Kevin Connolly, CEO of Vesiflo, recently authored a piece concerning the need to change the CMS review process for medical technology. His belief is that the current CMS policies regarding reimbursement of new technology are harming an entire industry, medical device manufacturing, that is primarily made up of small businesses.
He explains that the U.S. is the historical leader in medical technology, but federal policies are stifling innovation and placing American companies at a competitive disadvantage by forcing them to navigate both FDA regulations and CMS requirements for reimbursement:
Connolly includes some interesting statistics, including the wait time for FDA approval, citing that the industry average for medtech reimbursement is now 3½-5 years from the time of FDA approval.
The FDA review process to determine whether devices are “safe and effective” is rigorous and can be expensive, but is transparent. The agency is staffed by reviewers with subject matter expertise and their pushback is specific and typically actionable. In contrast, there are few specific benchmarks by which CMS determines whether devices are “reasonable and necessary” and decisions are made by reviewers whose identities and qualifications are often unknown. Most important, these decisions are almost invariably negative with regard to new technologies.
Connolly further draws the conclusion about how the long lead time between an application and approval is subsequently passed down to the patient. He writes, “At best, CMS (in)actions mean patients must wait years to benefit from medical devices that the FDA has found to be “safe and effective.” At worst, the double jeopardy created by FDA regulatory and CMS reimbursement processes has resulted in a level of capital risk and time for return on investment that is making medtech uninvestable.”
In fact, reimbursement risk is beginning to rear its ugly head just as the regulatory situation at the FDA’s device arm improves. Connolly cites a Fierce Biotech article that further examines the situation, pointing to the increasingly common instances where conferences that getting paid for innovation by public and private payers (and not FDA regulations) which is now the biggest impediment to more med tech VC deals. The article quotes New Enterprises Associates partner Justin Klein as agreeing with this statement, saying, “I think reimbursement has sort of reasserted itself as the scariest part of investing in med tech.”
For those who are not privy to the world of FDA approval, Connolly outlines the two pathways for reimbursement of medical devices: 1) coverage under CPT codes for devices requiring physician services and 2) coverage under HCPCS codes for devices categorized as supplies. CPT codes are refereed by the American Medical Association, whose review process is challenging, but is conducted according to published rules of evidence and utilization. Both HCPCS coding and coverage decisions are determined by CMS, whose processes are not public and are reflexively negative – no HCPCS codes for new devices were issued in 2015.
While most private payers look to CMS to establish HCPCS codes and determine coverage, Connolly explains that their decision-making process has scant criteria for how coding applications will be judged, how coverage decisions will be made or opportunities to interact with decision makers.
Fixing the HCPCS coverage process requires increased transparency and access to medical expertise. Currently, CMS is hurting its beneficiaries and creating a situation that is not economically sustainable for the companies in medtech who provide innovation.
Connolly cites a rich case history to back up this conclusion, drawing from his own company, Vesiflo. For example, Vesiflo is commercializing a technology, the inFlow™ Urinary Prosthesis, that serves a patient population in acute need, women who cannot empty their bladders due to neurologic disease or injury (advanced MS, SCI, spina bifida, stroke, etc.). Theirs is an incurable condition and their only medical alternative currently is to use urinary catheters every day for the rest of their lives. As a result, these women routinely get catheter-associated infections that can progress to sepsis and kill them. CMS has made reducing these infections one of its highest health care priorities.
The inFlow has been shown to have a lower infection rate than the current standard of care:
“It is noteworthy that the most significant of adverse events – UTI – appears to occur at a lower rate with the inFlow device as compared to CIC [clean intermittent catheterization, the current standard of care].” –FDA 10-14-2014 News Release
The American Urological Association (AUA, the leading medical society concerned with voiding disorders) has officially recommended to CMS that inFlow use be reimbursed and over 1,000 AUA members are on record as wanting to prescribe the inFlow. Its use has also been endorsed by national patient advocacy groups (Underactive Bladder Foundation, MS Society, etc.) as well as by medical experts in female voiding dysfunction:
“There are no good alternatives for women who need chronic catheterization. The inFlow device is truly remarkable in its ability to virtually restore the functional behavior of the urinary bladder. No other product, drug, or device can accomplish this to the same degree.”
– Richard A. Schmidt, M.D.
CMS currently pays for any type of urinary catheter needed by women with neurologically impaired bladder function. The inFlow costs the same or less than these catheters and provides significant therapeutic benefits that no other method can, yet received a non-coverage decision even before submitting a claim. Connolly then poses the question: Why would CMS want to deny these women the right to live safer and more normal lives when it doesn’t cost them anything? In fact, the inFlow will likely save CMS money by decreasing expenses to treat catheter-associated infections.
Connolly’s issues with the CMA review process are not without his own proposed solutions. He writes, citing an MDMA Brief of June 16, 2017: “MDMA urged CMS to implement a revised approach to coverage for innovative devices called “Provisional Accelerated Coverage to Encourage Research (PACER).” Under this approach, CMS would clarify existing statutory authorities to allow CMS and Medicare Administrative Contractors (MACs) to cover certain innovative medical devices and diagnostics following approval by the FDA while the manufacturer voluntarily collects additional data on the technology. Furthermore, we believe that CMS should instruct MACs to rescind all local coverage determinations (LCDs) that presumptively deny coverage for Current Procedural Terminology (CPT) Category III Codes and that CMS should review the Value Based Purchasing (VBP) Program to ensure that it truly promotes high-value care.”