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July 3, 2023

CMS Proposes Transitional Coverage for Emerging Technologies

Advisory

On June 22, 2023, the Centers for Medicare & Medicaid Services (CMS) released a long-awaited procedural notice with comment period (CMS-3421-NC)1 that outlines a proposed Transitional Coverage for Emerging Technologies (TCET) pathway for certain Breakthrough Devices that would build off the Medicare national coverage determination (NCD) process and Coverage with Evidence Development (CED). This highly anticipated notice sets forth three stages of the TCET Pathway: (1) premarket, (2) coverage under the TCET pathway, and (3) transition to post-TCET coverage. As a companion to the notice, CMS also released proposed guidance documents on CED and CMS’ National Coverage Analysis Evidence Review.

How did we get here?

This is CMS’ second attempt at addressing an accelerated coverage pathway for breakthrough devices. TCET replaces the Medicare Coverage for Innovative Technology (MCIT) final rule, which the present administration repealed in November 2021, before it took effect, citing beneficiary safety concerns. TCET represents a significant departure from MCIT’s approach, which would have afforded devices with breakthrough designation immediate transitional national coverage upon marketing (or a date specified by the manufacturer) for four years, without any imposition of evidence development as a condition of coverage. This latest iteration is not entirely unexpected, however, as CMS leadership identified key principles of TCET in a JAMA article last year that foreshadowed the proposed procedural processes contained in the TCET notice.

TCET Pathway Procedures

CMS proposes that the TCET pathway would be voluntary for manufacturers of certain breakthrough devices to “accelerate patient access to beneficial medical products while generating evidence.” The agency outlines certain “TCET General principles” including limiting the pathway to certain candidates, conducting early evidence reviews and engagement with manufacturers, avoiding duplicative or conflicting evidence development requirements, ensuring any CED requirement be time-limited under the pathway, and affording the option at different phases for manufacturers to opt out of the TCET pathway. The notice also describes how CMS anticipates collaborating with the Food and Drug Administration (FDA) and the Agency for Healthcare Research and Quality (AHRQ).

Appropriate Candidates for TCET Pathway

Devices that are:

  • FDA-designated Breakthrough Devices that receive market authorization for one or more indications for use covered by the designation
  • Within a Medicare benefit category
  • Not the subject of an existing NCD
  • Not statutorily excluded from Medicare coverage
  • Not intended to include diagnostic lab tests

Stage 1: Premarket

TCET Pathway Nomination and Selection

  • Approximately 12 months prior to FDA’s anticipated regulatory decision, manufacturers that are appropriate candidates may submit a self-nomination and other supporting information to CMS via email.
  • Within 20 days of receipt of a complete nomination, CMS will offer a 30-minute intake meeting (held remotely) with the manufacturer to discuss the device, application, and questions.
  • CMS will meet with FDA to learn about the technology and potential FDA review timing.
  • If all other pathway criteria have been met, CMS may initiate a benefit category review. TCET nominations of devices determined not to have a benefit category will be denied; acceptance into TCET does not mean there is a final determination of a benefit category or of coverage.
  • Within 30 business days of initiating its review, CMS will make a decision on the nomination and notify the manufacturer.

Evidence Preview and Meeting

  • CMS will initiate an Evidence Preview — a systematic literature review intended to provide the manufacturer with early feedback on the strengths or weaknesses of the available evidence and any shortfalls or evidence gaps in relation to the possibility of Medicare coverage.
  • The Evidence Preview is anticipated to last 12 weeks.
  • CMS will share the Evidence Preview with the manufacturer and offer a 60-minute meeting (virtually or in person), which may include representatives from FDA and AHRQ. The meeting is an opportunity to discuss the evidence and available coverage pathways, including CED.

Manufacturer Decision to Pursue TCET Pathway

  • After the Evidence Preview and meeting, manufacturers that wish to continue the TCET pathway must submit a formal NCD request letter to CMS to open a TCET NCD analysis.
  • For manufacturers that withdraw, CMS will not publicly post the Evidence Preview, but proposes to share it with the Medicare Administrative Contractors (MACs) “to aid them in their decision making” given the substantial investment of public resources for the Evidence Preview. (CMS solicits comments on this point.)

Evidence Development Plan (EDP)

  • Manufacturers must submit an EDP with the NCD request letter if the Evidence Preview identifies evidence gaps.
  • The EDP should specify studies to sufficiently address the evidence gaps. Studies may include traditional clinical study designs and/or a “fit-for-purpose” (FFP) study design, which is one where the study design, analysis plan, and study data are appropriate for the question the study aims to answer.
  • EDPs should include clinically meaningful benchmarks for each study outcome and provide supporting evidence.
  • Within 30 days of receiving the EDP, CMS will review the plan, share with AHRQ for its input, and provide the manufacturer with written feedback.
  • CMS will hold an EDP meeting with the manufacturer (and may include AHRQ) to discuss recommended refinements and address questions.
  • CMS will have a minimum of 60 business days of the EDP meeting to make any adjustments to the plan. If the EDP is insufficient to address the standards set by CMS and AHRQ, CMS may withdraw participation from TCET.

Stage 2: Coverage Under the TCET Pathway

For devices selected for the TCET pathway, CMS would, pending an approved EDP for cases with evidence gaps, initiate the NCD process under section 1862(l) of the Social Security Act, with a goal of releasing a proposed and final NCD in advance of the statutory NCD deadlines. At this stage, manufacturers would again have the option to request to withdraw from the TCET pathway and CMS would not pursue an NCD. CMS anticipates a TCET coverage period of three to five years, as evidence is generated, but it could be longer. CMS makes clear, however, that it may reconsider an NCD at any time.

Stage 3: Transition to Post-TCET Coverage

After the evidence development under stage 2 concludes, CMS would assess whether there is sufficient evidence to satisfy the reasonable and necessary standard by:

  • Conducting an updated evidence review (within six months of the review date specified in the EDP), based on a renewed, systematic literature review and qualified evidence synthesis and compare findings against the NCD outcome benchmarks
  • Reviewing applicable practice guidelines and consensus statements to assess whether conditions of coverage remain appropriate
  • Collaborating with AHRQ and FDA, as appropriate, on the updated review

CMS would then initiate a reconsideration of the original NCD for the breakthrough device, which may result in any one of the following outcomes: an NCD (with coverage or non-coverage), an NCD with CED, or coverage per Medicare contractor discretion (local coverage policies or claim-by-claim adjudication).

Considerations for Industry

The Scope of TCET Would Be Limited: CMS expects that many breakthrough devices either would be coverable without TCET (e.g., bundled items or items subject to an existing NCD) or not indicated for the Medicare population. CMS anticipates receiving eight nominations per year and accepting up to five TCET candidates annually, prioritizing innovative technologies that CMS determines to have the potential to benefit the greatest number of Medicare beneficiaries. However, CMS also seeks comments on whether to extend coverage of similar devices under the TCET pathway to establish a “level playing field and avoid delays in access” that might occur with separate NCDs.

Role of CED: Under the TCET pathway, CED is likely to be an element of the NCD, albeit time-limited, given that CMS expects that most candidates would not yet meet Medicare’s “reasonable and necessary” standard for coverage. CMS took several steps over the last year to revisit its CED policy. In September and December of 2022, respectively, AHRQ issued proposed and final reports on “Analysis of Requirements for Coverage with Evidence Development (CED).” In February 2023, CMS convened a panel of the Medicare Evidence Development and Coverage Advisory Committee to examine the minimum CED criteria for clinical studies submitted for CMS approval (information available here). As noted, the agency is proposing to update its CED criteria, which would apply to the TCET pathway.

TCET Timeline: It is unclear if the proposed timeline for the TCET pathway is realistic — particularly the stages that require engagement with the agency over evidence. In a number of places CMS notes that the anticipated timeline may take longer (e.g., longer Evidence Preview if the review involves novel items or the evidence is conflicting). To further compound matters, the pre-market portion of TCET would take place at the same time manufacturers are travelling along the FDA regulatory pathway.

TCET Fact Sheet: CMS also released a fact sheet regarding the TCET procedural notice, which is available here. Notably, the fact sheet states that “the TCET pathway will help coordinate benefit category determination, coding, and payment reviews,” but the notice is silent and does not explain how such coordination might occur. The fact sheet also specifies that CMS will soon announce the opening of an “NCD pilot” that will incorporate aspects of the new evidence development framework outlined in the notice and guidance documents. Industry should stay tuned for further developments.

The comment period for the notice closes August 28, 2023.

If readers have further questions, Arnold & Porter professionals following these issues would be happy to fill in details and provide perspectives. Feel free to contact any of the authors listed above.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

  1. Medicare Program; Transitional Coverage for Emerging Technologies Notice with comment period. 88 Fed. Reg. 41633 (June 27, 2023).