A Break for Breakthrough Devices? CMS Issues Transitional Coverage for Emerging Technologies Notice

On June 22, 2023, the Centers for Medicare & Medicaid Services (CMS) released a Notice with Comment Period (Notice) proposing a new Transitional Coverage for Emerging Technologies (TCET) pathway. 88 Fed. Reg. 41,633 (Jun. 27, 2023). The long-anticipated TCET pathway would create a new mechanism to provide Medicare patients with more timely and predictable access to medical devices with Breakthrough Device designation from the Food and Drug Administration (FDA). TCET features early and voluntary manufacturer engagement with CMS, national coverage for three to five years pending development of evidence to support more permanent national or local coverage, and opportunities for public comment. Due to CMS resource constraints, the agency anticipates a small number of medical devices (approximately five per year) being accepted for TCET. Significantly, CMS notes that devices that are not paid separately, such as devices furnished under the inpatient payment system, are coverable without TCET.

Stakeholders may submit comments to the Notice during the comment period, which will end on August 28, 2023. According to a CMS Fact Sheet on TCET, CMS will respond to comments in a final notice.

Eligibility to participate in TCET

As proposed, the TCET pathway would facilitate coverage only for devices that have Breakthrough designation from the FDA. CMS notes that diagnostic laboratory tests could be eligible for the TCET pathway, but the agency also explains that it has delegated review of many of these tests to specialized Medicare Administrative Contractors (MACs), and it believes that the “majority of coverage determinations for diagnostic tests granted Breakthrough Designation” should continue to be made by local contractors. Additionally, the TCET process would begin approximately one year prior to receiving marketing authorization from the FDA. Thus, those devices that have obtained Breakthrough designation and already received clearance or approval from FDA seemingly would not be eligible to participate in TCET.

TCET is necessarily limited to those devices that fit within a Medicare statutory benefit category. Before acceptance into the TCET pathway CMS will make a benefit category determination for eligibility purposes. The TCET pathway does not (and cannot) grant coverage for devices that are not eligible for coverage under the Social Security Act. Relatedly, any devices that would fall under an existing NCD will not be accepted into the TCET program.

In addition, CMS explains that “many Breakthrough Devices are currently coverable without the TCET pathway because they are not separately payable.” This includes devices that are furnished in the hospital inpatient setting, where a bundled payment applies to all services and supplies used during a hospital stay. This is significant because CMS historically considers whether a device is covered to be a separate question from how the device is reimbursed. For example, CMS has a process to request coverage of devices and related services that are being studied under an Investigational Device Exemption (IDE), regardless of how the device is reimbursed.

CMS notes that it anticipates approximately five devices to be accepted into the TCET program per year out of an estimated eight applicants per year. In light of this, CMS states that it intends to accept devices into the program that will have the biggest impact for Medicare beneficiaries.

Advantages of the TCET pathway

There appear to be two primary advantages to the TCET pathway. The first is early feedback from CMS on clinical evidence and a plan for developing clinical evidence. The second is national coverage for three to five years while that evidence is gathered.

Evidence development

With respect to the evidence development component of TCET, this appears to be CMS’s attempt to address stakeholder feedback that there is uncertainty as to what evidence CMS deems sufficient for emerging technologies to grant long-term coverage. Instead of defining a clear standard for evidence that would apply to all devices, CMS aims to make the coverage process more flexible and transparent, while acknowledging differences in devices’ utilization and risk profiles.

In the Notice, CMS proposes to establish a very collaborative process and states that it will review the evidence provided with a TCET nomination package, confer with the FDA, and conduct an “Evidence Preview,” which is a systematic literature review to provide early feedback on the strengths and weaknesses of the publicly available evidence for a specific item or service. CMS intends to use contractors to conduct Evidence Previews, using standardized evidence grading, risk of bias assessment, and applicability assessment according to a protocol developed in collaboration with the Agency for Healthcare Research and Quality (AHRQ) in 2020.

For devices that are accepted into TCET, the manufacturer will need to develop an Evidence Development Plan (EDP) to address evidence gaps identified by CMS and/or AHRQ during the Evidence Preview, and submit the EDP along with an NCD request to CMS. CMS intends to allow “fit-for-purpose” (FFP) studies, where the study design, analysis plan and study data are appropriate for the question the study aims to answer, which should be driven by the gaps identified in the Evidence Preview. CMS notes that manufacturers should consider continued access studies that maintain market access between the period when the primary EDP is complete, the evidence review by CMS is refreshed, and a decision regarding post-TCET coverage is finalized.

After the EDP study is completed, CMS will conduct a refreshed evidence review within six calendar months of the review date specified in the EDP. Again, CMS intends to engage a third-party contractor to conduct the systematic literature review. CMS will assess whether the evidence is sufficient to reach the reasonable and necessary standard for longer-term coverage outside of TCET.

Temporary national coverage

The other main benefit of TCET is the approximately three to five years of temporary national coverage following FDA marketing authorization while the EDP is executed and evidence is developed. Coverage would be established via the NCD process following the statutory timeframes in section 1862(l) of the Social Security Act, including the 30-day comment period on proposed NCDs. The NCD would need to be requested by the manufacturer, proposed by CMS, open to comment from the public, and eventually finalized. Typically, this process takes nine months from the opening of a national coverage analysis in light of the statutory timeframes, though CMS intends to expedite the NCD process for devices in TCET. Given that CMS has had considerable backlogs for NCDs, it is unclear whether CMS will be able to deliver on that intent and whether the added national coverage analyses due to TCET will exacerbate this backlog.

CMS encourages specialty societies and patient advocacy organizations to provide input on proposed TCET NCDs, given that the evidence base for these emerging technologies will likely be incomplete and practice standards not yet established. When the FDA approves or clears a Breakthrough Device, it is likely that similar devices, developed by other manufacturers, may later receive marketing authorization. CMS requests comment on whether coverage under a TCET NCD should be extended to similar devices without Breakthrough Designation. If CMS were to extend coverage under a TCET NCD to subsequent devices, CMS suggests that the other devices would be subject to the same coverage conditions, including a requirement to propose an EDP.

The length of national coverage under a TCET NCD will be tied to the CMS and AHRQ approved EDP. CMS anticipates this transitional coverage period to generally last for three to five years, though it may vary from device to device and CMS retains the right to reconsider an NCD at any point in time. Following a review of the evidence developed as part of the EDP, CMS will decide whether to establish an NCD without an evidence development requirement, an NCD with CED, a non-coverage NCD, or leave coverage to MAC discretion.

The TCET timeline

In order to ensure timely coverage of devices under TCET, the pathway would begin before a manufacturer receives FDA market authorization and CMS proposes very tight evidence review timelines. In general, the process would begin approximately one year before anticipated FDA marketing authorization with a self-nomination packet from the manufacturer that includes, among other things:

  • A comprehensive list of peer-reviewed, English-language publications supporting the device;
  • A list of Part A or Part B benefit categories, as applicable, into which the manufacturer believes the medical device falls;
  • A statement describing how the device addresses the health needs of the Medicare population; and
  • A statement explaining why the device is an appropriate candidate for TCET.

CMS will send the manufacturer an email to either ask for more information or confirm that the nomination is complete and under review. CMS commits to making at least a preliminary decision to provisionally accept or decline a nomination within 30 business days of this email. This does not mean that CMS has accepted a device into the TCET pathway.

Next, within 20 business days of receipt of a complete nomination, CMS will offer an initial meeting with the manufacturer to discuss the device, its intended use, a high-level summary of the evidence, and the expected timeframe for FDA review. CMS representatives also will meet with FDA counterparts to learn more about the technology.

After meeting with the FDA, CMS will initiate a benefit category review before determining whether the device is an appropriate candidate for TCET. Should CMS determine the device is an appropriate candidate, it will use a contractor to conduct the Evidence Preview, which should take approximately 12 weeks. At this point, a manufacturer may decide whether to continue with the TCET pathway or to withdraw. If a manufacturer withdraws at this point, CMS will not publicize any tracking sheet related to their application nor any notice that an Evidence Preview was conducted. CMS requests public comment on whether the Evidence Preview should be shared with MACs to aid them in their decision making, noting that it represents a substantial investment of public resources.

If a manufacturer chooses to continue with the TCET pathway, the manufacturer would submit the requested NCD and EDP to address gaps in evidence identified during the Evidence Preview. CMS requests that the EDP be submitted as soon as possible following FDA marketing authorization in order to meet CMS’s goals of having a finalized EDP approximately 90 business days after market authorization and a finalized TCET NCD within six months after FDA market authorization.

CMS states that it intends to conduct a review, via a contractor, of the evidence developed under the EDP within six months of the timeline specified in the EDP.

Below is a figure provided by CMS of the proposed TCET timeline:

Areas for comment

CMS is soliciting comment on the TCET pathway as a whole and a few specific elements. First, CMS is seeking input on its approach to publicly posting a tracking sheet and Evidence Preview elements for participating manufacturers. Second, CMS is seeking comment as to whether devices similar to the Breakthrough device should be eligible for coverage under a TCET NCD.

CMS is also accepting comment on its proposed revisions to the CED process. The proposed changes are available in this guidance document, which is open for public comment through August 21, 2023.

If you have any questions on CMS’s proposed TCET pathway for breakthrough medical devices, or would like to submit a comment to CMS, please contact the Hogan Lovells attorney with whom you regularly work, or any of the authors of this alert.


Authored by Beth Roberts, Beth Halpern, Stuart Langbein, Victoria Wallace, and Rianna Modi


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