CMS lays out strategy to foster medical innovation in Medicare

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The Centers for Medicare and Medicaid Services is taking steps to overhaul and modernize its policies to ensure that Medicare beneficiaries have access to the latest medical technologies.

Speaking on Thursday at the annual meeting of the Medical Device Manufacturers Association, CMS Administrator Seema Verma laid out the agency’s strategy for fostering technological innovation.

“When I came to CMS, I inherited outdated government rules and regulation that stifle innovation and access to innovative treatments,” Verma told the MDMA conference. “For CMS, as the largest payer in the country, we have a particularly outsized effect on the market. And our often arcane and outmoded regulations around coverage, coding, and payment can lead to unpredictability for innovators.”

Verma announced at the conference that CMS is making changes to the Healthcare Common Procedure Coding System (HCPCS), a collection of codes that represent procedures, supplies, products and services which may be provided to Medicare beneficiaries.

“Coding decisions are based on whether a new code needs to be developed, or whether an existing code can adequately describe the new therapy,” said Verma, who added that the agency has “been evaluating how to offer more frequent opportunities to request a HCPCS code and other refinements to the process.”

As a result, CMS is changing the current process of allowing only one opportunity per year to apply for new HCPCS Level II codes. Specifically, the agency is adopting a process with quarterly opportunities to apply for drugs, and semi-annual opportunities to apply for devices.

“This requires a complete redesign of the process, which is currently annual and includes public meetings to collect broad stakeholder input,” observed Verma. “There will now be quarterly opportunities for submissions and decisions for drugs and semi-annual opportunities for devices. We expect this will greatly improve the ability of innovators to accelerate through the adoption curve.”

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In addition, for technologies with Current Procedural Terminology (CPT) Category III codes, Verma announced that CMS is clarifying that for technologies that do not fall under an existing Local Coverage Determination, Medicare contractors are required to follow the transparent new LCD process for every local coverage decision, including reviewing the evidence with respect to the technology.

“We’ve been hearing concerns that our Medicare contractors are making decisions to automatically non-cover technologies with Category III CPT codes, which are used for emerging technologies,” according to Verma. “Contractors are not authorized to make coverage determinations to automatically non-cover any item or service, and must instead follow the new LCD process for each and every local coverage decision they make. This means the contractors cannot make local coverage decisions that automatically non-cover an item or service because it has a Category III code.”

Verma also mentioned last week’s release of a proposed Inpatient Prospective Payment System (IPPS) rule from CMS that seeks to increase the new technology add-on payment—which provides hospitals with additional payments for cases with high costs involving new technology—as well as a proposal to modernize payment policies for medical devices that meet FDA’s Breakthrough Devices designation.

She noted that this proposal includes waiving the requirement for “substantial clinical improvement,” which is one of the criteria that must be met for CMS to make additional payments.

“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 don’t have to wait for access to the latest innovations,” Verma said. “After devices have been on the market for two years, they would still have to demonstrate evidence of ‘substantial clinical improvement’ to receive the third year of add-on payment. We’re also considering waiving this requirement for similar ‘pass through’ payments.”

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