CMS Delays Codifying Definition of “Reasonable and Necessary”

CMS announced that it will delay the effective date of a final rule updating the definition of “reasonable and necessary” and the guidelines surrounding the Medicare Coverage of Innovative Technology (MCIT) pathway. This delay is intended to give CMS time to address stakeholder issues that surfaced during its public comment period. 

CMS originally published its final rule, titled “Medicare Program; Medicare Coverage of Innovative Technology (MCIT) and Definition of ‘Reasonable and Necessary,’” (MCIT/R&N) in January 2021. 

“The January 2021 final rule established a Medicare coverage pathway to provide Medicare beneficiaries nationwide with faster access to new, innovative medical devices designated as breakthrough by the Food and Drug Administration (FDA),” the CMS announcement stated. 

The rule was planned to go into effect on March 15th, but a memorandum from Ronald A. Klain, Assistant to the President and Chief of Staff, outlined President Biden’s intention to closely review all new and pending rules before implementation. In addition, the memorandum asked that agencies review all facts and legal considerations prior to submitting rules to the Office of the Federal Register. 

Due to this announcement, CMS delayed the effective date to May 15th and opened a public comment period to address any concerns. 

After receiving 215 responses addressing various concerns about the rule, CMS determined that it would not be feasible to implement the changes by May 15th. 

“An additional delay in the effective date would allow time for CMS to address to evidentiary concerns raised by stakeholders and consider how to better balance the needs of all stakeholders and beneficiaries in particular,” the announcement stated. 

The rule states that Medicare will only cover items and services that fall under Medicare Parts A and B that fit their criteria of “reasonable and necessary.” The CMS definition of “reasonable and necessary” requires that an item or service not be experimental or investigational, be appropriate for Medicare beneficiaries according to their medical needs, and be safe and effective.

Some commenters suggested that the “reasonable and necessary” definition should be an entirely separate rule, while others did not believe that a codified rule was necessary. Stakeholders also voiced concern over the definition relying on commercial insurer policies, which might needlessly restrict coverage. 

The MCIT coverage pathway was designed to accelerate coverage and provide Medicare beneficiaries access to breakthrough medical technologies, specifically for devices under the FDA’s Breakthrough Devices Program. However, many stakeholders were confused about coverage and payment for these innovative medical devices.

“A substantial number of comments from a variety of stakeholders expressed evidentiary concerns with MCIT as currently designed, including that the current MCIT/R&N final rule’s pathway establishes an open-ended coverage commitment for all breakthrough devices without demonstrating a health benefit in the Medicare population,” the announcement explained. 

In addition, stakeholders were concerned that providing evidence documentation under MCIT is voluntary—this makes it difficult to pinpoint coverage criteria outside of the FDA’s determinations for use. Overall, commenters called for more clarity on the coverage and criteria for innovative medical devices. 

“If the MCIT/R&N final rule goes into effect, we believe there could be confusion and disruption stemming from devices receiving MCIT approval without a clear path for appropriate coding and payment. The delay will allow CMS time to ensure the public has a clear understanding of the pathways to coverage, coding, and payment,” the announcement stated.

Concerns from manufacturers, providers, health plans participating in Medicare Advantage, and special interest medical organizations indicated the need to revisit the MCIT/R&N rule and ensure that it is clear and equitable for all parties. 

The extra time will “provide CMS an opportunity to address all the issues raised by stakeholders, especially Medicare patient protections, evidence criteria and lack of coordination between coverage, coding and payment as noted previously. During the delay, we will determine appropriate next steps that are in the best interest of all Medicare stakeholders, and beneficiaries in particular,” the announcement stated.