[Federal Register Volume 86, Number 217 (Monday, November 15, 2021)]
[Rules and Regulations]
[Pages 62944-62958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24916]



[[Page 62944]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 405

[CMS-3372-F3]
RIN 0938-AT88


Medicare Program; Medicare Coverage of Innovative Technology 
(MCIT) and Definition of ``Reasonable and Necessary''

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: This final rule repeals the ``Medicare Coverage of Innovative 
Technology (MCIT) and Definition of ``Reasonable and Necessary'' final 
rule, which was published on January 14, 2021, and was to be effective 
on December 15, 2021.

DATES: This final rule is effective December 15, 2021.

FOR FURTHER INFORMATION CONTACT: Lori Ashby, (410) 786-6322 or 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

A. January 14, 2021 Final Rule

    In the January 14, 2021, Federal Register, we published a final 
rule titled ``Medicare Program; Medicare Coverage of Innovative 
Technology (MCIT) and Definition of `Reasonable and Necessary'''(86 FR 
2987) (hereinafter referred to as the ``MCIT/R&N final rule''). The 
MCIT/R&N final rule established a Medicare coverage pathway to provide 
Medicare beneficiaries nationwide with faster access to recently market 
authorized medical devices designated as breakthrough by the Food and 
Drug Administration (FDA). Under the final rule, MCIT would result in 4 
years of national Medicare coverage starting on the date of FDA market 
authorization or a manufacturer chosen date within 2 years thereafter. 
The MCIT/R&N final rule would also implement regulatory standards to be 
used in making reasonable and necessary determinations under section 
1862(a)(1)(A) of the Social Security Act (the Act) for items and 
services that are furnished under Medicare Parts A and B.

B. March 2021 Interim Final Rule (IFC) and May 2021 Final Rule To Delay 
Effective Date

    In response to the January 20, 2021, memorandum from the Assistant 
to the President and Chief of Staff titled ``Regulatory Freeze Pending 
Review'' (``Regulatory Freeze Memorandum'') (86 FR 7424, January 28, 
2021) and guidance on implementation of the memorandum issued by the 
Office of Management and Budget (OMB) in Memorandum M-21-14 dated 
January 20, 2021, we determined that a 60-day delay of the effective 
date of the MCIT/R&N final rule was appropriate to ensure that--
     The rulemaking process was procedurally adequate;
     We properly considered all relevant facts;
     We considered statutory or other legal obligations;
     We had reasonable judgment about the legally relevant 
policy considerations; and
     We adequately considered public comments objecting to 
certain elements of the rule, including whether interested parties had 
fair opportunities to present contrary facts and arguments.
    Therefore, in an interim final rule with comment period that went 
on display at the Federal Register and took effect on March 12, 2021 
(hereinafter referred to as the ``March 2021 IFC''), and was published 
in the March 17, 2021, Federal Register (86 FR 14542), we--(1) delayed 
the MCIT/R&N final rule effective date until May 15, 2021 (that is, 60 
days after the original effective date of March 15, 2021); and (2) 
opened a 30-day public comment period on the facts, law, and policy 
underlying the MCIT/R&N final rule.
    Many commenters on the March 2021 IFC supported further delaying 
the MCIT/R&N final rule. Based upon the public comments, we did not 
believe that it was in the best interest of Medicare beneficiaries for 
the MCIT/R&N final rule to become effective on May 15, 2021. Therefore, 
in a final rule that went on display at the Federal Register and took 
effect on May 14, 2021 (hereinafter referred to as the ``May 2021 final 
rule''), and was published in the May 18, 2021, Federal Register (86 FR 
26849), we summarized the comments on the March 2021 IFC and further 
delayed the MCIT/R&N final rule effective date until December 15, 2021. 
We explained that the additional delay would provide us an opportunity 
to address issues raised by stakeholders, especially those related to 
Medicare patient protections and evidence criteria. We announced that 
during the delay, we would determine appropriate next steps that are in 
the best interest of all Medicare stakeholders, and beneficiaries in 
particular.

C. September 2021 Proposed Rule To Repeal the MCIT/R&N Final Rule

    In the September 15, 2021, Federal Register (86 FR 51326) 
(hereinafter referred to as the ``September 2021 proposed rule''), we 
published a proposed rule that would repeal the January 14, 2021 final 
rule. The September 2021 proposed rule included a 30-day public comment 
period on the provisions of the proposed repeal.

II. Provisions of Proposed Regulations and Analysis of and Responses

    We received approximately 115 timely items of correspondence in 
response to the September 2021 proposed rule. Commenters included a 
broad range of stakeholders, including physicians, professional 
societies, manufacturers, manufacturer associations, venture capital 
firms, and patient advocates. In this section of this final rule, we 
present our proposal to repeal the January 2021 MCIT/R&N final rule, 
our rationale for the proposal, as well as our summation of and 
responses to the public comments received.

A. Proposed Repeal of Medicare Coverage of Innovative Technology Policy

    CMS developed MCIT in part due to concerns that delays and 
uncertainty in Medicare coverage slowed innovation and impaired 
beneficiary access to important new technologies, specifically those 
designated as breakthrough devices by FDA. In response to these 
concerns, the rule provided 4 years of expedited coverage to FDA market 
authorized Breakthrough Devices on the first day of FDA market 
authorization or a select date up to 2 years after the market 
authorization date as requested by the device manufacturer. While the 
final rule did not require manufacturers to develop additional 
scientific evidence supporting the use of the Breakthrough Devices in 
the Medicare population, manufacturers were aware that, upon conclusion 
of MCIT coverage, the existing coverage pathways would be available 
(that is, reasonable and necessary determinations would be made via 
claim-by-claim adjudication, local coverage determinations (LCDs), and 
national coverage determinations (NCDs), which include the coverage

[[Page 62945]]

with evidence development pathway). The NCD and LCD development 
processes include reviews of publicly available clinical evidence to 
determine whether or not the items or services are reasonable and 
necessary and would be covered by Medicare.
    As we noted in the September 2021 proposed rule, we believe that 
the finalized MCIT/R&N rule is not in the best interest of Medicare 
beneficiaries because the rule may provide coverage without adequate 
evidence that the Breakthrough Device would be a reasonable and 
necessary treatment for the Medicare patients that have the particular 
disease or condition that the device is intended to treat or diagnose. 
We have had a growing concern that the provisions that we established 
in the MCIT/R&N final rule to protect Medicare patients may not have 
been sufficient. We received comments on this issue again in our 
subsequent rules that delayed the effective date. By repealing that 
rule, we can better address those safety concerns in the future. As 
commenters have noted, the agency must balance competing interests. 
Although we continue to be in favor of increasing access to new 
technologies, we are also mindful that sometimes those devices have 
unknown or unexpected risks. The Medicare program will need to include 
adequate safeguards to act in those situations.
    While the rule tried to address stakeholder concerns about 
accelerating coverage of new devices, concerns persist about the 
availability of clinical evidence on Breakthrough Devices when used in 
the Medicare population as well as the benefit or risks of these 
devices with respect to use in the Medicare population upon receipt of 
coverage. Based on the comments received throughout the development of 
the MCIT pathway, we do not believe that the final rule as currently 
drafted is the best way to achieve the goals of MCIT as outlined in the 
MCIT/R&N final rule, in particular, to more precisely meet the needs 
Medicare beneficiaries and other stakeholders in a timely fashion. We 
believe that there are other ways to achieve our stated goals. This may 
include better utilizing existing pathways or conducting future 
rulemaking.
    As noted in the May 2021 final rule, our prior policies permitted 
the Medicare program to deny coverage for particular devices if we 
learned that a particular device may be harmful to Medicare 
beneficiaries. Specifically, Medicare Administrative Contractors (MACs) 
could have denied claims under certain circumstances (86 FR 26851, May 
18, 2021). Under the MCIT/R&N final rule, this case-specific 
flexibility would have been removed. While we could remove coverage 
through the NCD process, we would be able to expeditiously remove a 
Breakthrough Device from the MCIT coverage pathway for only limited 
reasons, such as if FDA issued a safety communication or warning letter 
regarding the Breakthrough Device or removed the marketing 
authorization for a device. This limitation on our authority is 
impracticable as it may lead to preventable harm to Medicare 
beneficiaries and it impedes Medicare's ability to make case-by-case 
determinations regarding whether a device is reasonable and necessary 
based on clinical evidence. After reviewing Breakthrough Devices with 
FDA authorization that would be eligible for MCIT, we no longer believe 
that CMS should grant full national coverage solely based on 
Breakthrough Designation. While the FDA reviews a device to ensure it 
meets the applicable safety and effectiveness standard, there is often 
limited evidence regarding whether the device is clinically beneficial 
to Medicare patients. We believe this is a key factor in determining 
coverage under Medicare. The FDA's focus is the safety and 
effectiveness profile of devices for the intended population, and while 
these devices may improve symptoms for some patients, the risk-benefit 
profile may be different for older patients. Further evidence 
development is needed to better inform medical decision making 
generally as well as Medicare coverage under the reasonable and 
necessary standard.
    While the MCIT/R&N final rule would have provided expedited 
Medicare coverage following market authorization for breakthrough 
designated devices, there is currently no FDA requirement that Medicare 
beneficiaries must be included in clinical studies needed for market-
authorization. Because the MCIT/R&N final rule also did not require 
data concerning Medicare beneficiaries to fill this gap in evidence 
specific to Medicare patients, there is the potential that Medicare 
would cover devices, even in the absence of data demonstrating that the 
device is reasonable and necessary for Medicare patients. The FDA 
definition of a medical device is broad, and includes a wide range of 
products, such as surgical sutures, joint replacements, blood glucose 
monitors, stents, and implanted valves. After reviewing FDA-designated 
Breakthrough Devices that have FDA authorization and eligible for MCIT, 
CMS has concluded that in treating all breakthrough devices similarly, 
the MCIT/R&N final rule could establish insufficient beneficiary 
protections for certain devices. Accordingly, we have determined that 
repealing the MCIT/R&N final rule and revisiting the policy is in the 
best interest of Medicare patients.
    In response to the March 2021 IFC, several medical device 
manufacturers suggested that, for inclusion in MCIT, FDA pivotal 
studies should require inclusion of sufficient numbers of Medicare 
beneficiaries (86 FR 26851, May 18, 2021). We note that a simple 
proportional requirement may be insufficient, particularly for studies 
with the smaller sample sizes that are typical for medical devices; 
valid statistical conclusions require that clinical studies be 
sufficiently powered to reliably assess risks and benefits in the 
Medicare population. Certain proponents of accelerated Medicare 
coverage have argued that FDA's determination that a product meets 
applicable safety and effectiveness standards for marketing 
authorization should be sufficient to support Medicare coverage of 
Breakthrough Devices. However, after further consideration of all 
public comments, we no longer agree that the FDA safety and 
effectiveness standards alone are sufficient to support open-ended 
Medicare coverage. FDA and CMS act under different statutes that have 
different goals. The standard for Medicare coverage (that is, a 
determination that a device is reasonable and necessary for the 
diagnosis or treatment of illness or injury or to improve the 
functioning of a malformed body member) is not synonymous with the 
standards for FDA marketing authorization of devices, which are not 
specific to the Medicare population. Since we issued the MCIT/R&N final 
rule, we have a better understanding and a growing realization of the 
consequences of incorporating FDA standards into Medicare decision 
making to the degree stated in the final rule. We have fully considered 
the implications, especially in terms of how this would hamper CMS' 
ability to address unanticipated harms that may arise in the Medicare 
population. CMS no longer believes that it is appropriate to grant all 
FDA market authorized Breakthrough Devices automatic coverage solely 
based on its Breakthrough Designation. While the FDA reviews devices to 
ensure they meet applicable safety and effectiveness standards, there 
is often limited evidence regarding whether the device is clinically 
beneficial to Medicare patients. As stated earlier, this is an

[[Page 62946]]

important consideration in determining the type of coverage under 
Medicare. For example, when only limited evidence on health outcomes 
was studied for the Medicare population, it is unclear whether Medicare 
should cover the device with evidence development or should only 
provide coverage for certain patients, practitioners, or health care 
facilities. Immediate, broad, unrestricted Medicare coverage under this 
circumstance could lead to patient harm. Information specific to 
Medicare populations is important to better inform medical decision 
making generally, as well as Medicare coverage under the reasonable and 
necessary standard. Among other things, FDA conducts premarket review 
of certain devices to evaluate their safety and effectiveness and 
determines if they meet the applicable standard to be marketed in the 
United States. In doing so, FDA relies on scientific and medical 
evidence that does not necessarily include patients from the Medicare 
population. In general, under the Medicare statute, CMS is charged with 
determining whether items and services are reasonable and necessary to 
diagnose or treat an illness or injury or to improve the functioning of 
a malformed body member. One consideration for CMS in making national 
coverage determinations under the reasonable and necessary standard is 
whether the item/service improves health outcomes for Medicare 
beneficiaries. For CMS, the evidence base underlying the FDA's decision 
to approve or clear a device for particular indications for use has 
been crucial for determining Medicare coverage through the NCD process. 
CMS looks to the evidence supporting FDA market authorization and the 
device indications for use for evidence generalizable to the Medicare 
population, data on improvement in health outcomes, and durability of 
those outcomes. If there are no data on those elements, it is difficult 
for CMS to make an evidence-based decision whether the device is 
reasonable and necessary for the Medicare population.
    It is important to determine whether Medicare beneficiaries' health 
outcomes are improved because these individuals are often older, with 
multiple comorbidities,\1\ and are often underrepresented or not 
represented in many clinical studies.
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    \1\ Davide L Vetrano, M.D., Katie Palmer, Ph.D., Alessandra 
Marengoni, M.D., Ph.D., Emanuele Marzetti, M.D., Ph.D., Fabrizia 
Lattanzio, M.D., Ph.D., Regina Roller-Wirnsberger, M.D., MME, Luz 
Lopez Samaniego, Ph.D., Leocadio Rodr[iacute]guez-Ma[ntilde]as, 
M.D., Ph.D., Roberto Bernabei, M.D., Graziano Onder, M.D., Ph.D., 
Frailty and Multimorbidity: A Systematic Review and Meta-analysis, 
The Journals of Gerontology: Series A, Volume 74, Issue 5, May 2019, 
Pages 659-666, https://doi.org/10.1093/gerona/gly110.
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1. Evidence Development and Patient Safety
    The Medicare national coverage determination process includes a 
robust review of available clinical evidence and focuses on the 
Medicare population to make reasonable and necessary determinations. In 
contrast, the MCIT pathway would establish an expedited 4-year coverage 
pathway for all Breakthrough Devices that fall under a Medicare benefit 
category without a specific requirement that the device must 
demonstrate it is reasonable and necessary for the Medicare population. 
In general, Medicare patients have more comorbidities and often require 
additional and higher acuity clinical treatments which may impact the 
outcomes differently than the patients generally enrolled in early 
clinical trials. These considerations are often not addressed in the 
device development process.
    When we issued the MCIT/R&N final rule on January 14, 2021, we 
responded to commenters who suggested that CMS should take a different 
approach. Some commenters suggested that we should require 
manufacturers to provide data about Medicare outcomes before providing 
coverage as reasonable and necessary. Other commenters suggested that 
we provide incentives to manufacturers to include Medicare 
beneficiaries in clinical studies, similar to CMS's Coverage with 
Evidence Development (CED) paradigm, before coverage under section 
1862(a)(1)(A) of the Act was allowed (86 FR 2990, January 14, 2021).\2\ 
In response to the March 2021 IFC, additional commenters supported 
evidence development as part of the requirements to participate in the 
MCIT pathway. Some commenters noted that some clinical trials that were 
conducted to support market authorization through the Breakthrough 
Devices pathway lack data on patients older than 65, patients with 
disabilities, and patients with end stage renal disease (ESRD). They 
asserted that the absence of this clinical information poses some 
uncertainty about whether FDA's determination of safety and efficacy 
could be generalized to the Medicare population (86 FR 26850 and 26851, 
May 18, 2021).
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    \2\ CMS, Guidance for the Public, Industry, and CMS Staff 
Coverage with Evidence Development, available at https://www.cms.gov/medicare-coverage-database/details/medicare-coverage-document-details.aspx?MCDId=27.
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    In response to commenters' concerns about expedited coverage 
without adequate evidentiary support, CMS agrees that guaranteeing 
coverage for all Breakthrough Devices receiving market authorization 
for any Medicare patient could be problematic if there is insufficient 
evidence demonstrating a health benefit or addressing the additional 
risks for Medicare beneficiaries (86 FR 26850 and 26851, May 18, 2021). 
We noted that a Breakthrough Device may only be beneficial in a subset 
of the Medicare population or when used only by clinicians within a 
certain specialty to ensure benefit. Without additional clinical 
evidence on the device's clinical utility for the Medicare population 
or appropriate providers, it is challenging to determine appropriate 
Medicare coverage of newly market-authorized Breakthrough Devices (86 
FR 26850 and 26851, May 18, 2021).
    We recognize that the breakthrough designation may be granted by 
FDA before sufficient clinical evidence is available to prove there is 
a health benefit for Medicare patients. FDA has explained in guidance 
that because decisions on requests for breakthrough designation will be 
made prior to marketing authorization, FDA considers whether there is a 
``reasonable expectation that a device could provide for more effective 
treatment or diagnosis relative to the current standard of care (SOC) 
in the U.S'' for purposes of the designation. This reasonable 
expectation can be ``supported by literature or preliminary data 
(bench, animal, or clinical)''.\3\ Without sufficient evidence 
developed to show the device improves health outcomes for Medicare 
beneficiaries, it may be challenging for the Medicare program to 
determine the health benefit of these devices for Medicare 
beneficiaries. Public comments expressed concern about how the Medicare 
population is often excluded from clinical trials due to age and health 
status.
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    \3\ Food and Drug Administration, Breakthrough Devices Program 
Guidance for Industry and Food and Drug Administration Staff, 9, 
available at: https://www.fda.gov/media/108135/download.
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    Previously, in the MCIT/R&N final rule, we noted that ``device 
coverage under the MCIT pathway is reasonable and necessary for a 
duration of time under section 1862(a)(1)(A) of the Act because the 
device has met the very unique criteria of the FDA Breakthrough Devices 
Program'' (86 FR 2988, January

[[Page 62947]]

14, 2021).\4\ Through further consideration of the breakthrough 
designation process, we have changed our position on this issue and 
determined that Breakthrough Device designation is not, by itself, 
sufficient for expedited Medicare coverage purposes. Rather, as 
explained previously, we understand that FDA may grant a device 
breakthrough designation when the device has shown a ``reasonable 
expectation'' of providing more effective treatment or diagnosis of a 
life-threatening or irreversibly debilitating disease or condition 
relative to the current U.S. SOC and that it meets the other criterion 
for designation in section 515B(b)(2) of the Federal Food, Drug, and 
Cosmetic Act (FD&C) Act (21 U.S.C. 360e-3(b)(2)). CMS acknowledges that 
we have changed our position on this issue after further consideration 
of public comments and after considering the full range of FDA 
designated Breakthrough Devices from diagnostic laboratory tests to 
implanted valves. As noted previously, we do not believe that granting 
broad national coverage solely on Breakthrough Device designation alone 
is in the best interest of beneficiaries or the Medicare program, as 
this approach does not provide CMS with the necessary flexibility to 
establish beneficiary safeguards, similar to the patient protections we 
include in NCDs, specifically CED NCDs, for some of these devices that 
do not have an evidence base generalizable to the Medicare population. 
Under the MCIT/R&N final rule, CMS would not be able to include any 
beneficiary safeguards until the conclusion of the 4-year expedited 
coverage period and upon completion of an NCD. While we acknowledge 
that improvements can be made to the existing coverage processes, the 
inability for CMS to establish beneficiary safeguards under the MCIT/
R&N final rule is a significant limitation that can lead to potential 
beneficiary harm. For these reasons we no longer believe it is in the 
best interest of Medicare patients to base expedited multiyear, broad 
national coverage through section 1862(a)(1)(A) of the Act on 
Breakthrough Device designation alone.
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    \4\ 86 FR 2988 (January 14, 2021) available at https://www.govinfo.gov/content/pkg/FR-2021-01-14/pdf/2021-00707.pdf.
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    Clinical studies that are conducted in order to gain market 
authorization for FDA Breakthrough Devices are not required to include 
information on patients with similar demographics and characteristics 
of the Medicare population. A potential reason there may not be a 
strong evidence base specific to the Medicare population could include 
the desire by device manufacturers to demonstrate the safety and 
effectiveness of a device as clearly as possible. To achieve this aim, 
many studies impose stringent exclusion criteria that disqualify 
individuals with certain characteristics, such as comorbidities and 
concomitant treatment, that might make the effect of the 
investigational device more difficult to determine. Consequently, the 
safety and effectiveness of a device for older patients with more 
comorbidities may not be well understood at the time of FDA market 
authorization.
    Additionally, there may be devices designated as breakthrough that 
do not have adequate data on the effectiveness of the device for the 
Medicare population. Without such evidence, it is possible that 
Medicare would be covering and paying for devices that may have little 
or no Medicare relevant clinical evidence to assist physicians and 
patients in making treatment decisions. Separate from information and 
evidence submitted for breakthrough designation and market 
authorization, is the concept of post-market evidence development. 
Without requiring any evidence development specific to Medicare 
patients following market authorization, there may not be any evidence 
to demonstrate whether the device is beneficial after the conclusion of 
MCIT coverage after 4 years. Evidence-based coverage policy is 
essential to our objective of improving health outcomes while 
delivering greater value. Supportive clinical evidence that ensures a 
device is both safe and effective and reasonable and necessary in the 
Medicare population is crucial in order to grant coverage for a device 
under section 1862(a)(1)(A) of the Act. Such evidence is used to 
determine whether a new technology meets the appropriateness criteria 
of the longstanding Medicare Program Integrity Manual Chapter 13 
definition of reasonable and necessary.\5\ We believe that it is 
important to require manufacturers participating in an innovative 
coverage pathway, such as MCIT, to produce evidence that demonstrates 
the health benefit of the device and the related services for patients 
with demographics similar to that of the Medicare population.
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    \5\ CMS, Medicare Program Integrity Manual, Chapter 13, 13.5.4, 
available at https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/pim83c13.pdf
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    In response to the March 2021 IFC, some commenters cited evidence 
that FDA-mandated postmarket studies are not reliably completed (less 
than 20 percent of required studies are completed within 3 to 5 years 
after market authorization),\6\ and asserted that evidence 
demonstrating a device's health benefit in Medicare beneficiaries is 
essential. Commenters also recommended that CMS outline in guidance 
documents the types of evidence that would be acceptable for 
applications for national or local coverage determinations once the 
MCIT pathway's 4 years had expired, such as real-world data or 
randomized, controlled trials (86 FR 26851, May 18, 2021). By 
voluntarily developing this evidence during the time a device is 
covered under the MCIT pathway, the manufacturer could have the 
evidence base needed for one of the other coverage pathways after the 
MCIT pathway ends. The MCIT/R&N final rule did not require 
manufacturers of Breakthrough Devices to develop evidence as part of 
their participation requirements under MCIT. In the May 2021 final 
rule, we noted that numerous commenters, including physicians with 
experience in clinical research and medical specialty societies, sought 
modifications to the MCIT/R&N final rule regarding evidence 
development, including the addition of real-world evidence 
requirements. We agree that guidance documents or similar publications 
outlining the types of evidence that would be acceptable for requests 
for NCD and LCDs is a good idea. We are continuing to explore 
additional opportunities to more efficiently publish relevant health 
outcomes for different disease treatments. CMS is working on the best 
and most efficient manner to communicate what are important health 
outcomes. As was noted by commenters in response to the March 2021 IFC, 
early and unrestricted adoption of devices may have adverse 
consequences that may not be easy to reverse. CMS expects physicians to 
consider the available evidence and assess the care needs of each 
patient when considering the best treatment options. However, by 
guaranteeing coverage of devices based solely on breakthrough status 
and FDA marketing authorization, rather than also taking into account 
whether the device provides an effective, reasonable and necessary 
treatment for Medicare patients, there may be an incentive for 
physicians to use a device that has coverage under the MCIT pathway 
rather than a device that is not covered under the MCIT pathway but is 
nonetheless covered under an existing coverage pathway and that may be 
more

[[Page 62948]]

beneficial to patients. We believe that providers' clinical treatment 
decisions should take the individual needs of the patient into account; 
therefore, we seek to avoid incentivizing the use of MCIT-covered 
devices when an alternative item or service may be more appropriate.
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    \6\ Rathi et al.
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    While the MCIT/R&N final rule may provide beneficiaries and 
manufacturers an assurance of national Medicare coverage, evidence 
development under MCIT as previously finalized is voluntary and there 
was no requirement that manufacturers conduct studies to generate 
evidence to demonstrate clinical benefit to Medicare patients. We 
acknowledge that we no longer believe that voluntary evidence 
development, as provided for in the MCIT/R&N final rule, is in the best 
interests of Medicare beneficiaries as we believe such evidence is key 
to determining the best treatments for Medicare patients to ensure that 
the benefits of treatments outweigh the potential harms. For devices 
that lack evidence that is generalizable to the Medicare population, we 
believe it is important for such evidence to be developed and some 
public commenters suggested that we establish the coverage criteria 
(for example, provider experience, site of service, availability of 
supporting services) to ensure delivery of high-quality, evidence-based 
care.
    While we proposed to repeal the MCIT/R&N final rule, and we now 
finalize the repeal of the MCIT/R&N rule, this action does not prohibit 
coverage of Breakthrough Devices. As we noted in the May 2021 final 
rule, even without the MCIT/R&N final rule in effect, a review of 
claims data showed that Breakthrough Devices have received and are 
receiving Medicare coverage when medically necessary. As more 
Breakthrough Devices achieve market authorization, and as we continue 
to examine claims data, we are learning that many of the eligible 
Breakthrough Devices are coverable and payable through existing 
mechanisms, such as bundled payments. Some Breakthrough Devices may be 
addressed by an existing LCD or NCD. New items and services can also be 
adjudicated on a claim-by-claim basis and be covered and paid under the 
applicable Medicare payment system if the MAC determines them to be 
reasonable and necessary for specific patients upon a more 
individualized MAC assessment. The MACs may take into account a 
beneficiary's particular clinical circumstances to determine whether a 
beneficiary may benefit from the device. CMS acknowledges, among other 
factors, that MCIT was developed in response to stakeholder concerns 
about time lags and coverage uncertainty for devices subject to claim-
by-claim coverage determinations. While these paths provide some 
coverage, it may not meet stakeholders' expectations of faster and more 
predictable coverage.
2. Limitations of the MCIT Pathway
    The MCIT/R&N final rule limited MCIT only to Breakthrough Devices. 
In accordance with section 515B of the FD&C (21 U.S.C. 360e-3), FDA's 
Breakthrough Devices Program is for certain medical devices and device-
led combination products, and can include lab tests.\7\ To be granted a 
Breakthrough Device designation under the Breakthrough Devices Program, 
medical devices and device-led combination products must meet two 
criteria. The first criterion is that the device provides for more 
effective treatment or diagnosis of life-threatening or irreversibly 
debilitating human disease or conditions. The second criterion is that 
the device must satisfy one of the following elements:
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    \7\ Breakthrough Devices Program Guidance for Industry and Food 
and Drug Administration Staff, available at https://www.fda.gov/media/108135/download.
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     It represents a breakthrough technology.
     No approved or cleared alternatives exist.
     It offers significant advantages over existing approved or 
cleared alternatives.
     Device availability is in the best interest of patients 
(for more information see 21 U.S.C. 360e-3(b)(2)).
    Some commenters to the September 2020 MCIT/R&N proposed rule 
expressed concern that the MCIT pathway could give specific 
technologies an unfair advantage that would be unavailable to 
subsequent market entrants, thereby decreasing innovation and market 
competition (86 FR 2998 and 2999). Commenters submitted a variety of 
alternative approaches to covering second-to-market and non-
breakthrough designated new technology to remedy this unintended 
consequence. Some commenters supported that CMS cover iterative 
refinements of the same Breakthrough Device for the duration of the 
original device's MCIT term. Other commenters suggested coverage under 
the MCIT pathway for subsequent similar breakthrough and non-
breakthrough designated devices of the same type and indication for the 
balance of the first device's MCIT term. Yet other commenters proposed 
that new market entrants that are very similar to a Breakthrough Device 
should each receive the full 4 years of MCIT coverage, not tied to the 
timeline of the original product.
    We acknowledge that we have changed our policy position on this 
issue after further consideration of all public comments received as we 
have worked to develop the MCIT pathway. We carefully considered the 
likelihood of reliance by stakeholders, including manufacturers and 
patients on the MCIT/R&N final rule and our decision to repeal the 
rule. Because the rule has never gone into effect we believe there has 
been minimal, if any, reliance on the MCIT/R&N final rule. Further, we 
believe we can work with stakeholders to achieve appropriate coverage 
through existing mechanisms. We also agree with commenters that there 
are many drawbacks to limiting coverage through the MCIT pathway only 
to those devices that are part of the Breakthrough Devices Program, and 
we now believe that any future alternative coverage pathway should not 
include this limitation. As noted previously, the potential incentives 
created by offering immediate coverage of Breakthrough Devices may 
disincentivize development of innovative technologies that do not meet 
the criteria for the Breakthrough Devices Program, such as some non-
breakthrough-designated second-to-market devices and subsequent 
technologies of the same type. Additionally, we now believe a more 
flexible coverage pathway that leverages existing statutory authorities 
may be better able to provide faster coverage of new technologies to 
Medicare beneficiaries while prioritizing patient health and outcomes.
3. Future Coverage Policy Rulemaking
    While we proposed to repeal the MCIT/R&N final rule as it is 
currently written, we considered future policies and potential 
rulemaking to provide improved access to innovative and beneficial 
technologies. We are committed to exploring other policy options and 
statutory authorities for coverage that better suit the needs of 
Medicare beneficiaries and other stakeholders when the items or 
services are supported by adequate evidence. For example, we are 
planning on initiating several coverage process improvements, including 
engaging the Agency for Healthcare Research and Quality (AHRQ) to 
explore updating the CED study criteria, as well as exploring options 
of expediting the NCD process. It is our goal to address these issues 
in future rulemaking and/or subregulatory guidance.

[[Page 62949]]

    Comment: Commenters from multiple stakeholder groups 
(manufacturers, physicians, associations, etc.) agreed with CMS' 
proposal to repeal the MCIT/R&N final rule as they believe that the 
MCIT pathway as originally constructed was flawed and would not achieve 
the intended outcome of removing delays and uncertainty to improve 
beneficiary access to innovative technologies.
    Response: We appreciate commenters' support for our proposal to 
repeal the MCIT/R&N final rule. We agree with commenters that while the 
MCIT/R&N final rule attempted to improve timeliness and predictability 
of coverage for new technologies, it was flawed in a number of ways 
that would have prevented predictable, timely coverage for beneficial 
devices and technologies. We agree with commenters that one of MCIT's 
limitations is that the MCIT/R&N final rule would have granted up to 4 
years of open-ended Medicare coverage for FDA designated Breakthrough 
Devices upon market authorization, with no conditions of coverage 
beyond the FDA approved or cleared indication(s) for use. Further, the 
rule only granted expedited coverage for designated Breakthrough 
Devices; it did not grant the same coverage to devices or technologies 
that may treat the same condition but are not FDA designated as a 
Breakthrough Device, or older devices/technologies that may be more 
beneficial. This uneven approach to important beneficial devices was 
concerning and must be addressed.
    Comment: Some commenters from multiple stakeholder groups 
reiterated their concerns that the provision of expedited coverage for 
certain devices (that is, Breakthrough Devices) without adequate 
evidence on the Medicare population and no requirement to develop the 
evidence places beneficiaries at risk of significant harms. Commenters 
noted that this is especially problematic since Medicare beneficiaries 
often have comorbidities and may respond differently than other 
populations that comprise that majority of most clinical trial 
participants.
    Response: We agree that the lack of requirements in the MCIT/R&N 
final rule for manufacturers to continue to develop evidence 
demonstrating improved health outcomes in the Medicare population was 
problematic. When there is a lack of evidence specific to the Medicare 
population it makes it difficult for CMS to ensure that devices are not 
posing additional risks in the Medicare population. Continuing to 
develop evidence generalizable to the Medicare population is important 
not only to payers, but is key to patients, their caregivers and their 
treating clinicians to make the most informed decisions for their 
treatment. We continue to believe that it is important to require 
manufacturers participating in any innovative coverage pathway, such as 
MCIT, to produce evidence that demonstrates the health benefit of the 
device and the related services for patients with demographics similar 
to that of the Medicare population. It is our intention to address this 
issue in future rulemaking and we intend to hold at least two 
stakeholder public meetings in calendar year (CY) 2022 to inform our 
future policy-making in this space.
    Comment: Several commenters noted that CMS already has mechanisms 
in place to provide coverage of Breakthrough Devices and that the 
repeal of the MCIT/R&N final rule would not prohibit coverage of these 
devices.
    Response: We appreciate stakeholders' acknowledgement that even 
without the MCIT pathway, Breakthrough Devices have received and are 
able to receive Medicare coverage when medically necessary. We also 
recognize that it is important that stakeholders have transparent, 
predictable coverage. We are committed to working through this issue as 
we explore other policy options within our statutory authorities, 
including future rulemaking. As noted previously, we are planning on 
initiating several coverage process improvements, including engaging 
AHRQ to explore updating the CED study criteria, as well as exploring 
options of expediting the NCD process, and future rulemaking.
    Comment: Many commenters indicated that a multitude of revisions 
would be needed to overcome MCIT's limitations and achieve its intended 
goals of faster and more predictable Medicare coverage. Commenters 
cited examples of revisions such as a process that would include 
benefit category determination (if needed), coding, payment, timeframes 
for coordinating with FDA, and clinical evidence assessment and 
development.
    Response: We agree that the final MCIT/R&N rule has significant 
limitations and needs modifications. We will consider these issues as 
we engage in future rulemaking.
    Comment: Some commenters reiterated their concerns that the MCIT/
R&N final rule does not specify, nor can it require, coverage criteria 
beyond the FDA approved or cleared indication(s) for use such as 
patient criteria and/or provider or facility qualifications or 
experience. Commenters expressed that clinical trial populations are 
typically different from the Medicare population, and thus, the 
evidence supporting those indication(s) for use are less germane to the 
Medicare population. Without an evidence development requirement pre or 
post coverage that includes Medicare patients, commenters are concerned 
about the absence of generalizable clinical evidence. Without 
information on Medicare patients, commenters are concerned about 
providers inferring proven performance of breakthrough devices 
regardless of patient characteristics or facility capabilities.
    Response: We appreciate these comments. We will consider these 
comments as we refine our coverage processes. It is our intention to 
address this issue in future rulemaking and we intend to hold at least 
two stakeholder public meetings in CY 2022 to inform our future policy-
making in this space.
    Comment: There is general agreement among commenters that CMS can 
address the limitations of the MCIT pathway in future rulemaking. 
Several commenters recommended that CMS increase efforts to facilitate 
early engagement among manufacturers, CMS and FDA to discuss suitable 
trial designs, evidentiary goals, and to ensure that study populations 
are representative of the Medicare population.
    Response: We appreciate the support for our proposal. We will 
consider all of these comments as we explore other policy options and 
statutory authorities as we explore future rulemaking to provide 
appropriate expedited access to innovative and beneficial technologies. 
We will hold at least two public stakeholder meetings in CY 2022 as we 
consider several initiatives to improve the coverage process.
    Comment: Commenters offered suggestions for CMS to consider in the 
future as it develops an alternative expedited coverage pathway, 
including recommendations for how CMS could improve the MCIT pathway 
and better leverage and improve existing coverage mechanisms, such as 
parallel review, coverage with evidence development (CED) or the 
investigational device exemption (IDE) process, in addition to 
conducting future rulemaking. For example, commenters expressed strong 
support for CMS to leverage the CED paradigm to provide Medicare 
beneficiaries with access to new devices and technologies while 
additional evidence is generated to document a proven benefit for 
Medicare patients. These commenters noted CMS' past efforts with CED, 
specifically Transcatheter Aortic Valve Replacement (TAVR), and noted 
that CMS could require post market studies and data collection through 
a modified CED

[[Page 62950]]

paradigm to ensure that beneficiaries are gaining appropriate access to 
new technologies that improve health outcomes. Some commenters 
recommended that CED be time-limited so that the access restrictions 
that can sometimes accompany CED decisions do not last indefinitely 
especially in instances when the evidentiary questions of interest have 
been addressed. Commenters expressed the importance of collecting real 
world data to fill post-market evidence gaps and encouraged CMS to 
incorporate such data collection in an improved coverage pathway. These 
commenters noted that these new technologies need careful monitoring in 
real world populations.
    Response: We appreciate all of the submitted recommendations for 
CMS to consider as we develop an alternative expedited coverage 
pathway. It is our intention to address this issue in future rulemaking 
and we intend to hold at least two stakeholder public meetings in CY 
2022 to inform our future policy-making in this space.
    Additionally, we currently have a number of initiatives underway to 
leverage existing coverage mechanisms and inform our efforts to 
facilitate improvements in coverage pathways. For example, CMS is 
engaged with the AHRQ to review the current CED study criteria and 
determine whether the criteria should be revised or updated. Similar to 
the last CED revision, if a revision is needed, we will use a 
transparent process that will include public participation such as 
public comment on any proposed revisions to the CED study criteria, and 
we will provide as well for public participation in a Medicare Evidence 
Development and Coverage Advisory Committee (MEDCAC) meeting which CMS 
will announce a date through a Federal Register notice and on the CMS 
Coverage website. For general information on MEDCAC, please see https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/MEDCAC.
    Comment: Many commenters representing a wide-range of stakeholder 
groups offered additional suggestions on improvements CMS can make to 
NCDs, including a recommendation that CMS should omit trial design 
specifications within NCDs and that CMS should address coverage of new 
indications in NCDs. Some commenters encouraged CMS to review NCD 
requests and issue NCD implementation instructions within specified 
timeframes. Several commenters asked that CMS prohibit concurrent NCD 
and LCD processes.
    Response: We appreciate these comments and helpful suggestions 
offered by commenters on how CMS can improve the NCD process. We will 
consider these comments as we explore other policy options and 
statutory authorities to provide appropriate expedited access to 
innovative and beneficial technologies.
    Comment: Several commenters requested that CMS ensure equity 
between fee-for-service and Medicare Advantage (MA) beneficiaries in an 
alternative expedited coverage pathway. Some of these commenters noted 
that MA plans often impose restrictive prior authorization requirements 
or decline to cover services that are routinely covered and paid for 
under fee-for-service Medicare, simply due to the absence of a LCD or 
NCD.
    Response: We appreciate these comments and will consider this as we 
explore other policy options that may help to ensure coverage 
consistency among Medicare beneficiaries regardless of whether they are 
enrolled in fee-for-service or MA.
    Comment: A few commenters suggested that as CMS takes future action 
to provide for an alternative expedited coverage pathway, that it 
provide expedited coverage for a class of devices rather than of a 
single device to ensure there is not inconsistent or delayed coverage 
of similar devices or technologies.
    Response: We appreciate the comment and will consider this as we 
explore other policy options. It is our intention to address this issue 
in future rulemaking and we intend to hold at least two stakeholder 
public meetings in CY 2022 to inform our future policy-making in this 
space.
    Comment: Some commenters reiterated their concerns that the MCIT 
pathway has the unintended consequence of limiting access to 
competitive devices. These commenters recommended that CMS consider 
broadening the technologies eligible for an expedited coverage pathway 
to replace MCIT beyond Breakthrough Devices in order to ensure a 
competitive and innovative marketplace. Several commenters suggested 
that such an expedited coverage pathway should not only include 
Breakthrough Devices but also other medical products that are the 
subject of FDA expedited programs, such as those that receive 
breakthrough therapy designation or are granted accelerated approval. 
Commenters specifically requested that screening tests, diagnostics, 
drugs and biologicals be included.
    Response: We appreciate the comments and will further consider 
these comments as we explore other policy options and statutory 
authorities.
    Comment: As noted previously, some commenters requested that drugs 
and biological products be included in an alternative expedited 
coverage pathway as they believe that delayed access to innovative drug 
and biologic therapies is just as detrimental as delays to innovative 
devices. However, a few commenters expressed the viewpoint that drugs 
and biological products not be included as inclusion may lead to 
unnecessary delays and access issues.
    Response: We appreciate the comments and will further consider 
these comments as we explore other policy options and statutory 
authorities.
    Comment: Several commenters reiterated their concerns that since 
the MCIT/R&N final rule was solely a coverage rule, a number of 
operational issues that would inhibit the successful implementation of 
the MCIT pathway still need to be addressed, including benefit category 
determination, coding and payment issues. Commenters indicated that the 
goals of MCIT cannot be achieved until these operational issues are 
resolved. Several commenters offered suggestions as to how CMS could 
remedy these issues, including modifications to existing operational 
processes. For example, these commenters recommended that CMS could 
adapt the processes used for the IDE, new technology add-on payment 
(NTAP) and transitional passthrough (TPT) to establish codes and 
payment for technologies in an expedited coverage pathway. Some 
commenters requested that any future rulemaking for an alternative 
expedited coverage pathway include coding and payment information.
    Response: We appreciate these comments and agree we should consider 
all of the operational issues as we work to develop an alternative 
expedited coverage pathway. We will consider this comment as we 
initiate coverage process improvements, including engaging AHRQ to 
explore updating the CED criteria, as well as exploring options of 
expediting the NCD process, including future rulemaking.
    Comment: Several commenters that explicitly stated their opposition 
to or disappointment with our proposal to repeal the MCIT/R&N final 
rule provided information and examples specific to their technologies 
for why an expedited coverage pathway similar to MCIT is needed. These 
commenters lauded MCIT as a significant advancement in removing delays 
in national coverage after FDA market authorization and uncertainty in 
the timing and duration of coverage to improve beneficiary access to 
innovative technologies.

[[Page 62951]]

    Response: The majority of the comments citing specific examples of 
how MCIT is beneficial to its specific technology would likely face the 
operational challenges because after review of the commenters' devices, 
it was not clear whether there was a benefit category for the devices. 
At least one commenter's device would be part of a bundled payment and 
not separately payable. Because the MCIT/R&N final rule did not address 
BCD issues, the MCIT/R&N final rule would likely not have resulted in 
the full coverage they were seeking. We are aware that there is concern 
when coverage decisions are made at the MAC level, specifically when an 
LCD is not applicable. This coverage uncertainty may also influence 
provider decision-making because they are reluctant to submit claims 
for services that may not be paid for by Medicare.
    Comment: A commenter requested that CMS clarify how it intends to 
approach coverage and payment for prescribed digital therapeutics 
(PDTs) and include the information in the preamble to this final rule 
since it had not been addressed in prior MCIT/R&N rulemaking.
    Response: We appreciate this comment. However, we are not 
responding to specific technology evaluations in this final rule as 
they are out of scope. We will consider this comment as we initiate 
several coverage process improvements.
    Comment: Some commenters stated CMS should allow the MCIT/R&N final 
rule to go into effect on December 15, 2021, and subsequently issue a 
proposed rule with appropriate revisions to the MCIT pathway or release 
subregulatory guidance that addresses the numerous concerns rather than 
finalizing the repeal.
    Response: We appreciate commenters sharing their belief that the 
rule should go into effect, but we disagree. While we acknowledge that 
some stakeholders are seeking a replacement pathway simultaneously upon 
repeal, we need time to more fully evaluate the comments received on 
the September 2021 proposed rule, and in particular the feedback 
offered by commenters on how we can improve upon the MCIT pathway.
    The final MCIT/R&N rule had major flaws that must be addressed to 
ensure there is a balance between expedited coverage of devices and 
patient protections. As we discussed earlier, these flaws also included 
operational concerns regarding benefit category determinations, coding 
and payment implementation with expedited coverage. Further, 
Breakthrough Devices have not necessarily demonstrated a health benefit 
in the Medicare population. Most importantly, we believe that evidence 
development must be part of an expedited coverage process, as needed. 
Based upon these significant concerns with the MCIT pathway, both from 
the Agency and from several commenters, we believe it is important to 
move forward with repealing the MCIT/R&N final rule rather than letting 
it go into effect and modifying it after the fact. We believe that 
letting the MCIT/R&N final rule go into effect and later modifying it 
would cause disruptions in health care delivery as there would be 
confusion and uncertainty among stakeholders, most importantly 
beneficiaries and their treating clinicians. For example, since the 
January 2021 MCIT/R&N final rule is a coverage rule only, there could 
be confusion and disruption stemming from devices receiving MCIT 
approval without a clear path for appropriate coding and payment. As 
noted previously, under the January 2021 MCIT/R&N final rule, there is 
no requirement for evidence that MCIT devices will specifically benefit 
the Medicare target population. Additionally, the MCIT/R&N final rule 
limits tools the CMS has to deny coverage when it becomes apparent that 
a particular device can be harmful to the Medicare population. If the 
January 2021 MCIT/R&N final rule were to go into effect, and a device 
is later found to be harmful to Medicare recipients is approved under 
the MCIT pathway, CMS would be limited in the actions it can take to 
expeditiously withdraw or modify coverage to protect beneficiaries. 
Finally, it is not clear that CMS has legal authority under the Allina 
Supreme Court ruling to use subregulatory guidance to modify aspects of 
the MCIT/R&N final rule as some commenters suggested.
    Comment: Of the commenters who disagreed with the proposed rule to 
repeal the MCIT/R&N rule, most acknowledged the limitations of the MCIT 
pathway and indicated that modifications were needed, such as the 
inclusion of coding and payment information and evidentiary standards. 
A number of these same commenters expressed that while they were 
disappointed with CMS' proposal to repeal MCIT, they appreciated CMS' 
ongoing commitment to finding solutions, including an alternative 
expedited coverage pathway.
    Response: We appreciate the comment and will consider the suggested 
modifications as we move forward.
    Comment: Many commenters requested that if CMS were to move forward 
with repealing the MCIT/R&N final rule, CMS should release a proposed 
rule offering an alternative expedited coverage pathway simultaneously 
or as soon as possible thereafter. These commenters requested that CMS 
provide a timeline for releasing a new rule for an alternative 
expedited coverage pathway. These commenters noted that an alternative 
expedited coverage pathway is an urgent need to address the long-
standing concerns that Medicare coverage is often slow and 
unpredictable and impedes beneficiary access to innovative 
technologies. Some commenters raised concerns that following repeal, 
CMS would not continue with the forward momentum to create an 
alternative expedited coverage pathway.
    Response: We appreciate these comments. As we move forward with 
repealing the MCIT/R&N final rule, we want to reassure stakeholders 
that CMS does not intend to maintain the status quo. We remain 
committed to our goal of establishing an alternative expedited coverage 
pathway that better achieve the goals of timely and predictable 
Medicare coverage of devices while ensuring that Medicare covers items 
and services on the basis of scientifically sound clinical evidence and 
with appropriate safeguards. CMS acknowledges that more can be done to 
address the current uncertainty surrounding Medicare coverage of new 
medical technologies and while we are unable to provide a specific 
timeframe for doing so, we are working expeditiously to develop an 
alternative expedited coverage pathway with adequate patient safeguards 
to ensure devices are safe for Medicare patients and an evidence base 
that is generalizable to Medicare beneficiaries is further generated.
    Comment: Some commenters stated that CMS has received sufficient 
public input on potential improvements to MCIT and existing coverage 
pathways over the course of three public comment periods on the MCIT 
pathway, other commenters encouraged CMS to conduct town halls to 
obtain further stakeholder feedback. Numerous commenters expressed 
willingness to be a resource for CMS as it developed future policies.
    Response: Stakeholder engagement is a vitally important component 
of our efforts to develop an alternative expedited coverage pathway 
that provides an appropriate balance of innovation and beneficiary 
protections. We value the diverse viewpoints, perspectives, and options 
offered by

[[Page 62952]]

commenters. As we move forward, we will continue to be open and 
transparent and will work with stakeholders in efforts to achieve 
consensus whenever possible.
    Even with the repeal of the MCIT/R&N final rule, we have a number 
of initiatives underway and in development within our existing 
authorities. These initiatives take into account the feedback CMS has 
received on the MCIT pathway to date, and we will leverage these 
initiatives to inform future policy making in this space.
    Further, CMS has multiple pathways to facilitate engagement such as 
the Medicare Evidence Development and Coverage Advisory Committee 
(MEDCAC) and the public input process through the Federal Register. We 
are also receptive to informal engagement with stakeholders, including 
with manufacturers who are interested in the development of a new 
expedited coverage pathway. In addition, we are also exploring other 
potential avenues to facilitate timely and transparent stakeholder 
engagement, including listening sessions or town hall meetings, in 
order to receive additional feedback from stakeholders that can help 
inform CMS' development of an alternative expedited coverage pathway. 
In addition, we are initiating coverage process improvements, including 
engaging AHRQ to explore updating the CED study criteria, as well as 
exploring options of expediting the NCD process, including future 
rulemaking.
    Comment: Some commenters who disagreed with CMS' proposal to repeal 
the MCIT/R&N final rule asserted that the patient protections in place 
in the MCIT/R&N final rule, specifically the reliance on FDA safety and 
efficacy requirements to grant coverage to Breakthrough Devices under 
MCIT, were sufficient to prevent beneficiary harm. Some of these 
commenters stated that CMS will be endangering the patients it is 
trying to protect if MCIT does not go into effect on December 15, 2021. 
Some commenters also noted that the data Medicare needs to evaluate a 
device has already been generated during the FDA approval process.
    Response: We disagree that there are sufficient patient protections 
in the MCIT/R&N final rule. After consideration of all public comments 
received as we have worked to develop the MCIT pathway, and as we 
indicated in the September 2021 proposed rule, we no longer believe 
that FDA safety and effectiveness standards alone are sufficient to 
support open-ended Medicare coverage. FDA and CMS act under different 
statutes that have different goals and the standard for Medicare 
coverage (that is, a determination that a device is reasonable and 
necessary for the diagnosis or treatment of illness or injury or to 
improve the functioning of a malformed body member) is not synonymous 
with the standards for FDA marketing authorization of devices, which 
are not specific to the Medicare population. CMS acknowledges that we 
have changed our position on this issue after further consideration of 
public comments and a review of all FDA-designated Breakthrough Devices 
eligible for MCIT. As noted previously, granting all eligible FDA-
designated Breakthrough Devices national coverage, the MCIT/R&N final 
rule establishes insufficient beneficiary protections for a subset of 
devices and must be revised.
    Further, we strongly disagree that our repeal of the MCIT/R&N final 
rule will cause harm to beneficiaries. While there is no guaranteed 
national coverage that does not mean a given FDA-designated 
Breakthrough Device is non-covered. CMS' MACs are empowered to make 
reasonable and necessary coverage determinations on any device where 
there is not a nationally policy in place, including FDA-designated 
Breakthrough Devices. We reviewed fee-for-service claims data for 
several recent market-authorized breakthrough devices. The majority of 
the FDA market authorized Breakthrough Devices that would have been 
eligible for the MCIT pathway: Were already paid through an existing 
mechanism, were directed to a pediatric population, were a diagnostic 
lab test, were subject to an existing NCD; or had no benefit category 
or an uncertain benefit category. Of those that would be separately 
payable by Medicare on a claim-by-claim basis, the reviewed devices 
were covered when reasonable and necessary and paid under the 
applicable Medicare payment system. Further, in general, there are 
typically many treatment options available in the practice of medicine 
and even if one particular item is not covered, beneficiaries have 
access to other treatment options.
    Comment: Some commenters expressed that beneficiaries and their 
physicians should be provided with more latitude to assess the 
advantages and risks of a medical device to treat an individual's 
specific medical condition.
    Response: Patients and their treating clinicians should have 
latitude to make informed treatment decisions. If we were to guarantee 
coverage of devices based solely on breakthrough status and FDA 
marketing authorization, rather than also consider whether the device 
provides an effective, reasonable and necessary treatment for Medicare 
patients, there may not be enough information for patients and their 
treating clinicians to make an adequately informed decision with 
respect to use of the device for Medicare beneficiaries. Further, there 
may be an incentive for use of a device that has coverage under the 
MCIT pathway rather than a device that is not covered under the MCIT 
pathway which may be more beneficial to patients. This could adversely 
impact beneficiaries if there is another item or service available to 
treat the patient that has an evidence-base to suggest that it may lead 
to better health outcomes for Medicare patients.
    Comment: Commenters asserted that the repeal of the MCIT/R&N final 
rule will undercut evidence development as innovators hold off on study 
development and enrollment while waiting on CMS to conduct rulemaking 
with evidentiary standards and other modifications to the MCIT pathway. 
These commenters also contend that CMS' repeal of the MCIT/R&N final 
rule could further stifle innovation by undercutting incentives to 
encourage investment in device development.
    Response: Innovation is important to CMS and we strongly encourage 
innovators to develop reliable evidence to demonstrate that their 
device is beneficial for Medicare patients. If one of the biggest 
impediments to innovation is uncertainty, demonstrating with reliable 
evidence a device's value in treating Medicare patients will largely 
assist in removing that uncertainty. Ultimately, it is the 
responsibility of the innovator or manufacturer to demonstrate the 
value of their device. Evidence development should continue with or 
without CMS support.
    Final Decision: After review of the public comments received, we 
are finalizing the repeal of the January 2021 MCIT/R&N final rule as 
proposed in the September 2021 proposed rule without modification.

B. Definition of ``Reasonable and Necessary''

    In general, section 1862(a)(1)(A) of the Act permits Medicare 
payment under Part A or Part B for items or services that are 
reasonable and necessary for the diagnosis or treatment of illness or 
injury or to improve the functioning of a malformed body member. The 
definition of ``reasonable and necessary'' in the MCIT/R&N final rule 
mirrored the longstanding CMS Program Integrity Manual's definition of 
``reasonable and necessary'' with a modification to the appropriateness 
factor to specify when and how (upon publication of guidance) we would

[[Page 62953]]

utilize commercial insurer coverage policies.
    Expanding the reasonable and necessary definition to systematically 
consider commercial insurer coverage presents implementation and 
appeals process challenges that would likely persist. In the preamble 
to the MCIT/R&N final rule, in response to commenters concerns that the 
commercial insurer appropriateness criterion was vague, we stated our 
intention to gather additional public input on the methodology by which 
commercial insurers' policies are determined to be relevant to the 
reasonable and necessary appropriateness criteria. We stated that not 
later than 12 months after the effective date of the MCIT/R&N final 
rule (that is, December 15, 2021), we would publish for public comment, 
a draft methodology for determining when commercial insurers' policies 
could be considered to meet the reasonable and necessary definition 
appropriateness criterion for coverage of an item or service. Comments 
received in response to the March 2021 IFC expressed concern about how 
the commercial insurer policy provision would be implemented. 
Commenters also expressed concerns that the R&N definition included in 
the MCIT/R&N final rule, and more specifically the commercial insurance 
aspects of the definition, will remove existing flexibilities and 
potentially impact CMS' ability to ensure equitable health care access 
for all Medicare beneficiaries. Additionally, commenters suggested that 
the reasonable and necessary definition should be included in a 
separate rule as MCIT and R&N are independent and distinct provisions 
with different implications for Medicare policy. In light of our 
proposal to repeal the R&N definition, including the commercial 
insurance aspects of the MCIT/R&N final rule, we will not be issuing 
subregulatory guidance by March 15, 2022, on consideration of 
commercial insurer coverage polices when there is insufficient evidence 
to make a national or local coverage determination.
    While we proposed to fully repeal the MCIT/R&N final rule as it is 
currently written, we invited comments on the R&N aspect of our 
proposal. In lieu of fully repealing the R&N rule, we considered 
whether the final rule should instead merely repeal the commercial 
insurance aspects of the rule. We also asked if CMS does consider 
future rulemaking to include defining reasonable and necessary, what 
criteria should CMS consider as part of the reasonable and necessary 
definition? For example, should CMS maintain the codification of the 
definition of ``Reasonable and Necessary'' as found in the Chapter 13 
of the CMS Program Integrity Manual (PIM) or consider different 
criteria?
    Comment: Most commenters supported the full repeal of the 
reasonable and necessary definition in the MCIT/R&N final rule. Similar 
to the past two public comment periods, many commenters requested that 
CMS bifurcate MCIT and R&N into separate rules because they are 
independent and distinct provisions with different implications for 
Medicare policy. Commenters noted that the codification of a R&N 
definition is significant because it affects all Medicare items and 
services and represents a change from current practice. Commenters 
reiterated their position that the definition needs more public input 
and CMS should ensure it receives feedback from all interested parties, 
which is a broader group than the audience with expertise and interest 
in the MCIT pathway.
    Response: We agree that further stakeholder engagement on the topic 
is warranted; and therefore, we will finalize the repeal of the R&N 
definition. Similar to what we described previously for MCIT, we are 
exploring potential opportunities for obtaining additional stakeholder 
feedback via listening sessions, town hall meetings, or other means. We 
acknowledge the requests made by a number of commenters to bifurcate 
MCIT and R&N into separate rules for the purposes of future rulemaking. 
We will consider these comments as we address these issues in the 
future.
    Comment: The commenters cited concerns that if codified, the 
definition of reasonable and necessary in the MCIT/R&N final rule would 
remove flexibility and may impact CMS's ability to ensure equitable 
health care. Some stated that the definition as finalized would be 
problematic for lab tests.
    Response: Further stakeholder engagement on the topic is warranted. 
We will consider these comments as we address these issues in the 
future.
    Comment: Several commenters questioned whether a codified 
definition is necessary as they believe that the current definition in 
Chapter 13 of the CMS Program Integrity Manual is a sufficient 
framework that preserves the necessary flexibility to provide 
appropriate access. A significant number of commenters indicated their 
support for maintaining the definition in subregulatory guidance. 
Commenters noted that CMS has not provided a clear rationale for why 
codification of the definition in regulation is necessary or beneficial 
and that CMS should more clearly articulate the benefits and drawbacks 
associated with codification as compared to the status quo.
    Response: We will finalize our proposed rule to repeal the R&N 
definition. As noted previously, we believe further stakeholder 
engagement on the definition is warranted. We will consider these 
comments as we address these issues in the future.
    Comment: The majority of commenters supported the repeal of the 
commercial insurer criterion in the R&N definition. Commenters 
reiterated that commercial coverage policies already can (and have 
been) reviewed by CMS as part of the NCD process. Commenters further 
note that formalizing their inclusion could lead to an item or service 
that had been covered previously becoming non-covered depending on how 
a specific commercial payor may have determined coverage. Commenters 
reiterated their concerns regarding implementation of commercial 
insurer policy provisions, the potential of unnecessarily restricting 
coverage by relying on commercial insurer policies designed for a 
different population with different incentives, commercial insurer 
policies' lack of transparency, and potential for fraud and abuse. A 
few commenters cited a concern that some commercial plans consider 
costs in their decisions which could potentially violate the Medicare 
statutory prohibition regarding consideration of cost in coverage 
determinations. Lastly, a commenter questioned why CMS would want to 
cede this authority to other entities.
    Response: We appreciate these comments. We agree with commenters 
that CMS can (and has) reviewed commercial policies in recent years as 
part of a national coverage analysis. After further consideration of 
public comments, we no longer agree with our position in the January 
2021 MCIT/R&N final rule that it is necessary to include regulatory 
language to give us clear authority to review commercial insurers' 
policies. Because we are finalizing the full repeal of the R&N 
definition, we will not be issuing subregulatory guidance on 
consideration of commercial insurer coverage polices when there is 
insufficient evidence to make a national or local coverage 
determination. Further, we would like to clarify that while CMS has a 
long-standing position to not consider costs when making coverage 
determinations, it is not because of a statutory prohibition.
    Comment: Though commenters were largely opposed to the inclusion of 
the commercial insurance aspects of the

[[Page 62954]]

R&N definition, some commenters offered alternative approaches for CMS 
to consider in applying commercial payer policies. Specifically, some 
commenters recommended commercial policies only be utilized as evidence 
to support expansion of coverage on a proposed policy or asking for a 
reconsideration of an existing one.
    Response: We appreciate these comments. As noted previously, we can 
use the private market as a source of evidence for coverage.
    Comment: A few commenters disagreed with CMS' proposal to fully 
repeal the definition of R&N. These commenters expressed their support 
for a R&N definition in line with the definition in Chapter 13 of the 
PIM. One of these commenters specifically encouraged CMS to codify the 
R&N definition stating that it is a much needed step and something that 
CMS has sought to do for decades.
    Response: We appreciate these comments. However, after considering 
the totality of the comments, we believe that the overarching issues 
raised by commenters, in particular issues regarding the need for more 
clarity and broader stakeholder input, warrant further consideration 
and engagement before moving forward with a codified definition of R&N. 
As other commenters noted, a codified definition of R&N is a 
considerable change from current practice and will affect all Medicare 
services. We believe it is important to provide for additional 
stakeholder feedback on this topic that includes a wider group of 
stakeholders than those who may have offered input during rulemaking 
for the MCIT/R&N final rule. We look forward to engaging with 
stakeholders in the future as we determine appropriate next steps that 
are in the best interest of the Medicare program and all stakeholders.
    Comment: Some commenters expressed opposition to only repealing the 
commercial aspects of the R&N definition. A commenter stated that 
trying to leave part of the rule in place now does not provide adequate 
opportunity for comment, as stakeholders do not truly know what is 
being proposed for comment.
    Response: We appreciate these comments. We acknowledge that 
commenters representing a wide range of stakeholder groups want more 
clarity from CMS and more opportunities to provide input before we move 
forward with codifying a definition of R&N. As noted previously, we 
look forward to engaging with stakeholders on this topic.
    Comment: Commenters provided many suggestions as to what criteria 
CMS should consider as part of the R&N definition in response to our 
solicitation for that information in the September 2021 proposed rule. 
Specifically, a commenter noted that a definition of R&N should take 
into consideration the perspective of providers and enhance the ability 
of providers to use their medical judgment. Another commenter stated 
that CMS should adhere to a definition that is patient-focused. Some 
commenters noted that Medicare should consider the definition of 
appropriateness for Medicare beneficiaries since not all beneficiaries 
are aged 65 and older, and all beneficiaries should be considered. A 
commenter recommended that the definition should be expanded to include 
maintenance or prevention of deterioration of function as well. Some 
commenters expressed concern with the inclusion of `safe and effective' 
in the definition and contend that Medicare coverage should not be 
dependent on meeting standards established by FDA for a different 
purpose. Some commenters recommended that CMS eliminate the inclusion 
of ``at least as beneficial as an existing and available medically 
appropriate alternative'' in the definition. A commenter stated that it 
was problematic as it as it appears to impose a comparative 
effectiveness requirement for coverage.
    Response: We appreciate the informative and helpful recommendations 
provided by commenters. We will consider these comments for potential 
future policy development. As noted previously, we intend to provide 
additional opportunities for stakeholders to provide feedback on this 
topic and look forward to further engagement with stakeholders.
    Final Decision: After review of the public comments received, we 
are finalizing the repeal of the January 2021 MCIT/R&N final rule as 
proposed in the September 2021 proposed rule without modification.

C. Effect of Proposed Repeal

    In the September 2021 proposed rule, we stated that if the MCIT/R&N 
final rule is repealed as proposed, the revisions to part 405 of title 
42 of the Code of Federal Regulations would not occur and the text 
would remain unchanged. Specifically, a definition of ``reasonable and 
necessary'' would not be included among the terms defined at 42 CFR 
405.201(b) and the guidance that the rule would have required 
(subregulatory guidance on the topic of utilization of commercial 
insurer polies) would not be introduced. Additionally, subpart F, which 
wholly consisted of Medicare Coverage of Innovative Technology, would 
not be added, and subpart F would remain reserved for other purposes.
    After review of the public comments received, we are finalizing the 
repeal of the January 2021 MCIT/R&N final rule as proposed in the 
September 2021 proposed rule without modification.

III. Regulatory Impact Analysis

A. Statement of Need

    The purpose of this final rule is to repeal the MCIT/R&N final 
rule. As stated in the preceding sections, we are repealing MCIT 
because this coverage policy is not in the best interest of Medicare 
beneficiaries. We are repealing the definition of R&N because further 
stakeholder engagement on the topic is warranted based on stakeholder 
feedback. CMS developed MCIT in part due to concerns that delays and 
uncertainty in Medicare coverage slowed innovation and impaired 
beneficiary access to important new technologies, specifically those 
designated as breakthrough devices by FDA. We believe that the 
finalized MCIT/R&N rule is not in the best interest of Medicare 
beneficiaries because the rule may provide coverage without adequate 
evidence that the Breakthrough Device would be a reasonable and 
necessary treatment for the Medicare patients that have the particular 
disease or condition that the device is intended to treat or diagnose.
    The definition of ``reasonable and necessary'' in the MCIT/R&N 
final rule mirrored the longstanding CMS Program Integrity Manual's 
definition of ``reasonable and necessary'' with a modification to the 
appropriateness factor to specify when and how (upon publication of 
guidance) we would utilize commercial insurer coverage policies. This 
final rule to not codify the definition of R&N maintains the status quo 
with respect to the use of the CMS Program Integrity Manual's 
definition and is responsive to the numerous stakeholders who requested 
that, if CMS were to develop a definition of reasonable and necessary, 
that the stakeholder engagement process would require more than public 
comment via rulemaking.
    Through this final rule we repeal the MCIT/R&N final rule and, as 
stated previously, intend to work with stakeholders to develop a 
coverage policy and definition for R&N that addresses the concerns they 
raised. CMS plans on hosting at least two stakeholder meetings with 
several audiences, including, but not limited to,

[[Page 62955]]

manufacturers, clinicians, patients, and disability groups.
    This final rule repeals the MCIT pathway and codification of the 
definition of ``reasonable and necessary.'' Because the January 2021 
final rule effective date was delayed until December 15, 2021, the MCIT 
coverage pathway and definition of ``reasonable and necessary'' have 
not been implemented, and no payments for items and services have been 
made in relation to these provisions because they have not taken 
effect. In the January 2021 final rule, we included a robust regulatory 
impact analysis of these provisions. Because the final rule did not go 
into effect, and this final rule repeals the provisions, there has not 
been an impact from these provisions nor will there be an impact, 
relative to current coverage practice, upon repeal; however, effects 
would be non-negligible relative to the future trajectory without this 
repeal.
    In the September 2021 proposed rule, we examined the impact of the 
repealing the MCIT/R&N final rule as required by Executive Order 12866 
on Regulatory Planning and Review (September 30, 1993), Executive Order 
13563 on Improving Regulation and Regulatory Review (January 18, 2011), 
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999), the Congressional 
Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year). The MCIT/R&N 2021 final rule reached the economic threshold and 
thus was considered a major rule. Because this final rule completely 
repeals the provisions, this rule also reaches the economic threshold 
and its finalization is a major rule. Accordingly, we have prepared a 
Regulatory Impact Analysis that to the best of our ability presents the 
costs and benefits of the rulemaking. Therefore, based on our 
estimates, OMB's Office of Information and Regulatory Affairs has 
determined that this rulemaking is ``economically significant'' as 
measured by the $100 million threshold, and hence also a major rule 
under Subtitle E of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (also known as the Congressional Review Act).

B. Detailed Economic Analysis

1. MCIT Pathway
    CMS considered alternatives to repealing the MCIT pathway and the 
definition of reasonable and necessary, such as maintaining the 
provisions of the MCIT/R&N final rule and further delaying the 
effective date. For the reasons described in detail in section II. of 
this rule such as patient safety and need for further public 
engagement, we chose to repeal the provisions. We note that further 
delay of the MCIT/R&N final rule would not alter the patient safety 
concerns inherent in the MCIT pathway.
    As described in the MCIT/R&N final rule, the impacts of the MCIT 
pathway and defining ``reasonable and necessary'' were hard to quantify 
without knowing the specific Breakthrough Devices that would seek MCIT 
and other items and services that would be included in future NCDs and 
LCDs and the criteria that CMS would use for determining which 
commercial insurers will be considered.
    In the MCIT/R&N final rule specifically for MCIT, we considered 
regulatory alternatives to combine Medicare coverage with clinical 
evidence development under section 1862(a)(1)(E) of the Act, to take no 
regulatory action, or to adjust the duration of the MCIT pathway.
    The impact of implementing the MCIT pathway was difficult to 
determine without knowing the specific Breakthrough Devices that would 
be covered. In addition, many of these devices would be eligible for 
coverage in the absence of the rule, such as through a local or 
national coverage determination, so the impact for certain items may be 
the acceleration of coverage by just a few months. Furthermore, some of 
these devices would be covered immediately if the MACs decide to pay 
for them, which would result in no impact on Medicare spending for 
devices approved under this pathway. However, it is possible that some 
of these Breakthrough Devices would not otherwise be eligible for 
coverage in the absence of the rule. Because it was not known how these 
new technologies would otherwise come to market and be reimbursed, it 
was not possible to develop a point estimate of the impact. In general, 
we believed the MCIT coverage pathway would have ranged in impact from 
having no impact on Medicare spending to a temporary cost for 
innovations that are adopted under an accelerated basis.
    The decision to enter the MCIT pathway would have been voluntary 
for the manufacturer. Because manufacturers typically join the Medicare 
coverage pathway that is most financially beneficial to them, this 
could result in selection against the existing program coverage 
pathways (to what degree is unknown at this point). In addition, the 
past trend of new technology costing more than existing technology 
could lead to a higher cost for Medicare if this trend continued for 
technologies enrolling in the MCIT pathway. Nevertheless, new 
technology may also mitigate ongoing chronic health issues or improve 
efficiency of services thereby reducing some costs for Medicare.
    To demonstrate the potential impact on Medicare spending, for MCIT 
the CMS Office of the Actuary (OACT) developed three hypothetical 
scenarios that illustrate the impact of implementing the MCIT pathway. 
Scenarios two and three assumed that the device would not have been 
eligible for coverage in the absence of MCIT (see Table 1). The 
illustration used the new devices that applied for a NTAP in fiscal 
year (FY) 2020 as a proxy for the new devices that would utilize the 
MCIT pathway. The submitted cost and anticipated utilization for these 
devices was published in the Federal Register.\8\ In addition, we 
assumed that two manufacturers would elect to utilize the

[[Page 62956]]

MCIT pathway in the first year, three manufacturers in the second year, 
four manufacturers in the third year, and five manufacturers in the 
fourth year each year for all three scenarios. This assumption is based 
on the number of medical devices that received FY 2020 NTAP and were 
non-covered in at least one MAC jurisdiction by LCDs and related 
articles and our impression from the FDA that the number of devices 
granted breakthrough status is increasing. For the first scenario, the 
no-cost scenario, we assumed that all the devices would be eligible for 
coverage in the absence of MCIT. If the devices received coverage and 
payment nationally and at the same time then there would be no 
additional cost under this pathway. For the second scenario, the low-
cost scenario, we assumed that the new technologies would have the 
average costs ($2,044) and utilization (2,322 patients) of similar 
technologies included in the FY 2020 NTAP application cycle. Therefore, 
to estimate the first year of MCIT, we multiplied the add-on payment 
for a new device by the anticipated utilization for a new device by the 
number of anticipated devices in the pathway ($2,044 x 2,322 x 2 = $ 
9.5 million). For the third scenario, the high-cost scenario, we 
assumed the new technologies would receive the maximum add-on payment 
from the FY 2020 NTAP application cycle ($22,425) and the highest 
utilization of a device (6,500 patients). Therefore, to estimate for 
the first year of MCIT, we estimated similarly ($22,425 x 6,500 
patients x 2 = $ 291.5 million). For subsequent years, we increased the 
number of anticipated devices in the pathway by three, four, and five 
in the last two scenarios until 2024.\9\ In addition to not taking into 
account inflation, the illustration does not reflect any offsets for 
the costs of these technologies that would be utilized through existing 
authorities nor the cost of other treatments (except as noted). It is 
not possible to explicitly quantify these offsetting costs but they 
could substantially reduce or eliminate the net program cost. However, 
by assuming that only two to five manufacturers would elect MCIT 
coverage, we implicitly assumed that, while more manufacturers could 
potentially elect coverage under MCIT, the majority of devices would 
have been covered under a different coverage pathway. Therefore, a 
substantial portion of the offsetting costs are implicitly reflected.
---------------------------------------------------------------------------

    \8\ FY 2020 Hospital Inpatient Prospective Payment System (IPPS) 
Proposed Rule (84 FR 19640 and 19641) (May 3, 2019) available at 
https://www.govinfo.gov/content/pkg/FR-2019-05-03/pdf/2019-08330.pdf 
(accessed October 17, 2019).
    \9\ An indirect effect of the final rule would be decreased 
distortions in the labor markets taxed to support the Medicare Trust 
Fund. Such distortions are sometimes referred to as marginal excess 
tax burden (METB), and Circular A-94--OMB's guidance on cost-benefit 
analysis of Federal programs, available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A94/a094.pdf--suggests that METB may be valued at roughly 25 percent of 
the estimated transfer attributed to a policy change; the Circular 
goes on to direct the inclusion of estimated METB change in 
supplementary analyses. If secondary costs and cost savings--such as 
decreased marginal excess tax burden, in the case of this final 
rule--are included in regulatory impact analyses, then secondary 
benefits must be as well, in order to avoid inappropriately skewing 
the net benefits results, and including METB only in supplementary 
analyses provides some acknowledgement of this potential imbalance.
---------------------------------------------------------------------------

    Based on this analysis, there was a range of potential impacts of 
MCIT as shown in Table 1. The difference between the three estimates 
demonstrates how sensitive the impact is to the cost and utilization of 
these unknown devices.
    Because MCIT has not yet been implemented, we lack evidence with 
which to update the earlier estimates, so Table 1, only differs from 
the analogous table accompanying the MCIT/R&N final rule in terms of 
the sign (that is, the direction) on the estimates and a shifting of 
the time horizon by one year so as to avoid stating this MCIT would 
have effects in the nearly-ended FY 2021.

                  Table 1--Illustrated Impact on the Medicare Program by MCIT Coverage Pathway
----------------------------------------------------------------------------------------------------------------
                                                                        Costs (in millions)
                                                 ---------------------------------------------------------------
                                                      FY 2022         FY 2023         FY 2024         FY 2025
----------------------------------------------------------------------------------------------------------------
No-cost Scenario................................              $0              $0              $0              $0
Low-cost Scenario...............................            -9.5           -23.7           -42.7           -66.4
High-cost Scenario..............................          -291.5          -728.8        -1,311.9        -2,040.7
----------------------------------------------------------------------------------------------------------------

    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Some hospitals and other providers and suppliers are 
small entities, either by nonprofit status or by having revenues of 
less than $7.5 million to $38.5 million in any 1 year. Individuals and 
States are not included in the definition of a small entity. For the 
MCIT/R&N final rule, we reviewed the Small Business Administration's 
Table of Small Business Size Standards Matched to North American 
Industry Classification System (NAICS) Codes to determine the NAICS 
U.S. industry titles and size standards in millions of dollars and/or 
number of employees that apply to small businesses that could be 
impacted by this rule. We determined that small businesses potentially 
impacted by that rule include surgical and medical instrument 
manufacturers (NAICS code 339112, dollars not provided/1,000 
employees), Offices of Physicians (except Mental Health Specialists) 
(NAICS code 621111, $12 million/employees not provided), and 
Freestanding Ambulatory Surgical and Emergency Centers (NAICS code 
621493, $16.5 million/employees not provided). Because the impact of 
this final rule is ultimately no change in current coverage policy, we 
determined that small businesses identified would not be impacted by 
this final rule. Given the nature of the breakthrough devices market 
authorized thus far and the timely notification of the MCIT/R&N final 
rule's delay of effective date, we do not anticipate that small 
businesses would have made investment decisions or experienced a loss 
of anticipated positive reimbursement as a result of the MCIT/R&N final 
rule. Because MCIT has not gone into effect, and we are repealing the 
rule, payments have not occurred under MCIT; therefore, the impact of 
this final rule is neither an increase nor decrease in revenue for 
providers. We are not preparing a further analysis for the RFA because 
we have determined, and the Secretary of the Department of Health and 
Human Services (the Secretary) certifies, that this final rule will not 
have a significant negative economic impact on a substantial number of 
small entities because small entities are not being asked to undertake 
additional effort or take on additional costs outside of the ordinary 
course of business.

[[Page 62957]]

    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area for Medicare payment regulations and has fewer than 
100 beds. We are not preparing an analysis for section 1102(b) of the 
Act because we have determined, and the Secretary certifies, that this 
final rule would not have a significant impact on the operations of a 
substantial number of small rural hospitals because small rural 
hospitals are not being asked to undertake additional effort or take on 
additional costs outside of the ordinary course of business. Obtaining 
Breakthrough Devices for patients is at the discretion of providers. We 
are not requiring the purchase and use of Breakthrough Devices. 
Providers should continue to work with their patients to choose the 
best treatment. For small rural hospitals that provide Breakthrough 
Devices to their patients, this final rule would not change the way 
they are currently covered through the Medicare program.
2. ``Reasonable and Necessary'' Definition
    In order to demonstrate the potential impact on Medicare spending 
for the definition of ``reasonable and necessary'' in the MCIT/R&N 
final rule we developed scenarios that illustrated the impact of 
implementing the two alternatives considered (no change/not codifying a 
definition and codifying a definition). One of the options was making 
no change, that is not codifying the definition of ``reasonable and 
necessary'' in regulations. The number of NCDs and LCDs finalized in a 
given year can vary and the cost of items and services within the 
coverage decisions varies. Further, while we reviewed coverage of items 
and services, we did not take into account unique Medicare rules 
regarding which type of providers/clinicians may furnish certain 
services, place of service requirements, or payment rules. Our analysis 
was based on whether Medicare covered or non-covered an item or service 
and based on the numbers of NCDs and LCDs finalized in 2020 (see Table 
1). In 2020, CMS and the MACs finalized 3 NCDs and 31 LCDs. (This 
number represents new LCDs in 2020 and made publicly available via the 
Medicare Coverage Database. If more than one MAC jurisdiction issued an 
LCD on the same item or service with the same coverage decision, only 1 
of the LCDs was included in the count.) Of the NCDs finalized in 2020, 
all 3 resulted in expanded national Medicare coverage. Because none of 
those NCDs resulted in non-coverage, we did not evaluate whether 
commercial insurers would have covered the item or service. Therefore, 
based on 2020 data for NCDs only, the impact would be $0.
    Of the 31 LCDs, 27 provided Medicare positive coverage and 4 
resulted in non-coverage. For these non-covered items and services, we 
established that the possible range of the cumulative cost of covering 
them could be from $0 to $3.4 billion for a single year (based on price 
and approximate Medicare beneficiary utilization). Because our analysis 
looked for any commercial insurer that covered the item or service, the 
cost may be less when utilizing commercial insurer polices that 
represent a majority of covered lives. In addition, even if a 
commercial insurer covers an item or service, the final rule did not 
require automatic Medicare coverage. Therefore, not all items and 
services that are non-covered by Medicare but covered by commercial 
insurance would be presumed covered under the MCIT/R&N final rule. 
Rather, commercial insurer coverage would have been a factor that CMS 
would have taken into account as part of the body of evidence in 
determining coverage through the NCD and LCDs processes. Because not 
all commercial insurer positive coverage will necessarily translate to 
Medicare coverage and because CMS was to define which types of 
commercial insurers (based on majority of covered lives) would be 
relevant, we believe that commercial insurer coverage impact is likely 
much smaller, closer to 15 to 25 percent of $3.4 billion, that is, $51 
to $880 million.

  Table 2--Illustrated Impact for the Medicare Program by Definition of
                        Reasonable and Necessary
------------------------------------------------------------------------
                                 Estimated change in Medicare costs for
                               the alternatives considered for the MCIT/
                                             R&N final rule
                              ------------------------------------------
                               No change (not codifying      Codified
                                     a definition)          definition
------------------------------------------------------------------------
Coverage Determinations (NCDs                       $0   $51-880 million
 and LCDs).
------------------------------------------------------------------------

    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2021, that 
threshold was approximately $158 million. This final rule would not 
impose a mandate that will result in the expenditure by State, local, 
and Tribal Governments, in the aggregate, or by the private sector, of 
more than $158 million in any one year.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a final rule that imposes 
substantial direct requirement costs on State and local governments, 
preempts State law, or otherwise has federalism implications. Since 
this final rule does not impose any costs on State or local 
governments, the requirements of Executive Order 13132 are not 
applicable.
    Comment: A few commenters expressed concerns regarding the 
financial impact of the MCIT/R&N final rule, including that CMS' impact 
estimate of $0 to $4 billion over the first several years indicated 
that CMS could not assess the potential impact given the multiple 
variables involved. Another commenter asserted that the MCIT/R&N final 
rule significantly underestimated anticipated spending and would 
accelerate Medicare Trust Fund insolvency.
    Response: We acknowledge that assessing the financial impact of 
MCIT, with multiple variables and limited access to publicly available 
data to derive impacts, makes it difficult to estimate precise spending 
on the policy. For future rulemaking, we anticipate this estimate to 
become more finely tuned as more public-facing data about Breakthrough 
Devices becomes available.

[[Page 62958]]

C. Alternatives Considered

    CMS considered alternatives to repealing the MCIT pathway and the 
definition of reasonable and necessary, such as maintaining the 
provisions of the MCIT/R&N final rule and further delaying the 
effective date. For the reasons described in detail in section II. of 
this final rule such as patient safety and need for further public 
engagement, we chose to repeal the provisions. We described the impact 
of these MCIT alternatives in Table 1. The alternative considered for 
not codifying the definition of ``reasonable and necessary'' was to 
codify the definition. We describe the impact of codifying the 
definition in Table 2.

D. Accounting Statement and Table

    We have prepared an accounting statement showing the classification 
of the expenditures associated with the provisions of this final rule. 
This table addresses the costs that would have been incurred through 
implementing the MCIT/R&N final rule, but, due to this final rule 
repealing that rule, reflects that those costs will not be incurred 
under the policies.
    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), we have prepared an accounting statement in Table 3 showing the 
classification of the impact associated with the provisions of this 
final rule.

                                                              Table 3--Accounting Statement
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Unit rate
                                        Primary         Minimum         Maximum    ------------------------------------------------    Source citation
             Category                  estimate        estimate        estimate                      Discount rate                     (RIA, preamble,
                                                                                      Year dollar         (%)       Period covered          etc.)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers:
    Federal Annualized monetized    ..............          (34.0)       (1,044.1)            2022               7       2022-2025  RIA: This reflects
     transfers: ``on budget''                                                                                                        the repeal of MCIT.
     ($millions/year)MCIT.                                                                                                           We estimated a zero-
                                                                                                                                     cost scenario for
                                                                                                                                     each of the fiscal
                                                                                                                                     years 2022-2025.
    MCIT..........................  ..............          (34.9)       (1,071.7)            2022               3       2022-2025
    Definition of ``Reasonable and  ..............          (51.0)         (880.0)            2022               7       2022-2025  RIA: This reflects
     Necessary''.                                   ..............  ..............  ..............  ..............  ..............   the repeal of the
                                                            (51.0)         (880.0)            2022               3       2022-2025   reasonable and
                                                                                                                                     necessary
                                                                                                                                     definition.
--------------------------------------------------------------------------------------------------------------------------------------------------------
From whom to whom?................     From: Federal Government
                                                        To: Medicare Providers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Items in parentheses indicate negative numbers.

    This final rule is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress 
and the Comptroller General for review.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on November 9, 2021.

List of Subjects in 42 CFR Part 405

    Administrative practice and procedure, Diseases, Health facilities, 
Health professions, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, X-rays.
    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR part 405 as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority for part 405 continues to read as follows:

    Authority:  42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x, 
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).


Sec.  405.201  [Amended]

0
2. Section 405.201 is amended in paragraph (b) by removing the 
definition for ``Reasonable and necessary''.

Subpart F--[Removed and Reserved]

0
3. Remove and reserve subpart F, consisting of Sec. Sec.  405.601 
through 405.607.

    Dated: November 9, 2021.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-24916 Filed 11-12-21; 8:45 am]
BILLING CODE P