Fueling the Fire of Access to Emerging Medical Devices

“Creaky” is my new favorite word to describe the antiquated Medicare reimbursement system, thanks to a physician and medtech entrepreneur who recently made a guest appearance on AdvaMed’s Medtech POV podcast.

“We essentially have to subsidize through capital that we raise, delivering this technology to patients while waiting for the creaky system of reimbursement acknowledging the value of this to catch up,” said Lishan Aklog, MD, a cardiac and thoracic surgeon, medtech entrepreneur, and CEO of PAVmed and Lucid Diagnostics.

In talking to host Scott Whitaker about the hurdles blocking patient access to innovative medical technology, Aklog joked about how he explains to friends from other industries the lag between a new medical device being allowed on the U.S. market and Medicare coverage of that device.

“Can you imagine if you made cars, and you made some new electric car, and you had to essentially give them away for free for some period of time until some organization said, ‘Okay, now we’ll start paying for it.’ It’s a very odd thing,” Aklog said.

As Whitaker noted in a blog post following his conversation with Aklog, we don’t see that business model anywhere because it doesn’t make any sense.

“And yet, so many medtech companies are forced to operate that way because CMS reimbursement decisions, in many cases, take many years after a given technology receives FDA approval.”

For new medical devices that address unmet needs, manufacturers can apply for breakthrough status from FDA. That program was specifically intended to provide timely access to medical devices and lab tests by speeding up the review process while still ensuring that the new technology passes muster in terms of safety and effectiveness. But this program only addresses one set of regulatory hurdles that medical device manufacturers face. So, even after a device secures breakthrough status and makes it through that review process and onto the market, manufacturers must clear an entirely different set of hurdles to ensure that Medicare patients get access to their technology.

But one thing that people outside the medtech industry doesn’t realize is that winning over Medicare is about so much more than just getting access to the Medicare population. That’s because Medicare coverage decisions also hold massive sway with private insurance companies’ coverage decisions.

And yet, there is an ever-widening chasm between breakthrough technologies clearing FDA hurdles and when Medicare decides to cover those same devices, if the agency decides to cover it at all.

CMS dangled a fairly big carrot in front of the medtech industry when, under the Trump administration, the agency was on track to implement a rule that would have given Medicare beneficiaries immediate access to technology FDA had deemed a breakthrough device. In fact, the Medicare Coverage of Innovative Technology (MCIT) rule wasn’t just a big carrot, it was a big carrot with a heaping side of Ranch Veggie Dip.

MCIT was widely applauded by industry, but it was far from perfect. For one thing, the way FDA reviews a new device is completely different from how CMS reviews new devices. And, as CMS argues, devices that make it through FDA’s review often have not been proven clinically beneficial to the Medicare population.

So, in 2021, CMS rescinded the MCIT final rule, saying it would explore alternative options to improve coverage to breakthrough medical devices. In other words, the agency didn’t take the carrot away entirely, but suddenly the carrot looked less appealing and much farther away. In June 2023, the agency finally proposed that alternative rule in the form of the Transitional Coverage for Emerging Technologies (TCET) proposal.

“The TCET pathway will support coverage for promising new technologies as manufacturers develop additional evidence after the devices enter the market. The pathway also includes safeguards that protect Medicare beneficiaries while promoting high-quality care,” CMS officials noted in a commentary piece published by JAMA Health Forum last August.

Aside from that publication, however, CMS doesn’t seem very motivated to move the TCET proposed rule forward. Fed up with the procrastination, trade associations like AdvaMed are rightfully holding the agency’s feet to the fire.

Whitaker, AdvaMed’s CEO, wrote a letter to CMS Administrator Chiquita Brooks-LaSure in late February about the lack of a finalized rule TCET rule.

In the letter, he called the delay in finalizing TCET “puzzling.”

“The ability to establish a workable policy to ensure Medicare coverage of safe, effective, FDA-designated and market-authorized breakthrough devices should be easily within the agency’s grasp,” Whitaker wrote. “Medicare beneficiaries have waited long enough—too long—for coverage of breakthrough medical technologies to prevent, diagnose, and treat the chronic conditions from which they are suffering unnecessarily.”

He noted that 81 medical technologies authorized under FDA’s breakthrough device pathway have been “effectively denied by CMS to Medicare beneficiaries for years through CMS inaction.”

To drive home this point, you can go to AdvaMed’s home page and find an up-to-the-second timer showing how much time has elapsed since CMS killed the MCIT rule. Unpopular opinion alert – I’m glad CMS rescinded the MCIT rule.

But there is an urgency to seeing a final notice on TCET as soon as possible. CMS has dangled the carrot before industry and patients for long enough. The agency has clearly collected and reviewed stakeholder comments on the new proposed rule, so what’s the holdup? CMS also must recognize and take into consideration the power it possesses over the entire reimbursement system in America as private insurers look to Medicare coverage decisions to determine their own coverage decisions.

Aklog nailed it when he described the Medicare reimbursement system as “creaky.” And the TCET rule would serve as a much-needed coat of oil for all the cogs in the U.S. medical reimbursement machine.