On May 14, 2021, the Centers for Medicare & Medicaid Services (CMS) released a new final rule that further delays until December 15, 2021, the effective date of the final rule titled “Medicare Program; Medicare Coverage of Innovative Technology (MCIT) and Definition of ‘Reasonable and Necessary’” (the January 2021 Rule), which was published in the final days of the Trump Administration.

As a reminder, the January 2021 Rule sought to:

  • Establish the MCIT pathway to provide beneficiaries nationwide with faster access to new, innovative medical devices designated as breakthrough devices by the Food and Drug Administration (FDA); and
  • Implement a codified regulatory standard that must be used in determining whether all items and services satisfy Medicare’s reasonable-and-necessary requirement.

Under the January 2021 Rule, the regulatory changes were originally scheduled to take effect on March 15, 2021. However, following a change in presidential administration, the January 2021 Rule became subject to a regulatory freeze.

On March 17, 2021, CMS published an interim final rule that delayed the effective date of the January 2021 Rule until May 15, 2021, and provided a new comment period to solicit additional feedback.

Now, with the considerable length of the most recent delay, CMS will have ample time to evaluate the planned regulatory changes and address any issues raised in stakeholders’ submitted comments. It is also possible that CMS may ultimately rescind the January 2021 Rule entirely.

For those looking to learn more about the January 2021 Rule, as currently written, below is a brief primer.

The MCIT Pathway

In 2016, Congress passed the 21st Century Cures Act, which codified a new pathway for the FDA to expedite the development, assessment, and review for market approval—and subsequent distribution to patients—of innovative medical devices and diagnostic tests via a special “breakthrough” designation. Notably, FDA specifically reserves such designation for those medical technologies that treat patient populations with debilitating conditions for which there are limited or no treatment alternatives. However, Congress did not expressly create a corresponding pathway for CMS to expedite coverage of such breakthrough technologies for Medicare beneficiaries. As a result, even after FDA approval or clearance, Medicare beneficiaries often wait years before being able to take advantage of breakthrough medical technologies and therapies.

The January 2021 Rule’s new MCIT pathway, which is voluntary for device manufacturers, would bridge the gap between FDA approval and Medicare coverage. That is, the regulation would provide Medicare beneficiaries with immediate national coverage for four years for any new medical device or diagnostic test designated as a “breakthrough” medical technology and deemed safe and effective by FDA, and then would require CMS and manufacturers to work together to identify and develop any additional data necessary to make a permanent coverage decision after the four-year coverage period expires. Specifically, at the end of the MCIT pathway, a breakthrough technology would either have a favorable National Coverage Determination (NCD), a non-coverage NCD, or coverage decided by a Medicare Administrative Contractor.

The “Reasonable and Necessary” Requirement

Section 1862(a)(1)(A) of the Social Security Act, 42 U.S.C. § 1395y(a)(1)(A), mandates that no payment may be made under Medicare Part A or Part B for any expenses incurred for items or services “not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” Despite the long-standing nature of this statutory requirement, to date CMS and its contractors have determined whether such items and services are “reasonable and necessary” on a case-by-case basis often subject to national and local coverage policies.

After several attempts in the past, the January 2021 Rule would represent the first time that CMS has codified a “reasonable and necessary” regulatory standard. For the most part, the January 2021 Rule would adopt preexisting criteria for “reasonable and necessary” outlined in the Medicare Program Integrity Manual. Specifically, an item or service would be deemed “reasonable and necessary”—and eligible for coverage—if such item or service is considered:

  1. Safe and effective;
  2. Not experimental or investigational; and
  3. Appropriate for Medicare patients, including the duration and frequency that is considered appropriate for the item or service.

Notably, the January 2021 Rule as currently written would include an alternative pathway to Medicare coverage: where there is insufficient evidence to satisfy the required appropriateness criteria, CMS would consider providing coverage to the extent the item or service is covered by a majority of commercial insurers.

What if I have additional questions?

Should you have any questions related to the postponement of the MCIT pathway or CMS’s Medicare-wide regulatory definition of “reasonable and necessary,” please do not hesitate to reach out to the health care attorneys at Reed Smith.