Medical Devices Applying for Outpatient Medicare Supplemental Payments.

Abstract

Importance: Medicare transitional pass-through payments (TPTPs) provide supplemental reimbursement that is intended to facilitate adoption of new devices in the outpatient setting. The US Centers for Medicare & Medicaid Services (CMS) have historically evaluated manufacturer applications for TPTPs based on newness, cost, and evidence of substantial clinical improvement, ie, the traditional pathway. In 2020, CMS introduced an alternative pathway to allow US Food and Drug Administration (FDA)-designated breakthrough devices to qualify for supplemental reimbursement without demonstrating substantial clinical improvement.

Objective: To characterize CMS TPTP approval rates and the premarket evidence used by FDA to support authorization of new outpatient medical devices considered for CMS TPTP.

Design and setting: This was a cross-sectional study of TPTP applications for new outpatient medical devices from 2017 to 2023. Using the Federal Register, CMS Outpatient Prospective Payment System final rules for fiscal years 2017 through 2023 were obtained, from which all manufacturer applications for TPTPs were identified. For each application, the CMS TPTP review pathway (traditional/alternative), CMS final decision (award/deny), and FDA authorization pathway were assessed.

Main outcomes and measures: Characteristics of devices considered for CMS TPTPs and design, effectiveness end points, and patient demographic characteristics of premarket clinical studies used to support FDA authorization.

Results: CMS approved 17 of 43 (40%) applications for TPTPs, including all 8 (100%) alternative pathway applications for breakthrough devices and 9 of 35 applications (26%) using the traditional pathway. Devices approved for TPTPs were more likely to have been assessed in premarket clinical studies than devices denied TPTPs (12/17 [71%] vs 2/26 [8%]). Among the 14 premarket studies of TPTP-approved devices, 8 (57%) used surrogate markers as primary effectiveness end points and 5 (42%) did not meet all primary end points. The median (IQR) percentage of female, Black, and Hispanic patients among the trials that reported demographic data was 26% (17%-36%), 6% (2%-17%), and 4% (3%-5%), respectively.

Conclusions and relevance: The findings of this cross-sectional analysis indicated that CMS more commonly awarded supplemental outpatient payment through TPTPs for devices assessed in premarket clinical studies to support FDA authorization. However, these studies often lacked generalizability to Medicare beneficiaries, used surrogate markers of effectiveness, or did not meet all primary end points. As more breakthrough devices receive FDA authorization and effectively qualify for automatic supplemental payments, strengthening premarket clinical evidence requirements for CMS TPTP approvals would provide better information to guide clinical decision-making and ensure that supplemental reimbursement enhances care for Medicare beneficiaries.