On November 9 and 10, 2022, the Medical Device Manufacturers Association (MDMA) held its Reimbursement and Health Policy Conference in-person in Washington, D.C. The conference
featured Centers for Medicare & Medicaid Services (CMS) officials and staff from both chambers of Congress, the Government Accountability Office, CPT Editorial Panel, and other health policy experts.

The agenda and the full list of speakers and their bios can be found here.

Conference Takeaways

• CMS is still revising its processes due to the Azar v. Allina Supreme Court decision, one of the changes is the inclusion of benefit category determinations in the HCPCS process.
• CMS officials highlighted challenges Medicare program is facing as they adjudicate coverage and payment for innovative technologies, AI, and digital therapeutics.
• Budget neutrality has been a constraint for making payment decisions on non-opioid pain management products and new technologies. There is a cost associated with rule making.
• Coverage for emerging technologies (TCET) is still a CMS priority and policy development is ongoing, expected timeline for the proposed rule is early 2023.
• There are 15 NCD requests on CMS’s waitlist and it will take CMS approximately 5 years to get through this list.
• There are major concerns with Medicare Advantage plans not covering services and items easily provided for Medicare FFS beneficiaries and desire for more CMS oversight over MA plans.

Practical Reimbursement Strategies

Day one of the conference was focused on the three pillars of reimbursement: coding, coverage, and payment. For any medical device or technology, reimbursement cannot be optimized unless all three elements are in place. This is true for both commercial and public space. MDMA held several panel discussions with health policy experts on strategic reimbursement questions, tactical considerations for alternative coverage options such as transitional pass-through, takeaways from the new benefit determination process, and managing prior authorization and appeals.

New technology incremental payment pathways were discussed in some detail. The New Technology Add On Payment (NTAP) is the only pathway to additional payment for a new technology for inpatients. When a device is granted NTAP status, the Medicare Severity Diagnosis-Related Group (MS-DRG) payment is increased by 65% of the device cost. On the other hand, the Transitional Pass-

Through payment is available in the outpatient setting and 100 percent of the device cost is added to the normal APC payment when the device is used. After the expiration of pass through the cost of the technology may be added into the cost of the APC or DRG if justified by the geometric mean cost of the new technology. An ideal path for continued coverage is assignment to a new technology APC. The speakers discussed several successful applications for new technology APCs and shared some lessons learned. Both add-on payment options have specific requirements that a device must meet to qualify.

AI, Software-as-a-Service and Digital Health: Reimbursement Challenges and Opportunities

Day two of the conference began with a discussion of software as a service and digital health reimbursement challenges. CMS has had a challenging time working through coverage coding and payment issues around Artificial Intelligence (AI). Federal encouragement of progress on this front is being coordinated by the National Artificial Intelligence Initiative which put additional energy behind the efforts to modernize Medicare’s understanding of the coding coverage and payment challenges. CPT has also made great progress recently in coding policy. CPT recognizes three levels of AI. The first being AI “assistive”- an example of this technology is computer-assisted imaging. The second category is AI “augmentative”- an example of this is the continuous glucose monitor (CGM). The third category is AI “autonomous” – an example of this is the new codes for automated retinal imaging which was assigned a fee schedule payment in 2022. Speaker Cybil Roehrenbeck discussed potential payment for AI under the Medicare physician fee schedule and in outpatient and inpatient settings.

The latest update on prescription digital therapeutics (DTx) was also part of this session. It is difficult for CMS to reimburse for technologies that have clinical benefits for patients but that do not fit within a Medicare benefit category or traditional payment system. The answer seems to lie in congressional action, as confirmed by Dr. Ryan Howe from CMS in the next session. There is a legislative bill (H.R. 7051) which would amend the Social Security Act to allow for coverage of DTx under Medicare that digital health stakeholders are rallying behind.

Medicare Fee-For-Service Payment Policy Updates

Dr. Ryan Howe, Deputy Director of Hospital and Ambulatory Policy Group gave an update on current Medicare fee-for-service payment policies. He highlighted that CMS has been focused on making sure they integrate up-to-date data that best serves Medicare program, beneficiaries, and providers in this volatile environment and with an eye towards stability. CMS has been researching and evaluating new data sources for inclusion in the fee schedule methodologies.

Dr. Howe also went through some of the policies in the newly finalized 2023 Physician Fee Schedule (PFS) and Outpatient Prospective Payment System (OPPS). CMS has recognized the limitations of traditional pass-through payment because of the requirement that the device be implanted or in contact with the skin. CMS is willing to assign new technology APCs to technology which does not meet that requirement, but which deserves payment under the Medicare system. Dr. Howe also discussed new technology add on payments which are designed to enhance the payment for certain imaging procedures when the technology is reasonable or necessary. This approach has been described in the 2023 OPPS final rule.

Additionally, Dr. Howe touched on the challenges of coverage and payment for digital therapeutics. As discussed in the previous session, he noted that under the current interpretation of Medicare’s three payment systems, CMS does not have the ability to cover these services. This is a problem which Medicare will continue to work on, and it may require congressional involvement. Dr. Howe also touched on payment for non-opioid pain management products. CMS recognizes that there is a need for these products but that demonstrating outcome differences can be challenging. CMS wants to ensure that its regulatory policies are not chasing away or limiting technologies, but it is challenged by budget neutrality requirements when it comes to payment for these devices.

Finally, Dr. Howe noted that legislative changes that happen at the end of the year (such as Congress passing the temporary physician pay bump at the end of last year) cause CMS to have to make last minute changes to its payment policies. Depending on what Congress might have in its end of year package, CMS might have to implement those changes before 2023.

CMS Technology, Coding and Pricing Group And Coverage And Analysis Group Leadership Insights

The director of the recently established Technology, Coding and Pricing Group (TCPG), Jason Bennett, and the Director of the Coverage and Analysis Group, Tamara Syrek Jensen, both joined the conference in-person. Mr. Bennett’s comments focused on an overview of TCPG, their approach for HCPCS coding and benefit category determinations, and what defines a device as new and different. Mr. Bennett emphasized that the Azar vs. Allina Health Services (Allina) Supreme Court decision1 has had a big impact on how CMS is approaching the HCPCS decisions and as a result, the HCPCS process now includes benefit category and payment determinations in addition to coding. Mr. Bennett stated that new technology claims can be submitted to the Medicare Administrative Contractors (MACs) and paid (or denied) on a claim-by-claim basis while waiting for CMS’s HCPCS decision. MACs can make benefit category determinations and Mr. Bennett mentioned that it is good to get the MACs’ opinion on new devices. Even though adjustments have been made in response to Allina, CMS’s decision-making process is fundamentally the same.

Mr. Bennett discussed issues with the Medicare durable medical equipment (DME) benefit category and the need to bring DME policy into the 21st century. The statute creating the DME benefit category specifically addresses items like wheelchairs, iron lungs and oxygen but the spectrum of DME devices is now far broader than it was when the benefit category was defined by Congress.

Mr. Bennett noted that the issues of therapy devices in the home are complicated. When considering coding and coverage for new devices, he said CMS spends a lot of time looking at the FDA label, how it’s used and supervised, and if it’s adjunct or adjunctive to therapy services. Mr. Bennett said that they try to figure out if therapy devices are an extension of the physician service or whether they are being prescribed for use at home. He emphasized that CMS is limited by statute, and as new devices and technologies emerge, CMS needs to have more statutory clarity.

Additionally, Mr. Bennett mentioned that his group is concerned about health equity and access, such as whether beneficiaries have limitations or if there is something about a device which makes it more accessible. He made an important note that there are risks associated with getting a brand new HCPCS code, such as prior authorization and limitations that may be imposed by other payers. He said that CMS includes these questions when considering whether a device/item new or looks and acts like an existing item.

Next, Tamara Syrek Jensen, discussed the challenges coverage decisions for new technology are presenting for the Medicare program. The Medicare policy concerning coverage still operates under the rules that we have become accustomed to. Ms. Syrek Jensen’s group has been tasked with designing the new and highly anticipated Transitional Coverage for Emerging Technologies (TCET) policy, which is meant to create an expedited pathway(s) for new technologies to get faster coverage under Medicare while still developing clinical evidence. CMS proposed and finalized a similar policy in 2020, which was then repealed in late 2021 before ever going into effect.2

Due to industry’s concern with how long it has taken CMS to establish this pathway, CMS officials have continued to signal progress on policy development. On October 12th, CMS published a JAMA article3 showing stakeholders a hint of where the agency is going. Ms. Syrek Jensen noted that this was the first time CMS has done something like this and that they hope to do it more often. When asked about whether TCET was going to look more like the current Coverage with Evidence Development (CED) pathway under National Coverage Determinations (NCD), Ms. Syrek Jensen said, “everything is on the table,” but that since CMS has not publicly announced anything about a unique coverage pathway, she would not comment. She also noted the reason why CMS could not just allow immediate coverage for devices that obtain a certain designation from the FDA is that what is required for CMS is different than what is required for the FDA. She said that the FDA was a good partner for all payers and a good place to start but that FDA trials do not always include the population that Medicare is concerned with (65+ and not all healthy).

One of the issues that attendees were most curious about was the NCD waitlist. CMS receives external requests to revise, remove, or create new NCDs and has a specific process of prioritizing those requests. She revealed that CMS currently has 15 NCDs that are on the waitlist and that with the current capacity of group, it will take 4-5 years to get through that list if new ones do not get added to the list. She agreed that CMS needs to be transparent about the waitlist, how they are prioritized, and which topics CMS is focusing on. She said that while none of this was a secret, CMS should do a better job of providing transparency to the public. She highlighted that NCDs which impact the largest number of beneficiaries and have the most impact on health receive priority consideration. Coverage decisions which affect a very small number of beneficiaries should be made at the MAC level.

While CMS creates and revises NCDs, MACs do have authority to make coverage decisions for claims for care in their jurisdictions. When asked about CMS oversight of the MACs and the local coverage determination (LCD) process, Ms. Syrek Jensen said that MACs have autonomy, and that CMS only looks at the LCDs to make sure that the statutory process is followed. If stakeholders disagree with the MACs and want CMS to look at the evidentiary decision, this is a considered an NCD request.

Listening Session with the CMS Medicare Technology and Pharmaceutical Ombudsman

Anthony Sutphin is the New Technology Liaison for the TCPG and the Acting CMS Medicare Technology and Pharmaceutical Ombudsman. Beginning Jan 2023, he will replace James Bailey as the Ombudsman, who is transitioning to the Deputy Director role under Jason Bennett in TCPG. Mr. Sutphin’s role is essentially to be a guide for manufacturers and stakeholders and to connect them with the appropriate people at CMS to address their concerns and issues. As the Ombudsman, he can receive and investigate concerns and questions from stakeholders regarding Medicare coding, coverage and payment and provide feedback to others in CMS regarding opportunities for improvement. As the New Technology Liaison, his role is to assist innovators with navigating Medicare coding, payment and coverage matters. Many of the stakeholders in the room have had interactions with Mr. Sutphin as he is usually the first step for connecting with CMS officials. His position as the new technology liaison for TCPG was implemented during the pandemic to provide a better pathway for stakeholders to communicate with CMS.

Congressional Perspectives on Medicare and Health Policy, Focus Is on TCET

TCET has been a hot topic in Congressional offices. Conor Sheehey, Senior Health Policy Advisor on Senate Committee on Finance (Sen. Mike Crapo, R-ID) stated that there was a lot of frustration with CMS when the prior version of the TCET rule was repealed in 2021 because usually CMS irons out issues in rulemaking in years following establishing the rule. He stated that it created a lot of instability to rescind the rule but CMS’s openness to feedback has been a positive. There is concern with whether CMS’s intention is to create a new pathway or CED reform. CED reform does not necessarily meet the need. Sarah Levin, Professional Staff on House Ways and Means Committee (Rep. Llyod Doggett, D-TX) echoed the concern with not knowing what CMS is going to do with TCET. There have been bipartisan briefings and conversations with CMS, but CMS has not been able to provide much clarity due to legal obstacles stemming from the Allina decision. Members of Congress on both sides are looking forward to the proposed rule and the opportunity to provide feedback.

Medicare Advantage Enrollment Trends and Policy Implications

Leslie Gordon, Acting Director of Health Care at the Government Accountability Office (GAO) and Jeannie Fuglesten Biniek, Senior Policy Analyst from Kaiser Family Foundation (KFF) discussed Medicare Advantage enrollment trends and policy issues. Nearly half of eligible Medicare beneficiaries are enrolled in Medicare Advantage (MA) Plans. While this has been a gradual shift, enrollment approaching 50 percent has sparked an intense focus on the MA program. While most MA plans provide access to some benefits not covered by traditional Medicare, most of their enrollees are required to receive prior authorization for higher cost services.

Ms. Fuglesten Biniek highlighted KFF research showing that per capita spending is higher in MA than in traditional Medicare and that per enrollee spending has grown more rapidly in MA. The higher and faster growing spending in MA contributes to Medicare’s solvency challenges and MA program is likely to face closer scrutiny as the number of beneficiaries in MA plans continues to rise.

There has not been a recent investigation into MA plans to understand inefficiencies, costs, and oversight issues. Both the Office of Inspector General and GAO can investigate the MA program. The GAO is an independent, non-partisan agency that works for Congress. GAO’s latest investigation of MA plans focused on network adequacy, disenrollment, and encounter data. The GAO made recommendations to CMS based on its findings, most of which CMS has yet to address.4

Many attendees in the room raised concerns with MA plans having more hurdles to beneficiary access for certain items and services than traditional fee-for-service Medicare. With the increasing number of beneficiaries enrolling in MA plans, there is a heightened desire for better CMS oversight of the program.

The CPT® Editorial Panel Overview

Dr. Robert Piana who serves on the CPT Editorial Board provided his perspectives for innovators considering going through the CPT process. The CPT Editorial Panel has the sole authority to create, revise, and update codes, descriptions, and applicable guidelines for appropriate CPT coding. Panel members are appointed by the American Medical Association Board. Dr. Piana reviewed the code change application process and panel review criteria, literature requirements, as well as roles of CPT Advisory Committee and Health Care Professionals Advisory Committee in the CPT process.

Private Payer Perspectives on Real World Evidence For Medical Devices

The conference closed out with a panel discussion on the use of real world evidence (RWE) in informing health care decision-making for medical devices and diagnostics by payers. There was consensus among the panel of experts that RWE cannot replace clinical trials, but that it can complement and supplement evidence. Drivers of the increasing emphasis on RWE include FDA’s efforts to leverage use of RWE for regulatory decision-making, CMS’s consideration of RWE in coverage determinations, and increasing availability of real-world data, including data collected directly by medical devices. RWE can be used by payers to measure effectiveness of treatment for beneficiaries, evaluate outcomes in value-based agreements, and assess success of alternative payment models. CMS uses RWE in NCDs through CEDs. Panelist shared insights on how to evaluate and apply medical device RWE. They especially highlighted the importance of working with high- quality registries and recognizing complementary roles of postmarket RWE and premarket evidence. Payers and manufacturers/innovators should collaborate to improve the efficiency and utility of evidence generation.

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This Applied Policy® Summary was prepared by Simay Okyay McNutt with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at sokyay@appliedpolicy.com or at 202-558-5272.

1 https://www.supremecourt.gov/opinions/18pdf/17-1484_4f57.pdf

2 https://www.federalregister.gov/documents/2021/11/15/2021-24916/medicare-program-medicare-coverage-of- innovative-technology-mcit-and-definition-of-reasonable- and#:~:text=The%20MCIT%2FR%26N%20final%20rule%20established%20a%20Medicare%20coverage%20pathw ay,and%20Drug%20Administration%20(FDA).

3 https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2797447

4 https://www.gao.gov/products/gao-22-106026