CMS and FDA Propose Major Changes for Breakthrough Devices with Proposed Repeal of NTAP “Alternative Pathway” and New “RAPID” Coverage Pathway

The Centers for Medicare & Medicaid Services (CMS) and the Food and Drug Administration (FDA) recently issued two related proposals that, taken together, would significantly alter the pathways available for Medicare coverage and payment for FDA-designated Breakthrough Devices. As described below, in a proposed rule published on April 14, 2026, CMS proposes to repeal the “alternative pathway” that currently allows Breakthrough Devices to qualify for new technology add-on payments (NTAP) without demonstrating substantial clinical improvement.¹ Additionally, on April 23, 2026, CMS and FDA jointly announced a new Regulatory Alignment for Predictable and Immediate Device (RAPID) coverage pathway designed to accelerate nationwide Medicare coverage for eligible Breakthrough Devices, with the goal of issuing a proposed National Coverage Determination (NCD) on the same day that a participating device receives FDA marketing authorization.² Taken together, the changes would increase the evidentiary burden for Breakthrough Devices seeking NTAP, while potentially shortening the time between FDA marketing authorization and nationwide Medicare coverage under the RAPID pathway.

This Alert summarizes the proposals, situates them within the broader history of FDA–CMS coordination efforts, and discusses implications for stakeholders.

I. CMS Proposal to Repeal the NTAP Alternative Pathway

In its annual proposed rule for the fiscal year (FY) 2027 inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system, published on April 14, 2026, CMS proposes to repeal NTAP’s “alternative pathway” for transformative medical devices beginning in FY 2028.³ If finalized, the proposal would make it more difficult for medical devices that previously would have been eligible under the alternative pathway to qualify for NTAP payments.

A. NTAP’s Traditional and Alternative Pathways for Devices

NTAP was established in 2001 in response to concerns that inadequate Medicare payment rates limited Medicare beneficiaries’ access to innovative, high-value technologies. Because a new technology is often more costly than predecessor technologies, and because of the time lag between the market entry of a new technology and CMS’s recalibration of diagnosis-related group (DRG) payment rates to reflect the use of the new technology, initial payment rates may not adequately account for the costs of new technologies.⁴ As a result, financial pressures may deter hospitals from adopting costly technologies, which may limit Medicare beneficiaries’ access to such technologies and their clinical benefits.

Through NTAP, CMS makes supplemental payments to incentivize physicians and hospitals to utilize certain new technologies.⁵ Under NTAP’s “traditional pathway” for establishing eligibility for these supplemental payments, a new medical service or technology is eligible for additional Medicare payments through NTAP if:

• The service or technology is “new,” i.e., (i) the service or technology is not “substantially similar” to one or more existing technologies,⁶ and (ii) CMS has not yet recalibrated the Medicare Severity Diagnosis Related Groups (MS-DRGs), based on available data, to reflect the cost of the technology (which generally occurs two to three years after a new medical service or technology is first introduced on the market) (collectively, the “newness criterion”);
• The medical service or technology is costly such that the applicable MS-DRG rate is inadequate, as determined by CMS based on the criteria set forth at 42 C.F.R. § 412.87(b)(3)⁷ (the “cost criterion”); and
• The service or technology is a substantial clinical improvement over existing services or technologies (the “substantial improvement” criterion).⁸

In 2019, CMS established an “alternative pathway” to NTAP eligibility for certain transformative new devices.⁹ To further improve Medicare beneficiaries’ access to new forms of treatment and beneficial medical technologies, the alternative pathway reduces the eligibility requirements for FDA-designated Breakthrough Devices. Under the alternative pathway, Breakthrough Devices are deemed “new” and not substantially similar to existing technology for purposes of NTAP by virtue of their participation in the Breakthrough Devices program and are not required to demonstrate substantial clinical improvement compared to existing services or technologies.¹⁰ In other words, under the alternative pathway, a Breakthrough Device is eligible for NTAP payments if the cost criterion is met and until CMS recalibrates the applicable DRGs to reflect the costs of the Breakthrough Device.

The alternative pathway appears to have contributed to an increase in NTAP applications for Breakthrough Devices, and, accordingly, may have supported Medicare beneficiaries’ access to such devices: CMS received a total of 47 NTAP applications for FY 2027 (32 applications for the alternative pathway and 15 for the traditional pathway);¹² by contrast, for FY 2020 (the fiscal year immediately before the alternative pathway took effect), CMS received 18 NTAP applications in total.¹³

CMS now proposes to eliminate the NTAP alternative pathway and require all new services and technologies to meet the same traditional pathway eligibility criteria described above. CMS explains in the proposed rule that, as the agency has gained experience, it has developed concerns with the “limited evaluation process for alternative pathway applications” and now believes it is in the best interest of Medicare patients to require that all new technologies approved for NTAP represent a substantial clinical improvement, relative to technologies previously available, with respect to the diagnosis or treatment of Medicare beneficiaries.¹⁴ If the proposed rule is finalized, beginning with NTAP applications for FY 2028, Breakthrough Devices would need to satisfy each of the newness criterion, the cost criterion, and the substantial improvement criterion in order to be eligible for NTAP.¹⁵

B. Potential Impacts on Device Manufacturers

For manufacturers of Breakthrough Devices, the proposed repeal of the alternative pathway may hinder market access and payment predictability by requiring manufacturers to demonstrate that their devices meet the substantial improvement criterion in order to be eligible for NTAP payments. Practically, manufacturers would need to develop evidence that their devices represent a substantial clinical improvement for Medicare beneficiaries before applying for NTAP. Commercially, the higher up-front evidentiary burden is likely to diminish the economic value of obtaining Breakthrough Device designation. While the Breakthrough Devices Program will continue to provide manufacturers with prioritized FDA review as well as enhanced opportunities to interact with FDA experts during the premarket review process, Breakthrough Device designation would no longer provide the same downstream reimbursement shortcut offered by the alternative pathway. Further, if fewer Breakthrough Devices receive NTAP payments as a result of the change, adoption of such devices by physicians and hospitals could slow, which in turn could delay the generation of real-world evidence regarding such devices.

The proposed repeal of the alternative pathway contrasts with prior Trump administration efforts to make Medicare reimbursement more accessible for Breakthrough Devices. In January 2021, under the first Trump administration, CMS finalized a rule establishing a new Medicare Coverage of Innovative Technology (MCIT) pathway, which would have provided automatic nationwide Medicare coverage for Breakthrough Devices, beginning on the date of FDA marketing authorization and continuing for up to four years, unless CMS determined that the device did not fall within an existing Medicare benefit category or was otherwise excluded from coverage by statute.¹⁶ At the time, CMS explained that MCIT was intended to improve Medicare beneficiaries’ access to new, innovative Breakthrough Devices and encourage innovation for patients, consistent with President Trump’s Executive Order 13890 (Oct. 3, 2019).¹⁷ Although CMS has recently announced new efforts to support Medicare coverage for Breakthrough Devices—namely, the RAPID coverage pathway described in more detail below—repeal of the NTAP alternative pathway could reduce incentives for the medical innovations that the Trump administration has previously sought to promote.

The proposed rule is open for public comment through June 9, 2026.

II. The Proposed RAPID Coverage Pathway

On April 23, 2026, CMS and FDA announced a new RAPID coverage pathway for FDA-designated Breakthrough Devices.¹⁸ To reduce delays between FDA marketing authorization and NCDs for Breakthrough Devices that address Medicare beneficiaries’ unmet medical needs, CMS and FDA will engage collaboratively with device manufacturers seeking FDA marketing authorization so that evidence generated for FDA review can also support Medicare coverage decisions. Under the RAPID coverage pathway, CMS will issue a proposed NCD the same day a participating device receives FDA marketing authorization, triggering a 30-day comment period. A final NCD may follow shortly thereafter, potentially enabling nationwide Medicare coverage in as little as two months after FDA marketing authorization—a meaningful acceleration compared to the year or more typically required at present.

Eligibility for the RAPID coverage pathway will be limited to devices that meet each of the following three criteria:

• the device is designated by FDA as a Breakthrough Device;
• the device is either a Class II device participating in FDA’s Total Product Life Cycle Advisory Program (TAP) or a Class III device; and
• the device is the subject of an Investigational Device Exemption (IDE) study that enrolls Medicare beneficiaries and studies clinical health outcomes agreed upon by FDA and CMS.

The April 23 announcement anticipates publication in the Federal Register of a formal proposal detailing the pathway sometime “soon”; the proposal will then be open for public comment for 60 days and followed by a final notice. CMS and FDA expect to launch the new pathway when the final notice is published, but the agencies have not indicated when the launch date might be expected.

A. CMS–FDA Collaborations, from Parallel Review to the RAPID Coverage Pathway

CMS and FDA have been exploring integrated FDA premarket review and Medicare coverage review for roughly two decades, with limited success. Parallel review was first proposed in early 2005 under then HHS Secretary Tommy Thompson, who envisioned that greater collaboration between FDA and CMS would speed patient access to innovative medical products, create new efficiencies, and spur medical product development. In 2010, FDA and CMS took tentative steps toward parallel review by entering into a memorandum of understanding (MOU) intended to “promote collaboration and enhance knowledge and efficiency by providing for the sharing of information and expertise” between the agencies and “[b]uild infrastructure and processes that meet the common needs for evaluating the safety, efficacy, utilization, coverage, payment, and clinical benefit of drugs, biologics and medical devices.”¹⁹

Parallel review finally became a reality when the current Parallel Review program launched as a pilot program in 2011, with the goal of providing Medicare beneficiaries earlier access to innovative medical technologies by reducing the time between FDA marketing authorization and Medicare coverage decisions.²⁰ The Parallel Review program was extended indefinitely in 2016,²¹ but a decade later, the program still has produced exceedingly few success stories. As of December 2024, CMS and FDA had received 97 formal requests to participate in Parallel Review, but only two devices—Exact Sciences’s Cologuard in 2014 and Foundation Medicine’s FoundationOne CDx in 2017—had successfully completed Parallel Review.²² Concerns expressed by industry stakeholders over the years regarding Parallel Review suggest potential causes of the program’s limited utilization. First, providing Medicare coverage exclusively through NCDs may deter manufacturers from utilizing Parallel Review, as manufacturers risk receiving a negative NCD that would prohibit Medicare coverage nationwide. Manufacturers generally prefer to achieve Medicare coverage incrementally through the local coverage determination (LCD) process, which is perceived as less risky.²³ Second, designing a clinical trial that satisfies both agencies’ needs might increase trial costs and complexity, potentially delaying a device’s time to market.²⁴ Third, manufacturers have expressed concerns regarding confidentiality and trade secret protections under Parallel Review. FDA’s premarket review process protects trade secrets and other proprietary information contained in applications, whereas the NCD process is required by statute to be a public process.²⁵ Although CMS and FDA have made assurances that the agencies will safeguard and limit access to information submitted for Parallel Review,²⁶ manufacturer comments submitted in response to this notice suggest that these assurances do not fully assuage manufacturers’ concerns.²⁷ Fourth, some have worried that the agencies’ collaboration could lead to intermingling of the agencies’ missions and statutory mandates and that CMS’s cost and coverage concerns might inappropriately influence FDA marketing authorization decisions.²⁸

The RAPID coverage pathway appears to build upon the Parallel Review program, but with key differences related to device eligibility, requirements for study design, degree of agency collaboration, and predictability of timing for Medicare coverage.

Compared to Parallel Review, eligibility for the RAPID coverage pathway is more limited: whereas Parallel Review is available broadly to devices requiring either PMA or de novo classification, RAPID eligibility is limited to FDA-designated Breakthrough Devices that are either Class II devices participating in TAP or Class III devices. With respect to study design, the RAPID coverage pathway appears to be more prescriptive: the Parallel Review program requires manufacturers to engage with FDA and CMS at the clinical trial design stage and incorporate feedback from both agencies, whereas the RAPID coverage pathway requires devices to be the subject of an IDE study that enrolls Medicare beneficiaries and studies clinical health outcomes agreed upon by FDA and CMS.

The RAPID coverage pathway also appears to contemplate a greater degree of collaboration and coordination between FDA and CMS, whereas under Parallel Review, the agencies independently review clinical data to determine whether the evidence meets their respective standards. With respect to Medicare coverage timing, the RAPID coverage pathway provides that CMS will issue a proposed NCD the same day a participating device receives FDA marketing authorization, whereas the Parallel Review program does not specify the timing of CMS’s Medicare coverage determination. Finally, whereas Parallel Review is expressly limited to no more than five candidates per year, CMS and FDA have not addressed whether the agencies will impose similar capacity limits for the RAPID coverage pathway.

B. Devices Most Likely to Benefit from the RAPID Pathway

In October 2022, as part of the Medical Device User Fee Agreement (MDUFA) V reauthorization, FDA launched the TAP Pilot, which is intended to speed the development of innovative medical devices by providing sponsors with early and frequent “high-speed interactions” with FDA and other stakeholders, including patients, providers, and payers. Despite providing a forum for discussions with payers, CMS has historically not been included in TAP interactions. As of April 23, 2026, 122 devices have been enrolled in the TAP Pilot since the program’s launch, and FDA is expanding the types of devices that are eligible for participation in the program.

As discussed above, Class II devices must participate in the TAP Pilot to be eligible for the RAPID coverage pathway. Therefore, Class II devices under the RAPID pathway will already benefit from enhanced communications with FDA and other stakeholders under the TAP Pilot. Class III devices are not required to participate in the TAP Pilot as a prerequisite to inclusion in the RAPID pathway. Nevertheless, Class III devices that qualify for the RAPID pathway may already participate in the TAP Pilot and benefit from enhanced FDA and stakeholder communications under the program.

The RAPID coverage pathway will likely present the greatest value for high-risk, evidence-intensive Breakthrough Devices, particularly Class III products requiring PMA approval that target serious or life-threatening conditions common in the Medicare population (e.g., therapies and diagnostics where FDA review already depends on prospective IDE studies with meaningful clinical endpoints). Additionally, a subset of Class II Breakthrough Devices that participate in the TAP Pilot stands to benefit from the RAPID pathway. The Class II devices most likely to benefit from RAPID participation include more complex technologies, such as novel diagnostics.

Based on the information provided regarding the RAPID pathway to date, there would not be any meaningful change in FDA communications compared to the TAP Pilot. However, RAPID participants could potentially benefit from enhanced CMS communications and a meaningful reduction in the lag between FDA marketing authorization and Medicare coverage.

C. Looking Forward

Despite the limited details provided to date regarding the RAPID coverage pathway, industry groups have nevertheless responded positively to the announcement. In a press release following the agencies’ announcement, AdvaMed called the announcement “a positive step toward expanding Medicare beneficiaries’ access to the FDA-authorized, safe, and effective breakthrough medtech they desperately need.”²⁹ Similarly, the Medical Device Manufacturers Association stated that “[t]he RAPID coverage pathway holds significant promise to alleviate the problem of delayed access for Medicare beneficiaries to the newest medical devices and diagnostic tests, and to strengthen the United States’ position as the global leader in medical technology.”³⁰ However, AdvaMed emphasized that the program’s value would ultimately depend on its implementation, stating that “[w]ithout meaningful timelines, accountability, and effective management of this program, patients are unlikely to see the full benefits of new technologies.”³¹ Indeed, if FDA and CMS cannot address the perceived limitations and shortcomings of Parallel Review such as those described above, the RAPID coverage pathway may similarly bear limited fruit. Until the agencies promulgate further guidance regarding RAPID, it will remain unclear how—or whether—the agencies will do so.

The future of the RAPID coverage pathway may also depend on Congress. The Ensuring Patient Access to Critical Breakthrough Products Act of 2025 (H.R. 5343/S. 1717), currently pending in Congress, proposes to amend the Social Security Act to provide four years of “transitional” Medicare coverage automatically upon a device being designated as a Breakthrough Device. Despite its projected costs—the Congressional Budget Office estimated that enacting the bill would increase direct spending by $906 million over 10 years, although this estimate assumed that Breakthrough Devices granted transitional coverage would also qualify for NTAP³²—the bill has received bipartisan support. In September 2025, the House Ways and Means Committee voted 37-3 to advance the bill to the full House of Representatives. Additionally, on April 21, 2026, a group of 82 bipartisan lawmakers called on HHS and CMS leaders to “use H.R. 5343 as a model for new regulation to ensure access to these innovative treatment and diagnostic devices”—essentially, to revive the MCIT pathway.³³ It remains to be seen whether the Ensuring Patient Access to Critical Breakthrough Products Act of 2025 will become law. Over the past decade, Congress has repeatedly considered similar proposals to provide automatic, time-limited Medicare coverage to Breakthrough Devices, without any such bills advancing to a vote before either chamber of Congress.³⁴ Only time will tell whether a better fate is in store for the current bill.

III. Conclusion

Taken together, CMS’s proposed repeal of the NTAP alternative pathway and the proposed RAPID coverage pathway could materially reshape the coverage and reimbursement landscape for FDA-designated Breakthrough Devices by increasing the evidentiary burden for NTAP while potentially accelerating nationwide Medicare coverage for certain eligible devices. As the agencies provide additional details and the comment processes unfold, device manufacturers and other stakeholders should continue to monitor these developments and assess how these changes may affect development plans, market access timelines, and commercialization.

For questions about these developments or assistance in preparing comments, please contact one of the authors or your usual Ropes & Gray advisor.