Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 2987 

1Executive Order on Protecting and Improving 

Medicare for Our Nation’s Seniors, available at 

https://www.whitehouse.gov/presidential-actions/ 

executive-order-protecting-improving-medicarenations-seniors/. 

2 Id. 

39 U.S.C. 3012(d)—Misleading 

References to the United States 

Government; Sweepstakes and 

Deceptive Mailings 

Persons may be liable to the United 

States for a civil penalty under 39 U.S.C. 

3012(d) for sending certain deceptive 

mail matter described in 39 U.S.C. 

3001((h)–(k), including: 

• Solicitations making false claims of 

Federal Government connection or 

approval; 

• Certain solicitations for the 

purchase of a product or service that 

may be obtained without cost from the 

Federal Government; 

• Solicitations containing improperly 

prepared ‘‘facsimile checks’’; and 

• Certain solicitations for ‘‘skill 

contests’’ and ‘‘sweepstakes’’ sent to 

individuals who, in accordance with 39 

U.S.C. 3017(d), have requested that such 

materials not be mailed to them. 

Currently, under the implementing 

regulations, this penalty is not to exceed 

$14,791 for each mailing. The new 

penalty will be $14,966. 

39 U.S.C. 3017(g)(2)—Commercial Use 

of Lists of Persons Electing Not To 

Receive Skill Contest or Sweepstakes 

Mailings 

Under 39 U.S.C. 3017(g)(2), the Postal 

Service may impose a civil penalty 

against a person who provides 

information for commercial use about 

individuals who, in accordance with 39 

U.S.C. 3017(d), have elected not to 

receive certain sweepstakes and contest 

information. Currently, this civil 

penalty may not exceed $2,957,993 per 

violation, pursuant to the implementing 

regulations. The new penalty may not 

exceed $2,992,956 per violation. 

39 U.S.C. 3017(h)(1)(A)—Reckless 

Mailing of Skill Contest or Sweepstakes 

Matter 

Currently, under 39 U.S.C. 

3017(h)(1)(A) and its implementing 

regulations, any promoter who 

recklessly mails nonmailable skill 

contest or sweepstakes matter may be 

liable to the United States in the amount 

of $14,791 per violation for each mailing 

to an individual. The new penalty is 

$14,966 per violation. 

39 U.S.C. 3018(c)(1)(A)—Hazardous 

Material 

Under 39 U.S.C. 3018(c)(1)(A), the 

Postal Service may impose a civil 

penalty payable into the Treasury of the 

United States on a person who 

knowingly mails nonmailable hazardous 

materials or fails to follow postal laws 

on mailing hazardous materials. 

Currently, this civil penalty is at least 

$320, but not more than $127,525 for 

each violation, pursuant to the 

implementing regulations. The new 

penalty is at least $324, but not more 

than $129,032 for each violation. 

List of Subjects in 39 CFR Part 233 

Administrative practice and 

procedure, Banks, Banking, Credit, 

Crime, Infants and children, Law 

enforcement, Penalties, Privacy, 

Seizures and forfeitures. 

For the reasons set out in the 

preamble, the Postal Service amends 39 

CFR part 233 as follows: 

PART 233—INSPECTION SERVICE 

AUTHORITY 

■ 1. The authority citation for part 233 

continues to read as follows: 

Authority: 39 U.S.C. 101, 102, 202, 204, 

401, 402, 403, 404, 406, 410, 411, 1003, 

3005(e)(1), 3012, 3017, 3018; 12 U.S.C. 3401– 

3422; 18 U.S.C. 981, 983, 1956, 1957, 2254, 

3061; 21 U.S.C. 881; Pub. L. 101–410, 104 

Stat. 890 (28 U.S.C. 2461 note); Pub. L. 104– 

208, 110 Stat. 3009; Secs. 106 and 108, Pub. 

L. 106–168, 113 Stat. 1806 (39 U.S.C. 3012, 

3017); Pub. L. 114–74, 129 Stat. 584. 

§ 233.12 [Amended] 

■ 2. In § 233.12: 

■ a. In paragraph (a), remove ‘‘$73,951’’ 

and add in its place ‘‘$74,825’’, remove 

‘‘$147,899’’ and add in its place 

‘‘$149,647’’, remove ‘‘$14,791’’ and add 

in its place ‘‘$14,966’’, and remove 

‘‘$2,957,993’’ and add in its place 

‘‘$2,992,956’’. 

■ b. In paragraph (b), remove ‘‘$36,975’’ 

and add in its place ‘‘$37,412’’, remove 

‘‘$73,951’’ and add in its place 

‘‘$74,825’’, remove ‘‘$7,395’’ and add in 

its place ‘‘$7,482’’, and remove 

‘‘$1,478,996’’ and add in its place 

‘‘$1,496,478’’. 

■ c. In paragraph (c)(4), remove 

‘‘$14,791’’ and add in its place 

‘‘$14,966’’. 

■ d. In paragraph (d), remove 

‘‘$2,957,993’’ and add in its place 

‘‘$2,992,956’’. 

■ e. In paragraph (e), remove ‘‘$14,791’’ 

and add in its place ‘‘$14,966’’. 

■ f. In paragraph (f), remove ‘‘$320’’ and 

add in its place ‘‘$324’’ and remove 

‘‘$127,525’’ and add in its place 

‘‘$129,032’’. 

Joshua Hofer, 

Attorney, Federal Compliance. 

[FR Doc. 2021–00447 Filed 1–13–21; 8:45 am] 

BILLING CODE 7710–12–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 405 

[CMS–3372–F] 

RIN 0938–AT88 

Medicare Program; Medicare Coverage 

of Innovative Technology (MCIT) and 

Definition of ‘‘Reasonable and 

Necessary’’ 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule establishes a 

Medicare coverage pathway to provide 

Medicare beneficiaries nationwide with 

faster access to new, innovative medical 

devices designated as breakthrough by 

the Food and Drug Administration 

(FDA). The Medicare Coverage of 

Innovative Technology (MCIT) pathway 

will result in 4 years of national 

Medicare coverage starting on the date 

of FDA market authorization or a 

manufacturer chosen date within 2 

years thereafter. This rule also 

implements regulatory standards to be 

used in making reasonable and 

necessary determinations under section 

1862(a)(1)(A) of the Social Security Act 

(the Act) for items and services that are 

furnished under Part A and Part B. 

DATES: This final rule is effective on 

March 15, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Tamara Syrek Jensen and JoAnna 

Baldwin, (410) 786–2281 or 

CAGinquiries@cms.hhs.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Department is committed to 

ensuring Medicare beneficiaries have 

access to new cures and technologies 

that improve health outcomes. Section 6 

of the October 3, 2019 Executive Order 

13890 (E.O. 13890) ‘‘Executive Order on 

Protecting and Improving Medicare for 

Our Nation’s Seniors,’’ 1 directs the 

Secretary to ‘‘propose regulatory and 

sub-regulatory changes to the Medicare 

program to encourage innovation for 

patients’’ including by ‘‘streamlining the 

approval, coverage, and coding 

process’’.2 The E.O. 13890 explicitly 


khammond on DSKJM1Z7X2PROD with RULES
2988 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

3 Id. 

4 Id. 

5Food and Drug Administration, Breakthrough 

Devices Program Guidance for Industry and Food 

and Drug Administration Staff, available at: https:// 

www.fda.gov/media/108135/download. 

6https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/downloads/ 

pim83c13.pdf. 

7FDA Guidance for Industry, ‘‘Medical Product 

Communications That Are Consistent With the 

FDA-Required Labeling—Questions and Answers’’, 

available at https://www.fda.gov/media/133619/ 

download. 

includes making coverage of 

breakthrough medical devices ‘‘widely 

available, consistent with the principles 

of patient safety, market-based policies, 

and value for patients.’’ 3 The E.O. also 

directs the Secretary to ‘‘clarify the 

application of coverage standards.’’ 4

Consistent with these directives, we 

proposed to create a new coverage 

pathway for breakthrough devices, 

which we are calling Medicare Coverage 

of Innovative Technology (MCIT). This 

pathway will accelerate the coverage of 

new, innovative breakthrough devices to 

Medicare beneficiaries. We also 

proposed to codify the term ‘‘reasonable 

and necessary’’ to provide greater 

certainty to stakeholders seeking 

coverage for innovative items and 

services and to ensure that this 

substantive legal standard is codified. 

The MCIT coverage pathway is 

specifically for Medicare coverage of 

devices that are designated as part of the 

Food and Drug Administration’s (FDA) 

Breakthrough Devices Program 

(hereafter referred to as ‘‘breakthrough 

devices’’) and are FDA market 

authorized. FDA’s Breakthrough Devices 

Program is for certain medical devices, 

device-led combination products, and 

can include lab tests.5 The MCIT 

pathway would be voluntary and device 

manufacturers would notify CMS if they 

want to utilize this coverage option. 

We proposed that National Medicare 

coverage under the MCIT pathway 

could begin immediately upon the date 

of FDA market authorization (that is, the 

date the medical device receives 

Premarket Approval (PMA); 510(k) 

clearance; or the granting of a De Novo 

classification request) for the 

breakthrough device or on the date 

designated by the manufacturer within 

any point during the four year eligibility 

period for coverage under MCIT. This 

coverage can occur unless the device 

does not have a Medicare benefit 

category or is otherwise excluded from 

coverage by statute (that is, the 

Medicare statute does not allow for 

coverage of the particular device.) This 

coverage pathway delivers on the 

Administration’s commitment to give 

Medicare beneficiaries access to the 

newest innovations on the market, 

consistent with the statutory definitions 

of Medicare benefits. Because Medicare 

is a defined benefit program, devices 

that do not fit within the statutory 

definitions may not be considered for 

MCIT. As an example, medical 

equipment for home use by the 

beneficiary must be durable (that is, 

withstand repeated use) for it to be 

coverable by Medicare (as defined in 

statutes and regulations by the 

Secretary). 

The Secretary has authority to 

determine whether a particular medical 

item or service is ‘‘reasonable and 

necessary’’ under section 1862(a)(1)(A) 

of the Act. (See Heckler v. Ringer, 466 

U.S. 602, 617 (1984).) When making 

coverage determinations, our policies 

have long considered whether the item 

or service is safe and effective, not 

experimental or investigational, and 

appropriate. (For more information see 

the January 30, 1989 notice of proposed 

rulemaking (54 FR 4307)). These factors 

are found in Chapter 13 of the Medicare 

Program Integrity Manual (PIM) at 

section 13.5.4—Reasonable and 

Necessary Provisions in LCDs as 

instructions for Medicare contractors.6

We proposed to codify in regulations 

the Program Integrity Manual definition 

of ‘‘reasonable and necessary’’ with 

modifications, including to add a 

reference to Medicare patients and a 

reference to commercial health insurer 

coverage policies. We proposed that an 

item or service would be considered 

‘‘reasonable and necessary’’ if it is—(1) 

safe and effective; (2) not experimental 

or investigational; and (3) appropriate 

for Medicare patients, including the 

duration and frequency that is 

considered appropriate for the item or 

service, in terms of whether it is— 

• Furnished in accordance with 

accepted standards of medical practice 

for the diagnosis or treatment of the 

patient’s condition or to improve the 

function of a malformed body member; 

• Furnished in a setting appropriate 

to the patient’s medical needs and 

condition; 

• Ordered and furnished by qualified 

personnel; 

• One that meets, but does not 

exceed, the patient’s medical need; and 

• At least as beneficial as an existing 

and available medically appropriate 

alternative. 

We also proposed that an item or 

service would be ‘‘appropriate for 

Medicare patients’’ under (3) if it is 

covered in the commercial insurance 

market, except where evidence supports 

that there are clinically relevant 

differences between Medicare 

beneficiaries and commercially insured 

individuals. An item or service deemed 

appropriate for Medicare coverage based 

on commercial coverage would be 

covered on that basis without also 

having to satisfy the previously listed 

bullets. We believed this definition 

would be a significant step in meeting 

the E.O.’s discussion of the need to 

bring clarity to coverage standards. 

Stakeholders have expressed interest in 

codifying a definition of ‘‘reasonable 

and necessary’’ for many years. 

A. Statutory Authority 

As stated in the previous section, we 

proposed to codify the PIM’s definition 

of reasonable and necessary with a 

modification to the appropriateness 

factor to allow CMS to refer to 

commercial coverage. We will finalize 

in regulation the factors we have 

historically used in making ‘‘reasonable 

and necessary’’ determinations under 

section 1862(a)(1)(A) of the Act, with a 

modification, discussed below, to factor 

(3) to determine whether an item or 

service is appropriate based, in 

prescribed circumstances, on coverage 

in the commercial market. In general, 

this section of the Act permits Medicare 

payment under part A or part B for any 

expenses incurred for items or services 

that are reasonable and necessary for the 

diagnosis or treatment of illness or 

injury or to improve the functioning of 

a malformed body member. Thus, with 

some exceptions, section 1862(a)(1)(A) 

of the Act requires that an item or 

service be ‘‘reasonable and necessary’’ 

to be covered by Medicare. The courts 

have recognized that the Secretary has 

significant authority to determine 

whether a particular item or service is 

‘‘reasonable and necessary,’’ and that 

the statute affords broad discretion to 

interpret this term (Heckler v. Ringer, 

466 U.S. 602, 617 (1984). See also, YaleNew Haven Hospital v. Leavitt, 470 F.3d 

71, 84 (2d Cir. 2006); Kort v. Burwell, 

209 F. Supp. 3d 98, 110 (D. D.C. 2016) 

(The statute vests substantial authority 

in the Secretary.)) In regard to the MCIT 

coverage pathway, we proposed 

national Medicare coverage for 

breakthrough devices that are FDA 

market-authorized and used consistent 

with the FDA approved or cleared 

indication for use (also referred to as the 

‘‘FDA-required labeling’’).7 This device 

coverage under the MCIT pathway is 

reasonable and necessary for a duration 

of time under section 1862(a)(1)(A) of 

the Act because the device has met the 

very unique criteria of the FDA 

Breakthrough Devices Program. 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 2989 

8 21st Century Cures Act, available at https://

www.congress.gov/114/plaws/publ255/PLAW114publ255.pdf; see FDA Guidance for Industry 

and Food and Drug Administration Staff, 

Breakthrough Devices Program available at https:// 

www.fda.gov/medical-devices/how-study-andmarket-your-device/breakthrough-devices-program. 

9FDA does not publish a list of breakthrough 

designated or breakthrough designated and 

subsequently market authorized devices. However 

if a breakthrough device gains market authorization 

through a PMA only, then the summary of safety 

and effectiveness data (SSED) will contain a 

reference for the breakthrough designation. This is 

not true for De Novos which have been granted or 

cleared 510(k)’s. In consideration of that approach, 

this notice of public rulemaking does not contain 

such lists. 10Section 1869(f)(4) of the Act. 

11CMS Program Integrity Manual, Chapter 13 

Local Coverage Determinations, available at https:// 

www.cms.gov/Regulations-and-Guidance/ 

Guidance/Manuals/downloads/pim83c13.pdf. 

12CMS, National Coverage Determination for 

Routine Costs in Clinical Trials available at https:// 

www.cms.gov/medicare-coverage-database/details/ 

ncd-details.aspx?NCDId=1&fromdb=true. 

B. FDA Breakthrough Devices Program 

Under the MCIT coverage pathway, 

CMS will coordinate with FDA and 

manufacturers as medical devices move 

through the FDA regulatory processes 

for breakthrough device designation and 

market authorization to ensure seamless 

Medicare coverage after market 

authorization unless CMS determines 

those devices do not have a Medicare 

benefit category. The Breakthrough 

Devices Program is an evolution of the 

Expedited Access Pathway Program and 

the Priority Review Program (section 

515B of the Federal Food, Drug, and 

Cosmetic Act (FD&C Act)), 21 U.S.C. 

360e–3; see also final guidance for 

industry entitled, ‘‘Breakthrough 

Devices Program,’’ https://www.fda.gov/ 

downloads/MedicalDevices/ 

DeviceRegulationandGuidance/ 

GuidanceDocuments/UCM581664.pdf). 

The FDA’s Breakthrough Devices 

Program is not for all new medical 

devices; rather, it is only for those that 

the FDA determines meet the standards 

for breakthrough device designation. In 

accordance with section 3051 of the 21st 

Century Cures Act (21 U.S.C. 360e–3),8

the Breakthrough Devices Program is for 

medical devices and device-led 

combination products that meet two 

criteria. The first criterion is that the 

device provide for more effective 

treatment or diagnosis of lifethreatening or irreversibly debilitating 

human disease or conditions. The 

second criterion is that the device must 

satisfy one of the following elements: It 

represents a breakthrough technology; 

no approved or cleared alternatives 

exist; it offers significant advantages 

over existing approved or cleared 

alternatives, including additional 

considerations outlined in the statute; or 

device availability is in the best interest 

of patients (for more information see 21 

U.S.C. 360e–3(b)(2)). These criteria 

make breakthrough designated devices 

unique among all other medical 

devices.9 The parameters of the 

breakthrough devices program focus on 

innovations for patients, in turn, MCIT, 

focuses on these breakthrough devices 

consistent with E.O. 13890 and in order 

to streamline coverage of innovative 

medical devices. We note that the FDA’s 

guidance stresses the need for 

breakthrough devices to still meet the 

statutory standard of reasonable 

assurance of safety and effectiveness at 

the time of approval, meaning that a 

device which receives FDA 

breakthrough designation automatically 

satisfies factor (1) of our reasonable and 

necessary definition. 

C. Current Medicare Coverage Pathways 

Currently, we utilize several coverage 

pathways for items and services, which 

includes medical devices. None of the 

coverage pathways described in this 

section offer immediate, predictable 

coverage concurrently with FDA market 

authorization like the proposed MCIT 

pathway would do. We summarize the 

other coverage pathways here to provide 

context for MCIT. 

• National Coverage Determinations 

(NCDs): Section 1862(l)(6)(A) of the Act 

defines the term national coverage 

determination as ‘‘a determination by 

the Secretary with respect to whether or 

not a particular item or service is 

covered nationally under this title.’’ In 

general, NCDs are national policy 

statements published to identify the 

circumstances under which particular 

items and services will be considered 

covered by Medicare. Traditionally, 

CMS relies heavily on health outcomes 

data to make NCDs. Most NCDs have 

involved determinations under section 

1862(a)(1)(A) of the Act, but NCDs can 

be made based on other provisions of 

the Act, and includes a determination 

that the item or service under 

consideration has a Medicare benefit 

category. The NCD pathway, which has 

statutorily prescribed timeframes, 

generally takes 9 to 12 months to 

complete.10

• Local Coverage Determinations 

(LCDs): Medicare contractors develop 

LCDs based on section 1862(a)(1)(A) of 

the Act that apply only within their 

geographic jurisdictions. (Sections 

1862(l)(6)(B) and 1869(f)(2)(B) of the 

Act.) MACs will not need to develop 

LCDs for breakthrough devices when 

they are nationally covered through 

MCIT. Manufacturers declining to 

participate in the MCIT pathway may 

still seek LCDs from the MACs during 

and after the four year eligibility period, 

using the current process. 

The MACs follow specific guidance 

for developing LCDs for Medicare 

coverage in the CMS Program Integrity 

Manual, and in some instances, an LCD 

can also take 9 to 12 months to develop 

(MACs must finalize proposed LCDs 

within 365 days from opening per 

Chapter 13—Local Coverage 

Determinations of the (PIM) 13.5.1). We 

note that the MCIT pathway does not 

alter the existing coverage standards in 

Chapter 13—Local Coverage 

Determinations of the PIM.11 That 

chapter will continue to be used, to the 

extent consistent with other parts of this 

final rule, in making determinations 

under section 1862(a)(1)(A) of the Act. 

• Claim-by-claim Adjudication: In the 

absence of an NCD or LCD, MACs 

would make coverage decisions under 

section 1862(a)(1)(A) of the Act and may 

cover or not cover items and services on 

a claim-by-claim basis. The majority of 

claims are handled through the claim 

adjudication process. 

• Clinical Trial Policy (CTP) NCD 

310.1: The CTP pathway can be used for 

coverage of routine care items and 

services (but generally not the 

technology under investigation) in a 

clinical study that is supported by 

certain Federal agencies. The CTP 

coverage pathway was developed in 

2000.12 This coverage pathway has not 

generally been utilized by device 

manufacturers because they usually 

seek coverage of the device, which is 

not included in the CTP pathway. 

• Parallel Review: Parallel Review is 

a mechanism for FDA and CMS to 

simultaneously review the submitted 

clinical data to help decrease the time 

between FDA’s approval of a premarket 

application or granting of a de novo 

classification and the subsequent CMS 

NCD. Parallel Review has two stages: (1) 

FDA and CMS meet with the 

manufacturer to provide feedback on the 

proposed pivotal clinical trial within 

the FDA pre-submission process; and (2) 

FDA and CMS concurrently review (‘‘in 

parallel’’) the clinical trial results 

submitted in the PMA, or De Novo 

request. FDA and CMS independently 

review the data to determine whether it 

meets their respective Agency’s 

standards and communicate with the 

manufacturer during their respective 

reviews. This program is most 

successful for devices that have a 

significant amount of clinical evidence. 

(Candidates for parallel review are not 

be appropriate for simultaneous MCIT 

consideration.) 


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2990 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

In contrast to these other coverage 

pathways, MCIT is readily available to 

provide immediate national coverage for 

new breakthrough devices with a 

Medicare benefit category as early as the 

same date as FDA market authorization. 

The MCIT pathway can support 

manufacturers that are interested in 

combining coverage with their own 

clinical study to augment clinical 

evidence of improved health outcomes, 

particularly for Medicare patients. 

Comment: Many commenters 

generally supported the MCIT concept, 

expressing that it would result in faster 

and more consistent access to newly 

authorized technologies for Medicare 

beneficiaries. Those commenters 

recognized that immediate coverage of 

newly FDA market-authorized 

breakthrough technologies via the 

pathway would avoid the ambiguity and 

possible inconsistency of claim-byclaim coverage by the MACs as well as 

the delays inherent in either the LCD or 

NCD pathways. Commenters suggested 

that MCIT will bring closer alignment of 

FDA and CMS decision-making, and 

would help to more closely coordinate 

coverage, coding and payment 

functions. Those who were supportive 

also stated their belief that the proposal 

would promote innovation; decrease 

uncertainty and delays in coverage; 

improve FDA—CMS coordination; and 

improve beneficiary access to cuttingedge treatments. Many commenters 

expressed support for the MCIT 

proposal in principle but nonetheless 

requested important clarifications or 

expressed significant reservations about 

specific elements. 

Some commenters did not believe that 

the proposed MCIT pathway was 

necessary because existing coverage 

pathways provide a sufficient 

mechanism for coverage of newly FDA 

market authorized items and services. 

One commenter expressed concern that 

the MCIT pathway may undermine or 

circumvent existing pathways. A few 

commenters recommended that 

coverage for breakthrough technologies 

should be left to MAC discretion 

because they retain considerable 

flexibility to cover new technologies 

and can adjust coverage policy as new 

evidence emerges. Other commenters 

discussed the parallel review and 

Coverage with Evidence Development 

(CED) programs (CED is a paradigm 

whereby CMS issues an NCD to cover 

items and services on the condition that 

they are furnished in the context of 

approved clinical studies or with the 

collection of additional clinical data). 

The commenters stated that the parallel 

review program may shorten the time 

between FDA market authorization and 

coverage, but is generally more 

appropriate for items and services 

where there is relatively greater clinical 

evidence than under the breakthrough 

device pathway. For topics where there 

is less evidence on safety and efficacy 

available, such as newly FDA market 

authorized breakthrough technologies, 

they asserted the CED pathway is more 

appropriate. A few commenters 

recommended that instead of 

establishing the MCIT pathway, more 

resources should be applied to existing 

pathways to allow CMS to conduct 

expeditious review of a larger number of 

topics. 

Response: CMS agrees that coverage 

of breakthrough devices through the 

MCIT pathway will accelerate access to 

items and services that address 

important unmet needs, as well as help 

CMS work more closely with FDA. We 

do not believe that simply devoting 

more resources to the existing coverage 

pathways will yield the synergy with 

FDA we anticipate will be created from 

the MCIT pathway. With the exception 

of claim-by-claim coverage, both LCDs 

and NCDs are subject to statutory 

timeframes and require considerable 

CMS resources to complete. This 

includes policy analysts, 

epidemiologists, physicians, data 

analysts and additional supporting staff 

in addition to contract money that is 

required to host meetings of the 

Medicare Evidence Development and 

Coverage Advisory Committee and 

commission external technical 

assessments. There are many steps 

outlined in Chapter 13 of the PIM 

regarding the process for attaining an 

LCD, and this process must be repeated 

in each MAC jurisdiction. The MCIT 

pathway will increase Medicare 

beneficiary access to newly FDA 

market-authorized treatments, for which 

similar devices may not exist and which 

improve health outcomes for patients, 

simplify and accelerate the process to 

gain coverage, and eliminate geographic 

variations in coverage that may occur 

for treatments covered on a claim-byclaim basis. Support for further 

innovation is a secondary benefit of the 

MCIT coverage pathway. We also agree 

with commenters that the parallel 

review program or CED may not be 

available to innovators under all 

circumstances, or may not be the most 

appropriate pathway for their 

circumstances, which is in part why we 

are making the MCIT pathway available 

as another route to CMS coverage. We 

remind commenters that coverage under 

MCIT is provisional, and that once 

MCIT coverage expires, our standard 

definition of reasonable and necessary 

as modified in this rulemaking, will be 

applied to determine whether and when 

to cover these devices. 

We do not agree that the MCIT 

pathway will undermine or circumvent 

existing pathways. Only breakthrough 

devices will be eligible for the MCIT 

pathway. Sec. 515B(c) of the Federal 

Food, Drug, and Cosmetic Act (FD&C 

Act) (21 U.S.C. 360e–3(c)) states that a 

request for a breakthrough device 

designation may be made at any time 

prior to the submission of an 

application for premarket approval, 

approval under Sec. 510(k) of the FD&C 

Act (21 U.S.C. 360(k)), or approval 

under a de novo marketing 

authorization. Because requesting a 

breakthrough device designation 

presumes an application for approval 

under one of these three pathways, the 

MCIT pathway depends on, and does 

not undermine, these three avenues for 

FDA approval. We also do not agree that 

coverage for breakthrough technologies 

should be left to MAC discretion. The 

MCIT pathway will provide innovators 

greater certainty of initial Medicare 

coverage. 

Comment: We solicited comments in 

the MCIT proposed rule on whether the 

MCIT pathway should also include 

diagnostics, drugs and/or biologics that 

utilize breakthrough or expedited 

approaches at the FDA (for example, 

Breakthrough Therapy, Fast Track, 

Priority Review, Accelerated Approval) 

or all diagnostics, drugs, and/or 

biologics. Some commenters expressed 

support for changing the way innovative 

technologies without FDA breakthrough 

device designation are covered by 

Medicare. These commenters pointed 

out that there may be innovative 

technologies which they believe ought 

to be covered by Medicare that choose 

not to use FDA’s breakthrough device 

pathway or may be an innovative 

technology that may not qualify for the 

designation. One commenter suggested 

that CMS should preclude MACs from 

non-covering these technologies. Other 

commenters suggested nonbreakthrough devices, drugs, and 

biologics should be eligible for an MCIT 

type of coverage pathway because nonbreakthrough items and services also 

improve patient health outcomes. One 

commenter recommended that CMS be 

able to include non-breakthrough 

devices based on agency discretion as to 

when beneficiaries should have 

expedited access to an item or service. 

In response to the question CMS 

posed about whether MCIT should 

include diagnostics, drugs, and 

biologics that use the breakthrough or 

other expedited FDA pathways, 

commenters provided varied 


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suggestions. Some commenters offering 

general support of the MCIT program 

stated that the MCIT program should be 

limited, as we proposed, to technologies 

that are designated by the FDA as 

breakthrough devices. Some of these 

commenters supported their position by 

suggesting that device coverage lags 

further behind that of drugs and 

biologics and; therefore, devices are 

more in need of a program like MCIT. 

There were specific requests for CMS to 

include humanitarian use devices. 

Other commenters suggested that 

innovative devices using FDA 

Investigational Device Exemption (IDE) 

Category B designation should be 

eligible for MCIT. 

Response: We appreciate that 

commenters shared their interest in 

CMS providing a pathway for nonbreakthrough designated devices, and 

we share their interest in furthering 

innovation. Noting that, as stated in our 

proposed rule, E.O. 13890 makes 

explicit mention of medical devices in 

its directive, we have heard concerns 

from stakeholders that there is more 

uncertainty surrounding coverage of 

devices than for other items and 

services, such as drugs and biologics. 

For this reason, our proposal centered 

on breakthrough designated devices, 

since we believed that this was the area 

with the most immediate need, 

particularly in light of the unique FDA 

criteria for breakthrough designation 

status. We agree with commenters that 

we should undertake efforts to promote 

innovation across all items and services 

which could potentially be covered 

under Medicare. However, because we 

have consistently heard from 

stakeholders about the need for more 

rapid approval of breakthrough devices 

in particular, E.O. 13890 explicitly 

mentions devices, and because the 

immediate opportunity is to align with 

the FDA’s breakthrough device 

designation, we are not expanding 

beyond breakthrough devices for the 

final rule. As the MCIT pathway 

develops and proves successful, we may 

consider expanding its application to 

other items and services, including 

Category B IDE and HUD devices in 

future rulemaking. 

Comment: Some commenters asserted 

that FDA market authorization of 

breakthrough devices should suffice to 

establish that they are safe and effective. 

Other commenters argued further that 

establishment of safety and effectiveness 

is within the exclusive purview of the 

FDA, and no additional evidence should 

be required to meet the CMS reasonable 

and necessary evidence standard. 

Response: We agree that 

establishment of safety and effectiveness 

is generally within the purview of the 

FDA under its statute, but not all items 

and services that may be covered under 

Medicare are regulated by the FDA. 

Comment: A significant number of 

commenters noted that some 

breakthrough devices have no clinical 

data at the time of FDA market 

authorization, and many breakthrough 

devices lack data on patients older than 

65, patients with disabilities, and 

patients with end stage renal disease, 

which poses some uncertainty about the 

FDA’s ability to gauge safety and 

efficacy in the context of the Medicare 

population. There was also concern 

expressed about how the Medicare 

population is often excluded from 

clinical trials due to age and health 

status. Numerous commenters noted 

that the FDA frequently extends market 

authorization after reviewing short-term 

clinical studies with the proviso that 

ongoing data collection in the postmarket authorization period is required 

to establish long-term durability of 

treatment effect. Furthermore, 

commenters cited evidence that FDA 

mandated post-market studies are not 

reliably completed and asserted that 

explicit assessment of safety and 

effectiveness in Medicare beneficiaries 

is essential. Several commenters 

provided specific examples of FDA 

market authorized devices that failed to 

demonstrate benefit when subjected to 

post-market clinical study. 

Response: FDA assessments of safety 

and efficacy are general 

characterizations of a product. It is 

always up to an individual, in 

consultation with their physician, to 

determine whether an item or service is 

best applied to their individual health 

circumstances. Given this fact, we 

believe that current FDA requirements 

for demonstrating safety and efficacy are 

sufficient in determining whether to 

grant coverage to a breakthrough device 

under MCIT. We also note that our rule 

provides for the termination of MCIT 

coverage in instances where a medical 

device safety communication or 

warning letter is issued by the FDA, or 

if the FDA revokes market authorization 

for a device. We believe that these 

provisions will help protect beneficiary 

safety while ensuring that beneficiaries 

have more rapid access to new and 

innovative technology. 

Additionally, in our proposed rule, 

we recognized that breakthrough 

devices are those that HHS has 

determined may provide better health 

outcomes for patients facing lifethreatening or irreversibly debilitating 

human disease or conditions. We 

believe that a device meeting these 

criteria, once also FDA market 

authorized, is ‘‘reasonable and 

necessary’’ for purposes of Medicare 

coverage. The MCIT pathway 

establishes rapid coverage of 

breakthrough devices because existing 

coverage pathways do not provide 

immediate, national Medicare coverage. 

We believe this policy will provide a 

balance of ensuring rapid adoption of 

breakthrough devices, which by 

definition provide more effective 

treatment or diagnosis for life 

threatening or debilitating conditions, 

while benefitting beneficiaries. We do 

not agree that automatic coverage for 

other FDA approved products under 

section 1862(a)(1)(A) is warranted 

because by definition, breakthrough 

devices are those for which no approved 

alternative exists or that offer significant 

advantages over existing approved or 

cleared alternatives (21 U.S.C. 360e– 

3(b)(2)). Because other alternatives exist 

for conditions that can be treated with 

non-breakthrough devices, the urgency 

to provide coverage for these items and 

services on a provisional basis is not as 

great. In addition, we believe other 

avenues exist for non MICT eligible 

items and services to expeditiously gain 

coverage. For example, FDA has special 

procedures in place to grant fast track 

designation for certain new drugs, and 

other types of new drugs are eligible for 

a separate breakthrough therapy 

designation (not to be confused with the 

breakthrough device designation for 

which this rule makes MCIT coverage 

available). Furthermore, the need for 

certainty in this regard is not as high as 

compared to breakthrough devices 

because, the FDA only grants 

breakthrough designation to devices 

where no approved or cleared 

alternatives exist and device availability 

is in the best interests of patients. 

D. MCIT Pathway 

We proposed that the MCIT pathway 

would provide immediate national 

coverage for breakthrough devices 

beginning on the date of FDA market 

authorization and continue for up to 4 

years, unless we determine the device 

does not have a Medicare benefit 

category as determined by us as part of 

the MCIT pathway process. The MCIT 

pathway is voluntary (that is, 

manufacturers would affirmatively optin), and would be initiated when a 

manufacturer notifies CMS of its 

intention to utilize the MCIT pathway. 

(This notification process is described 

further in section III. of this final rule). 

We would subsequently coordinate with 

the manufacturer regarding steps that 

need to be taken for MCIT 

implementation purposes. The 

frequency of subsequent engagement 


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13CMS, Guidance for the Public, Industry, and 

CMS Staff Coverage with Evidence Development, 

available at https://www.cms.gov/medicarecoverage-database/details/medicare-coveragedocument-details.aspx?MCDId=27. 

14Fast Track, Breakthrough Therapy, Accelerated 

Approval, Priority Review, available at https://

www.fda.gov/patients/learn-about-drug-and-deviceapprovals/fast-track-breakthrough-therapyaccelerated-approval-priority-review. 

will be largely driven by whether the 

manufacturer has questions for CMS, or 

CMS and FDA. The timing of coverage 

will be left to the manufacturer’s 

discretion provided they request to 

enter the MCIT pathway within the four 

year timeframe for which they would be 

eligible to participate. Engagements can 

take place in the form of in-person 

meetings, phone calls, emails, etc. We 

intend to put devices that are covered 

through the MCIT pathway on the CMS 

website so that all stakeholders will be 

aware of what is covered through the 

MCIT pathway. This measure was 

completely supported by the public 

comments. Manufacturers of 

breakthrough devices will not be 

obligated or mandated by CMS to 

conduct clinical studies during coverage 

under the proposed MCIT pathway. 

However, we sought comment as to 

whether CMS should require or 

incentivize manufacturers to provide 

data about outcomes or should be 

obligated to enter into a clinical study 

similar to CMS’s Coverage with 

Evidence Development (CED) 

paradigm.13 We are aware some 

manufacturers may be required by the 

FDA to conduct post market data 

collection as a condition of market 

authorization, and nothing in this 

proposed rule would alter that FDA 

requirement. Manufacturers are 

encouraged to develop the clinical 

evidence base needed for one of the 

other coverage pathways after the MCIT 

pathway ends. This evidence is 

encouraged not only for CMS and 

commercial health insurer coverage 

policies but also to better inform the 

clinical community and the public 

generally about the risks and benefits of 

treatment. CMS encourages early 

manufacturer engagement, both before 

and after FDA market authorization, for 

manufacturers to receive feedback from 

CMS on potential clinical study designs 

and clinical endpoints that may produce 

the evidence needed for a definitive 

coverage determination after MCIT. This 

feedback would not involve CMS 

predicting specific coverage or noncoverage. 

In order to further the goals of E.O. 

13890, CMS proposed to rely on FDA’s 

breakthrough device designation and 

market authorization of those devices to 

define the universe of devices eligible 

for MCIT, except for those particular 

devices CMS determines do not have a 

Medicare benefit category or are 

statutorily excluded from coverage 

under Part A or Part B. We proposed to 

establish a four year time limit on how 

long a breakthrough device can be 

eligible for MCIT (that is, considered a 

breakthrough device for coverage 

purposes). The 4 year coverage period is 

particularly important for manufacturers 

of breakthrough devices that choose to 

further develop the clinical evidence 

basis on which the FDA granted 

marketing authorization. From our 

experience with clinical studies 

conducted as part of an NCD, 4 years is 

approximately the amount of time it 

takes to complete a study. 

At the end of the 4-year MCIT 

pathway, coverage of the breakthrough 

device would be subject to one of these 

possible outcomes: (1) NCD (affirmative 

coverage, which may include facility or 

patient criteria); (2) NCD (non-coverage); 

or (3) MAC discretion (claim-by-claim 

adjudication or LCD). Manufacturers 

that are interested in a NCD are 

encouraged to submit a NCD request 

during the third year of MCIT to allow 

for sufficient time for NCD 

development. We sought public 

comment on whether CMS should open 

a national coverage analysis if a MAC 

has not issued an LCD for a 

breakthrough device within 6 months of 

the expiration date of the 4-year MCIT 

period. 

We sought public comment on the 

proposed MCIT pathway, the 

considerations described, whether any 

of the existing coverage pathways 

should be modified to achieve the goals 

set out by the E.O., and solicited 

alternatives to these proposals. We 

specifically sought public comment on 

whether the MCIT pathway should also 

include diagnostics, drugs and/or 

biologics that utilize breakthrough or 

expedited approaches at the FDA (for 

example, Breakthrough Therapy, Fast 

Track, Priority Review, Accelerated 

Approval 14) or all diagnostics, drugs 

and/or biologics. We sought data to 

support including these additional item 

categories in the MCIT pathway. Also, 

we specifically sought manufacturer 

input on whether an opt-in or opt-out 

approach would work best for utilizing 

the MCIT pathway. We believe 

manufactures will welcome this new 

coverage pathway. We want to preserve 

manufacturers’ business judgment and 

not assume which Medicare coverage 

pathway a given manufacturer of a 

breakthrough device would prefer (if 

any). Therefore, we proposed an opt-in 

approach with an email to CMS to 

indicate affirmative interest in coverage. 

We expressed interest in whether an 

opt-out approach would be less 

burdensome for stakeholders. We 

encouraged public comment on a 

process for stakeholders to opt-out of 

MCIT that would not be burdensome. 

Also, we sought public comment on 

whether, once a manufacturer has 

opted-out of coverage, it can 

subsequently opt-in to MCIT. 

Comment: The majority of comments 

generated by our questions concern 

issuing an NCD at the end of the four 

year period did not support CMS 

automatically opening an NCD if MACs 

had not issued an LCD after 6 months. 

One commenter stated that the 6 month 

timing was arbitrary with another stated 

that 6 months would not be enough time 

for MACs to perform a comprehensive 

analysis as data may not be fully 

available or there may be LCDs inprocess at the 6 month mark. Many 

manufacturers cited the desire for 

flexibility in the timing of requesting an 

NCD and some specifically cited 

support for claim by claim adjudication 

by the MACs and believe that FDA 

approved or cleared indications will be 

covered by MACs on a claim by claim 

basis. Some commenters did not want 

automatic LCDs or NCDs but wanted 

assurance that absent those mechanisms 

the MACs would, on a claim by claim 

basis, cover MCIT graduated 

technologies consistent with their FDA 

approved or cleared indications. A few 

commenters supported some version of 

a process by which an NCD would 

automatically be triggered including 

that the manufacturer would be required 

to submit an NCD request during year 3 

of MCIT coverage and requiring the 

NCD to be complete by the end of year 

4. A few commenters expressed general 

concern for potential uncertainty among 

patients and providers regarding 

whether MCIT coverage of a device 

would continue past year 4. One 

commenter noted that submission of 

requests for NCDs and LCDs are not 

restricted to manufacturers, anyone can 

submit a request. 

Response: We appreciate commenters’ 

input. We agree that manufacturers 

should have flexibility in timing their 

request for an NCD under MCIT so that 

they can adequately prepare to market 

the device and satisfy consumer 

expectations. We further believe that 

flexibility in the case of timing for the 

development of LCDs and NCDs would 

be in the best interest of beneficiaries, 

manufacturers and providers. We 

believe that there will be situations in 

which not enough evidence will be 

available on which an LCD or NCD can 


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be made and claim by claim 

adjudication is most appropriate, if even 

temporarily while the data continues to 

be developed. A 6-month timeframe 

may not be appropriate in all situations 

so this one size fits all approach to 

trigger an NCD at 6 months after the 

close of the 4 year MCIT coverage 

period is not flexible enough to account 

for the various levels of evidence that 

may be available. We are not able to 

require MACs to adjudicate claims for a 

particular result, this merely sidesteps 

the NCD process. However, we note that 

manufacturers and providers can 

discuss technologies with the clinical 

staff and medical directors working for 

each MAC. We also appreciate and are 

sensitive to the concern over the 

continuity of care for patients who are 

using breakthrough devices and find it 

important to state that beneficiaries with 

a device covered under MCIT will 

continue coverage of any routine 

services or complications related to that 

device beyond the 4-year period of 

MCIT coverage. After considering the 

comments, we are not making any 

changes in the final rule with respect to 

the possible outcomes at the end of the 

4-year MCIT pathway, which are: (1) 

NCD (affirmative coverage, which may 

include facility or patient criteria); (2) 

NCD (non-coverage); or (3) MAC 

discretion (claim-by-claim adjudication 

or LCD). Manufacturers that are 

interested in a NCD are encouraged to 

submit a NCD request during the third 

year of MCIT to allow for sufficient time 

for NCD development. CMS will not 

automatically open a national coverage 

analysis within six months of the 

expiration four year MCIT period. 

Comment: CMS received 

overwhelming support from 

commenters in favor of the voluntary, 

opt-in model of MCIT as proposed 

because it allows manufacturers to use 

their judgment in determining whether 

to participate. Some of the commenters 

who supported opting-in also added 

that communicating with CMS for entry 

into the MCIT program would be 

beneficial for both parties by 

encouraging discussion about the 

technology, coding, payment, and the 

evidentiary expectations after 4 years of 

coverage under MCIT. Another 

commenter indicated that opting-in 

would not be burdensome and would 

not likely be a deterrent to MCIT 

participation. A small number of 

commenters were in favor of automatic 

participation in MCIT unless a 

manufacturer chose to opt-out. One of 

these commenters cited the likelihood 

of administrative errors that could occur 

which could delay opting-in and would 

inadvertently exclude a manufacturer 

from MCIT. 

Response: We agree with commenters 

that supported the voluntary, opt-in 

model for the MCIT program. Of the 

commenters that had concerns, we 

believe their concerns will be addressed 

by finalizing that manufacturers may 

opt-into MCIT using no more than an 

email from the manufacturer to CMS 

indicating a desire to opt-in and the 

requested start date of MCIT coverage. 

We believe that this should ensure a 

simple engagement with CMS to opt and 

will limit burden and improve 

collaboration with CMS. Commenters 

who expressed support for the opt-in 

model spoke to increased collaboration 

with CMS. Commenters who supported 

the opt-out method in order to limit 

administrative burden and confusion 

will be pleased by the simplicity of and 

public information available for the 

process of opt-in. Manufacturers may 

request to opt-in any time during the 

first 2 years in which they are eligible 

to participate in MCIT, however, the 

four year coverage period begins the day 

the breakthrough devices receives FDA 

authorization. A more complete 

discussion including summary of 

comments and responses on the fouryear coverage period and when it begins 

appears later in this rule. 

II. Provisions of Proposed Regulations 

and Analysis of and Responses to 

Public Comments 

A. Defining ‘‘Reasonable and 

Necessary’’ 

As described in section I. of this final 

rule, the Secretary has authority to 

determine the meaning of ‘‘reasonable 

and necessary’’ under section 

1862(a)(1)(A) of the Act. We proposed to 

codify the longstanding Program 

Integrity Manual definition of 

‘‘reasonable and necessary’’ into our 

regulations at 42 CFR 405.201(b), with 

modification. Under the current 

definition, an item or service is 

considered ‘‘reasonable and necessary’’ 

if it is (1) safe and effective; (2) not 

experimental or investigational; and (3) 

appropriate, including the duration and 

frequency that is considered appropriate 

for the item or service, in terms of 

whether it is— 

• Furnished in accordance with 

accepted standards of medical practice 

for the diagnosis or treatment of the 

patient’s condition or to improve the 

function of a malformed body member; 

• Furnished in a setting appropriate 

to the patient’s medical needs and 

condition; 

• Ordered and furnished by qualified 

personnel; 

• One that meets, but does not 

exceed, the patient’s medical need; and 

• At least as beneficial as an existing 

and available medically appropriate 

alternative. 

In addition to codifying the 

previously discussed criteria, we 

proposed to include a separate basis 

under which an item or service would 

be appropriate under (previously stated) 

(3) that is based on commercial health 

insurers’ coverage policies (that is, nongovernmental entities that sponsor 

health insurance plans). We proposed 

the commercial market analysis would 

be initiated if an item/service fails to 

fulfill the existing factor (3) criteria 

defining appropriate for Medicare 

patients but fulfills (1) safe and effective 

and (2) not experimental or 

investigational. We believed that this 

approach would be in line with E.O. 

13890 that directs us to make 

technologies ‘‘widely available, 

consistent with the principles of patient 

safety, market-based policies, and value 

for patients.’’ Under this separate basis, 

we proposed that an item or service 

would satisfy factor (3) if it is covered 

under a plan(s) coverage policy if 

offered in the commercial insurance 

market, unless evidence supports that 

differences between Medicare 

beneficiaries and commercially insured 

individuals are clinically relevant. 

Under our proposal, we would exclude 

Medicaid managed care, Medicare 

Advantage, and other government 

administered healthcare coverage 

programs from the types of coverage 

CMS would consider, as these enrollees 

are not in the commercial market. In the 

following paragraphs, we sought 

comment on this proposal and on how 

best to implement this mechanism. 

We solicited comments on the 

following: 

• Sources of data that could be used 

to implement this policy, and whether 

CMS should make this information 

public and transparent. 

• Appropriate source(s) for these 

coverage policies and the best way to 

determine which commercial plan(s) we 

would rely on for Medicare coverage. 

• Whether beneficiaries, providers, 

innovators, or others wishing to gain 

coverage for an item or service should 

demonstrate that the item or service is 

covered by at least one commercial 

insurance plan policy. If they could 

provide CMS with evidence of 

commercial coverage or if CMS or its 

MACs identify such coverage from its 

review of compilations of health 

insurance offerings or data from other 

sources, CMS would consider factor (3) 

to be satisfied. 


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• Whether we should limit our 

consideration of commercial plan 

offerings or covered lives to a subset of 

the commercial market in the interest of 

simplicity, including looking at 

geographic subsets, subsets based on 

number of enrollees, subsets based on 

plan type (HMO, PPO, etc.), or other 

subsets of plans—including utilizing a 

singular plan. 

• Whether, given considerations such 

the variation and distribution of 

coverage policies and access to 

innovations, we should only cover an 

item or service if it is covered for a 

majority, or a different proportion such 

as a plurality, of covered lives amongst 

plans or a majority, plurality, or some 

other proportion of plan offerings in the 

commercial market. (A plan offering is 

a contract an insurer offers to its 

enrollees, and a single insurance 

company may provide many different 

offerings). 

We recognized that plan offerings may 

impose certain coverage restrictions on 

an item or service, e.g. related to clinical 

criteria, disease stage, or number and 

frequency of treatment. We proposed, 

when coverage is afforded on the basis 

of commercial coverage, we would 

adopt the least restrictive coverage 

policy for the item or service amongst 

the offerings we examine. However, 

given potential unreasonable or 

unnecessary utilization, we also 

solicited comment on whether we 

should instead adopt the most 

restrictive coverage policy. We further 

considered a variation whereby, if 

coverage restrictions are largely similar 

and present across the majority of 

offerings, CMS would adopt these in its 

coverage policies. We sought comment 

on whether, if we were to take this 

approach, we should instead use a 

proportion other than a majority, as low 

as any offering and as high as all 

offerings, as a sufficient threshold. As a 

final variation, we proposed we could 

defer, in the absence of an NCD or 

national policy, to the MACs to tailor 

the restrictions on coverage based on 

what they observe in the commercial 

market, just as we rely on MACs with 

regards to the current definition. 

We further solicited comment on 

whether to grant coverage for an item or 

service to the extent it meets the first 

and second factors and the commercial 

coverage basis for the third factor. 

Under this approach, we would only 

use the current definition of 

‘‘appropriate’’ from the current PIM 

when the exception for clinically 

relevant differences between Medicare 

beneficiaries and commercially insured 

individuals applies (or if the 

commercial coverage basis is 

determined by a proportion like a 

majority and there is insufficient 

commercial coverage information 

available). We noted that referring to 

commercial coverage in this way may 

expand or narrow the circumstances 

under which we would cover a 

particular item or service and; therefore, 

solicited comment on whether, under 

such an approach, we should 

grandfather our current coverage 

policies for items and services. We also 

emphasized that the MACs would 

continue to make judgements in 

evaluating individual claims for 

reimbursement, such that a decision by 

CMS that an item or service is 

reasonable and necessary in general 

does not mean that it is reasonable and 

necessary in all circumstances with 

respect to individual claims for 

reimbursement. 

We sought public comment on the 

most appropriate source(s) for these 

coverage policies. Further, we proposed 

each MAC would be responsible for 

reviewing commercial offerings to 

inform their LCDs or claim by claim 

decisions, which would include 

individual medical necessity decisions. 

We proposed that we may also allow the 

MACs to develop approaches to address 

any or all of the considerations as 

previously outlined, parallel to their 

current practice of making coverage 

decisions in the absence of an NCD or 

national policy. We solicited comment 

on the best role of the MACs, along 

these lines or otherwise. We also 

solicited comment on whether the 

discretion to use the current criteria in 

the PIM when there is evidence to 

believe Medicare beneficiaries have 

different clinical needs should be 

exercised through the NCD process or in 

other ways, as well as what quantum of 

evidence should be sufficient. 

In sum, we proposed to define the 

term ‘‘reasonable and necessary’’ based 

on the factors currently found in the 

PIM, plus an alternative basis for 

meeting factor (3) based on any coverage 

in the commercial market. We also 

solicited comment on an alternative 

under whether an item or service 

satisfies the commercial coverage basis 

for factor (3) is determined by how it is 

treated across a majority of covered lives 

amongst commercial plan offerings, as 

well as an alternative whereby an item 

or service would be appropriate for 

Medicare patients to the extent it is 

covered in the commercial market. 

When evidence supports that 

differences between Medicare 

beneficiaries and commercially insured 

individuals are clinically relevant, we 

proposed we would rely on the criteria 

in the current PIM. In the proposed, we 

stated we would continue relying on 

local administration of the program by 

MACs (including coverage on a claim by 

claim basis and LCDs) and maintain our 

discretion to issue NCDs based on the 

final rule. 

We solicited comment on the 

proposed definition of reasonable and 

necessary, and the previously outlined 

alternatives, as well as other 

mechanisms or definitions we could 

establish for the term ‘‘reasonable and 

necessary’’, and the merits and 

drawbacks associated with each, 

including the potential impact on 

Medicare program expenses or 

complexity. We proposed to finalize any 

variation or outgrowth of the policies 

described in the proposal, or some 

combination of these options in lieu of 

or in conjunction with the proposed 

definition. 

‘‘Reasonable and Necessary’’ Definition 

Comment: CMS received many 

comments requesting that the agency 

not finalize the reasonable and 

necessary definition in regulation. 

These commenters point out the 

Medicare has not codified the definition 

since the program was established. 

Some commenters recognized that the 

longstanding reasonable and necessary 

definition in the Program Integrity 

Manual is understood by stakeholders, 

including CMS, however, they believed 

that retaining this definition only in 

sub-regulatory guidance will allow for 

greater flexibility. 

Response: We disagree with those 

commenters that opposed the agency 

issuing a final rule codifying longstanding agency policies with 

modifications. When we establish 

substantive legal standards governing 

the scope of benefits, payment for 

services, or the eligibility of individuals, 

entities, or organizations definition that 

is currently in CMS manuals will not 

change how CMS is implementing 

reasonable and necessary currently. 

Adding it to furnish or receive services, 

the Medicare statute generally requires 

that the Secretary establish those 

policies by regulation. Although it is 

true that regulations cannot be changed 

as quickly as other policies, the public 

benefits by having the opportunity to 

participate in the rulemaking and the 

resulting policies will have the force of 

law and provide greater stability. In 

addition, issuing regulations in these 

circumstances is consistent with the 

Supreme Court’s decision in Azar v. 

Allina Health Services, 139 S. Ct. 1804 

(2019). Thus, we believe it is 

appropriate to establish the reasonable 

and necessary criteria in regulations, 


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and will not adopt the commenters’ 

suggestion. 

Comment: Commenters questioned 

whether the reasonable and necessary 

definition would apply to items and 

services beyond devices. 

Response: Yes, the reasonable and 

necessary definition applies to all items 

and services Medicare covers under Part 

A and Part B. This includes, but may 

not be limited to, drugs, devices and 

biologics. Medicare Advantage plans are 

required to offer coverage of these items 

and services on terms at least as 

permissive as those adopted by fee for 

service Medicare under this policy. 

Comment: CMS received a few 

comments regarding broadening the 

definition of reasonable and necessary 

to include prevention and screening 

items and services. 

Response: We are not adopting this 

suggestion because Congress has made 

express exceptions to 1862(a)(1)(A) in 

order to provide Medicare coverage for 

covers. Because those services are based 

on statutory authorities. CMS has 

already issue specific regulations for 

those services, it is not necessary or 

appropriate to amend the regulations 

defining reasonable and necessary to 

include preventive measures. 

Safe and Effective 

Comment: Several comments stated 

that CMS should further define what it 

means by ‘‘safe and effective.’’ For 

example, one commenter recommend 

that evidence-based guidelines that 

should be considered for meeting the 

safe and effective criteria. In addition, 

we had other comments state that FDA 

market authorization should meet the 

safe and effective criterion. However, 

other commenters state that there are 

items and services not regulated by the 

FDA; therefore, CMS should not further 

define this criterion to FDA-market 

authorization/approval. 

Response: The requirement of safe 

and effective is a long-standing part of 

the definition of reasonable and 

necessary. CMS believes the longstanding factor is an appropriate starting 

point for a definition, with minor 

technical changes as proposed and then 

finalized in this rule. 

Comment: CMS should establish its 

own stand-alone criteria that allows for 

‘‘investigational and experimental’’ 

treatment to be deemed to be reasonable 

and necessary. 

Response: CMS has stand-alone 

criteria that allows for coverage of 

certain investigational and experimental 

items and services. CMS covers certain 

Investigational Device Exemptions (IDE) 

devices under 42 CFR 405 Subpart B). 

In addition, CMS also covers certain 

investigational items under the Clinical 

Trial Policy (see https://www.cms.gov/ 

medicare-coverage-database/details/ 

nca-details.aspx?NCAId=186&bc=AAg

AAAAAAAAA&). 

Appropriate for Medicare Patients 

Comment: Commenters requested 

more clarification on how the 

appropriateness criteria may be applied. 

For example, one commenter requested 

CMS further explain ‘‘at least as 

beneficial.’’ Another commenter 

requested clarification regarding 

appropriate setting. 

Response: Because this is a longstanding definition and we are not 

making significant changes, we believe 

implementation will have no effect on 

its application to claim-by-claim 

adjudication, LCDs or NCDs. We also 

note that all NCDs and LCDs must go 

through a transparent process that 

includes opportunities for full 

stakeholder engagement when applying 

the reasonable and necessary definition 

criteria, including ‘‘at least as 

beneficial.’’ 

Comment: A few commenters 

requested that CMS update the 

appropriateness standard that states, 

‘‘ . . . furnished in accordance with 

accepted standards of medical practice 

for the diagnosis or treatment of the 

patient’s condition or to improve the 

function of a malformed body member’’ 

to include additional criteria such as 

improve, maintain, or prevent. 

Response: This long-standing 

definition allows flexibility and 

consistency to Medicare coverage 

process. By continuing to use the longstanding definition, there should not be 

any changes to its applicability when 

making coverage determinations. We 

note that prevention is addressed in 

statute and regulation elsewhere (see 

1861(ddd) and 42 CFR 410.64). Further, 

under 1862(a)(1)(A), the statute states 

‘‘diagnosis or treatment of illness or 

injury or to improve the functioning of 

a malformed body member.’’ The longstanding definition, while not a direct 

quote, uses the same terms in the 

statute. 

Comment: Some public commenters 

suggested that MACs must maintain 

flexibility for determining what is 

appropriate on case-by-case basis, 

because this factor turns on particular 

medical facts. They suggested that 

finalizing the regulatory proposal could 

mean patients with rare conditions are 

overlooked because ‘‘appropriate for 

Medicare patients’’ means decisions are 

not individualized. 

Response: We appreciate commenters’ 

feedback. We agree that the appropriate 

factor is made based on the 

consideration of specific facts and that 

MACs should continue to adjudicate 

individual claims to ensure that they are 

reasonable and necessary, in the 

absence of a NCD. We also agree that it 

is important to consider whether an 

item or service is reasonable and 

necessary when making NCDs that often 

apply to a particular patient population. 

Because it is the same long-standing 

definition, we do not believe the 

application of reasonable and necessary 

determinations on a case-by-case 

determination, LCDs or NCDs will 

change. Specifically, for treatments for 

rare diseases. The application of 

appropriateness for a small population 

may be best addressed as a claim-byclaim decision that takes into 

consideration the individual patient’s 

clinical situation. The MAC will 

continue to have the flexibility to decide 

the best approach to coverage on a local 

level. 

Comment: One commenter stated that 

the definition of appropriateness for 

Medicare beneficiaries should ensure all 

beneficiaries are considered—not just 

the aged. 

Response: We thank commenters for 

their input. We agree that it is important 

to consider the entire Medicare 

population, including beneficiaries 

younger than age 65, when deciding 

whether an item or service is reasonable 

and necessary. 

(3) Commercial Insurer Policy 

Utilization 

Comment: Commenters point out that 

review of commercial insurer policies to 

be the sole determinant of appropriate 

coverage is a ‘‘substantial policy 

change’’ and needs more stakeholder 

input. The commenters state that the 

proposal is vague, stated over 25 

questions, and provided little detail to 

support framework. Commenters 

questioned why CMS would need to 

codify this when the agency has already 

used its authority to look to commercial 

policies. One commenter outlined 

several questions CMS should ask the 

public to ensure we have appropriate 

stakeholder input and information 

before finalizing a definition. 

Response: At this time, we are not 

codifying the proposed modification to 

the PIM definition that allows 

commercial insurers to be the sole 

determinant. As some commenters 

pointed out CMS currently has the 

authority and has exercised this 

authority in the past to review 

commercial insurer policies as part of 

the NCD development process. 

However, we are including regulatory 

language that will give CMS clear 

authority to review the majority of 


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commercial insurers in the event that an 

item or service does not meet the 

appropriateness criteria that is long 

established policy. As part of CMS’ 

consideration, if Medicare coverage is 

different than the majority of 

commercial insurers, CMS will include 

in the national or local coverage 

determination its reasoning for different 

coverage. To ensure there is adequate 

public input, CMS has committed not 

later than 12 months after the effective 

date of this rule, CMS will publish for 

public comment draft methodology by 

which commercial insurer’s policies are 

determined to be relevant based on the 

measurement of majority of covered 

lives. 

Comment: Some commenters 

suggested that if CMS were to adopt a 

review of commercial insurer policies it 

should not be based on a single 

commercial policy, but a majority of 

commercial payers or use the most 

restrictive policy in the commercial 

market. Commenters also stated that 

commercial insurance policies vary 

widely and CMS could use any of the 

policies, including the most restrictive. 

The commenters continued that CMS 

should only adopt a commercial insurer 

policy if it expands coverage. 

Response: To ensure there is adequate 

public input on which commercial 

insurers are appropriate and to what 

extent, CMS has committed not later 

than 12 months after the effective date 

of this rule, it will publish draft 

methodology by which commercial 

insurer’s policies are determined to be 

relevant based on the measurement of 

majority of covered lives. 

Comment: A few commenters 

suggested that if CMS were to finalize 

the reasonable and necessary definition 

that includes consideration of 

commercial insurer policies, that CMS 

should consider the model CMS 

currently uses for compendia (https://

www.cms.gov/Medicare/Coverage/ 

CoverageGenInfo/compendia) to 

determine which commercial insurers to 

include. 

Response: We appreciate the idea and 

agree that more stakeholder engagement 

is needed. Therefore, CMS has 

committed not later than 12 months 

after the effective date of this rule, it 

will establish the methodology by 

which commercial insurer’s policies are 

determined to be relevant based on the 

measurement of majority of covered 

lives. 

Comment: A commenter asked why 

the Agency would assess the 

appropriateness of a service, find it 

lacking, but then decide to move 

forward with affirmative coverage 

because somewhere out in the private 

insurance landscape the service is 

covered. This approach would create 

new areas of important conflicts of 

interest between manufacturers and 

payers that would be difficult to 

monitor. 

Response: As the commenter stated, 

CMS will review commercial insurers 

only in the event it does not meet the 

appropriateness criteria. We believe it is 

important to ensure that we have 

evaluated all relevant evidence. To 

ensure we have full stakeholder 

engagement before we evaluate all 

commercial insurer policies, we will 

issue a sub-regulatory guidance for the 

public to comment. Further, CMS has 

committed to publish this no later than 

12 months after the effective date of this 

rule. The guidance will establish the 

methodology by which commercial 

insurer’s policies are determined to be 

relevant based on the measurement of 

majority of covered lives. 

Comment: Several commenters noted 

that commercial insurers typically 

consider other factors such as costeffectiveness of items or services in 

making coverage determinations; 

whereas, CMS does not. There is no 

single standard for commercial payer 

coverage policies which could create 

significant challenges in applying a 

commercial payer analysis to an item or 

service to determine coverage, including 

some commercial insurers may use 

Medicare coverage policies as part of its 

coverage. Commenters wanted to know 

how CMS will weigh and use these 

commercial analyses to determine 

coverage. These same commenters 

wanted that methodology to be 

transparent and public. 

Response: We agree. After further 

analyzing the definition along with the 

public comments it would be 

challenging to fully implement this part 

of the reasonable and necessary 

definition without further engagement 

with stakeholders. CMS has committed 

not later than 12 months after the 

effective date of this rule, it will 

establish the methodology by which 

commercial insurer’s policies are 

determined to be relevant based on the 

measurement of majority of covered 

lives. 

Comment: Commenters noted that, 

rather than include commercial payer as 

a separate criteria in the reasonable and 

necessary definition, CMS should 

review commercial policies as part of 

the established NCD/LCD development 

process to ensure beneficiaries have 

access to items and services. 

Response: We agree. CMS currently 

may consult commercial insurer 

policies as part of the NCD and LCD 

process and we have further committed 

to establish the methodology by which 

commercial insurer’s policies are 

determined to be relevant based on the 

measurement of majority of covered 

lives. 

Comment: CMS received many 

comments that if we adopted 

commercial insurer policies as part of 

the reasonable and necessary definition 

that transparency would be extremely 

important in the policies we reviewed. 

Many commenters stated that 

commercial insurers’ coverage policies 

are not public or transparent. The 

commenters stated that the public must 

have access to the scientific basis of 

commercial payers’ coverage decisions, 

including sources of data and the data 

itself. 

Response: We agree transparency is 

an important aspect of the coverage 

process. After reviewing the public 

comments, we recognized that 

implementation of inclusion of 

commercial payers would be 

challenging. Therefore, a transparent 

analysis of commercial insurers will be 

part of the NCD and LCD process, which 

includes public comment period of at 

least 30 days. 

Comment: If the reasonable and 

necessary definition is finalized with 

the commercial insurer policy 

provision, commenters were concerned 

it will cede essential government 

decisions to commercial insurers. 

Response: We appreciate the 

comment. Based on comments, we are 

finalizing a definition that requires CMS 

to explain why it would not follow a 

commercial insurer. This will be added 

to the NCD and LCD process to allow for 

a stakeholder engagement during the 

public comment period. In addition, as 

mentioned in previous responses, CMS 

committed not later than 12 months 

after the effective date of this rule, to 

establish the methodology by which 

commercial insurer’s policies are 

determined to be relevant based on the 

measurement of majority of covered 

lives. 

Commercial Insurer Policy—Universe 

and Analysis 

Comment: CMS received a wide 

variety of comments regarding which 

commercial insurers we should review 

for consideration. The comments ranged 

from supporting any single plan to 

working with both national and local 

health care management groups who 

have a stake in the various regions to a 

plurality of plans to commercial 

insurance changes too rapidly and 

should not be considered. We also 

received a few comments to include 

government insurance plans. A few 

larger insurers stated that it used fully 


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15FDA Guidance for Industry, ‘‘Medical Product 

Communications That Are Consistent with the 

FDA—Required Labeling—Questions and 

Answers’’, available at https://www.fda.gov/media/ 

133619/download. 

insured commercial plans and not 

administrative services only (ASO) 

commercial plans. 

Response: For reasons noted above 

including concerns there is not enough 

information or specificity regarding the 

commercial insurer criteria, we have 

committed to issuing standards on what 

types of commercial insurers should 

CMS consider for making NCDs and 

LCDs. 

Evidence That Supports Clinically 

Relevant Differences 

Comment: Commenters suggested that 

CMS provide greater specificity 

regarding its standard for determining 

when there are ‘‘clinically relevant 

differences between Medicare 

beneficiaries and commercially insured 

individuals.’’ Commenters 

recommended a variety of factors to 

consider. A commenter also stated there 

likely are not clinical differences in the 

need for DME and medical supplies 

between the privately insured and 

Medicare beneficiaries. 

Response: We have removed this 

criteria from the final definition. 

Grandfathering 

Comment: A few comments stated 

that CMS should grandfather 

established NCDs and LCDs that have 

already been subject to notice, 

stakeholder comment, and evidence 

review from any coverage restrictions 

stemming from incorporation of 

commercial coverage policies. Another 

comment stated that CMS should 

grandfather existing NCDs/LCDs and 

policies generated through negotiated 

rulemaking. 

Response: CMS does not intend to 

revise its LCDs and NCDs. We believe 

initially that definition is the familiar 

and will not require CMS to revise its 

coverage decisions. As we write the 

standards for establishing the 

methodology by which commercial 

insurer’s policies are determined to be 

relevant based on the measurement of 

majority of covered lives, we will 

consider how these standards may effect 

coverage at that time. 

Appeals Process 

Comment: Several commenters 

requested that a new appeals process be 

developed that allows a beneficiary or 

provider to use a commercial policy as 

part of their evidence that an item or 

service is reasonable and necessary, and 

then require the MAC to afford this 

policy significant weight as part of its 

review on reconsideration. Another 

commenter requested clarification on 

how the newly codified reasonable and 

necessary definition will be used for 

appeals. Another commenter stated that 

CMS would need a transparent and 

accelerated process to appeal coverage 

policies and articles. 

Response: We thank commenters for 

their input. We added in the final rule 

that commercial insurer coverage may 

be used as part of the evidence during 

an appeal. Nothing in this rule changes 

the process to appeal a claim. 

Final Action: We are finalizing our 

proposal with modification to define the 

term ‘‘reasonable and necessary’’ based 

on the factors currently found in the 

PIM. Further, for national and local 

coverage determinations, which have 

insufficient evidence to meet the longstanding appropriateness criteria, CMS 

will consider coverage to the extent the 

item or services are covered by a 

majority of commercial insurers. To 

ensure there is adequate stakeholder 

engagement on the standards, CMS 

committed, not later than 12 months 

after the effective date of this rule, it 

will establish the methodology by 

which commercial insurer’s policies are 

determined to be relevant based on the 

measurement of majority of covered 

lives. 

This definition is effective 60 days 

after publication of this final rule in the 

Federal Register. 

B. Application of the ‘‘Reasonable and 

Necessary’’ Standard to the MCIT 

Pathway 

We proposed that, under the MCIT 

pathway, an item or service that 

receives a breakthrough device 

designation from the FDA would be 

considered ‘‘reasonable and necessary’’ 

under section 1862(a)(1)(A) of the Act 

because breakthrough devices have met 

the FDA’s unique breakthrough devices 

criteria, and they are innovations that 

serve unmet needs. While other devices 

are still considered new to the market, 

for example, PMAs and even some 

510(k)s, the devices designated by the 

FDA as breakthrough are representative 

of true innovations in the marketplace. 

This application of the ‘‘reasonable and 

necessary’’ standard in this way would 

ensure that the MCIT pathway can 

provide a fast-track to Medicare 

coverage of innovative devices that may 

more effectively treat or diagnose lifethreatening or irreversibly debilitating 

human disease or conditions. 

MCIT would provide by providing 

national Medicare coverage for devices 

receiving the FDA breakthrough device 

designation, which are FDA marketauthorized and used consistent with the 

FDA approved or cleared indication for 

use (also referred to as the ‘‘FDA 

required labeling’’),15 so long as the 

breakthrough device is described in an 

appropriate Medicare benefit category 

under Part A or Part B and is not 

specifically excluded by statute. We 

believe the criteria for qualification as a 

breakthrough device, as defined in 

section 515B(b) of the Food, Drug and 

Cosmetic Act (21 U.S.C. 360e–3(b)) is 

sufficient to satisfy the elements of the 

‘‘reasonable and necessary’’ standard. 

The first breakthrough device 

designation criterion is that a device 

must ‘‘provide for more effective 

treatment or diagnosis of lifethreatening or irreversibly debilitating 

human disease or conditions’’ (21 U.S.C. 

360e–3(b)(1)). The second criterion is 

that the device must satisfy one of the 

following elements: It represents a 

breakthrough technology; there are no 

approved or cleared alternatives; it 

offers significant advantages over 

existing approved or cleared 

alternatives, including additional 

considerations outlined in the statute; or 

availability of the device is in the best 

interest of patients (21 U.S.C. 360e– 

3(b)(2)). Thus, breakthrough devices are 

those that HHS has determined may 

provide better health outcomes for 

patients facing life-threatening or 

irreversibly debilitating human disease 

or conditions. We believe that a device 

meeting these criteria, once also FDA 

market authorized, is ‘‘reasonable and 

necessary’’ for purposes of Medicare 

coverage. 

We recognize that the FDA market 

authorization of breakthrough devices 

warrants immediate coverage under the 

‘‘reasonable and necessary’’ clause in 

section 1862(a)(1)(A) of the Act. We 

previously stated that FDA 

determinations were not controlling 

determinations for Medicare coverage 

purposes under section 1862(a)(1)(A) of 

the Act. (For more information see the 

January 30, 1989 Federal Register (54 

FR 4307) (‘‘FDA approval for the 

marketing of a medical device will not 

necessarily lead to a favorable coverage 

recommendation . . . ’’) and the August 

7, 2013 Federal Register (78 FR 48165) 

(‘‘However, FDA approval or clearance 

alone does not entitle that technology to 

Medicare coverage.’’). Under the 

Secretary’s authority to interpret section 

1862(a)(1)(A) of the Act (supra section 

I.A.), we are revising our interpretation 

of the statute because of the practical 

concerns that our current standards 

have delayed access to a unique set of 


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innovative devices that FDA has found 

to be safe and effective, and we believe 

are ‘‘reasonable and necessary’’ for 

purposes of Medicare coverage. 

In light of E.O. 13890, the Secretary 

has determined that application of the 

current standards for making 

‘‘reasonable and necessary’’ 

determinations may take too long 

following FDA market authorization of 

breakthrough devices. More 

importantly, the existing standard has 

not always provided Medicare 

beneficiaries access to certain 

breakthrough medical devices when 

needed to improve health outcomes. We 

proposed that breakthrough devices per 

se meet the reasonable and necessary 

standard in order to increase access and 

to reduce the delay from FDA market 

authorization to Medicare coverage. 

Comment: We received a few 

comments supporting that FDAdesignated breakthrough devices should 

meet the reasonable and necessary 

definition under the MCIT pathway. 

Response: We appreciate the 

comments. Under the Secretary’s 

authority to interpret section 

1862(a)(1)(A) of the Act (supra section 

I.A.), we are revising our interpretation, 

we are finalizing this rule as proposed, 

FDA-designated breakthrough devices 

are considered reasonable and necessary 

for purposes of MCIT. 

Comment: We received a comment 

that stated reasonable and necessary 

should apply to any FDA breakthrough 

device regardless of entry into MCIT. 

Response: We disagree, qualification 

as a breakthrough device, as defined in 

section 515B(b) of the Food, Drug and 

Cosmetic Act (21 U.S.C. 360e–3(b)) is 

sufficient to satisfy the elements of the 

‘‘reasonable and necessary’’ standard. 

The first breakthrough device 

designation criterion is that a device 

must ‘‘provide for more effective 

treatment or diagnosis of lifethreatening or irreversibly debilitating 

human disease or conditions’’ (21 U.S.C. 

360e–3(b)(1)). The second criterion is 

that the device must satisfy one of the 

following elements: It represents a 

breakthrough technology; there are no 

approved or cleared alternatives; it 

offers significant advantages over 

existing approved or cleared 

alternatives, including additional 

considerations outlined in the statute; or 

availability of the device is in the best 

interest of patients (21 U.S.C. 360e– 

3(b)(2)). Thus, breakthrough devices are 

those that HHS has determined may 

provide better health outcomes for 

patients facing life-threatening or 

irreversibly debilitating human disease 

or conditions. We believe that a device 

meeting these criteria, once also FDA 

market authorized, is ‘‘reasonable and 

necessary’’ for purposes of Medicare 

coverage. 

Comment: Commenters expressed 

concern that MCIT eligibility will be 

based on commercial payer policies. 

Response: MCIT eligibility is not 

based on commercial payer policies. It 

is solely based on the eligibility criteria 

outlined in the rule. 

Final Action: After consideration of 

the public comments we received, we 

are finalizing this policy as proposed. 

C. MCIT Pathway 

We proposed the MCIT pathway to 

deliver on the Administration’s 

commitment to provide access to 

breakthrough devices to Medicare 

beneficiaries. The MCIT pathway 

provides up to 4 years of national 

coverage to newly FDA market 

authorized breakthrough devices. We 

are aware that this coverage may also 

facilitate evidence development on 

devices for the Medicare population 

because manufacturers can gather 

additional data on utilization of the 

device during the MCIT coverage 

period. 

1. Definitions 

In § 405.601(a), we proposed that the 

MCIT pathway is voluntary. 

Operationally, we proposed that 

manufacturers of breakthrough devices 

notify CMS of their intention to elect 

MCIT shortly after receiving notice from 

the FDA of being granted the 

breakthrough device designation. 

Ideally, this notification would be sent 

to CMS within 2 weeks of receiving 

breakthrough designation. However, 

entities will not be penalized for 

notifying CMS after that time. 

Alternatively, submitting a notification 

to CMS shortly before or concurrently 

with the date of the FDA marketing 

application submission should also 

afford CMS sufficient time to 

operationalize MCIT for the device. The 

CMS Coverage and Analysis Group 

would establish an email box for these 

inquiries and notification. This 

notification alerts CMS to offer guidance 

to manufacturers about the MCIT 

pathway and point to resources for 

coding and payment, which are key 

conversations to effectuate coverage 

upon FDA market authorization. We 

intend to utilize the existing coverage 

implementation processes to be 

prepared to offer coverage immediately 

upon the FDA market authorization 

when requested by the manufacturer. 

In § 405.601(b), we proposed the 

following definitions for the purposes of 

42 CFR part 405. We proposed to define 

‘‘breakthrough device’’ as a medical 

device that receives such designation by 

the FDA (section 515B(d)(1)) of the 

FD&C Act (21 U.S.C. 360e–3(d)(1)). We 

also proposed to define, for the sake of 

clarity in the rule that the acronym 

MCIT stands for Medicare Coverage of 

Innovative Technology. 

Comment: We received a few 

comments requesting that we not 

finalize MCIT and do not include drugs 

and biologics until there is evidence of 

a gap in coverage. The commenters 

suggested including drugs and biologics 

would require separate rulemaking and 

need to consider other FDA pathways 

(e.g., accelerated approval, priority 

review vouchers, orphan drug 

designation). 

Response: The final MCIT rule will 

not include drugs or biologics. The final 

rule will only include FDA-designated 

breakthrough devices as defined by the 

FDA (section 515B(d)(1) of the FD&C 

Act (21 U.S.C. 360e–3(d)(1)). 

Comment: We received several 

comments that support the definition of 

breakthrough devices. These comments 

stated that it ‘‘allows Medicare to focus 

resources and seems to be a reasonable 

filter to prevent overutilization of the 

pathway.’’ 

Response: We appreciate the 

comment. 

Comment: We received several 

comments requesting clarification of 

whether FDA-designated breakthrough 

devices that are clinical diagnostic lab 

tests or non-implanted devices are 

considered eligible for the MCIT 

pathway. 

Response: Any medical device that 

receives such designation by the FDA 

(section 515B(d)(1) of the FD&C Act (21 

U.S.C. 360e–3(d)(1)) and meets the other 

criteria outlined in this rule is eligible 

for the MCIT pathway. This includes 

any clinical lab diagnostic test, 

including in-vitro diagnostics, and 

devices that are not implanted, as long 

as it meets the MCIT eligibility criteria 

as outlined at § 405.603. 

Comment: Some commenters stated 

that the greater predictability afforded 

by the MCIT pathway would decrease 

reimbursement risk and increase both 

manufacturer and investor interest in 

developing new and innovative 

therapies. Several commenters stated 

that investors perceive reimbursement 

risk as a greater threat to innovation 

than technology, regulatory, or clinical 

risks. Some commenters asserted that 

the MCIT pathway would make it easier 

for innovators to raise funds necessary 

for development and refinement of new 

technologies (e.g., artificial kidney). 

However, some commenters argued that 

the MCIT pathway could give specific 

technologies an unfair advantage that 


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would be unavailable to subsequent 

market entrants, thereby paradoxically 

decreasing innovation and market 

competition. As a modification to the 

proposed MCIT rule, some commenters 

suggested that CMS cover iterative 

refinements of the same breakthrough 

device for the duration of the original 

device’s MCIT term. Some commenters 

also suggested coverage under the MCIT 

pathway for similar but unrelated 

breakthrough and non-breakthrough 

designated devices of the same type and 

indication for the balance of the first 

device’s MCIT term. Other commenters 

proposed that new market entrants that 

are very similar to a breakthrough 

device should each receive the full four 

years of MCIT coverage. 

Response: CMS agrees that the MCIT 

pathway is likely to promote 

development and refinement of 

innovative technologies and support 

medical advancement. CMS also agrees 

that iterative refinements of devices are 

common following FDA market 

authorization. These often represent 

material improvements, and Medicare 

beneficiaries should have access to the 

improved version of the predicate 

breakthrough device. In practice, many 

of these device refinements are market 

authorized through a supplement to the 

initial FDA PMA submission and would 

therefore remain eligible for coverage 

through the MCIT pathway for the 

duration of the original devices MCIT 

coverage period. 

CMS disagrees that the MCIT pathway 

provides an unfair advantage to a single 

device, or that it impedes market 

competition. The FDA defines 

breakthrough technologies in section 

515B(b) of the FD&C Act (21 U.S.C. 

360e–3(b)) as those (1) that provide for 

more effective treatment or diagnosis of 

life-threatening or irreversibly 

debilitating human disease or 

conditions; and (2)(A) that represent 

breakthrough technologies; (B) for 

which no approved or cleared 

alternatives exist; (C) that offer 

significant advantages over existing 

approved or cleared alternatives, 

including the potential, compared to 

existing approved alternatives, to reduce 

or eliminate the need for 

hospitalization, improve patient quality 

of life, facilitate patients’ ability to 

manage their own care (such as through 

self-directed personal assistance), or 

establish long-term NCD definition, 

FDA breakthrough-designated devices 

address an unmet need, and subsequent 

devices do not enjoy the same 

prioritized review process or 

breakthrough designation because there 

is an existing approved or cleared 

alternative. CMS similarly would not 

extend automatic coverage to 

subsequent similar devices because 

there would no longer be an unmet need 

in the market. Subsequent similar FDA 

market-authorized devices will benefit 

from any evidence generated through 

MCIT coverage of the predicate device. 

Please explain that although not 

automatically covered under the 

regulation, contractors could make a 

favorable coverage decision if a claim is 

submitted. 

Comment: Several commenters 

requested that CMS include devices that 

meet the ‘‘spirit of breakthrough’’ 

regardless of whether the device applied 

or received the FDA breakthrough 

designation. Examples commenters gave 

were second-to-market or subsequent 

technologies of the same type, even for 

the same indication or subsequent-tomarket non-breakthrough designated 

technologies that fall under the same 

class or category as the breakthrough 

technology and approved for the same 

indication. Commenters stated that 

competing devices from other 

manufacturers that are not breakthrough 

devices could be caught in a precarious 

limbo, at least for a time. At least one 

commenter, submitted a description of 

its device and how it meets the spirit of 

the FDA breakthrough designation. 

Response: If the device meets the 

eligibility criteria as outlined in 

§ 405.603, it is eligible for the MCIT 

pathway. Outside of that designation, 

CMS is not expanding the eligibility for 

MCIT. We will, of course, consider 

whether the subsequent devices satisfy 

the reasonable and necessary criteria if 

a claim is submitted for review. 

Comment: We received comments 

supporting expansion of MCIT to 

include diagnostic 

radiopharmaceuticals, combination drug 

or devices (device or drug-led), drugs, 

biologics and other technologies. At 

least one commenter wanted CMS to 

specifically include pain management 

and antimicrobial therapies. Another 

commenter stated that certain cellular 

and tissue-based wound care products 

(CTPs) do not require the traditional 

FDA PMA, BLA and 510k processes, but 

rather are regulated by the FDA under 

Section 361 as HCT/Ps. 

Response: Any medical device that 

receives such designation by the FDA 

(section 515B(d)(1)) of the FD&C Act (21 

U.S.C. 360e–3(d)(1)) and meets the other 

criteria outlined in this rule is eligible 

for the MCIT pathway. We received 

mixed public comments on expanding 

beyond devices and have determined to 

finalize the proposed rule which only 

includes devices that meet the criteria 

proposed. We need to provide a 

rationale not to extend automatic 

coverage further in light of the language 

in the Executive Order. We don’t 

provide reasons to support the 

conclusion. 

Comment: A few commenters 

requested that CMS include screening 

tests and preventive screening tests. 

Response: Screening and prevention 

tests have a unique statutory authorities 

and are not covered based on 

1862(a)(1)(A). These items and services 

fall outside the scope of this rule. 

Medicare has separate regulations for 

screening and preventive services that 

have been codified primarily in 42 CFR 

part 410, subpart B. 

Comment: We had several 

commenters request CMS to create new 

benefit categories or make a 

determination that an item or service 

(e.g., software, digital technologies) falls 

within a benefit category. 

Response: Decisions regarding 

specific items and services and the 

relevant benefit categories are outside 

the scope of this rule. For more 

information on benefit category 

determinations see the CMS Innovator’s 

Guide to Navigating Medicare (https://

www.cms.gov/medicare/coverage/ 

councilontechinnov/downloads/ 

innovators-guide-master-7-23-15.pdf). 

Comment: The Executive Order was 

interpreted too narrow. The commenter 

stated that MCIT should not be tied to 

the FDA breakthrough device definition 

but should include other CMSrecognized innovative non-breakthrough 

technologies (e.g., technologies eligible 

for New Technology Add-on Payment or 

Transitional Pass-through Payment). To 

aid in operationalizing this, commenter 

recommend that CMS consider 

preventing MACs from denying 

coverage of innovative nonbreakthrough technologies that meet 

predetermined criteria. 

Response: At this time, CMS will 

finalize its proposed definition of any 

medical device that receives such 

designation by the FDA (section 

515B(d)(1) of the FD&C Act (21 U.S.C. 

360e–3(d)(1)) and meets the other 

criteria outlined in this rule is eligible 

for the MCIT pathway. We received 

mixed public comments on expanding 

beyond devices and have determined to 

finalize the proposed rule which only 

includes devices. At this time, MACs 

retain the ability to make coverage 

determinations through current 

processes of either an LCD or claim by 

claim adjudication. 

Comment: Commenters requested that 

MCIT include IDEs involving 

breakthrough devices. 

Response: Investigation Device 

Exemptions (IDEs) are devices defined 

at 42 CFR 405 Subpart B. IDE devices 


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are not FDA market authorized or 

cleared (often referred to as premarket 

devices). Any IDE device FDAdesignated as breakthrough device is 

eligible for MCIT when it is FDA 

authorized for marketing The MCIT 

pathway begins no earlier than the date 

the breakthrough device receives FDA 

market authorization, or the date 

requested by the manufacturer, 

provided the requested date is within 

the four year window for MCIT 

eligibility. 

Comment: CMS should continue 

working to expand to a wider range of 

innovative medical devices (outside of 

breakthrough designation). 

Response: We appreciate the 

comment. CMS continues to review its 

coverage pathways to find appropriate 

efficiencies. 

Comment: CMS should expand MCIT 

to include humanitarian use devices. 

Commenter asserted they approved 

through an FDA expedited program to 

get technology to patients with rare 

conditions. 

Response: At this time, we are not 

expanding the MCIT pathway beyond 

the proposed rule. This includes any 

medical device that receives such 

designation by the FDA (section 

515B(d)(1) of the FD&C Act (21 U.S.C. 

360e–3(d)(1)) and meets the other 

criteria outlined in this rule is eligible 

for the MCIT pathway. 

Comment: If CMS chooses to retain 

the fifth criteria proposed in Section 

405.603(e), then we would ask that the 

agency clarify that ineligibility is tied to 

an absolute national non-coverage 

determination. 

Response: Upon receiving notification 

by a manufacturer of interest in MCIT, 

CMS will determine if there is an 

existing NCD on point. While possible, 

it is unlikely that there is pre-existing, 

explicit non-coverage NCD given the 

breakthrough nature of eligible devices. 

Comment: Patient preference should 

be considered when qualifying devices 

for MCIT. Commenter gave the example 

of non-invasive medical devices 

(including focused ultrasound) that may 

be strongly preferred by patients. 

Response: Any medical device that 

receives such designation by the FDA 

(section 515B(d)(1) of the FD&C Act (21 

U.S.C. 360e–3(d)(1)) and meets the other 

criteria outlined in this rule is eligible 

for the MCIT pathway. FDA takes 

patient preference under consideration 

as they make market authorization 

decisions. 

After consideration of the public 

comments we received, we are 

finalizing our proposed definition of 

breakthrough devices. 

2. MCIT Pathway Device Eligibility 

In § 405.603(a) we proposed that the 

pathway is available to devices that 

meet the definitions proposed in 

§ 405.601. Based on the explicit mention 

of devices in E.O. 13890 and our 

interaction and feedback from 

stakeholders who expressed their 

concern that there is more uncertainty 

of coverage for devices than for other 

items and services (for example, 

diagnostics, drugs and biologics), the 

proposed policy is for devices only. 

We proposed in § 405.603(b) that the 

breakthrough devices that received FDA 

market authorization no more than 2 

calendar years prior to the effective date 

of this subpart (the date the final rule is 

finalized) and thereafter will be eligible 

for coverage for claims submitted on or 

after the effective date of this rule. 

Claims for breakthrough devices with 

dates of service that occurred before the 

effective date of this rule will not be 

covered claims through MCIT. 

Breakthrough devices market authorized 

prior to the effective date of this rule 

will not be eligible for all 4 years of 

coverage. For these ‘‘lookback’’ devices, 

the 4-year period starts on the date of 

FDA market authorization. We proposed 

that if a manufacturer initially chooses 

to not utilize the MCIT pathway, and 

then chooses to do so some time after 

the breakthrough device’s market 

authorization, coverage still only lasts 4 

years from the date of FDA market 

authorization. We sought comment on 

this eligibility criterion for devices and 

specifically the 2 year lookback. 

Comment: Almost all commenters 

were supportive of a lookback period. 

Many agreed with a two year interval. 

A few commenters suggested a four year 

lookback or unlimited to the start of the 

Breakthrough Devices Program. 

Response: We appreciate the 

comments. We proposed a two year 

lookback to try to maximize the benefit 

of the MCIT rule. We believe this 

interval includes the recent period that 

presented the greatest initial confusion 

and uncertainty for manufacturers of 

innovative devices before the MCIT 

rule. We agree with commenters that the 

lookback period is important to launch 

the rule with highest impact. 

Considering comments, we believe that 

a two year lookback remains appropriate 

and maintains efficiency at start up. For 

breakthrough devices older than 2 years, 

it is possible that other coverage 

pathways such as LCDs or NCDs may 

have been developed and coverage 

concerns have been addressed. Potential 

overlap of coverage policies would 

hinder implementation. In addition, the 

majority of breakthrough devices were 

approved in the past 2 years since the 

program was authorized in 2017 (final 

agency guidance issued in December 

2018 (available at: https://www.fda.gov/ 

media/108135/download). We note that 

the lookback period is a one-time 

occurrence since there will not be a 

need for a lookback period for 

breakthrough devices approved going 

forward once the MCIT rule is effective. 

We proposed in § 405.603(c) that to be 

part of the MCIT pathway, the device 

must be used according to its FDA 

approved or cleared indication for use. 

We proposed that the device is only 

covered for use consistent with its FDA 

approved or cleared indication for use 

because that is the indication and 

conditions for use that were reviewed 

by the FDA and authorized for 

marketing. Data are unlikely to be 

available to support uses extending 

beyond the FDA required labeling for 

breakthrough devices on the date of 

marketing authorization. Use of the 

device for a condition or population that 

is not labeled (‘‘off-label’’) will not be 

covered as that use would not be FDA 

authorized. We specifically sought 

comment on whether off-label use of 

breakthrough devices should be covered 

and, if so, under what specific 

circumstances and/or evidentiary 

support. 

Comment: Most commenters agreed 

with the inclusion of the FDA required 

indication. A number of commenters 

noted that off indication or off label uses 

should be included under MCIT as well. 

Some commenters raised concern for 

on-indication use of breakthrough 

devices because the devices are so new 

to market. 

Response: We appreciate the 

comments. Consistent with the 

breakthrough device designation, we 

specified the FDA required indication 

(on-indication) for MCIT. We did not 

specifically provide automatic coverage 

for off-indication or off-label uses in the 

proposed MCIT rule, but we do not 

preclude possible coverage under other 

coverage mechanisms, such as through 

the claims process. However, we note 

that in general there is typically little 

clinical evidence to support off-label 

uses of new technology. We are aware 

that concerns for on-indication use of 

breakthrough devices were reiterated in 

recent published articles (Neumann and 

Chambers. Health Affairs, 12/02/2020; 

Bach. New York Times, 12/01/2020). 

Comment: Commenters noted that the 

FDA label indication only is not 

sufficient since other factors have 

important roles in determining positive 

outcomes from device therapy such as 

physician training and experience and 

facility capabilities and experience. 


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Response: We appreciate the 

comments and agree. We proposed 

provider and facility requirements in 

the proposed reasonable and necessary 

definition (please say what they were 

and where they are addressed in other 

comments) and finalize these 

requirements to maximize positive 

health outcomes for the Medicare 

population. We will look to the 

appropriate sources for provider and 

facility requirements for 

implementation purposes. 

Comment: Commenters noted that 

new FDA approved indications should 

be included. 

Response: We appreciate the 

comments and agree. We recognize that 

new FDA approved indications for a 

breakthrough device could be added 

during the MCIT period. We believe the 

new FDA required indication would 

also meet the MCIT definition and 

would be eligible for the duration of the 

breakthrough device MCIT period. 

In § 405.603(d) and (e), we 

additionally proposed limitations to 

what is coverable under the Act. In 

§ 405.603(e), we proposed that if CMS 

has issued an NCD on a particular 

breakthrough device, that breakthrough 

device is not eligible for MCIT. We 

proposed this because, once the device 

has been reviewed by CMS for the FDA 

required approved or cleared indication 

for use; CMS has made a coverage 

determination based on the available 

evidence for that technology. We believe 

this would happen rarely because 

breakthrough devices are new 

technologies that are not likely to have 

been previously reviewed through the 

NCD process. In § 405.603(f), we 

acknowledge that devices in the MCIT 

pathway may be excluded due to statute 

or regulation (for example, 42 CFR 

411.15, Particular services excluded 

from coverage) and, like other items and 

services coverable by Medicare, the 

device must fall within the scope of a 

Medicare benefit category under section 

1861 of the Act and the implementing 

regulations. If the device does not fall 

within a Medicare benefit category as 

outlined in the statute and 

implementing regulations, the device is 

not eligible for Medicare coverage; 

therefore, the device would not be 

eligible for the MCIT pathway. 

Comment: CMS proposed that the 

breakthrough device must fall into an 

existing benefit category to be included 

under MCIT. Commenters supported the 

benefit category designation. Several 

comments recommended the inclusion 

of breakthrough devices that do not fall 

within an existing benefit category, for 

example, digital health technologies, or 

to modify existing benefit categories to 

include these devices. 

Response: We appreciate the 

comments. However, in general, for 

Medicare coverage, an item or service 

must fall within an existing benefit 

category. Benefit categories are generally 

established by statute. CMS is unable to 

create a new benefit category or alter the 

language of existing benefit categories in 

this rule. 

After consideration of the public 

comments we received, we are 

finalizing the rule as proposed with 

slight modification, as we indicated 

with a placeholder in the proposed, to 

update 405.603(b) with the latest date 

for the lookback to be the date two years 

prior to the effective date of the rule. 

3. General Coverage of Items and 

Services Under the MCIT Pathway 

We proposed in § 405.605 that devices 

covered under the MCIT pathway are 

covered no differently from devices that 

are covered outside of MCIT. In other 

words, provided the items and services 

are otherwise coverable (that is, not 

specifically excluded and not found by 

CMS to be outside the scope of a 

Medicare benefit category), covered 

items and services could include the 

device, reasonable and necessary 

surgery to implant the device, if 

implantable, related care and services of 

the device (for example, replacing 

reasonable and necessary parts of the 

device such as a battery), and coverage 

of any reasonable and necessary 

treatments due to complications arising 

from use of the device. What the MCIT 

pathway offers compared to other 

pathways is predictable national 

coverage simultaneous with FDA market 

authorization that will generally last for 

a set time period. 

The proposed MCIT pathway would 

support and accelerate beneficiary 

access to certain innovative devices. 

CMS encourages manufacturers that 

have breakthrough devices covered 

under MCIT to develop additional data 

for the healthcare community. 

Comment: Commenters questioned for 

clarification of whether breakthrough 

diagnostic medical tests are eligible for 

MCIT. 

Response: Diagnostic medical tests are 

considered FDA medical devices and 

fall within an existing benefit category. 

Based on this categorization, 

breakthrough designated diagnostic 

medical tests would be eligible to be 

included under MCIT. 

Comment: Commenters questioned 

whether breakthrough medical devices 

that are approved for screening 

indications, for example cancer 

screening tests, would be eligible under 

MCIT. 

Response: We appreciate the 

comments. MCIT is based on a specific 

Medicare authority. Since screening 

tests and preventive services have 

separate and distinct statutory 

authorities, items and services used for 

screening and preventive services are 

outside the scope of the MCIT rule. 

Comment: Commenters suggested the 

inclusion of medical devices approved 

under different FDA designations, such 

as IDE, Humanitarian Device Exemption 

(HDE) and devices that have not 

received the breakthrough device 

designation. 

Response: We appreciate the 

comments. Medical devices that receive 

breakthrough designation from the FDA 

and meet the definition and inclusion 

criteria in the final rule will be eligible 

for MCIT. By the definition, nonbreakthrough devices will not be 

eligible for MCIT but in general other 

coverage mechanisms such as the claim 

review process, NCDs, or LCDs may be 

available. We note that for certain other 

medical devices that have received FDA 

IDE there are existing coverage 

regulations (42 CFR 405 Subpart B). The 

IDE regulation generally applies to 

devices that have not yet received 

formal FDA approval. Some 

breakthrough devices may also have IDE 

status and may be eligible for coverage 

under the IDE regulation and also may 

be subsequently eligible for coverage 

under MCIT once the breakthrough 

device receives FDA market 

authorization. 

Comment: Commenters requested 

clarification of what is covered under 

MCIT—the device only or the device 

and the implantation of the device if 

required. 

Response: MCIT would cover both the 

breakthrough device and the 

implantation of the device. Other items 

and services for the diagnosis and 

treatment of the patient’s illness would 

be recoverable as usual through existing 

coverage regulations and policies or 

when determined to be reasonable of the 

local Medicare Administrative 

Contractors (MACs) in the claims 

appeals process. There are existing 

Medicare coverage and payment 

policies that also may apply to other 

items and services that may be used for 

treatment during hospitalizations and 

complications that may arise from the 

device treatment in subsequent 

hospitalizations. MCIT rule does not 

supersede existing coverage and 

payment policies on routine and related 

items and services for the diagnosis and 

treatment of the patient’s illness. 


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After consideration of the public 

comments we received, we are 

finalizing this section of the proposed 

rule with only a minor textual 

clarification to also include reasonable 

and necessary procedures to use the 

breakthrough device. The proposed text 

stated only reasonable and necessary 

procedures to implant the device, which 

would not be representative of the 

universe of breakthrough devices. 

4. MCIT Pathway for Breakthrough 

Devices: 4 Years of Coverage 

In § 405.607(a), we proposed that the 

MCIT pathway for coverage would begin 

on the same date the device receives 

FDA market authorization. We proposed 

this point in time to ensure there is no 

gap between Medicare coverage and 

FDA market authorization. This start 

date supported the MCIT pathway’s 

focus of ensuring beneficiaries have a 

predictable access to new devices. 

Comment: CMS proposed that MCIT 

coverage would start on the day of FDA 

approval of the breakthrough device and 

last for 4 years. Several commenters 

supported the MCIT start date as 

proposed on the day of FDA approval. 

A number of other commenters 

recommend flexibility in the start date 

to be determined by the manufacturer 

since the breakthrough device may not 

be immediately available in the market 

on the date of FDA approval. 

Commenters noted that flexibility 

would allow the manufacturer time to 

be fully prepared for device 

dissemination with set coding, payment, 

and evidence development if the 

manufacturer voluntarily chooses. 

Response: We appreciate comments 

and agree. We recognize that not all 

breakthrough devices may be 

immediately available in the market on 

date of FDA approval due to various 

factors including production, large scale 

distribution, and coding. We have 

modified and, in the final rule, will 

include flexibility in the start date of 

MCIT to be determined by the 

manufacturer within certain parameters. 

We note that regardless of the date the 

manufacturer selects to begin MCIT 

coverage, they are eligible only during 

the four year period beginning on the 

date of FDA market authorization. 

Therefore, if a manufacturer waits one 

year after receiving FDA approval to 

request MCIT coverage of an item or 

service, the relevant item or service will 

have three years of coverage under 

MCIT. For implementation purposes, 

manufacturers must inform CMS of the 

desired future start date. We believe that 

the clarity and transparency of MCIT 

will assist manufacturers in developing 

product development and deployment 

plans earlier so the 4 years of MCIT can 

be used more efficiently. 

While we believe it is in the best 

interest of the manufacturer to invoke 

MCIT coverage early in the 4-year 

coverage period there may be 

breakthrough devices that can achieve 

the desired level of evidence 

development in less time. Because the 

time period for evidence development is 

dependent on the nature of the device 

and the disease or clinical condition for 

which it is intended we are comfortable 

with manufacturers electing their MCIT 

coverage start date (within the 

parameters outlined above). We further 

believe that it is counterintuitive for a 

breakthrough device manufacturer to 

opt-into MCIT coverage toward the end 

of the 2-year opt-in window. However, 

manufacturers have expressed interest 

in this type of flexibility and CMS is not 

in a position to predict the various 

reasons a manufacturer may find 

themselves in a position of needing to 

wait to opt-in. 

Comment: Commenters noted the 

potential time delays from coverage, 

coding, and payment. 

Response: We appreciate the 

comments and agree that enhanced 

coordination of coverage, coding and 

payment would be useful. While a 

detailed description of coding and 

payment is beyond the scope of the 

MCIT rule and resides in other payment 

rules, CMS, as directed by E.O. 13890, 

has worked to streamline coverage, 

coding, and payment. We have 

established new collaborations 

internally to enhance efficiency going 

forward. 

We proposed in § 405.607(b)(1) that 

the MCIT pathway for breakthrough 

devices ends 4 years from the date the 

device received FDA market 

authorization. We proposed this 4 year 

time period because it could allow 

manufacturers to develop clinical 

evidence and data regarding the benefit 

of the use of their device in a real world 

setting. For example, we believe 4 years 

would allow most manufacturers 

sufficient time to complete FDA 

required post-approval or other realworld data collection studies that may 

have been a condition of FDA market 

authorization. This assumption is based 

upon our historical experience with 

studies conducted through coverage 

with evidence development (CED). 

Many of these studies were completed 

within approximately 4 years. Further, 

this time period allows Medicare to 

support manufacturers that, whether 

required by the FDA or not, have an 

interest in better understanding the 

health outcomes of their device in the 

Medicare population, including impacts 

on patient-reported and longer-term 

outcomes. 

Further, in § 405.607(b) we proposed 

reasons that the MCIT pathway may end 

prior to 4 years. This included 

circumstances whereby the device 

became subject to an NCD, regulation, 

statute, or if the device could no longer 

be lawfully marketed. 

Comment: Most commenters were 

supportive of the four year period. Some 

commenters suggested longer duration 

up to 5 years at CMS discretion or if the 

manufacturer is actively conducting a 

clinical study. 

Response: We appreciate the 

comments and believe the 4 year 

duration of MCIT continues to be an 

adequate time period to foster 

innovation. We recognize the 

importance of continuing data 

collection and evidence development 

but have not mandated evidence 

development. We believe, with the 

transparency of MCIT, that 

manufacturers will be able to 

appropriately plan studies that could be 

completed within 4 years. In general 

evidence on improvements in health 

outcomes for Medicare patients not only 

would help support coverage through 

other mechanisms after MCIT but also 

importantly help physicians and 

patients in choosing the treatment that 

is best suited for the individual patient. 

Comment: A large number of 

respondents supported voluntary 

evidence development. Many 

commenters noted that the FDA already 

requires post market-authorization data 

collection in most cases. Many 

commenters argued that manufacturers 

should discuss their evidence 

development plans with CMS soon after 

FDA market-authorization. CMS, in 

turn, should be clear and transparent 

about any evidence gaps and any 

additional evidence needed to reach the 

reasonable and necessary threshold 

required for durable coverage after 

MCIT coverage ends. Commenters 

suggested that CMS be more flexible in 

agreeing to acceptable study designs and 

outcomes, including use of real world 

data. Commenters stated that 

manufacturers already have 

considerable incentive to meet the 

reasonable and necessary standard to 

assure coverage continuity after MCIT. 

Some commenters objected to a onesize-fits-all mandate for evidence 

development noting a diversity of 

devices come through the FDA 

breakthrough program. They argued that 

a voluntary evidence development 

regime allows flexibility for 

manufacturers to manage their own 

clinical study and evidence 


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development programs in line with their 

goals and business needs. 

A larger number of commenters 

supported mandatory evidence 

development. One commenter did not 

support the MCIT pathway, but if 

implemented, argued that mandatory 

evidence development mitigates the 

risks of this regulation. A number of 

commenters stated that early coverage 

tied to mandatory evidence 

development strikes an economically 

appropriate balance. Some commenters 

noted that post-market clinical studies 

may more efficiently capture longerterm outcomes than within 

conventional clinical studies. Several 

commenters stated that mandatory 

evidence development is appropriate 

provided that it is efficient, streamlined, 

and time-limited. Several commenters 

noted that post-market evidence 

development is essential for 

development and refinement of clinical 

practice guidelines that inform 

evidence-based clinical practice. Other 

commenters noted that mandatory data 

collection is necessary to assure 

appropriate use of technologies, and 

that use without oversight could be 

economically disastrous. Furthermore, 

they stated that low-value practice 

patterns may be very difficult to reverse 

once they are established. 

Response: CMS is not mandating 

evidence development during MCIT 

coverage. After coverage through the 

MCIT pathway ends, all existing 

coverage pathways will remain available 

to manufacturers to establish durable 

coverage. CMS will require 

breakthrough devices to meet the longestablished reasonable and necessary 

coverage standard, just as they would 

without the MCIT pathway. CMS 

anticipates that most manufacturers will 

voluntarily pursue robust evidence 

development to secure durable coverage 

after MCIT coverage sunsets. 

We are aware of stakeholders’ interest 

in CMS providing detailed, specific, and 

actionable guidance to manufacturers on 

evidence deficits relative to the longestablished reasonable and necessary 

threshold. We are considering the 

feasibility of this approach. CMS notes 

that the expected diversity of 

breakthrough devices speaks to 

flexibility in evidence development. In 

some instances, manufacturers may 

wish to participate in conventional 

clinical studies; in others, a registrybased clinical study may offer the most 

robust and cost-efficient option. 

Manufacturers may also wish to pursue 

studies that rely on real-world evidence, 

but they are strongly encouraged to 

review these study designs with CMS. 

Manufacturers are encouraged to engage 

CMS soon after FDA market 

authorization with an evidence 

development plan that addresses any 

identified evidence gaps. 

CMS believes that rigorous and 

publicly available evidence is necessary 

to inform beneficiaries, the clinical 

community, and the public about the 

risks and benefits of available treatment 

options. Published studies are also 

necessary for breakthrough devices to be 

included in evidence-based guidelines, 

which feature heavily in CMS’ 

assessment of accepted standards of 

medical practice. Therefore, CMS 

requires that stakeholders publish 

evidence in the peer-reviewed clinical 

literature and applies rigorous 

methodologic standards in evidence 

review supporting local or national 

coverage analyses. 

Comment: As related to the ending of 

MCIT, a number of commenters noted 

safety concerns of breakthrough devices 

over the four years. Commenters noted 

the need to continue to monitor use and 

outcomes and to suspend MCIT if the 

FDA withdraws approval or there are 

concerns with safety in post-market 

data. 

Response: We appreciate the 

comments and agree on the need to 

monitor harms. 

These concerns are particularly 

relevant to the suggested 4 year duration 

of MCIT. We believe appropriate 

mechanisms should be in place to end 

automatic coverage in certain scenarios. 

In general, safety is within the FDA 

authority. However, there are 

appropriate commonalities when the 

health outcomes are higher mortality or 

higher numbers of strokes or heart 

attacks. Based on overall comments on 

safety, we will include a mechanism in 

the final rule to allow suspension or 

termination of MCIT when FDA has 

issued a warning letter, medical device 

safety communication, or black box 

warning and CMS determines that 

harms outweigh benefits for Medicare 

patients. 

Comment: A series of comments cited 

FDA guidance that the Breakthrough 

Devices Program allows for greater 

uncertainty of risks and benefits than 

non-breakthrough approval processes 

because the breakthrough devices meet 

an important and unmet clinical need. 

Several commenters also note that the 

FDA relies more heavily on post-market 

data collection for these devices, and 

often breakthrough devices lack data on 

long-term safety and effectiveness at the 

time of FDA market authorization. 

Several commenters cited evidence that 

many FDA mandated post market 

studies are never completed and that the 

FDA safety and surveillance system is 

both flawed and insufficient to assure 

beneficiary safety during MCIT 

coverage. One commenter noted that lax 

FDA safety reporting may allow 

continued CMS coverage despite 

important safety problems. One 

commenter suggested that CMS should 

mandate safety reporting to both CMS 

and the FDA Manufacturer and User 

Facility Device Experience (MAUDE) 

database at regular intervals as a 

condition of MCIT coverage. Several 

commenters suggested that CMS should 

regularly review FDA safety reports for 

covered breakthrough devices. Several 

commenters argued that any safety 

warnings or product recalls should 

terminate coverage within the MCIT 

coverage pathway. 

One commenter noted that Medicare 

beneficiaries are likely to perceive that 

FDA market-authorized and CMScovered items or services have been 

established as safe and effective. 

Another commenter suggested that 

Medicare beneficiaries will be unwitting 

clinical trial subjects if they are treated 

with a breakthrough device through the 

MCIT coverage pathway. Several 

commenters stated that the proposed 

MCIT regulation lacks any mechanism 

for stakeholder input, especially 

specialty societies, into operator and 

institutional requirements that protect 

beneficiary safety prior to national 

coverage. A large number of 

commenters noted that absent 

mandatory evidence development, the 

MCIT regulation lacks a mechanism to 

assure safety, outcomes, and quality of 

care for covered breakthrough devices. 

Several commenters suggested that CMS 

should monitor safety events using 

registries, FDA safety reports, and 

claims data monitoring. 

Response: The Administration is 

committed to encouraging medical 

innovation and to ensuring Medicare 

beneficiaries have access to new cures 

and technologies that improve health 

outcomes. The MCIT regulation meets 

this goal for FDA market-authorized 

breakthrough devices. However, patient 

safety is always a central concern, and 

CMS agrees that the MCIT regulation 

must balance early access to innovative 

medical devices with strong patient 

safety protections. 

CMS has developed a number of 

process steps to address this important 

balance of access and safety. First, the 

Administration has championed 

transparency as a critical mechanism for 

beneficiary empowerment in decisionmaking about their own healthcare. 

Accordingly, devices covered through 

the MCIT pathway will be publicly 

posted on the CMS website. We aim to 

also indicate publicly available clinical 


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evidence related to the device. Patients 

and their clinicians are strongly 

encouraged to review this information. 

With access to this information, CMS 

believes that patients and their 

clinicians are best able to consider the 

risks and benefits of innovative new 

treatments in the context of their 

personal health and values. Second, 

CMS will continue to engage with 

relevant stakeholders—notably specialty 

societies with expert knowledge of the 

available treatments. CMS recognizes 

that these guidelines may evolve with 

greater experience with breakthrough 

devices and may assist CMS and 

clinicians in coverage of the devices 

after MCIT coverage sunsets. CMS 

advises operators and institutions to 

consider them carefully when offering 

breakthrough devices covered through 

the MCIT pathway. Third, CMS will 

coordinate with the FDA to receive 

regular feedback on important safety 

signals and concerns. As a practical 

matter, CMS will rely on existing FDA 

safety and surveillance publicly 

available reporting structures as an 

important mechanism for identifying 

safety concerns about covered 

breakthrough devices. While evidence 

development is voluntary, 

manufacturers have strong incentives to 

develop evidence that addresses any 

gaps identified through engagement 

with CMS at the onset of MCIT 

coverage. If these gaps are insufficiently 

addressed during the MCIT coverage 

pathway, manufacturers may risk not 

meeting the reasonable and necessary 

evidentiary threshold when MCIT 

coverage sunsets. Where manufacturers 

voluntarily pursue evidence 

development through robust clinical 

registries, those data may also provide 

detailed and timely data on safety of 

breakthrough devices under real-world 

conditions. Lastly consistent with some 

suggestions from commenters, we 

revised the rule to specify that coverage 

of a breakthrough device through MCIT 

can end if the FDA removes market 

authorization of a breakthrough device 

or at the discretion of the Secretary, 

subsequent to an FDA medical device 

safety communication or Warning Letter 

about the breakthrough device. 

Comment: Nearly a fifth of the 

comments received on the proposed 

rule were from individuals who urged 

Medicare to cover artificial kidney 

technology. The majority of these 

comments were from people who are 

affected by or care for someone affected 

by a form of kidney disease and/or End 

Stage Renal Disease. While some 

specifically mentioned MCIT, most did 

not. 

Response: CMS appreciates every 

comment and thanks commenters for 

sharing their personal stories and how 

their lives or the life of someone they 

care for could be improved by coverage 

of artificial kidney technology when it 

becomes broadly available. 

Comment: A large number of 

comments addressed the issue of how 

CMS should establish durable coverage 

after MCIT coverage sunsets. Several 

commenters acknowledged that CMS 

has limited resources and cannot open 

an NCD for all MCIT devices without 

securing more resources in the Coverage 

and Analysis Group. One commenter 

warned that an excessive emphasis on 

coverage review for MCIT devices could 

delay consideration of important nonbreakthrough NCD requests. Several 

commenters recommended that CMS be 

more transparent about the existing 

NCD wait list, the expected timing of 

any new NCDs, and the prioritization 

criteria for NCDs. They argued that 

manufacturers will need this 

information when considering which 

pathway is best after MCIT. The largest 

proportion of commenters stated that 

there should not be any automatic 

opening of an NCD, including if there is 

no LCD by 6 months after the end of 

MCIT coverage. Many commenters 

believe that manufacturers should 

instead have flexibility in choosing a 

coverage pathway. A smaller number of 

commenters recommended automatic 

opening of an NCD with sufficient time 

for seamless coverage after MCIT 

coverage sunsets. Several of these 

commented that because the MCIT 

pathway establishes national coverage 

that an NCD is the appropriate coverage 

pathway after MCIT coverage sunsets. A 

small number of commenters argued 

that coverage for devices in the MCIT 

pathway should continue indefinitely to 

the FDA label absent an LCD or NCD 

that specifically constrains coverage. 

Response: As previously noted, 

devices approved through the FDA 

breakthrough device program may have 

greater uncertainty about the risks and 

benefits of treatment than nonbreakthrough devices, and they 

generally lack data on long-term safety 

and effectiveness at the time of FDA 

market authorization. By contrast, CMS 

heavily considers demonstration of 

improved health outcomes in making 

positive coverage determinations. All of 

the conventional coverage pathways 

will be available for MCIT devices after 

the pathway sunsets, and our regulatory 

reasonable and necessary coverage 

standard will apply. Manufacturers and 

stakeholders must be aware of the 

important distinctions between FDA 

and CMS review criteria and use the 

time during the MCIT coverage pathway 

to close any evidence gaps that may be 

identified at the time of FDA market 

authorization. 

Based on the comments, we are aware 

not every manufacturer wishes to 

pursue the NCD coverage pathway. CMS 

already publishes an NCD Wait List 

(available here: https://www.cms.gov/ 

Medicare/Coverage/ 

DeterminationProcess) which is updated 

every month as need be and we are 

aware of stakeholder interest in 

guidance on how CMS will prioritize 

formal and complete NCD requests. 

Additionally, CMS intends to stay 

abreast of clinical evidence 

development for breakthrough devices 

in the MCIT pathway, and focus on 

whether there is new evidence in the 

published, peer-reviewed literature that 

addresses gaps identified at the time of 

FDA market authorization, especially 

whether there is compelling evidence 

that the device improves patient health 

outcomes. To allow greater stakeholder 

flexibility and efficient use of CMS 

resources, CMS will not automatically 

open a National Coverage Determination 

(NCD) as a part of the MCIT coverage 

pathway. As previously noted, the full 

range of coverage options at the end of 

the MCIT pathway includes opening an 

NCD or and claim submission to a MAC. 

MACs may either open Local Coverage 

Determinations (LCDs) or cover the 

breakthrough device on a claim-byclaim basis after MCIT coverage sunsets. 

After consideration of the public 

comments we received, we are 

finalizing the proposed rule and adding 

modifications consistent with the safety 

concerns raised by commenters. We 

updated the text to allow for coverage to 

end prior to 4 years at the discretion of 

the Secretary subsequent to an FDA 

medical device safety communication or 

Warning Letter. Additionally coverage 

will end if the FDA removes 

authorization of a device. 

Final Action 

In summary, the MCIT pathway will 

be voluntary for manufacturers on an 

opt-in basis, and would provide 

immediate or near immediate national 

coverage depending upon the 

manufacturer’s chosen start date. MCIT 

coverage expires four years after the 

date of FDA approval, irrespective of 

when the manufacturer requested 

activation of their MCIT coverage, at 

which point, the manufacturer may 

request CMS to undertake an NCD for 

the breakthrough device. We sought 

public comment on all of our proposals, 

and have included summaries of the 

comments received and the responses to 

those comments in this document. 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3005 

III. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We solicited public comment on each 

of the section 3506(c)(2)(A)-required 

issues for the following sections of this 

document that contain information 

collection requirements (ICRs). 

To derive average costs, we used data 

from the U.S. Bureau of Labor Statistics’ 

May 2018 National Occupational 

Employment and Wage Estimates for all 

salary estimates (https://www.bls.gov/ 

oes/current/oes131041.htm, released 

May 2019). In this regard, the table that 

follows presents the mean hourly wage, 

the cost of fringe benefits (calculated at 

100 percent of salary), and the adjusted 

hourly wage. 

TABLE 1—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES FOR MCIT 

Occupation title Occupation 

code 

Mean hourly 

wage 

($/hr) 

Fringe benefit 

($/hr) 

Adjusted 

hourly 

wage 

($/hr) 

Compliance Officer .......................................................................................... 13–1041 34.86 34.86 69.72 

As indicated, we are adjusting our 

employee hourly wage estimates by a 

factor of 100 percent. This is necessarily 

a rough adjustment, both because fringe 

benefits and overhead costs vary 

significantly from employer to 

employer. Nonetheless, there is no 

practical alternative and we believe that 

doubling the hourly wage to estimate 

total cost is a reasonably accurate 

estimation method. 

The proposed coverage pathway 

allows for a voluntary participation and 

therefore necessitates that 

manufacturers of breakthrough devices 

notify CMS of their intent to enter the 

MCIT pathway. Therefore, the burden 

associated with notifying CMS is the 

time and effort it would take for each of 

the organizations to send CMS an email 

or letter. We anticipate two MCIT 

pathway participants in the first year 

based upon the number of medical 

devices that received FY2020 NTAP and 

were non-covered in at least one MAC 

jurisdiction by LCDs and related 

articles. 

We estimate notifying CMS of intent 

to participate in MCIT would involve 15 

minutes at $69.72 per hour by a 

compliance officer. In this regard, we 

estimate 15 mins per notification at a 

cost of $17.43 per organization (0.25 

hours × $69.72). In aggregate, we 

estimate 0.5 hours (0.25 hours × 2 

submissions) at $34.86 ($17.43 × 2 

submissions). 

After the anticipated initial 2 

submitters, over the next 3 years we 

expect 3 submitters in year 2, 4 

submitters in year 3, and 5 submitters in 

year 4 to notify CMS of interested in the 

MCIT pathway. We expect this increase 

in submitters each year to level off at 

this point. In this regard, we estimate 

the same 0.25 hours per submission at 

a cost of $17.43 per organization. 

Similarly, in aggregate, we estimate, for 

year 2 (0.75 hours at $52.29 an hour), for 

year 3 (1.0 hour at $69.72 an hour), and 

for year 4 (1.25 hours at $87.15 an hour). 

The proposed requirements and 

burden will be submitted to OMB under 

control number 0938–NEW. 

IV. Regulatory Impact Statement 

This final rule makes Medicare 

coverage policy updates pursuant to the 

authority at section 1862(a)(1)(A) of the 

Act. We are using regulatory action per 

the October 3, 2019 ‘‘Executive Order on 

Protecting and Improving Medicare for 

Our Nation’s Seniors’’ to create a swift 

Medicare coverage pathway to allow 

beneficiaries across the nation to access 

breakthrough devices after FDA market 

authorization and define ‘‘reasonable 

and necessary’’. 

We have examined the impact of this 

final rule as required by Executive 

Order 12866 on Regulatory Planning 

and Review (September 30, 1993), 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Social Security Act, section 202 of 

the Unfunded Mandates Reform Act of 

1995 (March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999), the Congressional 

Review Act (5 U.S.C. 804(2)), and 

Executive Order 13771 on Reducing 

Regulation and Controlling Regulatory 

Costs (January 30, 2017). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any 1 year). 

This final rule reaches the economic 

threshold and thus is considered a 

major rule. 

CMS considered several alternatives 

for defining ‘‘reasonable and necessary.’’ 

These alternatives included not defining 

the term in regulation, define the term 

as finalized in this rule (commercial 

insurer coverage may be considered 

under the Medicare program), and 

define the term as commercial insurer 

coverage being the sole determinant of 

coverage under the Medicare program. 

Given the direction in E.O. 13890 to 

clarify standards we proposed and 

finalized in regulation, the definition of 

the term ‘‘reasonable and necessary.’’ 

The definition we are finalizing 

provides consistency and flexibility 

regarding the role of commercial insurer 

coverage in the Medicare program and 

the majority of public comments did not 

support the commercial payer 

alternative without more public 

engagement. We believe the final rule is 

consistent with what the public 

requested. 

The impact of defining ‘‘reasonable 

and necessary’’ is hard to quantify 

without knowing the specific items and 

services that would be included in 

future NCDs and LCDs and the criteria 

that CMS will use for determining 


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3006 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

which commercial insurers will be 

considered. Additional information 

regarding which commercial insurers 

and policies will be developed within 

12 months of the effective date of this 

rule. In order to demonstrate the 

potential impact on Medicare spending, 

we developed scenarios that illustrate 

the impact of implementing the three 

alternatives for defining ‘‘reasonable 

and necessary.’’ The number of NCDs 

and LCDs finalized in a given year can 

vary and the cost of items and services 

within the coverage decisions varies. 

Further, while we reviewed coverage of 

items and services, we did not take into 

account unique Medicare rules 

regarding which type of providers/ 

clinicians may furnish certain services, 

place of service requirements, or 

payment rules. Our analysis is based on 

whether Medicare covered or noncovered an item or service and whether 

we could find coverage for that item or 

service by any commercial insurer. 

Lastly, this impact analysis is based on 

the numbers of NCDs and LCDs 

finalized in 2020. (See Table 2 below) 

In 2020, CMS and the MACs finalized 

3 NCDs and 31 LCDs. (This number 

represents new LCDs in 2020 and made 

publically available via the Medicare 

Coverage Database. If more than one 

MAC jurisdiction issued an LCD on the 

same item or service with the same 

coverage decision, only 1 of the LCDs 

was included in the count.) 

Of the NCDs finalized in 2020, all 3 

resulted in expanded national Medicare 

coverage. Because none of those NCDs 

resulted in non-coverage we did not 

evaluate whether commercial insurers 

also covered. Therefore, based on 2020 

data for NCDs only, the impact would 

be $0 for all three alternatives. 

Of the 31 LCDs, 27 provided Medicare 

positive coverage and 4 resulted in noncoverage. For those items and services 

non-covered we identified 3 of those 

items and services were covered in at 

least 1 commercial insurer policy. For 

these non-covered items and services 

we can establish that the possible range 

of the cumulative cost of covering them 

could be from $0 to $3.4 billion for a 

single year (based on price and 

approximate Medicare beneficiary 

utilization). Because our analysis looked 

for any commercial insurer that covered 

the item or service, the cost may be less 

when utilizing commercial insurer 

polices that represent a majority of 

covered lives (CMS will publish draft 

guidance explaining its methodology 

within 12 months of the effective date 

of this rule). In addition, even if a 

commercial insurer covers an item or 

service, for the final rule it is not a 

requirement to automatically adopt the 

commercial insurers’ coverage. 

Therefore, not all items and services 

that are non-covered by Medicare and 

covered by a can be assumed covered 

under this rule. Rather, commercial 

insurer coverage is a factor that CMS 

will take into account as part of the 

body of evidence in determining 

coverage through the NCD and LCDs 

processes. Because not all commercial 

insurer positive coverage will 

necessarily transfer to Medicare 

coverage and because CMS still to 

define which types of commercial 

insurers (based on majority of covered 

lives) are relevant, we believe that 

commercial insurer coverage impact is 

likely much smaller, closer to 15–25% 

of $3.4 billion, that is, $51–$880 

million. Under the third alternative 

which requires Medicare to rely on any 

coverage by a commercial insurer in 

order to achieve Medicare coverage, the 

cost would much higher. Using the 

same data for the first 2 alternatives, 

there were 4 LCDs that resulted in 

Medicare non-coverage, and 3 

commercial insurers covered the item or 

service. Assuming that for this third 

assumption that Medicare must cover 

these items and services, the cost to the 

program could be at least $3.4 billion for 

a year for the commercial insurer as sole 

determinant of coverage. Because our 

analysis looked for any commercial 

insurer that covered the item or service, 

the cost may be less when utilizing 

commercial insurer polices that 

represent a majority of covered lives. 

TABLE 2—ILLUSTRATED IMPACT FOR THE MEDICARE PROGRAM BY DEFINITION OF REASONABLE AND NECESSARY

Estimated change in Medicare costs for the 

alternatives considered 

No change 

(not 

codifying a 

definition) 

Codified 

definition 

Commercial 

insurer 

coverage 

as sole 

determinant 

Coverage Determinations (NCDs and LCDs) ............................................................................. $0 $51–880 

million. 

$3.4+ billion 

Regulatory alternatives to this final 

rule for MCIT were to combine 

Medicare coverage with clinical 

evidence development under section 

1862(a)(1)(E) of the Act, to take no 

regulatory action at this time, or to 

adjust the duration of the MCIT 

pathway. Combining coverage with 

clinical evidence development would 

have met the E.O. 13890 overarching 

goal of beneficiary access to 

breakthrough devices. However, this 

alternative did not meet the other E.O. 

13890 aims of minimizing time between 

FDA market authorization and Medicare 

coverage and wide availability. The 

timing of coverage would depend upon 

the manufacturer being able to initiate a 

clinical study and the wide availability 

of coverage could be an issue if 

providers did not have the 

infrastructure necessary to participate in 

the clinical study. The pathway had the 

benefit of reducing the potential for 

patient harm by ensuring Medicare had 

clinical evidence while providing 

coverage. CMS chose to not to pursue 

combining coverage with evidence 

development for breakthrough devices 

because we wanted to meet the timing 

and wide availability aims of E.O. 

13890. 

CMS also considered taking no 

regulatory action and trying to leverage 

the existing Medicare coverage 

pathways or proposing subregulatory 

policies to achieve the streamlined 

coverage process described in E.O. 

13890. We could not develop 

subregulatory policies to achieve the 

desired national coverage and access 

envisioned in E.O. 13890 because, as 

described in this preamble, the existing 

coverage pathways do not consistently 

provide swift, national beneficiary 

access to innovative devices. As 

discussed elsewhere in the preamble, 

the nature of the problem being 

addressed by this final rule is a 

potential delay between a milestone 

such as FDA market authorization and 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3007 

16FY 2020 Hospital Inpatient Prospective 

Payment System (IPPS) Proposed Rule (84 FR 19640 

and 19641) (May 3, 2019) available at https://

www.govinfo.gov/content/pkg/FR-2019-05-03/pdf/ 

2019-08330.pdf (accessed October 17, 2019). 

17An indirect cost of the proposed rule would be 

increased distortions in the labor markets taxed to 

support the Medicare Trust Fund. Such distortions 

are sometimes referred to as marginal excess tax 

burden (METB), and Circular A–94—OMB’s 

guidance on cost-benefit analysis of federal 

programs, available at https://www.whitehouse.gov/ 

sites/whitehouse.gov/files/omb/circulars/A94/ 

a094.pdf—suggests that METB may be valued at 

roughly 25 percent of the estimated transfer 

attributed to a policy change; the Circular goes on 

to direct the inclusion of estimated METB change 

in supplementary analyses. If secondary costs— 

such as increased marginal excess tax burden is, in 

the case of this final rule—are included in 

regulatory impact analyses, then secondary benefits 

must be as well, in order to avoid inappropriately 

skewing the net benefits results, and including 

METB only in supplementary analyses provides 

some acknowledgement of this potential imbalance. 

CMS coverage; as such, we requested 

comment on a policy option of 

shortening of the duration of the MCIT 

pathway from the proposed 4 years to 1 

year. 

The impact of implementing the 

MCIT pathway is difficult to determine 

without knowing the specific 

technologies that would be covered. In 

addition, many of these technologies 

would be eligible for coverage in the 

absence of this rule, such as through a 

local or national coverage 

determination, so the impact for certain 

items may be the acceleration of 

coverage or adoption by just a few 

months. Furthermore, some of these 

devices would be covered immediately 

if the MACs decide to pay for them, 

which would result in no impact on 

Medicare spending for devices approved 

under this pathway. However, it is 

possible that some of these innovative 

technologies would not otherwise be 

eligible for coverage in the absence of 

this rule. Because it is not known how 

these new technologies would otherwise 

come to market and be reimbursed, it is 

not possible to develop a point estimate 

of the impact. In general, we believe the 

MCIT coverage pathway would range in 

impact from having no impact on 

Medicare spending, to a temporary cost 

for innovations that are adopted under 

an accelerated basis. 

The decision to enter the MCIT 

pathway is voluntary for the 

manufacturer. Because manufacturers 

typically join the Medicare coverage 

pathway that is most beneficial to them, 

this could result in selection against the 

existing program coverage pathways (to 

what degree is unknown at this point). 

In addition, the past trend of new 

technology costing more than existing 

technology could lead to a higher cost 

for Medicare if this trend continued for 

technologies enrolling in the MCIT 

pathway. Nevertheless, new technology 

may also mitigate ongoing chronic 

health issues or improve efficiency of 

services thereby reducing some costs for 

Medicare. 

In order to demonstrate the potential 

impact on Medicare spending, the CMS 

Office of the Actuary (OACT) developed 

three hypothetical scenarios that 

illustrate the impact of implementing 

the proposed MCIT pathway. Scenarios 

two and three assume that the device 

would not have been eligible for 

coverage in the absence of the proposed 

rule. (See Table 2) The illustration used 

the new devices that applied for a NTAP 

in FY 2020 as a proxy for the new 

devices that would utilize the MCIT 

pathway. The submitted cost and 

anticipated utilization for these devices 

was published in the Federal Register.16

In addition, we assumed that two 

manufacturers would elect to utilize the 

MCIT pathway in the first year, three 

manufacturers in the second year, four 

manufacturers in the third year, and five 

manufacturers in the fourth year each 

year for all three scenarios. This 

assumption is based on the number of 

medical devices that received FY 2020 

NTAP and were non-covered in at least 

one MAC jurisdiction by LCDs and 

related articles and our impression from 

the FDA that the number of devices 

granted breakthrough status is 

increasing. For the first scenario, the nocost scenario, we assumed that all the 

devices would be eligible for coverage 

in the absence of the proposed rule. If 

the devices received payment nationally 

and at the same time then there would 

be no additional cost under this 

pathway. For the second scenario, the 

low-cost scenario, we assumed that the 

new technologies would have the 

average costs ($2,044) and utilization 

(2,322 patients) of similar technologies 

included in the FY 2020 NTAP 

application cycle. Therefore, to estimate 

the first year of MCIT, we multiplied the 

add-on payment for a new device by the 

anticipated utilization for a new device 

by the number of anticipated devices in 

the pathway ($2,044 × 2,322 × 2 = $9.5 

million). For the third scenario, the 

high-cost scenario, we assumed the new 

technologies would receive the 

maximum add-on payment from the 

FY2020 NTAP application cycle 

($22,425) and the highest utilization of 

a device (6,500 patients). Therefore, to 

estimate for the first year of MCIT, we 

estimated similarly ($22,425 × 6,500 

patients × 2 = $291.5 million). For 

subsequent years, we increased the 

number of anticipated devices in the 

pathway by three, four, and five in the 

last two scenarios until 2024.17 In 

addition to not taking into account 

inflation, the illustration does not reflect 

any offsets for the costs of these 

technologies that would be utilized 

through existing authorities nor the cost 

of other treatments (except as noted). It 

is not possible to explicitly quantify 

these offsetting costs but they could 

substantially reduce or eliminate the net 

program cost. However, by assuming 

that only two to five manufacturers will 

elect MCIT coverage, we have implicitly 

assumed that, while more 

manufacturers could potentially elect 

coverage under MCIT, the majority of 

devices would have been covered under 

a different coverage pathway. Therefore, 

a substantial portion of the offsetting 

costs are implicitly reflected. 

Based on this analysis, there is a range 

of potential impacts of the proposed 

MCIT coverage pathway as shown in 

Table 2. The difference between the 

three estimates demonstrates how 

sensitive the impact is to the cost and 

utilization of these unknown devices. 

TABLE 3—ILLUSTRATED IMPACT ON THE MEDICARE PROGRAM BY MCIT COVERAGE PATHWAY

Costs 

(in millions) 

FY 2021 FY 2022 FY 2023 FY 2024 

No-cost Scenario ............................................................................................. $0 $0 $0 $0 


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18Small Business Administration, Table of Small 

Business Size Standards Matched to North 

American Industry Classification System (NAICS) 

Codes, available at https://www.sba.gov/sites/ 

default/files/2019-08/ 

SBA%20Table%20of%20Size%20Standards_

Effective%20Aug%2019%2C%202019_Rev.pdf. 

19 2017 County Business Patterns and 2017 

Economic Census. Number of Firms, Number of 

Establishments, Employment, Annual Payroll, and 

Preliminary Receipts by Enterprise Employment 

Size for the United States, All Industries: 2017 

(release date: May 6, 2020). 

20 Id. 

TABLE 3—ILLUSTRATED IMPACT ON THE MEDICARE PROGRAM BY MCIT COVERAGE PATHWAY—Continued 

Costs 

(in millions) 

FY 2021 FY 2022 FY 2023 FY 2024 

Low-cost Scenario ........................................................................................... 9.5 23.7 42.7 66.4 

High-cost Scenario .......................................................................................... 291.5 728.8 1,311.9 2,040.7 

We believe the assumptions used in 

the three scenarios are reasonable to 

show the possible wide range of impacts 

for implementing this proposed 

pathway, in particular for a technology 

that would not have otherwise been 

eligible for coverage. 

Comment: A commenter supported 

CMS’ assertion that new technology 

may mitigate ongoing chronic health 

issues or improve efficiency of services 

thereby reducing some cost for 

Medicare, and that incentivizing 

breakthrough medical devices will lead 

to both direct cost offsets (i.e., cost 

savings) and indirect benefits (e.g., 

quality of life, clinical outcomes) across 

multiple therapeutic areas. Another 

expressed concern that funding for 

MCIT will result in neutrality 

adjustments across the Physician Fee 

Schedule (PFS). 

Response: We appreciate these 

comments. Payment for Medicare 

covered physician services and other 

services paid under the PFS are subject 

to statutorily-required budget neutrality 

adjustments, determined based on the 

utilization of particular services. The 

RIA did not incorporate changes to PFS 

as we do not expect that it is likely PFS 

will require adjustment. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Some 

hospitals and other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of less than $7.5 million to $38.5 

million in any 1 year. Individuals and 

States are not included in the definition 

of a small entity. We reviewed the Small 

Business Administration’s Table of 

Small Business Size Standards Matched 

to North American Industry 

Classification System (NAICS) Codes to 

determine the NAICS U.S. industry 

titles and size standards in millions of 

dollars and/or number of employees 

that apply to small businesses that 

could be impacted by this rule.18 We 

determined that small businesses 

potentially impacted may include 

surgical and medical instrument 

manufacturers (NAICS code 339112, 

dollars not provided/1,000 employees), 

Offices of Physicians (except Mental 

Health Specialists) (NAICS code 

621111, $12 million/employees not 

provided), and Freestanding 

Ambulatory Surgical and Emergency 

Centers (NAICS code 621493, $16.5 

million/employees not provided). 

During the first 4 years of MCIT, we 

anticipate approximately 14 surgical 

and medical instrument manufacturers 

may participate, and based off of U.S. 

Census data, the majority of this 

businesses type are small businesses 

with less than 1,000 employees (968 out 

of 1,093 businesses have less than 500 

employees).19 As such, this final rule 

will impact less than 5 percent of these 

businesses, and the revenue impact, if 

any, would not be negative. Rather, it 

would be a positive impact because 

MCIT would provide Medicare coverage 

(and subsequent payment) to providers 

who purchase the devices from these 

manufacturers. For Offices of Physicians 

(except Mental Health Specialists) and 

Freestanding Ambulatory Surgical and 

Emergency Centers that may be 

providing the breakthrough devices, the 

majority are small businesses with less 

than 1,000 employees (4,060 out of 

4,385 and 160,367 out of 161,286 have 

less than 500 employees, 

respectively).20 Given that we estimate, 

at most in the high-cost scenario, that 

6,500 beneficiaries would utilize 

breakthrough devices through MCIT per 

year, and even if each beneficiary were 

to access services at only one of these 

small businesses (that is, no two 

beneficiaries used the same office or 

center), still less than 5 percent of these 

small businesses would be impacted by 

MCIT. As such, the revenue impact, if 

any, would not be negative, rather, it 

would be a positive impact because 

MCIT would provide Medicare coverage 

(and subsequent payment) to providers. 

Overall, this final rule results in a 

payment, not a reduction in revenue. 

We are not preparing a further analysis 

for the RFA because we have 

determined, and the Secretary certifies, 

that the proposed rule and this 

subsequent final rule will not have a 

significant negative economic impact on 

a substantial number of small entities 

because small entities are not being 

asked to undertake additional effort or 

take on additional costs outside of the 

ordinary course of business. Rather, for 

small entities that develop or provide 

breakthrough devices to patients, the 

proposed rule and this final rule are a 

means for the device to be covered 

through the Medicare program, which 

does not detract from revenue and could 

be viewed as a positive economic 

impact. With the limited information we 

had to base this estimate, we solicited 

public comment on improvements to 

this estimate for this final rule. 

After consideration of the public 

comments we received, we are 

finalizing the rule as proposed. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area for 

Medicare payment regulations and has 

fewer than 100 beds. We are not 

preparing an analysis for section 1102(b) 

of the Act because we have determined, 

and the Secretary certifies, that the 

proposed rule and the final rule would 

not have a significant impact on the 

operations of a substantial number of 

small rural hospitals because small rural 

hospitals are not being asked to 

undertake additional effort or take on 

additional costs outside of the ordinary 

course of business. Obtaining 

breakthrough devices for patients is at 

the discretion of providers. We are not 

requiring the purchase and use of 

breakthrough devices. Providers should 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3009 

continue to work with their patients to 

choose the best treatment. For small 

rural hospitals that provide 

breakthrough devices to their patients, 

this proposed rule is a means for the 

device to be covered through the 

Medicare program. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2020, that threshold was 

approximately $156 million. This final 

rule would have no consequential effect 

on State, local, or tribal governments or 

on the private sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Since this final rule does not impose 

any costs on State or local governments, 

the requirements of Executive Order 

13132 are not applicable. 

Executive Order 13771 (E.O. 13771), 

titled Reducing Regulation and 

Controlling Regulatory Costs, was 

issued on January 30, 2017. The 

proposed rule, is being finalized as 

proposed, and is expected to impose no 

more than de minimis costs and thus be 

neither an E.O. 13771 regulatory action 

nor an E.O. 13771 deregulatory action. 

In accordance with the provisions of 

Executive Order 12866, this final rule 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 405 

Administrative practice and 

procedure, Diseases, Health facilities, 

Health professions, Medical devices, 

Medicare, Reporting and recordkeeping 

requirements, Rural areas, X-rays. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

■ 1. The authority for part 405 

continues to read as follows: 

Authority: 42 U.S.C. 263a, 405(a), 1302, 

1320b–12, 1395x, 1395y(a), 1395ff, 1395hh, 

1395kk, 1395rr, and 1395ww(k). 

■ 2. Section 405.201 is amended in 

paragraph (b) by adding a definition for 

‘‘Reasonable and necessary’’ in 

alphabetical order to read as follows: 

§ 405.201 Scope of subpart and 

definitions. 

* * * * * 

(b) * * * 

Reasonable and necessary means that 

an item or service is considered— 

(i) Safe and effective; 

(ii) Except as set forth in § 411.15(o) 

of this chapter, not experimental or 

investigational; and 

(iii) Appropriate for Medicare 

patients, including the duration and 

frequency that is considered appropriate 

for the item or service, in terms of 

whether it meets all of the following 

criteria: 

(A) Furnished in accordance with 

accepted standards of medical practice 

for the diagnosis or treatment of the 

patient’s condition or to improve the 

function of a malformed body member; 

(B) Furnished in a setting appropriate 

to the patient’s medical needs and 

condition; 

(C) Ordered and furnished by 

qualified personnel; 

(D) Meets, but does not exceed, the 

patient’s medical need; and 

(E) Is at least as beneficial as an 

existing and available medically 

appropriate alternative; or 

(F) Not later than March 15, 2022, 

CMS will issue draft subregulatory 

guidance on the methodology of which 

commercial insurers are relevant based 

on the measurement of majority of 

covered lives. For national and local 

coverage determinations, which have 

insufficient evidence to meet paragraphs 

(b)(3)(i) through (v) of this section, CMS 

will consider coverage to the extent the 

items or services are covered by a 

majority of commercial insurers. As part 

of CMS’ consideration, CMS will 

include in the national or local coverage 

determination its reasoning for its 

decision if coverage is different than the 

majority of commercial insurers. 

* * * * * 

■ 3. Subpart F, consisting of §§ 405.601– 

405.607, is added to read as follows: 

Subpart F—Medicare Coverage of 

Innovative Technology 

Sec. 

405.601 Medicare coverage of innovative 

technology. 

405.603 Medical device eligibility. 

405.605 Coverage of items and services. 

405.607 Coverage period. 

Subpart F—Medicare Coverage of 

Innovative Technology 

§ 405.601 Medicare coverage of innovative 

technology. 

(a) Basis and scope. Medicare 

coverage of innovative technology 

(MCIT) is a program that provides 

national, time-limited coverage under 

section 1862(a)(1)(A) of the Act for 

certain breakthrough medical devices. 

Manufacturer participation in the 

pathway for breakthrough device 

coverage is voluntary. 

(b) Definitions. For the purposes of 

this subpart, the following definitions 

are applicable: 

Breakthrough device means a device 

that receives such designation by the 

Food and Drug Administration (FDA) 

(section 515B(d)(1) of the FD&C Act (21 

U.S.C. 360e–3(d)(1)). 

MCIT stands for Medicare coverage of 

innovative technology. 

§ 405.603 Medical device eligibility. 

The MCIT pathway is available only 

to medical devices that meet all of the 

following: 

(a) That are FDA-designated 

breakthrough devices. 

(b) That were FDA market authorized 

on [Enter date 2 years prior to effective 

date of final rule] and thereafter. 

(c) That are used according to their 

FDA approved or cleared indication for 

use. 

(d) That are within a Medicare benefit 

category. 

(e) That are not the subject of a 

Medicare national coverage 

determination. 

(f) That are not otherwise excluded 

from coverage through law or 

regulation. 

§ 405.605 Coverage of items and services. 

Covered items and services furnished 

within the MCIT pathway may include 

any of the following, if not otherwise 

excluded from coverage and according 

to existing coverage and/or payment 

policies as applicable: 

(a) The breakthrough device. 

(b) Any reasonable and necessary 

procedures to implant and/or use the 

breakthrough device. 

(c) Reasonable and necessary items 

and services to maintain the 

breakthrough device. 

(d) Related care and services for the 

breakthrough device. 

(e) Reasonable and necessary services 

to treat complications arising from use 

of the breakthrough device. 

§ 405.607 Coverage period. 

(a) Start of the period. The MCIT 

pathway begins on the date requested by 

the manufacturer in an email to CMS at 

any time opting in to the MCIT pathway 

provided the requested start date is no 

earlier than— 

(1) The date the breakthrough device 

receives FDA market authorization; or 

(2) The date requested by the 

manufacturer, provided that such a date 

is not later than 2 years after the date 


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3010 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

described in paragraph (a)(1) of this 

section. 

(b) End of the period. The MCIT 

pathway for a breakthrough device ends 

as follows: 

(1) No later than 4 years from the date 

the breakthrough device received FDA 

market authorization. 

(2) Prior to 4 years if a manufacturer 

withdraws the breakthrough device 

from the MCIT pathway. 

(3) Prior to 4 years if the breakthrough 

device becomes the subject of a national 

coverage determination or otherwise 

becomes noncovered through law, 

regulation, or at the discretion of the 

Secretary subsequent to an FDA medical 

device safety communication or 

Warning Letter. 

(4) Prior to 4 years if the FDA removes 

authorization of a device, the 

breakthrough device is removed from 

the MCIT pathway. 

Dated: December 31, 2020. 

Seema Verma, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: January 5, 2021. 

Alex M. Azar II, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2021–00707 Filed 1–12–21; 4:15 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Part 1 

[HHS–OS–2021–0001] 

RIN 0991–AC18 

Department of Health and Human 

Services Transparency and Fairness in 

Civil Administrative Enforcement 

Actions 

AGENCY: Office of the Secretary, 

Department of Health and Human 

Services. 

ACTION: Final rule. 

SUMMARY: The Department of Health and 

Human Services is issuing regulations 

promoting transparency and fairness in 

civil enforcement actions. These 

regulations will help to ensure that 

regulated parties receive fair notice of 

laws and regulations they are subject to, 

and have an opportunity to contest an 

agency determination prior to the 

agency taking an action that has a legal 

consequence. 

DATES: Effective January 12, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Brenna Jenny, Department of Health and 

Human Services, 200 Independence 

Avenue SW, Room 713F, Washington, 

DC 20201. Email: Good.Guidance@

hhs.gov. Telephone: (202) 690–7741. 

I. Statutory and Regulatory Background 

The primary legal authority 

supporting this rulemaking is 5 U.S.C. 

301. That provision provides that the 

‘‘head of an Executive department or 

military department may prescribe 

regulations for the government of his 

department, the conduct of its 

employees, the distribution and 

performance of its business, and the 

custody, use, and preservation of its 

records, papers, and property.’’ This 

statute authorizes an ‘‘agency to regulate 

its own affairs,’’ and issue rules, such as 

this one, that are ‘‘rules of agency 

organization[,] procedure or practice.’’ 

Chrysler Corp. v. Brown, 441 U.S. 281, 

309–10 (1979). Similarly, 42 U.S.C. 1302 

provides that the Secretary ‘‘shall make 

and publish such rules and regulations, 

not inconsistent with this chapter, as 

may be necessary to the efficient 

administration of the functions with 

which [he] is charged’’ under Chapter 7 

of the Social Security Act. Chapter 7 

contains, among other things, statutory 

provisions governing Medicare, 

Medicaid, and the Health Insurance 

Portability and Accountability Act 

(HIPAA). 

The Administrative Procedure Act 

(‘‘APA’’), 5 U.S.C. 551 et seq., specifies 

the process by which such regulations 

are promulgated. Department heads 

generally must prescribe regulations 

through notice-and-comment 

rulemaking, but there is an exception for 

‘‘rules of agency organization, 

procedure, or practice.’’ The 

requirements for notice and comment 

prior to finalization also do not apply to 

regulations that involve ‘‘a matter 

relating to agency management or 

personnel.’’ 5 U.S.C. 553(a)(2). 

Because this final rule only specifies 

procedures that agency personnel must 

follow or that will govern civil 

enforcement actions, it is exempt from 

the requirement for notice and comment 

prior to finalization. In determining 

whether notice-and-comment 

rulemaking is required, the ‘‘critical 

feature is that [the rule] covers agency 

actions that do not themselves alter the 

rights or interests of the parties, 

although it may alter the manner in 

which the parties present themselves or 

their viewpoints to the agency.’’ Nat’l 

Sec. Counselors v. CIA, 931 F. Supp. 2d 

77, 106–07 (D.D.C. 2013) (quoting 

Batterton v. Marshall, 648 F.2d 694, 707 

(D.C. Cir. 1980)). This rule is exempt 

from notice and comment because it 

does not ‘‘put[ ] a stamp of approval or 

disapproval on a given type of 

behavior.’’ Am. Hosp. Assoc. v. Bowen, 

834 F.2d 1037, 1047 (D.C. Cir. 1987). 

What had been a regulatory violation 

prior to finalization of this rule still is; 

the Department of Health and Human 

Services (‘‘HHS’’ or ‘‘the Department’’) 

is only modifying the procedures 

governing civil enforcement actions and 

the Department’s civil enforcement 

action practices. To be sure, these 

procedural modifications, like most 

rules of agency procedure or personnel, 

might have some impact on the public. 

But agency rules that impose 

‘‘derivative,’’ ‘‘incidental,’’ or 

‘‘mechanical’’ burdens upon regulated 

individuals are considered procedural, 

rather than substantive, and are 

therefore exempt from the notice-andcomment requirement. Id. at 1051. 

Moreover, to the extent this rule has 

effects on the public, it only provides 

additional protections to the public, 

rather than depriving the public of any 

rights or interests it previously had. 

The APA requires that 

‘‘administrative policies affecting 

individual rights and obligations be 

promulgated pursuant to certain stated 

procedures so as to avoid the inherently 

arbitrary nature of unpublished ad hoc 

determinations.’’ Morton v. Ruiz, 415 

U.S. 199, 232 (1974). The Freedom of 

Information Act amended the APA to 

advance this goal, and generally 

requires that agencies publish in the 

Federal Register their substantive rules 

of general applicability, statements of 

general policy, and interpretations of 

law that are generally applicable. 5 

U.S.C. 552(a)(1)(D). Unless a party has 

actual and timely notice of the terms of 

a rule or policy, the Freedom of 

Information Act generally provides that 

a party may not be adversely affected by 

a rule or policy required to be published 

in the Federal Register that is not so 

published. 5 U.S.C. 552(a)(1)(flush 

language). This rule of agency procedure 

ensures that HHS actions comport with 

these requirements. 

II. Summary of Transparency and 

Fairness Regulations 

To provide regulated parties with 

greater transparency and fairness in 

administrative actions, and consistent 

with the requirements of Executive 

Order 13892 of October 9, 2019, 

‘‘Promoting the Rule of Law Through 

Transparency and Fairness in Civil 

Administrative Enforcement and 

Adjudication,’’ 84 FR 55239 (Oct. 15, 

2019), HHS is setting forth policies that 

promote transparency and fairness in 

civil enforcement actions that will apply 

to all divisions of HHS. The 

requirements in this rule amend 45 CFR 

part 1. 


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