On May 2, the Centers for Medicare and Medicaid Services (CMS or the Agency) announced in a press release that it will be changing how frequently the Agency reviews applications for new and revised Level II codes under the Healthcare Common Procedure Coding System (HCPCS). Specifically, CMS stated that the Agency “is moving to a process with quarterly opportunities to apply for drugs, and semi-annual opportunities to apply for devices.”
CMS Administrator Seema Verma discussed this change, among other policies and proposals relating to coverage, HCPCS Coding and payment, in a speech to the Medical Device Manufacturers Association that outlined CMS’s “plan for Fostering Innovation.” According to CMS, these efforts are part of the Agency’s “comprehensive strategy to improve patients’ access to emerging technologies” and are intended “to unleash innovation in our healthcare system.” An overview of key updates addressed in Administrator Verma’s remarks follows below. For certain payment proposals relating to new technology add-on payments, CMS is currently accepting public comments through June 24, 2019.
HCPCS Coding: Changes To The HCPCS Level II Application Process
- Increased Frequency of Reviews. For HCPCS Level II coding requests, CMS has stated it will move to a process with quarterly opportunities to apply for drugs and semi-annual opportunities to apply for devices. The current process allows only one opportunity per year for applicants to submit and have CMS review HCPCS Level II coding requests. Administrator Verma stated that this change is expected to improve “the ability of innovators to accelerate through the adoption curve.” Administrator Verma’s remarks and the related CMS press release indicate that additional details about this change will be forthcoming. Further, at the HCPCS public meetings on May 13–15, 2019, CMS indicated that the Agency plans to offer opportunities for stakeholder input as it works to implement this change.
- Additional Recently Announced Changes. The timing change for HCPCS Level II coding requests and reviews builds on other changes CMS previously announced regarding the HCPCS Level II coding criteria and application process. For example, as Administrator Verma highlighted in her May 2 remarks, CMS has removed the requirement that non-drug products must demonstrate a 3% market share to qualify for a new HCPCS Level II code. CMS also has implemented recent changes that include (1) conducting a beta test for online application submission with a limited number of stakeholders; (2) facilitating remote participation in HCPCS public meetings; and (3) providing an online archive of past years’ files and decisions on the CMS.gov HCPCS website.
Coverage: Local Coverage Determination (Lcd) Clarifications And Process Updates
- Clarification Regarding LCDs and Technologies With Category III Current Procedural Terminology (CPT) Codes. Administrator Verma stated that CMS has “been hearing concerns that [the Agency’s] Medicare contractors are making decisions to automatically non-cover technologies with category III CPT codes, which are used for emerging technologies.” In response to these concerns, she said, CMS has been working to clarify its view with contractors and has posted online a set of questions and answers (Qs & As) about the LCD process, “which explain that [Medicare] contractors are not authorized to make coverage determinations to automatically non-cover any item or service.” Instead, she added, Medicare contractors must follow the LCD process “for each and every local coverage decision they make” and “cannot make local coverage decisions that automatically non-cover an item or service because it has a category III code.”
- LCD Qs & As. The Agency’s clarification regarding category III CPT codes was one of several topics and clarifications addressed in the LCD process Qs & As document that CMS recently posted online.
Payment: New Technology Add-on Payment (NTAP) Proposals In The FY2020 Hospital Inpatient Prospective Payment System (HIPPS) Proposed Rule
- Proposed Increase in Maximum NTAP Amount. Administrator Verma’s May 2 remarks described CMS’s recent proposal to increase the maximum NTAP amount as one of several “significant payment policy changes” that CMS has proposed “to support broad access to transformative technologies.”
- Currently, the maximum add-on payment is equal to the lesser of (1) 50% of the costs of the new medical service or technology; or (2) 50% of the amount by which the costs of the case exceed the standard bundled payment. In the FY2020 HIPPS proposed rule, published in the Federal Registeron May 3, 2019, CMS stated that “capping the add-on payment amount at 50% could, in some cases, no longer provide a sufficient incentive for the use of new technology.” CMS has proposed to address this by increasing the maximum add-on payment amount to 65% (instead of the current 50%) for hospital discharges occurring on or after October 1, 2019.
- Proposed New NTAP Pathway for Breakthrough Devices. Administrator Verma also noted CMS’s recent proposal to waive certain NTAP application criteria for devices that have received marketing authorization from the Food and Drug Administration (FDA) and are part of the FDA’s Breakthrough Device Program. Specifically, CMS has proposed that, for NTAP application purposes, such devices would (1) be considered new and not substantially similar to an existing technology and (2) not need to satisfy 42 C.F.R. § 412.87(b)(1), which requires that the device represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.
- Invitation for Comments on NTAP Substantial Clinical Improvement Criterion. In the FY2020 HIPPS proposed rule, CMS also discusses and invites comments on the Agency’s application of and requirements for satisfying the “substantial clinical improvement” criterion under the HIPPS NTAP policy (and under the Hospital Outpatient Prospective Payment System transitional pass-through payment policy for devices). CMS states that the comments received on this topic “will inform future rulemaking after” the FY2020 HIPPS final rule. As noted above, for stakeholders who wish to respond to this request for information or other NTAP-related proposals in the FY2020 HIPPS proposed rule, comments are due to CMS by June 24, 2019.
Stakeholders should monitor these developments closely and consider active participation in available comment opportunities as CMS moves forward with these initiatives and efforts to improve patient access to new innovative technologies.
For More Information: https://www.sidley.com/en/insights/newsupdates/2019/05/cms-announces-coding