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Speech: Remarks by Administrator Seema Verma at the Medical Device Manufacturers Association Annual Meeting

May 18, 2019 | DMEPOS Suppliers, Leadership

Remarks by Administrator Seema Verma at the Medical Device Manufacturers Association Annual Meeting
(As prepared for delivery – May 2, 2019)

Thank you, Paul, for that kind introduction, and it’s a pleasure to be with all of you today. Earlier this year, we at CMS set forth 16 strategic initiatives, one of which is Fostering Innovation. This spans across the agency — reducing burden through Patients over Paperwork, regulatory reform, and enhancing access to new transformative technologies. Today, I’m pleased to discuss our plan for Fostering Innovation as we focus on overhauling and modernizing CMS’s policies for new technologies.

At CMS, we understand that relentless innovation is a crucial driver in creating value across all industries. As Thomas Edison noted, “There’s always a way to do it better—find it.” Healthcare and technology, of course, are no exceptions.

Our vision is ambitious yet achievable: to protect and secure Medicare and ensure beneficiaries have access to the latest medical technologies. There is no greater need for innovation than in American health care. Today’s innovation and technology will be drivers for reducing costs, improving quality, and increasing access to health care for all Americans for years to come.

Think about it, in recent years—thanks to improved diagnostics and therapies, tools, and technologies—healthcare has witnessed a myriad of innovations designed to extend and improve the quality of our lives.

For example, we need only look at the history of hip replacement surgery. Not long ago, this surgery involved an expensive multi-day hospital stay, lengthy and often exceedingly painful rehab, and a device implant that was susceptible to wear and tear. Today, a patient can have a very different journey: more durable materials, coupled with advances in peri-operative management, have led to shorter hospital stays, lower costs, and improvements in outcomes such as lower surgical revision rates.

Or perhaps a patient is having symptoms indicating a heart attack. Innovative, high-tech tools such as pocket-sized ultrasound connected to a mobile phone can help physicians make a rapid diagnosis and potentially reduce expensive and unnecessary hospital stays.

Undoubtedly, innovation—coupled with the American free market—is the fuel that powers the engine of progress and creativity. That’s why the Trump Administration wants to do everything we can to promote, enhance, and assist it.

Unfortunately, we’re all too aware of the problem. When I came to CMS, I inherited outdated government rules and regulation that stifle innovation and access to innovative treatments. For CMS, as the largest payer in the country, we have a particularly outsized effect on the market. And our often arcane and outmoded regulations around coverage, coding, and payment can lead to unpredictability for innovators. In many cases, it isn’t enough for an innovator to wind their way through the maze of regulations. Because Medicare is set up with defined benefit categories set in law, innovations often can’t be covered or paid for by Medicare without an act of Congress. Meanwhile, there continues to be an ongoing discussion of Medicare for All, a complete government takeover of healthcare. Sitting where I sit, and seeing – on a daily basis – all the problems faced by patients in accessing innovative technology, it’s hard to imagine anyone could advocate for such a takeover. Let me be clear: government run healthcare will stall innovation and risk the development and adoption of new technology. Medicare for All leads to innovation for none.

The advent of novel medical technologies requires CMS to remove barriers to ensure safe and effective treatments are readily accessible to beneficiaries without delaying patient care. In essence, keeping new technologies and treatments moving from bench to bedside—and into the hands of those who need them most.

Currently—as many of you are aware—when it comes to new technology, the CMS process generally involves three elements. One aspect is coverage. CMS coverage decisions are guided by laws and procedures that determine whether CMS makes a National Coverage Determination to cover a new therapy nationwide…or, Medicare Administrative Contractors (or MACs) may make individual Local Coverage Determinations to cover a therapy in their region, leading to inconsistent access.

Another element is coding. Coding decisions are based on whether a new code needs to be developed, or whether an existing code can adequately describe the new therapy.

A third element is payment. CMS makes payment decisions for a new therapy through the Medicare payment systems, with a different decision on how each new therapy is reimbursed. For example, if a new therapy is provided to a beneficiary as part of a hospital stay, Medicare pays for it according to the relevant DRG. This may also include the possibility of a new technology add-on payment (or NTAP) if, for example, the cost of a medical product is significantly more than the current payment. But if a new therapy can be provided in a beneficiary’s home and meets certain criteria, it may be considered Durable Medical Equipment (or DME).

With the remarkable number of transformative technologies coming to market — many with unprecedented price tags — Medicare must develop new frameworks that will support tomorrow’s innovations and endure the test of time.

Simply put, our goal is to get new innovations to our beneficiaries concurrent with FDA approval by (1) removing government barriers to innovation and (2) harmonizing CMS coverage, coding, and payment processes.

That’s exactly what the Trump Administration has been working to do since day one—and we’ve already witnessed substantial accomplishments when it comes to changing outdated and harmful regulations around new technology.

For example:

We’ve undertaken painstaking efforts to unravel – one by one – government-imposed tangles to ensure access to specific technology. This includes a situation where Medicare refused to pay for a glucose meter because the meter could also be used with an app. In another situation, Medicare started paying for disposable insulin pumps more than a decade after private sector insurance had already begun covering it.

We announced that we would consider validated commercial payments in determining payments for certain innovative DME without predecessors in our fee schedule composed in the mid ‘80s, which the Medicare law requires as the starting point for DME payment. And we’re looking for other opportunities to make sure Medicare is getting the best deal for 2020…not 1986.

We’ve advanced proposals to bring telehealth services, remote communication services and monitoring, and care management in the physician fee schedule to all Medicare beneficiaries, not just those in rural areas. We are leveraging for the first time certain technologies that have long been available in the private marketplace. This is a historic advancement designed to improve access for all Medicare beneficiaries.

We also redesigned the LCD process as part of our Patients over Paperwork initiative to ensure a clear roadmap to local coverage. Patients over Paperwork is an agency-wide effort to solicit input from stakeholders on policies that are outdated, redundant, or overly burdensome, and to make updates in response. We believe these changes clarify and simplify the process, helping to ensure that manufacturers get appropriate therapies and medical devices to patients more efficiently. These improvements respond to stakeholders’ suggestions for more transparency, including multiple opportunities for engagement with CMS and our MACs.

We are advancing efforts to lower drug costs while increasing competition and encouraging the development of biosimilars in the United States. In 2018, we changed reimbursement for biosimilars, allowing each biosimilar for a reference product to be coded separately—adding pricing predictability for biosimilar innovators and encouraging their development.

And last week we announced significant payment policy changes to support broad access to transformative technologies, including certain antimicrobial drugs and CAR-T cell therapy. These include an increase to the NTAP, which provides hospitals with additional payments for cases with high costs involving new technologies.

We’ve proposed to modernize payment policies for medical devices that are granted FDA Breakthrough Devices Program designation to expedite their entry into the market. This includes waiving the requirement for “substantial clinical improvement,” which is one of the criteria that must be met for CMS to make additional payments. For devices granted Breakthrough-designated FDA approval, real-world data regarding outcomes in different patient populations is often limited at the time of approval, making it hard for innovators to meet this requirement. Waiving this requirement would provide additional Medicare payment for the technologies for a period of time while real-world evidence is emerging, so Medicare beneficiaries don’t have to wait for access to the latest innovations. After devices have been on the market for two years, they would still have to demonstrate evidence of “substantial clinical improvement” to receive the third year of add-on payment. We’re also considering waiving this requirement for similar “pass through” payments.

Additionally, CMS is soliciting comment on what constitutes “substantial clinical improvement.” This will help innovators better understand how we evaluate applications for NTAP under our payment policies.

These are great first steps, but our work is not done. It’s a vision of fostering innovation to lower cost and improve quality. Ultimately, we want to transform health care to deliver better value and results for Medicare — and all Americans — through competition and innovation.

Fostering innovation is the reason we’re currently examining several new systematic initiatives to speed up the process for engaging with innovators and new technologies.

First, we’re working to enhance transparency and inter-agency coordination for innovators navigating CMS.

Coverage, coding and payment determinations are not always made in a particular sequence. This can lead to unpredictable pathways for innovators with respect to review timelines and engaging with CMS. Innovators and other external stakeholders have therefore asked for better harmonization of these determinations—and for more transparency into our processes.

In addition, CMS would like to provide enhanced guidance on how our processes sync with those at FDA. And we are actively working with FDA even before devices are approved to expedite coverage opportunities for Medicare beneficiaries. Commissioner Gottlieb and I had numerous conversations about this, and I’m looking forward to working together with Acting Commissioner Sharpless. The goal is to enhance coordinated review and minimize redundancies for innovators.

Since my tenure, CMS and FDA have been working together to advance innovation. Some of you may have heard of the formal CMS-FDA Parallel Review Program that grants FDA approval and CMS coverage on the same day. However, not as well publicized have been the multitude of meetings whereby both agencies work together to provide coordinated regulatory and coverage advice to manufacturers. In addition to FDA-approved devices, CMS in coordination with FDA created a policy to cover certain devices in the context of an FDA-approved study. Since 2017, CMS has reviewed and covered close to 200 devices including numerous novel technologies. Our goal is to build on the success of this collaboration and to further enhance our ability to rapidly provide access to transformative technologies.

We’ve also been evaluating how to offer more frequent opportunities to request a HCPCS code, and other refinements to the process.

Innovators like yourselves have expressed particular concern about the length of the coding process, as well as the issuance of temporary vs permanent codes. Temporary HCPCS codes do not have a particular period associated with them, but are issued when there’s a need for a new code outside of the current annual process.

We’ve heard from you that using general codes makes it hard to bill for services, inhibiting your ability to gain a foothold for a product. And we heard that permanent codes should be issued more often to enhance ease of billing for new technologies.

Other innovators have expressed concern with the transparency and predictability of coding decisions, requesting that CMS provide more information regarding denied applications. They’ve also suggested modifications to the factors used to determine if a new code is appropriate; for example, we recently eliminated the requirement that a new item have a three percent market share.

So we’ve been exploring more frequent issuance of HCPCS codes, potentially on a semiannual or quarterly basis. This requires a complete redesign of the process, which is currently annual and includes public meetings to collect broad stakeholder input. But, the Trump Administration is listening, and I am pleased to announce today that, as a result of this exploration and review, we will be changing the current process of allowing only one opportunity per year. There will now be quarterly opportunities for submissions and decisions for drugs and semi-annual opportunities for devices. We expect this will greatly improve the ability of innovators to accelerate through the adoption curve.

On a related note, we’ve been hearing concerns that our Medicare contractors are making decisions to automatically non-cover technologies with category III CPT codes, which are used for emerging technologies. We have also been working to understand this and clarify our view with our contractors. So, I am also pleased to announce that, just this week, we posted answers to commonly asked questions about the LCD process, which explain that contractors are not authorized to make coverage determinations to automatically non-cover any item or service, and must instead follow the new LCD process for each and every local coverage decision they make. This means the contractors cannot make local coverage decisions that automatically non-cover an item or service because it has a category III code.

We are also working with Congress on a raft of legislative changes to address the challenges we face in adapting the Medicare program to modern technology. For example, the President’s Budget proposes expanding coverage of disposable devices, such as innovative glucose monitors and insulin pumps that substitute for a durable device, for use in the management and treatment of diabetes.

Taken together, these steps represent several key components of a comprehensive CMS strategy to address barriers to medical innovation in the Medicare program. If we implement all of these changes, we will ensure beneficiaries have access to the latest technologies in a timely manner; improve the innovator experience with Medicare; create predictable coverage pathways; enhance opportunities for coverage for transformative technologies; reduce wait times for permanent codes; and modernize payment for innovative services.

To achieve these goals, all of us will need to work together towards a modernized CMS that can readily adapt to tomorrow’s innovations.

And we need to work with our external stakeholder community, all of you, to ensure that potential barriers to innovation are identified and addressed as early as possible, so that patient access to transformative technologies is not diminished.

Ultimately, a modernized CMS, with stronger inter-agency collaborations with FDA and NIH, will unleash innovation for years to come, and be a catalyst for improving quality, enhancing access, increasing efficiency, and lowering costs. You’ll be hearing next from Tamara Syrek Jensen, who leads our Coverage and Analysis Group, and has been hard at work to make this vision a reality. I feel privileged to work with Tamara, and I appreciate the tireless efforts from her and her team on behalf of patients across the country.

Of course, whatever CMS is doing to promote and foster innovation is really all about one thing: putting the patient first.

And the changes I’ve outlined today will strengthen Medicare and help patients, but there will always be limitations to a government-run system. When the government controls the process, a group of people in Washington makes decisions about access and payment for the entire country – and, as dedicated as we may be, we aren’t perfect.

The pace of change in government is painfully slow – the problems I’ve laid out today have been in place for years and even decades. We can’t rely on the government to bend the curve on innovation – and a complete government takeover of healthcare through Medicare for All would only stymie this progress without the creativity and accountability that private payers bring to the marketplace.

Innovation proves that in healthcare or any other industry, as Edison said, “there’s always a way to do it better.” So let’s find it together. Thank you, and I wish you a productive, and innovative, conference.

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