Congress Responds to the Proposed Transitional Coverage for Emerging Technologies Medicare Pathway

Congress has been closely following both the Trump and Biden administration’s proposals for Medicare coverage for Food and Drug Administration (FDA)-designated breakthrough devices. The Trump Administration’s approach, Medicare Coverage for Innovative Technology (MCIT), would have afforded devices with breakthrough designation immediate transitional national coverage upon marketing (or a date specified by the manufacturer) for four years, and it enjoyed widespread support among manufacturers and many members of Congress. Transitional Coverage for Emerging Technologies (TCET), the Biden administration’s proposed replacement after repealing MCIT in 2021, while not yet final, is less robust and has enjoyed a cooler reception on Capitol Hill thus far, particularly among Republicans. Coverage under the proposed TCET pathway would not be immediate. Instead, it would build off the Medicare national coverage determination (NCD) process and Coverage with Evidence Development (CED), and involve three stages: (1) premarket, (2) coverage under the TCET pathway, and (3) transition to post-TCET coverage. Additional coverage of the differences between the two pathways can be found in our previous Advisory.

In between the repeal of MCIT and the recent TCET proposal, Congress has introduced several pieces of bipartisan legislation that would have effectively codified the MCIT rule, and on July 18, less than a month after the Centers for Medicare & Medicaid Services (CMS) issued its procedural notice with comment period, House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-WA) and Health Subcommittee Chair Brett Guthrie (R-KY) held a Health Subcommittee hearing focused primarily on the need for a more reliable coverage pathway for breakthrough devices.

During the hearing, Chair McMorris Rodgers acknowledged that CMS’ TCET notice contains “some good” but voiced concerns that it will lead to uncertainty for patients and doctors. She noted provisions from the MCIT rule could be used to strengthen the TCET proposal. Health Subcommittee Chair Guthrie took a harsher stance, saying that failing to provide reliable coverage under the Medicare program for breakthrough medical devices and technologies will significantly stifle innovation. He voiced particular concern with the proposal’s limit on the number of devices (five) that can use the pathway and its prolonged process for providing Medicare coverage compared to MCIT, questioning whether device makers will be motivated to pursue such a path. Members of the committee also criticized the widening gap between authorizations made by the FDA and CMS’ coverage policies.

Many of the witnesses testifying before the Health Subcommittee, including Dr. Todd Brinton, Corporate Vice President and Advanced Technology Chief Scientific Officer at Edwards Lifesciences, Dr. Lishan Aklog, Chairman and CEO of PAVmed Inc., and Dr. Brian Miller, a non-resident fellow with the American Enterprise Institute, also criticized the proposal. They said it lacks specific criteria on how CMS will select candidates eligible for the pathway, creates a system akin to a lottery due to the limited number of candidates accepted each year, and disproportionately hurts devices targeted for rare diseases, with CMS aiming to choose candidates that benefit a broad Medicare population. In his written testimony, Dr. Miller called the proposal “a band-aid applied to a dysfunctional and broken technology assessment process at CMS,” and offered transparency and regular opportunity for public input as potential ways to improve the proposal.

In June 2021, Congress responded to MCIT’s repeal with the Ensuring Patient Access to Critical Breakthrough Products Act (reintroduced this Congress as H.R. 1691), a bipartisan bill that would provide Medicare coverage for FDA-designated breakthrough products for four years, during which CMS would determine permanent coverage. The bill would also provide temporary coverage for certain breakthrough devices, like digital therapeutics, that did not exist or were not considered when Medicare was first created. A broader piece of bipartisan legislation from the 117th Congress, Cures 2.0 (H.R.6000), also included similar language, though the bill has yet to be reintroduced this Congress.

While the Ensuring Patient Access to Critical Breakthrough Products Act, under joint jurisdiction of the House Energy and Commerce and the House Ways and Means Committees, has bipartisan support in the House and faced little scrutiny during Energy and Commerce’s Health Subcommittee hearing, other bills attempting to codify Trump-era rules have received significant pushback from Energy and Commerce Democrats this Congress. While the bill has 29 Democratic cosponsors, the fact that CMS, under the Biden administration, has weighed in with its TCET proposal may temper their enthusiasm. Further, the bill’s yet-to-be-announced budgetary effects, expected to be substantial but yet to be formally calculated by the Congressional Budget Office, could also hurt its prospects.

To date, there is no Senate companion of the Ensuring Patient Access to Critical Breakthrough Products Act. Its outlook in the chamber is uncertain. Medical device innovation has not been among Senate Majority Leader Chuck Schumer’s (D-NY) top health care priorities. Instead, he has been primarily interested in lowering prescription drug costs through increased price transparency, particularly among pharmacy benefit managers and legislation that would cap the cost of insulin in commercial insurance markets. That focus means that further activity in this space is likely to continue to be driven by the House, though it will be competing for members’ attention to other more urgent priorities, namely funding the government and reauthorizing a host of critical programs, when Congress returns from its August break.

© Arnold & Porter Kaye Scholer LLP 2023 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.