On June 22, 2023, the Department of Health and Human Services announced a new Medicare coverage pathway called the Transitional Coverage for Emerging Technologies (TCET) pathway. The TCET pathway is limited to novel medical devices and device-led combination products with FDA-designated Breakthrough Device status awaiting full FDA approval. The new pathway provides device manufacturers a unique opportunity to receive extensive support from the Centers for Medicare & Medicaid (CMS) while seeking early Medicare coverage for their devices.

Medicare’s Device Coverage Under the Current Framework

Today, medical devices may become eligible for reimbursement by Medicare through one of three coverage pathways:

•  Claim-by-claim adjudications, whereby the Medicare Administrative Contractors (MACs) responsible for processing claims make coverage decisions for a new device on an individual case-by-case basis. While potentially a fast path to coverage on an individual basis, this determination process creates the most inconsistency for manufacturers and individuals alike. 

• Local coverage determinations (LCD) allow each MAC that is responsible for one of twelve different geographic jurisdictions to make a broad coverage determination applicable to its own geographic jurisdiction. Again this results in inconsistent coverage determinations based solely on geography. 

• National coverage determinations (NCD) apply to all MACs across the  United States and present the best opportunities for consistency in reimbursement. 

Notably, under the current regulatory framework, a novel medical device must receive Food and Drug Administration (FDA) marketing authorization before obtaining a coverage determination under any of these pathways. 

Traditionally, the FDA and CMS have been siloed in their regulatory approaches as new medical devices come to market. While the FDA reviews data on safety and efficacy for a new medical device, CMS reviews data to determine whether the device is reasonable and necessary for treating certain conditions and whether the outcomes it achieves are sufficient for assigning reimbursement for the device’s use. This siloed approach has resulted in a lengthy timeline for when a device may practically expect to enter the market as a covered device eligible for reimbursement. 

CMS has attempted to address this issue by working with the FDA under the Parallel Review Program (PRP). The PRP has two stages: 1) FDA and CMS meet with the manufacturer to provide feedback on the proposed clinical trial, and 2) FDA and CMS concurrently review the clinical trial results. Under the PRP, CMS relies on the proposed medical device having an existing quality evidence base, frequently obtained from clinical trials, to support the analysis for a NCD. A significant benefit of TCET over PRP is that TCET will allow manufacturers to begin engaging CMS around evidence gaps and the clinical trials necessary to fill those gaps twelve months prior to an anticipated FDA decision date as opposed to waiting for a device to approach FDA market authorization before receiving such feedback from CMS.

Proposed Requirements for Eligible Devices

Currently, the proposed TCET pathway is limited to certain eligible FDA-designated Breakthrough Devices. The Breakthrough Devices Program is a voluntary program for medical devices and device-led combination products that meet two criteria: 

1. the device provides for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human diseases or conditions; and

2. the device satisfies one of the following elements: 

1. it represents a breakthrough technology; 

2. no approved or cleared alternatives exist; 

3. it offers significant advantages over existing approved or cleared alternatives; or 

4. device availability is in the best interest of patients.

In addition to being an eligible FDA-designated Breakthrough Device, appropriate candidates for the TCET pathway are (1) within an existing Medicare benefit category; (2) not already the subject of a current Medicare national coverage determination; and (3) not otherwise excluded from coverage through law or regulation. Note: the Department of Health and Human Services has shared that diagnostic tests are likely not candidates for this new coverage pathway.

How the TCET Pathway is Different

The proposed TCET pathway narrows the scope of who may apply for this early collaborative review process between the FDA, CMS, and the manufacturer. There are three main changes that make the TCET pathway unique:

1. Early evidence review by CMS to fast-track identifying evidence gaps;

2. Manufacturer’s ability to develop an Evidence Development Plan (EDP) before even receiving FDA market authorization; and

3. Coverage for the medical device through the Coverage with Evidence Development (CED) process within six months from when the device receives FDA market approval.

The TCET pathway will identify evidence gaps for manufacturers to create an EDP addressing those gaps before the device has even received FDA market approval. Further, coverage of the device within six months of receiving FDA market approval will reduce coverage delays by three to six months.

Manufacturers of FDA-designated Breakthrough Devices that fall within a Medicare benefit category may self-nominate to participate in the TCET pathway on a voluntary basis and should apply to the pathway approximately twelve months prior to their anticipated FDA decision date as determined by the manufacturer. CMS anticipates receiving few respondents and accepting up to five TCET candidates annually due to resource constraints.

Stages of the TCET Pathway

Initiation

A manufacturer submits their voluntary TCET pathway nomination by email to CMS, the agency will begin engaging with the manufacturer by offering an initial remote meeting to review the nomination within twenty business days of receipt. 

Before FDA Marketing Authorization

CMS will meet with the FDA to learn more about the technology. If the device meets the four criteria proposed by CMS indicating it is appropriate for the TCET pathway, CMS will conduct an early evidence preview before the FDA grants market authorization to identify evidence shortfalls specific to the Medicare population. This new evidence preview will be composed of a CMS-conducted systematic literature review. Following the review, CMS will initiate discussions with the manufacturer to address evidence gaps for coverage purposes and the types of study designs that could address them. The manufacturer can then submit an EDP along with a NCD letter and CMS will work with the manufacturer to refine the plan in order to meet both CMS evidence development and FDA post-market requirements. 

Post FDA Marketing Authorization - CED

After receiving FDA market authorization and an approved EDP is pending, CMS will initiate the NCD process by posting a tracking sheet on its website followed by a 30-day public comment period. After public comment review, CMS will issue a proposed TCET NCD and EDP within 6 months of opening the NCD. A final TCET NCD will be due within 90 days of the proposed TCET NCD. TCET medical devices will receive reimbursement under the CED process. CED allows a Breakthrough Device to be reimbursed while manufacturers continue to collect evidence on its efficacy. The duration of transitional coverage through the TCET pathway will be tied to the approved EDP and is expected to last three to five years as evidence is generated to address gaps identified in the evidence preview. 

Transition to Permanent Coverage

CMS’ overall goal is to finalize a TCET NCD within six months after FDA market authorization as a Breakthrough Device. A third-party contractor will conduct an updated evidence review based on CMS's detailed requirements within six calendar months of the EDP-specified review date. Based on this review and additional practice guidelines, CMS may open a NCD reconsideration.

Key Takeaways

The TCET pathway presents a great opportunity for novel medical device manufacturers to receive early transitional coverage of their device, potentially reducing the wait for coverage by three to six months.

• The new pathway introduces a CMS-conducted evidence preview which provides novel device manufacturers with direct feedback to integrate into additional clinical trials for coverage determination.

• Interested manufacturers of FDA-designated Breakthrough Devices should apply to TCET if their device is within an existing Medicare benefit category, not subject to a current Medicare NCD, and not otherwise excluded by law or regulation.

• Impact of the new pathway will be very limited as currently proposed. Stakeholders should encourage CMS to expand the program by planning to accept more nominations, allowing more innovative devices to hit the market with associated reimbursement opportunities.

Open Comments Period for TCET: Make Your Voice Heard!

CMS is seeking comments from the public on this new pathway, especially in regard to sharing information from the evidence preview with MACs to aid them in their decision-making prior to a national coverage determination announcement, and we’re here to help! The comment period is currently open and closes on August 28, 2023. Please contact us by August 7, 2023 for assistance in drafting and submitting your comments.  You may also submit comments directly at https://www.regulations.gov or at the address indicated below. 

• By regular mail addressed to: 

  Centers for Medicare & Medicaid Services 

Department of Health and Human Services

Attention: CMS-3421-NC

P.O. Box 8013

Baltimore, MD 21244-8013 

• By overnight mail addressed to: 

Centers for Medicare & Medicaid Services

Department of Health and Human Services

Attention: CMS-3421-NC

Mail Stop C4-26-05

7500 Security Boulevard

Baltimore, MD 21244-1850

• Or we can help! 

If you’re not yet a client, we’ll update the blog with the final ruling and outline what it means for device manufacturers in general. (And if you want to know how these changes impact your business specifically, click here to find out if we’re a good fit to work together.)

(Special thanks to Summer Associate Hannah Merry for her contributions to this post.)