CMS Delays Rule on Medicare Coverage

On March 12, 2021, CMS delayed by 60 days the effective date of a final rule on Medicare coverage entitled "Medicare Coverage of Innovative Technology (MCIT) and Definition of 'Reasonable and Necessary.'" The coverage final rule was published in the Federal Register on January 14, 2021, (86 FR 2987) and was slated to become effective March 15, 2021. See our Advisory on the final rule. The interim final rule providing for the delay was published on March 17, 2021.

In justifying the delay, CMS cites a January 20, 2021, memorandum from President Biden's Chief of Staff instructing agencies to consider delaying rules that have not yet become effective to provide time for review of any questions of fact, law, or policy raised by such rules. In this instance, the delay is not merely pro forma: CMS articulates a number of specific, potential concerns (as summarized briefly below) and invites comment. CMS provided a 30-day comment period following publication of the delay rule.

Specific concerns raised by CMS, on which it seeks comment:

• Operational issues. The MCIT rule did not address how to speedily establish coding and payment rates for applicable devices to facilitate smooth availability of Medicare payments once coverage commences. Issues include determining whether a breakthrough device falls within a Medicare benefit category, the sites of service in which it may be used, whether there is an appropriate billing code, and whether an existing payment methodology applies. CMS notes it underestimated the operational challenges involved and seeks comment on how they may be resolved.
• Overlap with another rule. CMS proposed a rule relating to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) on November 4, 2020. (85 FR 70358) This rule outlined a process for establishing benefit category determinations for DMEPOS; benefit category determinations are one of the operational issues that the MCIT rule did not address. The agency reports that commentors on the DMEPOS rule have requested that CMS align the processes between the DMEPOS and MCIT rules.
• Volume of breakthrough devices. CMS assumed, in its estimates of the budget effect of the coverage rule, that a relatively small number of devices would qualify for the new MCIT pathway. This assumption was based in part on information that 97 devices had been designated as breakthrough as of the end of FY 2018. In February, FDA released information that over 400 devices have been designated as breakthrough. CMS notes that it is unknown whether these devices will receive market-authorization or when, but it seeks comment on whether the higher than estimated number indicates that the public did not have a meaningful opportunity to comment on the budget effect of the rule.
• Protection of Medicare beneficiaries. CMS notes that observers have raised concerns about assuming that FDA's breakthrough designation is adequate assurance that a device should be covered for Medicare beneficiaries, absent specific evidence that a MCIT-eligible device benefits the Medicare population.
• Request for more detail about the "reasonable and necessary" part of the rule. Commentors criticized the final rule for lack of detail, specifically regarding a proposal to refer to commercial insurance coverage to help resolve issues of whether items and services should be considered "reasonable and necessary" for diagnosis or treatment of illness or injury in Medicare beneficiaries. CMS seeks comment as to whether the proposed rule's characterization of this proposal was an adequate basis for comment and whether the final rule responded adequately to objections.
• Adequacy of the rulemaking process. CMS indicates interest in whether the rulemaking process leading to the coverage rule suffered from procedural issues, and whether the rule should be amended, rescinded, further delayed, or allowed to go into effect.

As noted above, comments on these substantive issues are due on April 16, 30 days after publication of the delay rule. The delay in the effective date of the MCIT rule will last until May 15, 2021. On or before that date, CMS may issue a further delay of, amend, or rescind the MCIT rule.

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.