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CMS Proposes Changes to Payments Tied to FDA Breakthrough Device Program

NEW YORK (360Dx) – The Centers for Medicare & Medicaid Services has proposed changes to its payment policy for medical devices that are part of the US Food and Drug Administration's Breakthrough Device Program.

The proposed policy would waive for two years a requirement that a device maker show that their product demonstrates "substantial clinical improvement." It also would increase the add-on payment to device makers of such breakthrough devices to a maximum of 65 percent of the cost of the technology from the current 50 percent.

The Breakthrough Device Program was designed to expedite the development and review of new and innovative drugs and medical devices for unmet medical needs. In its new proposal released on Tuesday, CMS said that approving or clearing a new device under the current rules of the Breakthrough Device Program "could lead to situations where the evidence base for demonstrating substantial clinical improvement in accordance with CMS's current new technology add-on payment policy has not fully developed at the time of [US Food and Drug Administration] market authorization."

This, in turn, could slow down the pace of truly innovative devices becoming available to patients.

CMS has now proposed that if a medical device is provided marketing authorization by the FDA as part of one its expedited programs, CMS would consider that device new and not substantially similar to an existing technology for the purposes of the new add-on payment. Under the proposal, the agency would waive the "substantial clinical improvement" criteria until fiscal year 2021.

CMS also said that it would raise the add-on payment because the current 50 percent rate may not be adequate for certain transformative technologies. The add-on payment is a "marginal cost factor … of the estimated costs of the case in excess of the full" payment paid by CMS under its inpatient prospective payment system that categorizes each device into a diagnosis-related group. Each DRG has a payment weight, calculated by CMS, assigned to it.

The Advanced Medical Technology Association applauded CMS's proposal. "This proposed rule is a significant step forward in providing patient access to truly life-changing technologies," the organization said in a statement. "This will help ensure that hospitals and patients have access to breakthrough innovations and care, and further incentivize transformational technologies."