in fact, it is implanted); device-related care and services; and any reasonable and necessary treatments due to complications arising from the product’s use. Diagnostic medical tests are eligible to be included under MCIT, but drugs and biologics are not.

CMS will coordinate with the FDA and manufacturers to ensure seamless Medicare coverage for four years after market authorization unless CMS determines the device does not have a Medicare benefit category. Companies should note that Medicare is a defined benefit program, so devices that do not fit within the statutory definitions may not be considered for MCIT.

CMS believes the current FDA requirements for demonstrating safety and efficacy are sufficient to determine whether to grant coverage under MCIT. Additional indications can be added through the MCIT pathway, if approved for the breakthrough device. Conversely, coverage under the rule can be withdrawn if the FDA removes market authorization.

MCIT is readily available to provide immediate national coverage for new breakthrough devices as early as the same date of FDA market authorization. Breakthrough device manufacturers are not required to conduct clinical studies during MCIT coverage because CMS concluded that four years of allotted coverage allows companies to adequately develop clinical evidence and data about the device’s benefit in real-world settings to support future coverage decisions.

It should be noted that MCIT is provisional. Once MCIT coverage expires, the standard definition of “reasonable and necessary” is applied to determine whether these devices should be covered.

MCIT is a voluntary pathway, and device manufacturers must notify CMS if they want to utilize this coverage option. MCIT is initiated when a manufacturer notifies CMS of its intention to utilize the MCIT pathway.

That notification ideally should be sent to CMS within two weeks of breakthrough designation receipt, but there is no penalty for notifying CMS after that time. Requests may also be submitted before the date of or concurrently with the FDA marketing application submission.

The CMS Coverage and Analysis Group will receive these inquires and notifications via email. The coverage will last four years, beginning from the date of FDA market authorization for which the device would be eligible to participate. CMS has implemented a two-year lookback (a one-time event), making devices that received breakthrough designation on or after March 15, 2019, eligible to maximize MCIT’s benefit.

After four years, coverage of the breakthrough device will be subject to one of the following:

• NCD (affirmative coverage) – Manufacturers are encouraged to submit an NCD request during the third year of MCIT to allow enough time to develop an NCD
• NCD (non-coverage)
• MAC discretion (claim-by-claim adjudication or local coverage determination

The devices will be posted on the CMS website to inform all stakeholders of MCIT coverage.

CMS has updated its definition of “reasonable and necessary” in relation to Part A and Part B coverage of items and services. The agency now deems an item or service reasonable and necessary as long as it meets three main elements: it must be safe and effective; not experimental or investigational; and appropriate for Medicare patients. CMS is not broadening the “reasonable and necessary” definition to include prevention and screening items and services.

CMS uses the following criteria to determine whether items or services would be appropriate for Medicare patients:

• Furnished in accordance with accepted medical practice standards for diagnosing or treating the patient’s condition or to improve a malformed body function;
• Furnished in a setting appropriate to the patient’s medical needs and condition;
• Ordered and furnished by qualified personnel;
• Meets, but does not exceed, the patient’s medical need; and
• Is at least as beneficial as an existing and available medically appropriate alternative.

An item or service deemed “appropriate for Medicare patients” would be covered in the commercial insurance market unless there is evidence of clinically relevant differences between Medicare beneficiaries and commercially insured individuals.

National and local coverage determinations that lack the evidence to meet longstanding appropriateness criteria could still be eligible for coverage if the item or services are reimbursed by most commercial insurers. Within a year of MCIT’s implementation (but no later than March 15, 2022), CMS will issue draft guidance on the methodology for determining the relevance of commercial insurance policies based on coverage for the majority of covered lives.

As part of its consideration, CMS will include in the NCD or local coverage determination its reasoning for deciding different coverage than most commercial insurers. Various comments will be considered, and CMS welcomes input on topics like these:

• Reviewing a majority of commercial insurance policies, or using the most restrictive policy in the commercial market.
• Determining which commercial insurers CMS should review for consideration.
• Examining the methodology CMS uses to determine coverage, as the agency lacks a single standard commercial payer analysis program.
• Transparency. The public should have access to the scientific basis of commercial payers’ coverage decisions, including data sources and the data itself if CMS adopts commercial insurance policies as part of the new “reasonable and necessary” definition.

The “reasonable and necessary” definition that applies to all items and services Medicare covers includes but may not be limited to drugs, devices, and biologics. Medicare Advantage Plans are required to offer coverage for these items and services on terms equally as permissive as those offered by fee-for-service Medicare.

Any item or service that is deemed a breakthrough device will be considered “reasonable and necessary” under the MCIT rule. Breakthrough devices receiving FDA market authorization also are considered “reasonable and necessary” because they have met the agency’s unique breakthrough devices criteria and are considered innovations that serve unmet needs.

CMS will provide national Medicare coverage for FDA-designated breakthrough devices approved for market and used consistent with their authorized or cleared indication for use, but the breakthrough device must be described in an appropriate Medicare benefit category under Part A or Part B and cannot specifically be excluded by statute. 

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John McDermott has more than 30 years of experience as a market access, reimbursement, and HEOR consultant and practice leader. His interests include market access strategy, reimbursement planning, valuation, product differentiation, value proposition, health economic modeling, outcomes studies, and payer and provider market research. Through hundreds of engagements for the drug and medical device industries, he has evaluated products in various therapeutic areas, with deep experience in cardiology, orthopedics, urology, oncology, rare diseases, and diagnostic imaging.