[Federal Register Volume 86, Number 9 (Thursday, January 14, 2021)]
[Rules and Regulations]
[Pages 2987-3010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00707]


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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.

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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 <a href="/cdn-cgi/l/email-protection#bdfefcfad4d3ccc8d4cfd4d8cefdded0ce93d5d5ce93dad2cb"><span class="__cf_email__" data-cfemail="89cac8cee0e7f8fce0fbe0ecfac9eae4faa7e1e1faa7eee6ff">[email protected]</span></a>.

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

[[Page 2988]]

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\
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    \1\ Executive Order on Protecting and Improving Medicare for Our 
Nation's Seniors, available at https://www.whitehouse.gov/presidential-actions/executive-order-protecting-improving-medicare-nations-seniors/.
    \2\ Id.
    \3\ Id.
    \4\ Id.
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    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.
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    \5\ Food and Drug Administration, Breakthrough Devices Program 
Guidance for Industry and Food and Drug Administration Staff, 
available at: https://www.fda.gov/media/108135/download.
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    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--
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    \6\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/pim83c13.pdf.
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    <bullet> 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;
    <bullet> Furnished in a setting appropriate to the patient's 
medical needs and condition;
    <bullet> Ordered and furnished by qualified personnel;
    <bullet> One that meets, but does not exceed, the patient's medical 
need; and
    <bullet> 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, Yale-New 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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    \7\ FDA 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.

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[[Page 2989]]

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 
life-threatening 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.
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    \8\ 21st Century Cures Act, available at https://www.congress.gov/114/plaws/publ255/PLAW-114publ255.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-and-market-your-device/breakthrough-devices-program.
    \9\ FDA 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.
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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.
    <bullet<ls-thn-eq> 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\
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    \10\ Section 1869(f)(4) of the Act.
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    <bullet> 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.
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    \11\ CMS Program Integrity Manual, Chapter 13 Local Coverage 
Determinations, available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/pim83c13.pdf.
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    <bullet<ls-thn-eq> 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.
    <bullet<ls-thn-eq> 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.
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    \12\ CMS, 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.
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    <bullet<ls-thn-eq> 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.)

[[Page 2990]]

    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-by-claim 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 cutting-edge 
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-by-claim 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 non-breakthrough 
devices, drugs, and biologics should be eligible for an MCIT type of 
coverage pathway because non-breakthrough 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

[[Page 2991]]

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 non-breakthrough 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 post-market 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 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. 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 opt-in), 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

[[Page 2992]]

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 non-coverage.
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    \13\ CMS, Guidance for the Public, Industry, and CMS Staff 
Coverage with Evidence Development, available at https://www.cms.gov/medicare-coverage-database/details/medicare-coverage-document-details.aspx?MCDId=27.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \14\ Fast Track, Breakthrough Therapy, Accelerated Approval, 
Priority Review, available at https://www.fda.gov/patients/learn-about-drug-and-device-approvals/fast-track-breakthrough-therapy-accelerated-approval-priority-review.
---------------------------------------------------------------------------

    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 in-process 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

[[Page 2993]]

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 four-year 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--
    <bullet> 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;
    <bullet> Furnished in a setting appropriate to the patient's 
medical needs and condition;
    <bullet> Ordered and furnished by qualified personnel;
    <bullet> One that meets, but does not exceed, the patient's medical 
need; and
    <bullet> 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, non-
governmental 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:
    <bullet> Sources of data that could be used to implement this 
policy, and whether CMS should make this information public and 
transparent.
    <bullet> Appropriate source(s) for these coverage policies and the 
best way to determine which commercial plan(s) we would rely on for 
Medicare coverage.
    <bullet> 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.

[[Page 2994]]

    <bullet> 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.
    <bullet> 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 long-standing 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,

[[Page 2995]]

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 
long-standing 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=AAgAAAAAAAAA&).
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 long-standing 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 
long-standing 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 long-standing 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-by-claim 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

[[Page 2996]]

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 cost-effectiveness 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

[[Page 2997]]

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 long-
standing 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 life-threatening 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 market-authorized 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 life-
threatening 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.
---------------------------------------------------------------------------

    \15\ FDA 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.
---------------------------------------------------------------------------

    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

[[Page 2998]]

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 FDA-designated 
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 life-threatening 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 Sec.  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 Sec.  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 Sec.  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

[[Page 2999]]

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-to-market 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 Sec.  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 CMS-recognized 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 non-breakthrough 
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

[[Page 3000]]

are not FDA market authorized or cleared (often referred to as 
premarket devices). Any IDE device FDA-designated 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 Sec.  405.603(a) we proposed that the pathway is available to 
devices that meet the definitions proposed in Sec.  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 Sec.  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 Sec.  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.

[[Page 3001]]

    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 Sec.  405.603(d) and (e), we additionally proposed limitations 
to what is coverable under the Act. In Sec.  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 Sec.  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 Sec.  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, non-breakthrough 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.

[[Page 3002]]

    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 Sec.  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 Sec.  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 real-
world 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 Sec.  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 one-size-
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

[[Page 3003]]

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 longer-term 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 
long-established 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 long-established 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 registry-
based 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 CMS-covered 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 decision-making 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

[[Page 3004]]

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 non-breakthrough 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 non-breakthrough 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-by-claim 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.

[[Page 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:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    <bullet> The accuracy of our estimate of the information collection 
burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> 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
----------------------------------------------------------------------------------------------------------------
                                                                 Mean hourly     Fringe benefit  Adjusted hourly
              Occupation title                Occupation code    wage  ($/hr)        ($/hr)        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 x $69.72). In aggregate, we estimate 0.5 hours 
(0.25 hours x 2 submissions) at $34.86 ($17.43 x 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

[[Page 3006]]

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 non-covered 
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 non-coverage. 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
                                                              --------------------------------------------------
                                                                                                    Commercial
                                                                No change (not                       insurer
                                                                 codifying a        Codified       coverage as
                                                                 definition)       definition          sole
                                                                                                   determinant
----------------------------------------------------------------------------------------------------------------
Coverage Determinations (NCDs and LCDs)......................              $0          $51-880    $3.4+ billion
                                                                                      million.
----------------------------------------------------------------------------------------------------------------

    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

[[Page 3007]]

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 no-cost 
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 x 2,322 x 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 x 6,500 patients x 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.
---------------------------------------------------------------------------

    \16\ FY 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).
    \17\ An 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.
---------------------------------------------------------------------------

    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

[[Page 3008]]

 
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.
---------------------------------------------------------------------------

    \18\ Small 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.
---------------------------------------------------------------------------

    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

[[Page 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

0
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).

0
2. Section 405.201 is amended in paragraph (b) by adding a definition 
for ``Reasonable and necessary'' in alphabetical order to read as 
follows:


Sec.  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 Sec.  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.
* * * * *

0
3. Subpart F, consisting of Sec. Sec.  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


Sec.  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.


Sec.  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.


Sec.  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.


Sec.  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

[[Page 3010]]

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


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