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Health Affairs – Access For 21st Century Cures: Updating Medicare’s Approach To Coverage And Payment

Health Affairs – Access For 21st Century Cures: Updating Medicare’s Approach To Coverage And Payment

In recent years, considerable bipartisan Congressional action, leadership from both Democratic and Republican administrations, and broad-based multistakeholder collaborations have focused on improving the tools and regulatory processes at the Food and Drug Administration (FDA), other government agencies, and public-private collaborations to support more efficient and timely development of new medical technologies. Enhanced funding through user fees and the bipartisan Twenty-First Century Cures legislation have supported a robust and better-resourced FDA and enabled science-driven collaborations in a range of areas including innovative clinical trials, “patient-focused” drug development, and greater clarity around standards for regulatory approval of new technologies.


These efforts have accompanied an unprecedented pipeline of innovative medical technologies that is expected to result in more new biomedical technologies reaching the market – technologies like cellular and regenerative medicines and gene therapies that hold the promise of durable if not curative effects on serious conditions; more advanced implantable devices assisted by advanced robotics and 3D printing; early diagnostics that may detect cancers, Alzheimer’s Disease, and other serious health risks long before they become symptomatic; well-targeted drugs and combination treatments based on improved understanding of whole disease pathways to intercept disease progression; and support for all of these technologies through “real-world” electronic data and analytic techniques that may enable them to improve substantially with experience and additional evidence.


Yet there has been no comparable concerted effort to bolster the processes and infrastructure to support what happens as these technologies are approved for use – that is, the processes around coverage and payment that are critical for timely and efficient patient access to new technologies.

The Challenge of Timely and Efficient Access to New Technologies

High-profile debate continues around the prices of these treatments and the price negotiations that influence them. But much less attention has been directed toward the capabilities, processes, and expectations for the Centers for Medicare and Medicaid Services (CMS) and other payers to support informed decisions about these technologies. Whatever pricing reforms are adopted, many critical questions will remain about the appropriate use and value of these technologies when they reach the market. There has been no comparable effort to improve the nation’s capacity to address these questions, to enable better decisions by payers, policymakers, and especially clinicians and patients.


Consequently, alongside other health reforms, a broad-based effort is needed to update processes and evidence related to access to new technologies. Such an initiative should involve health care stakeholders and Federal agencies, particularly CMS. It should build on recent efforts toward transparent, timely, and scientifically up-to-date processes for coding, coverage, and payment, and for developing the best clinical evidence to inform policy and decision making for Medicare and Medicaid beneficiaries.


Below, we lay out these challenges in more detail. We provide a potential path for improving access and restraining costs with better, more informed use of new technologies, regardless of what happens on such controversial issues as medical product pricing.


CMS already has a foundation for addressing the predictability, coordination, and impact of its processes related to access and evidence on medical technologies. However, the resources available for these activities are limited and have not kept up with the rapid progress in technological innovation or enhanced regulatory expertise at FDA. Broadly speaking, the challenges break down into three categories: coding, coverage, and payment.

Coding Processes

New technologies must follow a sometimes time-consuming administrative process and schedule to receive the HCPCS Level II codes required for payment. Currently, there are only a limited number of application periods each year. The typical process takes at least several months, despite efforts to reduce the time, and involves both CMS and the American Medical Association.


The codes initially assigned are often general and do not reliably enable payers and researchers to track how specific new technologies are being used in practice in their early years, a critical time for learning more about a product’s adoption and impact. Problems with inefficient or lagged coding are particularly acute for diagnostic tests and innovative technologies that evolve over time and that may lend themselves to outcomes-based or alternative payment models, and thus need to be tracked reliably with links to patient outcomes or results.


To address these issues, CMS with other stakeholders should develop ways in which more detailed and specific codes can be assigned in time for product launch. Additional reforms should address ways to reduce the administrative burden of collecting and analyzing data on technology use and subsequent care and outcomes, to provide a foundation for learning more and paying more appropriately and quickly for new technologies.

Coverage Processes

By law, Medicare coverage is based on whether a technology is “reasonable and necessary” (R&N) for treatment of a disease in the Medicare population. This is different than the determination that a medical product is “safe and effective,” the standard for FDA approval. The R&N standard depends on considerations related to treating a disease or disease risk in the real-world setting.


How the R&N standard will be applied in particular contexts is sometimes not clear to product developers. This is especially true for smaller companies that lack experience and resources for navigating the coverage process, as well as for companies working in new or groundbreaking areas of innovation where R&N may not have been previously applied. CMS has the authority to promulgate coverage guidance that would provide greater predictability to product developers; it has worked with FDA to develop a “parallel review” process for medical devices with early meetings to address coverage issues before approval. However, the agency has not produced more extensive disease- and topic-specific guidance documents and cadence of regular meetings with innovative companies like FDA has been required to develop under user fee and Twenty-First Century Cures legislation.


Payers, clinicians, and patients also often have important unanswered questions not only about real-world safety and effectiveness, but also about comparative effectiveness and cost-effectiveness at the time of FDA approval. Medicare beneficiaries are often underrepresented in clinical trials, meaning that substantial direct evidence on the effectiveness of new technologies is not immediately available for many populations over the age of 65. There is typically little evidence on the long-term benefits of new technologies, because this type of clinical follow-up exceeds the duration of preapproval trials. For products approved based on surrogate endpoints with other limits on pre-approval clinical evidence, all stakeholders would prefer to have additional evidence relevant to outcomes that matter to patients, including impacts on the cost of care.


Medicare has sometimes sought to address such evidence gaps while avoiding non-coverage by using its coverage with evidence development (CED) authority. But CMS currently must approach CED issues on a “one-off” basis, often without a clear path for coordinated advanced planning with manufacturers, payers, and other stakeholders. For example, in the case of CAR-T, CMS initially proposed a CED approach because only a small number of Medicare-eligible patients were included in the pivotal trials for approval. But CMS ended up dropping its CED proposal after a delay in finalizing its national coverage determination, in part because there has been no reliable infrastructure in place to support more than the FDA-mandated postmarket studies.


The absence of a systematic and predictable approach to CED can mean delays and narrower coverage. It can additionally mean administrative burdens on health care providers, and also result in the failure to develop the postmarket infrastructure and evidence needed to maximize the benefits and avoid unnecessary costs of new technologies in practice.


To address these challenges, policy reforms could enhance the predictability, efficiency, and evidence development activities associated with the coverage decision process. This could include clarifying expectations around R&N determinations, potentially through more formal guidance and stakeholder outreach. Efforts could also focus on enhanced support for MEDCAC or other public-private collaborations capable of helping CMS to adequately anticipate the types of evidence gaps and needs that will be associated with new technologies.


Steps to improve Medicare’s CED policies could reduce the burden and increase the effectiveness of evidence development using current and emerging electronic data and analytic capabilities. Finally, joint CMS and FDA initiatives could build on previous programs for cross-agency coordination and efficiency in addressing each agency’s needs involving new technologies. For example, the agencies could support efforts to build on existing postmarket evidence systems, like the FDA Sentinel Initiative, for both FDA-related purposes (e.g., completion of required postmarket studies) and CMS-related purposes (e.g., improved evidence on comparative benefits and costs that can help clinicians and patients make better decisions in the use of covered treatments).

Payment Processes

On top of delays and uncertainties associated with coding and coverage processes, access can be complicated by conflicts between manufacturers and payers about payment mechanisms. For commercial plans, states, and Part D plans, such concerns may reflect genuine disagreements about the value of a technology,  which as we have noted are often compounded by the limitations of evidence available at the time of approval and limited capacity to develop further evidence. To address these challenges, commercial and state payers are adopting outcome-based payments, subscription payments, and other alternative payment models (APMs) to paying for new technologies. But these innovative approaches are not available in traditional Medicare.


Further actions could clarify or revise the processes by which truly novel new products are assigned to diagnosis-related groups (DRGs) or ambulatory and outpatient payment categories, and by which New Technology Add-On Payments (NTAPs) are determined. Reforms could also be explored that might enable Medicare to implement alternative payment models like those that are being developed in the private sector and states — payment models that are focused on achieving important outcomes. For example, one could envision an approach in which, if a critical mass of APMs exist for a class of products or specific disease state, Medicare could be able to transparently select and implement an APM approach that has already demonstrated results within the health care system.

Cross-Cutting Resource And Expectation Challenges

With the expectations for more clarity and engagement that have accompanied additional resources at FDA, the agency has developed documentation and the capacity for periodic meetings between agency experts and multistakeholder groups throughout the regulatory process. Some stakeholders (including smaller, less experienced companies) are concerned that there is no comparable “front door” or clear pathway for the process at CMS – that is, no overall coordination for coding, coverage, and payment processes in particular disease areas or fields of innovation.


At the Center for Medicare and Medicaid Innovation (CMMI) and other parts of CMS, the agency has turned additional administrative resources into steps to support innovations in many areas of care delivery that have the potential to achieve better outcomes and avoid unnecessary costs. But so far, these efforts have largely not extended to more effective ways to integrate new medical technologies into the care of Medicare beneficiaries.


These problems reflect two underlying issues: Medicare has quite limited resources available to address all of these challenges, and there are fewer explicit, agreed-upon expectations than at FDA about the standards for timeliness and transparency that these processes should achieve. Ongoing bipartisan support for FDA’s regulatory mission through additional appropriations and user fees has resulted in hundreds of additional expert staff positions in recent years, enabling FDA to implement clearly developed expectations about transparent, rapid, and up-to-date regulatory processes.


In contrast, CMS resources in areas related to new technology payment and access have declined over the past decade. For example, the entire CMS Coverage and Analysis Group (CAG) within the Center for Clinical Standards and Quality (CCSQ) has a total of less than 20 expert professionals. This CMS staff is responsible for overseeing coverage-related issues, nationally and locally, as well as regulations related to technical topics including compendia, preventive services, and many others. While further administrative actions can address the resource and support challenges, Congressional action will also likely be needed.


Consequently, further steps should not only explore the benefits of additional resources and how they should be provided, but also should develop broad-based expectations around how CMS technology processes might be improved without incurring excess spending or creating potentially unsafe or uninformed access for beneficiaries. Analysis of current resources and the costs and benefits of augmenting the expertise and capacity in the CMS CAG, the Center for Medicare, or other federal or private contracted entities could provide a foundation for enabling Medicare to meet enhanced expectations and coordinate with FDA and other entities. The analysis should describe how additional resources could be paired with benchmarks for achieving key performance improvements in coding, coverage, and payment process, and any consequences for overall Medicare costs and beneficiary outcomes.

Developing A Bipartisan Path Forward

Both the Administration and Congress have shown interest in jointly challenges for innovative technologies related to coding, coverage, and payment. Recent CMS-led steps have included new proposals in 2019’s Inpatient Prospective Payment System rule that make changes to the NTAP program, as well as plans to increase the number of annual opportunities for medical products to receive new Level II Healthcare Common Procedure Coding System (HCPCS) codes. The President’s recent Executive Order on Medicare proposes a number of reforms at CMS to increase FDA-CMS coordination for handling new products to provide more clarity for manufacturers on Medicare coverage requirements, as well as other steps generally intended to support faster and more predictable coverage decisions. However, the EO does not identify new resources to support these efforts.


At the same time, there is increasing Congressional interest in proposals that could address some of the challenges to efficient coding, coverage, and payment practices, including demonstration projects.


These activities suggest the potential for a more robust initiative to update CMS processes, capabilities, and stakeholder engagement to align with the pace of change of emerging medical technologies. While issues involving CMS and new technology certainly are not without controversy, addressing many of the challenges described here have the potential for wide support. For example, there are divergent views about whether the Medicare program should make a specific value determination for a medical product. However, there appears to be broader support for steps like improving the clarity and timeliness of Medicare’s processes related to new technologies, and for building on recent initiatives to improve electronic data interoperability to enable the more routine development of real-world evidence.


Much of the foundation for an improved, comprehensive, and patient-focused approach to improving access to new technologies already exists, both in terms of processes and capabilities at CMS and in the private sector, and in terms of broad-based support from policymakers for addressing these issues. But our review suggests that challenges remain in bringing coverage and evidence processes sufficiently up to date through the same kind of bipartisan progress that has bolstered technology development and marketing approval. Fulfilling the promise of 21st century, innovative care will require further steps to address issues related to technology access at CMS and throughout the US health care system.