CMS Finalizes New Transitional Coverage for Emerging Technologies (TCET) Pathway to Expedite Medicare Coverage of FDA Breakthrough Devices

Introduction

On August 12, 2024, the Centers for Medicare & Medicaid Services (“CMS”) published a final notice (“Final Notice”) describing the process and procedures for the Transitional Coverage for Emerging Technologies (“TCET”) pathway.¹ The TCET pathway utilizes current national coverage determination (“NCD”) and coverage with evidence development (“CED”) processes to expedite Medicare coverage of certain devices designated as Breakthrough Devices by the Food & Drug Administration (“FDA”).² Through the TCET pathway, technologies with the potential to deliver improved outcomes to the Medicare population, but that do not yet meet the reasonable and necessary standard for coverage under the Social Security Act, can receive time-limited Medicare coverage.³

The TCET pathway is intended to balance multiple considerations when making coverage determinations, including (1) facilitating early, predictable, and safer beneficiary access to new technologies; (2) reducing uncertainty about coverage by evaluating early the potential benefits and harms of technologies with manufacturers; and (3) encouraging evidence development if notable evidence gaps exist for coverage purposes. CMS anticipates accepting up to five TCET candidates per year, and for technologies accepted into and continuing in the TCET pathway, CMS’s goal is to finalize an NCD within six months after FDA market authorization.

CMS intends for the TCET pathway to benefit both manufacturers and Medicare beneficiaries. For manufacturers, TCET aims to offer a more efficient and transparent Medicare coverage review process that allows for enhanced communications between industry and CMS, clear evidence requirements, and defined timelines for final coverage actions. For Medicare beneficiaries, TCET offers access to the latest medical innovations while ensuring these new technologies are appropriate and beneficial to the Medicare population based on data and available evidence.

The TCET pathway represents the culmination of years of agency deliberation regarding how to address the substantial time lag between FDA authorization of medical devices and Medicare coverage of the same. In January 2021, CMS appeared to be poised to address this topic when the agency finalized a rule establishing a novel Medicare Coverage of Innovative Technology (“MCIT”) pathway, which would have provided national coverage for Breakthrough Devices unless CMS determined that the device did not fall within an existing Medicare benefit category or was otherwise excluded from coverage by statute. However, following the change in presidential administration, CMS reversed course in November 2021 and repealed the MCIT final rule before it went into effect.

CMS asserts that the new TCET pathway improves upon MCIT. In contrast to MCIT, the TCET pathway includes a mechanism to coordinate benefit category, coding, and payment reviews, encourages evidence development if notable evidence gaps exist for coverage purposes, and incorporates patient safeguards intended to ensure that devices are clinically appropriate for the Medicare patient population. Nevertheless, some commenters expressed concerns that the TCET pathway does not go far enough and voiced their support for automatic, immediate coverage upon FDA market authorization. Pending legislation may grant these commenters’ wish: the Ensuring Patient Access to Critical Breakthrough Products Act of 2023, if passed, would provide four years of Medicare coverage to any device designated as a Breakthrough Device.

Eligibility

Eligibility for the TCET pathway is limited to devices that are (1) designated by FDA as Breakthrough Devices; (2) determined to be within a Medicare benefit category; (3) not already the subject of an existing Medicare NCD; and (4) not otherwise excluded from coverage through law or regulation. Additionally, although in vitro diagnostic (“IVD”) products such as diagnostic laboratory tests are not categorically excluded from the TCET pathway, CMS intends to prioritize TCET nominations of non-IVD devices. CMS believes that the majority of coverage determinations for IVDs granted Breakthrough Device designation should continue to be determined by Medicare Administrative Contractors and notes that a manufacturer of a Breakthrough-designated IVD product who wishes to seek national coverage may utilize the traditional NCD request process.

III. Procedures for the TCET Pathway

The TCET pathway has three stages: (1) pre-market; (2) coverage under the TCET pathway; and (3) transition to post-TCET coverage.

1. Pre-market

a. Non-Binding Letter of Intent. Manufacturers may submit a non-binding letter of intent to nominate a potentially eligible device for the TCET pathway approximately 18 to 24 months before anticipated FDA marketing authorization (as determined by the manufacturer). The submission of a non-binding letter of intent is intended to improve CMS’s ability to track potential candidates, coordinate with FDA, and make operational adjustments, and may avoid delays in TCET reviews.

b. Nominations for the TCET Pathway. Manufacturers should submit TCET pathway nominations approximately 12 months prior to when the manufacturer anticipates an FDA decision on a submission. Since TCET is forward-looking and extensive pre-market engagement is essential, nominations for Breakthrough Devices anticipated to receive an FDA decision on market authorization within six months may not be accepted.

c. CMS Review of Nominations. CMS will accept suitable TCET candidates quarterly. If a suitable nomination is not selected in the first review, it will be automatically considered in the subsequent quarter. Following the submission of a complete TCET nomination, CMS will offer an initial meeting with the manufacturer to review the nomination within 20 business days of receipt of a complete nomination. Additionally, CMS will meet with FDA to gain a better understanding of the device and potential FDA review timing.

If all other pathway criteria have been met and CMS believes that the device is likely to be payable through one or more benefit categories, the device may be accepted into the TCET pathway.⁴ In cases where CMS does not accept a nomination, CMS will offer a virtual meeting with the manufacturer to answer any questions and discuss other potential coverage pathways.

d. Evidence Preview

Following acceptance into the TCET pathway, CMS will initiate an Evidence Preview (“EP”), which is a systematic literature review intended to provide early feedback on the strengths and weaknesses of the publicly available evidence for a specific item or service. CMS anticipates that the EP will take approximately 12 weeks to complete once the review is initiated. However, additional time may be needed to complete the review if the technology is novel, has conflicting evidence, or other unanticipated issues arise.

Based on the findings of the EP literature review, CMS will share the EP with the manufacturer and will offer a meeting to discuss it. Manufacturers will have further input into the EP before it is finalized. Upon finalizing the EP, manufacturers may request a meeting to discuss the strengths and weaknesses of the evidence and discuss the available coverage pathways.

e. Evidence Development

If evidence gaps are identified during the EP, the manufacturer should submit an evidence development plan (“EDP”) to CMS that addresses the evidence gaps.⁵ This EDP should be submitted to CMS simultaneously with the formal NCD request cover letter.

CMS’s goal is to have a finalized EDP no later than 90 business days after FDA market authorization. Once CMS receives the EDP from the manufacturer, CMS will have 30 business days to review the proposed EDP and provide written feedback to the manufacturer. After providing written feedback, CMS will schedule a meeting with the manufacturer to discuss any recommended refinements and address any questions. Following the EDP meeting, the manufacturer and CMS will have another 60 business days to make any adjustments to the EDP.

Because of the tight timeframes needed to effectuate CMS’s goal of finalizing a TCET NCD within six months after FDA market authorization, manufacturers are encouraged to begin developing a proposed EDP as soon as possible after receiving the finalized EP and to submit an EDP to CMS as soon as possible after FDA market authorization.

2. Coverage under the TCET Pathway

If a device that is accepted into the TCET pathway receives FDA market authorization, CMS will initiate the NCD process by posting a tracking sheet, pending an approved EDP in cases where there are evidence gaps as identified in the EP. The process for Medicare coverage under the TCET pathway follows the NCD statutory timeframes.⁶

The duration of transitional coverage through the TCET pathway will be tied to the approved EDP. Coverage under the TCET will continue only as long as needed to facilitate the timely generation of evidence that can inform patient and clinician decision-making, but CMS anticipates that the transitional coverage period may typically last for five or more years as evidence is generated to address evidence gaps identified in the EP.

3. Transition to Post-TCET Coverage

TCET provides time-limited coverage for devices with the potential to deliver improved outcomes to the Medicare population but do not yet meet the reasonable and necessary standard for coverage under section 1862(a)(1)(A) of the Social Security Act. As such, TCET coverage is conditioned on further evidence development as agreed in the approved EDP.

CMS intends to initiate an updated evidence review within six calendar months of the review date specified in the EDP. This review will be performed in collaboration with an outside contractor who will perform a qualitative evidence synthesis and compare those findings against the benchmarks for each outcome specified in the original NCD. Based upon the updated evidence review and consideration of any applicable practice guidelines, CMS, when appropriate, will open an NCD reconsideration by posting a proposed decision that proposes one of the following outcomes: (1) an NCD without evidence development requirements; (2) an NCD with continued evidence development requirements; (3) a non-coverage NCD; or (4) permitting local MACs to make coverage decisions on a claim-by-claim basis.

Next Steps

CMS intends to review TCET pathway nominations on a quarterly basis. The agency anticipates accepting up to five TCET candidates per year. Nominations must be submitted by October 31, 2024 to be considered for the first quarterly review; the deadlines for the next three quarterly review cycles are January 31, 2025, April 30, 2025, and July 31, 2025. 

More information regarding the TCET pathway is available at the CMS Medicare Coverage Center. If you have any questions, please contact any of the authors or your usual Ropes & Gray advisor.