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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations CMS coverage; as such, we requested comment on a policy option of shortening of the duration of the MCIT
pathway from the proposed 4 years to 1
year.
The impact of implementing the MCIT pathway is difficult to determine without knowing the specific technologies that would be covered. In addition, many of these technologies would be eligible for coverage in the absence of this rule, such as through a local or national coverage determination, so the impact for certain items may be the acceleration of coverage or adoption by just a few months. Furthermore, some of these devices would be covered immediately if the MACs decide to pay for them, which would result in no impact on Medicare spending for devices approved under this pathway. However, it is possible that some of these innovative technologies would not otherwise be eligible for coverage in the absence of this rule. Because it is not known how these new technologies would otherwise come to market and be reimbursed, it is not possible to develop a point estimate of the impact. In general, we believe the MCIT coverage pathway would range in impact from having no impact on Medicare spending, to a temporary cost for innovations that are adopted under an accelerated basis.
The decision to enter the MCIT
pathway is voluntary for the manufacturer. Because manufacturers typically join the Medicare coverage pathway that is most beneficial to them, this could result in selection against the existing program coverage pathways to what degree is unknown at this point.
In addition, the past trend of new technology costing more than existing technology could lead to a higher cost for Medicare if this trend continued for technologies enrolling in the MCIT

pathway. Nevertheless, new technology may also mitigate ongoing chronic health issues or improve efficiency of services thereby reducing some costs for Medicare.
In order to demonstrate the potential impact on Medicare spending, the CMS
Office of the Actuary OACT developed three hypothetical scenarios that illustrate the impact of implementing the proposed MCIT pathway. Scenarios two and three assume that the device would not have been eligible for coverage in the absence of the proposed rule. See Table 2 The illustration used the new devices that applied for a NTAP
in FY 2020 as a proxy for the new devices that would utilize the MCIT
pathway. The submitted cost and anticipated utilization for these devices was published in the Federal Register.16
In addition, we assumed that two manufacturers would elect to utilize the MCIT pathway in the first year, three manufacturers in the second year, four manufacturers in the third year, and five manufacturers in the fourth year each year for all three scenarios. This assumption is based on the number of medical devices that received FY 2020
NTAP and were non-covered in at least one MAC jurisdiction by LCDs and related articles and our impression from the FDA that the number of devices granted breakthrough status is increasing. For the first scenario, the nocost scenario, we assumed that all the devices would be eligible for coverage in the absence of the proposed rule. If the devices received payment nationally and at the same time then there would be no additional cost under this pathway. For the second scenario, the low-cost scenario, we assumed that the new technologies would have the average costs $2,044 and utilization 2,322 patients of similar technologies
3007

included in the FY 2020 NTAP
application cycle. Therefore, to estimate the first year of MCIT, we multiplied the add-on payment for a new device by the anticipated utilization for a new device by the number of anticipated devices in the pathway $2,044 2,322 2 = $9.5
million. For the third scenario, the high-cost scenario, we assumed the new technologies would receive the maximum add-on payment from the FY2020 NTAP application cycle $22,425 and the highest utilization of a device 6,500 patients. Therefore, to estimate for the first year of MCIT, we estimated similarly $22,425 6,500
patients 2 = $291.5 million. For subsequent years, we increased the number of anticipated devices in the pathway by three, four, and five in the last two scenarios until 2024.17 In addition to not taking into account inflation, the illustration does not reflect any offsets for the costs of these technologies that would be utilized through existing authorities nor the cost of other treatments except as noted. It is not possible to explicitly quantify these offsetting costs but they could substantially reduce or eliminate the net program cost. However, by assuming that only two to five manufacturers will elect MCIT coverage, we have implicitly assumed that, while more manufacturers could potentially elect coverage under MCIT, the majority of devices would have been covered under a different coverage pathway. Therefore, a substantial portion of the offsetting costs are implicitly reflected.
Based on this analysis, there is a range of potential impacts of the proposed MCIT coverage pathway as shown in Table 2. The difference between the three estimates demonstrates how sensitive the impact is to the cost and utilization of these unknown devices.

TABLE 3ILLUSTRATED IMPACT ON THE MEDICARE PROGRAM BY MCIT COVERAGE PATHWAY
Costs in millions FY 2021

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No-cost Scenario
16 FY 2020 Hospital Inpatient Prospective Payment System IPPS Proposed Rule 84 FR 19640
and 19641 May 3, 2019 available at https
www.govinfo.gov/content/pkg/FR-2019-05-03/pdf/
2019-08330.pdf accessed October 17, 2019.
17 An indirect cost of the proposed rule would be increased distortions in the labor markets taxed to support the Medicare Trust Fund. Such distortions are sometimes referred to as marginal excess tax burden METB, and Circular A94OMBs guidance on cost-benefit analysis of federal programs, available at https www.whitehouse.gov/
sites/whitehouse.gov/files/omb/circulars/A94/
a094.pdfsuggests that METB may be valued at
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FY 2022
$0

FY 2023
$0

roughly 25 percent of the estimated transfer attributed to a policy change; the Circular goes on to direct the inclusion of estimated METB change in supplementary analyses. If secondary costs such as increased marginal excess tax burden is, in the case of this final ruleare included in regulatory impact analyses, then secondary benefits must be as well, in order to avoid inappropriately skewing the net benefits results, and including METB only in supplementary analyses provides some acknowledgement of this potential imbalance.

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FY 2024
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