[Federal Register Volume 60, Number 181 (Tuesday, September 19, 1995)]
[Rules and Regulations]
[Pages 48417-48425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23132]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 405 and 411
[BPD-841-FC]
RIN 0938-AH21
Medicare Program; Criteria and Procedures for Extending Coverage
to Certain Devices and Related Services
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule establishes in regulations that certain
devices with an investigational device exemption (IDE) approved by the
Food and Drug Administration (FDA) and certain services related to
those devices may be covered under Medicare. Specifically, it sets
forth the process by which the FDA will assist HCFA in identifying non-
experimental investigational devices that are potentially covered under
Medicare.
[[Page 48418]]
This rule responds to the mandate that Federal agencies streamline
their regulatory processes to make them less burdensome and more
customer-focused. It is intended to provide Medicare beneficiaries with
greater access to advances in medical technology and encourage clinical
researchers to conduct high quality studies of newer technologies.
DATES: Effective Date: This rule is effective November 1, 1995.
Comment Date: Comments will be considered if we receive them at the
appropriate address, as provided below, no later than 5 p.m. on
November 20, 1995.
ADDRESSES: Mail written comments (1 original and 3 copies) to the
following address:
Health Care Financing Administration, Department of Health and Human
Services, Attention: BPD-841-FC, P.O. Box 26688, Baltimore, MD 21207-
0519.
If you prefer, you may deliver your written comments (1 original
and 3 copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code BPD-841-FC. Comments received timely will be available for
public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in Room 309-G of
the Department's offices at 200 Independence Avenue, SW., Washington,
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.
(phone: (202) 690-7890).
Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date
of the issue requested and enclose a check or money order payable to
the Superintendent of Documents, or enclose your Visa or Master Card
number and expiration date. Credit card orders can also be placed by
calling the order desk at (202) 512-1800 or by faxing to (202) 512-
2250. The cost for each copy is $8. As an alternative, you can view and
photocopy the Federal Register document at most libraries designated as
Federal Depository Libraries and at many other public and academic
libraries throughout the country that receive the Federal Register.
FOR FURTHER INFORMATION CONTACT: Sharon Hippler, (410) 786-4633.
SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory Basis
The Social Security Act (the Act) provides Medicare coverage for
broad categories of benefits through the hospital insurance program,
known as Part A, and the supplementary medical insurance program, known
as Part B.
The Act does not, however, provide an all-inclusive list of covered
items, services, treatments, procedures, or technologies. Except for
certain items of durable medical equipment identified in section
1861(n) of the Act, some of the medical and other health services
listed in section 1861(s) of the Act, and exclusions from coverage
listed in section 1862 of the Act, the statute does not specify devices
that are covered or excluded from coverage.
The Congress understood that questions about the coverage of
specific services would invariably arise and would require a specific
decision of coverage by the Secretary. Thus, it vested in the Secretary
the authority to make those decisions. Among the provisions relevant to
the determination of coverage is section 1862(a)(1)(A) of the Act,
which states ``Notwithstanding any other provision of this title, no
payment may be made under Part A or Part B for any expenses incurred
for items or services which * * * are not reasonable and necessary for
the diagnosis or treatment of illness or injury or to improve the
functioning of a malformed body member.'' This is a key provision since
the words ``notwithstanding any other provision of this title * * *''
make this an overriding exclusion that may be applicable in a given
situation despite the existence of provisions that would otherwise
permit coverage. Thus, while the Congress provided for the coverage of
certain services, with limited exceptions specified by HCFA, coverage
for those services is prohibited unless they are ``reasonable'' and
``necessary.''
B. Implementation of the Law
Historically, HCFA has interpreted the statutory terms
``reasonable'' and ``necessary'' to mean that a device must be safe and
effective, medically necessary, and not experimental. For most Medicare
coverage purposes, the term experimental has been used synonymously
with the term investigational. Therefore, a device categorized by the
FDA as being investigational served as an indication that it was not
``reasonable'' and ``necessary'' within the meaning of the Medicare
program. As a general rule, these devices currently are not covered.
There is increasing recognition, however, that there are devices
that are refinements of existing technologies or replications of
existing technologies by other manufacturers. The FDA places many of
these devices within the investigational device exemption (IDE)
category as a means of gathering the scientific information necessary
to establish the safety and effectiveness of the particular device,
even though there is scientific evidence that similar devices can be
safe and effective. Arguably, these devices could be viewed as
``reasonable'' and ``necessary'' under Medicare and recognized for
payment if it were possible to identify them in the FDA's process.
C. January 1989 Proposed Rule on Coverage Decision Process
On January 30, 1989, we published a proposed rule (54 FR 4302) that
proposed to establish in regulations generally applicable criteria for
determining whether a service is ``reasonable'' and ``necessary'' under
the Medicare program, and the coverage decisionmaking process. In
response to that rule, we received comments pertaining to the coverage
of experimental procedures and services related to those procedures. In
this rule, we are choosing to respond to comments on investigational
devices and services related to those devices and to announce our final
policy. We have not completed our deliberations on the other issues
addressed in the January 1989 proposed rule. This rule does not respond
to comments other than those pertaining to devices.
Comment: Twenty-two commenters suggested that we revise our
proposed policy so that we do not automatically exclude from Medicare
coverage all devices that the FDA considers investigational. Several of
these commenters recommended that we allow coverage of investigational
devices when they are used in FDA-approved clinical trials.
Response: We agree that there are some investigational devices that
should be considered for coverage if they are used in accordance with
an FDA-approved protocol. The devices that will be considered for
possible coverage are those investigational devices for which the FDA
has determined that the device type can be safe and effective. For
example, we will consider for possible coverage those investigational
devices
[[Page 48419]]
that are of the same type as a device for which a manufacturer has
received FDA clearance or approval for marketing. We have entered into
an interagency agreement with the FDA to identify those investigational
devices that are of a device type for which the underlying questions of
safety and effectiveness have been resolved. These devices may be
covered if all other applicable Medicare coverage requirements are met.
Comment: One commenter recommended that we not change our previous
policy that excluded coverage of investigational devices.
Response: We do not agree. We believe that there are certain
investigational devices that should be covered if all other applicable
coverage requirements are met. However, the investigational devices
that we will consider for coverage will not include any device for
which the FDA is unsure whether the device type in general can be safe
and effective.
Comment: A number of commenters requested that we clarify the
coverage rules concerning the furnishing of services related to
experimental procedures (for example, a hospital stay).
Response: As stated earlier, we are limiting the focus of this rule
to Medicare coverage of certain investigational devices and services
related to those devices. Also, in the preamble to this rule and in new
Sec. 405.207, we explain our coverage policy concerning services
related to a noncovered device.
II. Provisions of This Final Rule
While the policies contained in this final rule will be effective
November 1, 1995, we are providing a 60-day comment period for the
receipt of public comments. We believe it is appropriate to provide an
opportunity for comment on these policies because we are broadening the
proposals concerning certain devices contained in the January 1989
proposed rule. Consequently, beneficiaries, providers, and suppliers
that may have chosen not to comment because they may have believed they
were not affected by the 1989 proposals may wish to comment on these
broadened final policies. If our consideration of the comments we
receive leads us to a change in these policies, we will publish another
document.
A. HCFA Coverage Decision Process
The Administration has set forth a mandate that all Federal
agencies must streamline their regulatory processes to make them less
burdensome and more customer-focused. Agencies have been directed to
review their policies and processes to determine which requirements can
be reduced or eliminated without lowering health and safety standards.
In accordance with this directive, the FDA reviewed its regulatory
processes for devices and HCFA reviewed its Medicare coverage policies.
This rule results in an improved process for covering certain
investigational devices that is expected to benefit Medicare
beneficiaries.
This new policy will lead to broader coverage of certain
investigational devices and certain services related to those devices.
A long-term benefit is to facilitate the collection of information
about these devices through approved clinical trials, which will enable
the marketing of these devices. Medicare beneficiaries will have
earlier access to the latest advances in medical technology.
To assist HCFA in its coverage decision process, the FDA will
follow a categorization process that differentiates between the
clinical assessment of novel, first-of-a-kind devices and newer
generations of legally marketed devices. The policy changes in this
rule reflect the categorization of investigational devices that are the
subject of FDA-approved IDEs.
The FDA uses the definition of a device that appears in 21 U.S.C.
321(h). A device, for purposes of the FDA process, refers to an
instrument, apparatus, implement, machine, contrivance, implant, in
vitro reagent, or other similar or related article, including any
component, part, or accessory, which is--
Recognized in the official National Formulary, or the U.S.
Pharmacopeia, or any supplement to them,
Intended for use in the diagnosis of disease or other
conditions, or in the cure, mitigation, treatment, or prevention of
disease, in man or other animals,
Intended for use in the diagnosis of conditions other than
diseases such as pregnancy,
Intended to affect the structure or any function of the
body of man or other animals, or
Considered an in vitro diagnostic product, including those
previously regulated as drugs, and which does not achieve any of its
principal intended purposes through chemical action within or on the
body of man or other animals
and which is not dependent upon being metabolized for the achievement
of any of its principal intended purposes.
When a sponsor (usually a manufacturer) submits a marketing
application for clearance or approval of a device to the FDA, the FDA
evaluates the safety and effectiveness of the device. If sufficient
information exists to determine its safety and effectiveness, the FDA
may clear the device for marketing. In some instances, for certain
devices, the FDA may require that clinical trials be conducted to
obtain clinical information to determine the device's safety and
effectiveness. Generally, in order for these devices to be shipped
lawfully for purposes of conducting the clinical trial, the sponsor
must obtain an approved investigational device exemption (IDE).
Under the Food, Drug, and Cosmetic Act (21 U.S.C. 360c), devices
fall into one of three classes:
Class I--Devices for which the general controls of the Food, Drug,
and Cosmetic Act, such as adherence to good manufacturing practice
regulations, are sufficient to provide a reasonable assurance of safety
and effectiveness.
Class II--Devices that, in addition to general controls, require
special controls, such as performance standards or postmarket
surveillance, to provide a reasonable assurance of safety and
effectiveness.
Class III--Devices that cannot be classified into Class I or Class
II because insufficient information exists to determine that either
special or general controls would provide reasonable assurance of
safety and effectiveness. Class III devices require premarket approval.
Under the new categorization process to assist HCFA, the FDA
assigns each device with an FDA-approved IDE to one of two categories:
Experimental/Investigational (Category A) Devices, or Non-Experimental/
Investigational (Category B) Devices. Under this categorization
process, an experimental/investigational device (Category A) is an
innovative device in Class III for which ``absolute risk'' of the
device type has not been established (that is, initial questions of
safety and effectiveness have not been resolved and the FDA is unsure
whether the device type can be safe and effective). A non-experimental/
investigational (Category B) device is a device believed to be in Class
I or Class II, or a device believed to be in Class III for which the
incremental risk is the primary risk in question (that is, underlying
questions of safety and effectiveness of that device type have been
resolved), or it is known that the device type can be safe and
effective because, for example, other manufacturers have obtained FDA
approval for that device type. The criteria the FDA will use to
categorize
[[Page 48420]]
an investigational device is described in the addendum to this rule.
Currently there are about 1,200 FDA-approved clinical trials of
devices. The FDA is categorizing those devices as ``experimental/
investigational (Category A)'' or ``non-experimental/investigational
(Category B),'' a process that is expected to be completed by November
1, 1995. The great majority of these devices in clinical trials are
likely to be categorized as ``non-experimental/investigational
(Category B)''.
The FDA will notify HCFA, when it notifies the sponsor, either by
electronic means or written communication, of its categorization
decisions. Through these categorization decisions, the FDA will be
advising HCFA as to the similarity of a device that has been approved
for use in an FDA-approved clinical trial to a device that has been
approved or cleared by the FDA for marketing.
HCFA excludes from Medicare coverage a device with an IDE that is
categorized by the FDA as experimental/investigational (Category A).
HCFA will continue to view these experimental/investigational (Category
A) devices as not satisfying the statutory requirement that Medicare
pay for only devices determined to be reasonable and necessary. HCFA is
not changing its policy on this issue because essential considerations
of health and safety are involved.
This rule does not affect HCFA's policy on services related to a
noncovered device. That is, services related to the use of a noncovered
device are not covered under Medicare. We are codifying in the
regulations a provision explaining that services related to a
noncovered device are not covered under Medicare. These services
include all services furnished in preparation for the use of a
noncovered device, services furnished contemporaneously with and
necessary to the use of a noncovered device, and services furnished as
necessary after-care that are incident to recovery from the use of the
device or from receiving related noncovered services.
Services furnished to address medical complications arising from
the use of the device (and that are not incident to normal recovery)
may be covered. Services not related to the use of a noncovered device,
which meet all other coverage requirements, can be covered under
Medicare.
The following are some examples of services ``related to'' and
``not related to'' noncovered devices furnished while the beneficiary
is an inpatient:
A beneficiary is hospitalized to receive a noncovered
device and breaks a leg while in the hospital. Services related to care
of the broken leg during this stay are ``not related to'' services and
are covered under Medicare.
A beneficiary is admitted to the hospital for a covered
service and during the hospital stay received a noncovered
investigational device. The services related to the admitting condition
are covered because the reason for the admission was to receive covered
services and not related to the diagnoses that led to the need for the
noncovered device.
A beneficiary is admitted to the hospital for covered
services related to a condition that led to receiving a noncovered
device during the same hospital stay. We would review all of the
services and make a comparison of the date they are received to the
date the beneficiary is identified as needing the noncovered device. If
our review reveals that services were required because of receiving the
noncovered device, the services ``related to'' the noncovered device
will not be covered.
After a beneficiary is discharged from a hospital stay
during which he or she receives a noncovered investigational device,
medical and hospital services to treat a condition or complication that
arises as a result of the noncovered device or related noncovered
services may be covered when they are reasonable and necessary in all
other respects. Thus, coverage could be provided for subsequent
inpatient hospital stays or outpatient treatment ordinarily covered by
Medicare, even if the need for treatment arose because of a previous
noncovered device or related noncovered services. Any subsequent
services that could be expected to have been incorporated into a global
fee, however, will not be covered.
The related services policy will also apply to experimental/
investigational (Category A) and non-experimental/investigational
(Category B) devices that are excluded from Medicare coverage.
Therefore, Medicare policy will continue to preclude coverage of
certain devices and services related to the use of those devices when
they are furnished as part of a hospital stay.
It is our intention that a beneficiary not pay for a noncovered
device or services related to a noncovered device when a beneficiary
did not know that the device or related services are not covered.
Existing regulations concerning limitations on liability in
Secs. 411.400 through 411.406 will apply to this broader coverage of
certain investigational devices and services related to those devices.
Medicare payment may be made for certain assigned claims for a service
related to a noncovered device if the service was excluded from
coverage in accordance with Sec. 411.15(k) as not medically necessary
under section 1862(a)(1)(A) of the Act. A beneficiary who did not know
and could not reasonably have been expected to know that payment would
be denied under section 1862(a)(1)(A) of the Act receives protection
from financial liability in accordance with Secs. 411.400 through
411.406 under the limitation on liability provision of section 1879 of
the Act. Similarly, when the beneficiary is protected and the provider
or supplier also did not know and could not reasonably have been
expected to know that payment would be denied, the provider or supplier
also receives protection from financial liability in accordance with
the limitation on liability provision. Consequently, Medicare payment
may be made to the provider or supplier.
For unassigned claims for related physician services excluded from
coverage as not medically necessary under section 1862(a)(1)(A) of the
Act, a beneficiary who did not know and could not reasonably have been
expected to know that payment would be denied as not medically
necessary may receive protection from financial liability in accordance
with existing Sec. 411.408 under the refund requirement provision of
section 1842(l) of the Act. If the beneficiary is found not to have
known, and the provider or supplier also did not know and could not
reasonably have been expected to know that payment would be denied, the
provider or supplier will receive protection from financial liability
under the refund requirement provision.
Under changes made by this final rule, HCFA will consider coverage
of a device with an FDA-approved IDE, categorized by the FDA as non-
experimental/investigational (Category B) for Medicare beneficiaries
participating in FDA-approved clinical trials. As a general rule for
all medical care, HCFA has authority to conduct a separate assessment
of an items or service's appropriateness for Medicare coverage,
including whether it is reasonable and necessary specifically for its
intended use for Medicare beneficiaries. Medicare coverage of a non-
experimental/investigational (Category B) device will be subject to the
same process and criteria used by Medicare contractors when making
coverage decisions for legally marketed devices. Coverage of the device
is dependent on it meeting all other Medicare coverage requirements
contained in the statute, regulations, and instructions issued by HCFA.
[[Page 48421]]
The FDA-approved IDE study protocols restrict investigational
device shipment to a limited number of investigational sites for
testing on a specific number of patients. To the extent Medicare covers
a non-experimental/investigational (Category B) device, coverage is
limited to beneficiaries meeting the protocol requirements. For
example, coverage of an investigational device may be limited to
Medicare beneficiaries participating in trials conducted by certain
health care practitioners in an approved clinical trial.
Medicare coverage of a non-experimental/investigational (Category
B) device is predicated, in part, upon the device continuing to meet
criteria that led to this designation by the FDA. In the event a device
fails to meet the criteria for Category B designation or its use
violates relevant IDE requirements necessitating the withdrawal of the
IDE approval, the FDA will immediately notify the sponsor and HCFA.
HCFA will re-evaluate the device's continued eligibility for Medicare
payment.
Payment under Medicare for a non-experimental/investigational
(Category B) device will be based on, and may not exceed, the amount
that would have been paid for a currently used device serving the same
medical purpose that has been approved or cleared for marketing by the
FDA. In cases involving a hospital stay, the diagnosis related group
(DRG) payment under the prospective payment system ordinarily will not
be affected.
B. Re-evaluation of Categorization Decision
We anticipate that instances will arise under which a device
sponsor believes that a device, categorized by the FDA as experimental/
investigational (Category A), should be categorized as non-
experimental/investigational (Category B). In these instances, the
sponsor may request that the FDA re-evaluate its categorization
decision. Only after the FDA has completed its re-evaluation, and
concluded that the device still is an experimental/investigational
(Category A) device, may a sponsor request review by HCFA. A sponsor
may request review by HCFA even if no Medicare claims are involved.
1. FDA Action
Under this process, the sponsor may submit a written request for
re-evaluation to the FDA (at the same address it submitted its original
application), together with information and rationale that it believes
support recategorization. Only the sponsor of a device may seek a re-
evaluation of the FDA IDE categorization decision.
Time limits on seeking a re-evaluation will not be imposed. The FDA
will review the request and inform the sponsor, and HCFA, of its
decision. If the FDA does not agree to recategorize the device, the
sponsor may seek further review by HCFA.
2. HCFA Action
Upon written request to the HCFA Administrator from the sponsor of
a device with an FDA-approved IDE, HCFA will review the categorization
of the device. As part of this process, HCFA will review all
information submitted by the sponsor and the FDA's recommendation. HCFA
will review only information in the FDA record to determine whether to
change the categorization. HCFA will not accept or review any
information from the sponsor that was not previously reviewed by the
FDA. While HCFA, during the re-evaluation process, will be the final
decisionmaker concerning categorization of a device for Medicare
coverage purposes, HCFA relies heavily on the FDA review of the
scientific information related to the device and consequently the FDA
recommendation. HCFA will issue a written decision and notify the
sponsor and the FDA. No further reviews will be available to the
sponsor.
3. Update of Categorization Decision
If the circumstances that led to the initial categorization
decision change (for example, a premarket approval application is
approved for a device similar to one under investigation), the FDA will
re-evaluate the categorization designation and notify the sponsor and
HCFA of any change. Neither the FDA categorization and re-evaluation
nor HCFA's review constitute an initial determination for purposes of
the Medicare appeals processes under 42 CFR part 405, subparts G or H,
or parts 417, 473, or 498.
C. Quarterly Announcement of Categorization Decisions
HCFA publishes quarterly in the Federal Register a notice that
lists HCFA manual instructions, substantive and interpretive
regulations and other Federal Register notices, and statements of
policy that relate to the Medicare and Medicaid programs. HCFA will
announce in the quarterly notice all IDE categorizations, using IDE
numbers the FDA assigns. The initial notice will include all FDA-
approved IDE numbers organized by the categories to which the device
numbers are assigned (that is, Category A or Category B, and identified
by the IDE number). Subsequent notices will include the additions and
deletions to the initial list of all devices with an FDA-approved IDE.
D. Confidentiality of Investigational Device Exemption Information
Data and information otherwise exempt from public disclosure may be
revealed in judicial proceedings if the data or information are
relevant. HCFA will take appropriate measures, or request that
appropriate measures be taken, to reduce disclosure to the minimum
necessary under the circumstances. Because HCFA relies on information
submitted to the FDA under 21 U.S.C. 360j(g), HCFA will consult with
the FDA to ensure that the confidentiality of the information is
protected to the extent possible.
E. Contractor Coverage Decisions of Devices With an FDA-approved IDE
1. Current Contractor Functions
Sections 1816 and 1842 of the Act provide for most claims
processing and administrative functions for Medicare to be handled by
public or private insurance organizations (commercial insurers or Blue
Cross/Blue Shield Associations) acting as fiscal agents or contractors
for the Medicare program.
The contractors responsible for the administration of Part A
benefits are called fiscal intermediaries. The major role of the
intermediaries is to review and pay claims submitted by providers (such
as hospitals, skilled nursing facilities, and home health agencies) for
covered services furnished to Medicare beneficiaries. The intermediary
makes payments for hospital inpatient services generally under the
prospective payment system. It makes payments for hospital and other
provider outpatient services by reviewing submitted cost reports and
making reasonable cost determinations or payment determinations under a
fee schedule following policies set by HCFA.
Under Part B, the contractors are called carriers. Part B services
are paid on a fee schedule, reasonable charge, or reasonable cost
basis. One of the major functions of the carriers is to determine the
appropriate amount of payment for each medical care service paid for
under the program. Carriers also are responsible for reviewing and
paying claims to or on behalf of beneficiaries for the services
furnished.
The functions performed by Medicare contractors include utilization
review, beneficiary hearings and appeals, professional relations, and
statistical activities, in addition to claims review and processing.
Currently, there are 29
[[Page 48422]]
carriers, 46 intermediaries, and some other entities under contract
with HCFA that perform reviews and process claims for Medicare
beneficiaries.
2. Current Criteria and Procedures for Contractor Coverage Decisions
Contractors make Medicare coverage decisions within the parameters
set by statutory authority and regulations and program instructions
issued by HCFA. If HCFA has issued a national coverage decision,
contractors are bound by that decision. If no national coverage
decision has been issued, a contractor must decide whether the service
in question is reasonable and necessary and therefore covered by
Medicare.
Medicare contractors may specifically consider, among other
factors, whether the service is--
Medically necessary in the particular case and whether the
amount, duration, and frequency of use or application of the service
are medically appropriate;
Furnished in accordance with accepted standards of medical
practice; and
Furnished in a setting appropriate to the patient's
medical needs and condition (such as inpatient care at a hospital or
skilled nursing facility, outpatient care at a hospital or physician's
office, or home care).
3. Changes to Contractor Process
Under this rule, contractors will review the instructions HCFA
issues to determine if a non-experimental/investigational (Category B)
device is potentially covered under Medicare. After determining that a
device is potentially covered, the contractor will apply HCFA's long-
standing criteria and procedures for making coverage decisions. When
considering whether a non-experimental/investigational (Category B)
device is furnished in accordance with accepted standards of medical
practice, it will consider those standards that relate to an FDA-
approved clinical trial.
In accordance with HCFA coverage policy, Medicare contractors are
precluded from covering any device that is an experimental/
investigational (Category A) device.
F. Appeals Under Part A and Part B
While the categorization decision is not itself an initial
determination, if HCFA denies a Medicare claim on the basis that the
device is an experimental/investigational (Category A) device, the
initial determination denying the claim encompasses the categorization
decision. A proper party to the denied Medicare claim has a right to
appeal the experimental/investigational (Category A) categorization as
an initial determination under 42 CFR part 405, subparts G or H.
A decision that a device is experimental/investigational (Category
A) means that the device is experimental and, therefore, excluded from
coverage as not reasonable and necessary under section 1862(a)(1)(A) of
the Act. HCFA's acceptance of the FDA categorization of an
experimental/investigational (Category A) device constitutes a national
coverage decision and is binding on HCFA's contractors. In accordance
with section 1869(b)(3)(A) of the Act, national coverage decisions made
by HCFA under section 1862(a)(1) of the Act may not be reviewed by
administrative law judges.
III. Regulatory Impact Statement
Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612), we prepare a regulatory flexibility analysis unless we
certify that a rule will not have a significant economic impact on a
substantial number of small entities. For purposes of the RFA, all
device manufacturers and providers are considered to be small entities.
Individuals and States are not included in the definition of a small
entity.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 50 beds.
This regulation removes certain investigational devices from being
presumed excluded by Medicare and places them in a category under which
they may be covered. On a claim-by-claim basis, Medicare contractors
verify or determine that devices are covered under the circumstances
presented by the claim or bill. This regulation does not change that
process, except the contractors must ascertain whether these devices
were furnished to beneficiaries participating in, and in accordance
with the requirements of, approved clinical trials. Once coverage is
verified, payment is made at the level established for a similar device
that has been approved as covered by Medicare.
We anticipate that this regulation will lead to a beneficial but
not a major expansion of coverage of devices. Each year the FDA
receives approximately 200 IDE applications for review. The majority of
these IDEs are approved for study. At the present time, there are
approximately 1,200 clinical trials underway involving devices, which
are being conducted under FDA-approved IDEs.
We expect that this regulation will have a number of beneficial
effects. It will provide Medicare beneficiaries with greater access to
advances in medical technology. It will allow Medicare beneficiaries
faced with a decision of choosing between a fully covered device and
one undergoing clinical trials to choose the investigational device
without losing Medicare coverage. Because Medicare payment is based on
the payment for a fully covered device, that choice would not result in
increased costs to Medicare for those devices.
At the present time, device manufacturers and the providers that
furnish services involving non-experimental/investigational devices
(Category B) are not eligible for Medicare payments. We estimate that
this regulation will result in negligible costs to the Medicare
program. We expect affected entities would receive less than $10
million per year over the next 5 years.
Virtually all of these devices replace devices for which Medicare
coverage is currently available and which would have been furnished to
beneficiaries if we had not changed the policy. The services are
primarily furnished on an inpatient basis in hospitals. Hospitals are
paid on a prospective basis so that prices are not adjusted based on
changes in the price-components (that is, device costs) of individual
DRGs. Instead, the payment base under the prospective payment system is
annually updated based on a host of considerations, including the
increased cost of inputs. As a result, this change in coverage will not
significantly affect Medicare's current payments and will only affect
its future payments in concert with the other factors affecting the DRG
update decisions.
For these reasons, we are not preparing analyses for either the RFA
or section 1102(b) of the Act because we have determined, and we
certify, that this rule will not have a significant economic impact on
a substantial number of small entities or a significant impact on the
operations of a substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
[[Page 48423]]
IV. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).
V. Response to Comments
Because of the large number of items of correspondence we normally
receive on Federal Register documents published for comment, we are not
able to acknowledge or respond to them individually. We will consider
all comments we receive by the date and time specified in the ``DATES''
section of this preamble, and, if we proceed with a subsequent
document, we will respond to the comments in the preamble to that
document.
List of Subjects
42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medicare, Reporting and recordkeeping
requirements, Rural areas, X-rays.
42 CFR Part 411
Kidney diseases, Medicare, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 42 CFR Chapter IV is
amended as follows:
A. 42 CFR part 405 is amended to read as follows:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
1. A new subpart B, consisting of Secs. 405.201-405.215, is added
to read as follows:
Subpart B--Medical Services Coverage Decisions That Relate to Health
Care Technology
Sec.
405.201 Scope of subpart and definitions.
405.203 FDA categorization of investigational devices.
405.205 Coverage of a non-experimental/investigational (Category B)
device.
405.207 Services related to a noncovered device.
405.209 Payment for a non-experimental/investigational (Category B)
device.
405.211 Procedures for Medicare contractors in making coverage
decisions for a non-experimental/investigational (Category B)
device.
405.213 Re-evaluation of a device categorization.
405.215 Confidential commercial and trade secret information.
Subpart B--Medical Services Coverage Decisions That Relate to
Health Care Technology
Authority: Secs. 1102, 1862, and 1871 of the Social Security Act
as amended (42 U.S.C. 1302, 1395y, and 1395hh).
Sec. 405.201 Scope of subpart and definitions.
(a) Scope. This subpart establishes that--
(1) HCFA uses the FDA categorization of a device as a factor in
making Medicare coverage decisions; and
(2) HCFA may consider for Medicare coverage certain devices with an
FDA-approved investigational device exemption (IDE) that have been
categorized as non-experimental/investigational (Category B).
(b) Definitions. As used in this subpart--
Class I refers to devices for which the general controls of the
Food, Drug, and Cosmetic Act, such as adherence to good manufacturing
practice regulations, are sufficient to provide a reasonable assurance
of safety and effectiveness.
Class II refers to devices that, in addition to general controls,
require special controls, such as performance standards or postmarket
surveillance, to provide a reasonable assurance of safety and
effectiveness.
Class III refers to devices that cannot be classified into Class I
or Class II because insufficient information exists to determine that
either special or general controls would provide reasonable assurance
of safety and effectiveness. Class III devices require premarket
approval.
Contractors refers to carriers, fiscal intermediaries, and other
entities that contract with HCFA to review and adjudicate claims for
Medicare services.
Experimental/investigational (Category A) device refers to an
innovative device believed to be in Class III for which ``absolute
risk'' of the device type has not been established (that is, initial
questions of safety and effectiveness have not been resolved and the
FDA is unsure whether the device type can be safe and effective).
IDE stands for investigational device exemption. An FDA-approved
IDE application permits a device, which would otherwise be subject to
marketing clearance, to be shipped lawfully for the purpose of
conducting a clinical trial in accordance with 21 U.S.C. 360j(g) and 21
CFR parts 812 and 813.
Non-experimental/investigational (Category B) device refers to a
device believed to be in Class I or Class II, or a device believed to
be in Class III for which the incremental risk is the primary risk in
question (that is, underlying questions of safety and effectiveness of
that device type have been resolved), or it is known that the device
type can be safe and effective because, for example, other
manufacturers have obtained FDA approval for that device type.
PMA stands for ``premarket approval'' and refers to a marketing
application for a Class III device, which includes all information
submitted with or incorporated by reference in the application in
accordance with 21 U.S.C. 360e and 360j and 21 CFR 814.3(e).
Sponsor refers to a person or entity that initiates, but does not
conduct, an investigation under an IDE.
Sec. 405.203 FDA categorization of investigational devices.
(a) The FDA assigns a device with an FDA-approved IDE to one of two
categories:
(1) Experimental/Investigational (Category A) Devices.
(2) Non-Experimental/Investigational (Category B) Devices.
(b) The FDA notifies HCFA, when it notifies the sponsor, that the
device is categorized by FDA as experimental/investigational (Category
A) or non-experimental/investigational (Category B).
(c) HCFA uses the categorization of the device as a factor in
making Medicare coverage decisions.
Sec. 405.205 Coverage of a non-experimental/investigational (Category
B) device.
(a) For any device that meets the requirements of the exception at
Sec. 411.15(o) of this chapter, the following procedures apply:
(1) The FDA notifies HCFA, when it notifies the sponsor, that the
device is categorized by FDA as non-experimental/investigational
(Category B).
(2) HCFA uses the categorization of the device as a factor in
making Medicare coverage decisions.
(b) If the FDA becomes aware that a categorized device no longer
meets the requirements of the exception at Sec. 411.15(o) of this
chapter, the FDA notifies the sponsor and HCFA and the procedures
described in paragraph (a)(2) of this section apply.
Sec. 405.207 Services related to a noncovered device.
(a) When payment is not made. Medicare payment is not made for
medical and hospital services that are related to the use of a device
that is not covered because HCFA determines the device is not
``reasonable'' and
[[Page 48424]]
``necessary'' under section 1862(a)(1)(A) of the Act or because it is
excluded from coverage for other reasons. These services include all
services furnished in preparation for the use of a noncovered device,
services furnished contemporaneously with and necessary to the use of a
noncovered device, and services furnished as necessary after-care that
are incident to recovery from the use of the device or from receiving
related noncovered services.
(b) When payment is made. Medicare payment may be made for
services, ordinarily covered by Medicare, to treat a condition or
complication that arises because of the use of a noncovered device or
from the furnishing of related noncovered services.
Sec. 405.209 Payment for a non-experimental/investigational (Category
B) device.
Payment under Medicare for a non-experimental/investigational
(Category B) device is based on, and may not exceed, the amount that
would have been paid for a currently used device serving the same
medical purpose that has been approved or cleared for marketing by the
FDA.
Sec. 405.211 Procedures for Medicare contractors in making coverage
decisions for a non-experimental/investigational (Category B) device.
(a) General rule. In their review of claims for payment, Medicare
contractors are bound by the statute, regulations, and all HCFA
administrative issuances, including all national coverage decisions.
(b) Potentially covered non-experimental/investigational (Category
B) devices. Medicare contractors may approve coverage for any device
with an FDA-approved IDE categorized as a non-experimental/
investigational (Category B) device if all other coverage requirements
are met.
(c) Other considerations. Medicare contractors must consider
whether any restrictions concerning site of service, indications for
use, or any other list of conditions for coverage have been placed on
the device's use.
Sec. 405.213 Re-evaluation of a device categorization.
(a) General rules. (1) Any sponsor that does not agree with an FDA
decision that categorizes its device as experimental/investigational
(Category A) may request re-evaluation of the categorization decision.
(2) A sponsor may request review by HCFA only after the
requirements of paragraph (b) of this section are met.
(3) No reviews other than those described in paragraphs (b) and (c)
of this section are available to the sponsor.
(4) Neither the FDA original categorization or re-evaluation
(described in paragraph (b) of this section) nor HCFA's review
(described in paragraph (c) of this section) constitute an initial
determination for purposes of the Medicare appeals processes under part
405, subpart G or subpart H, or parts 417, 473, or 498 of this chapter.
(b) Request to FDA. A sponsor that does not agree with the FDA's
categorization of its device may submit a written request to the FDA at
any time requesting re-evaluation of its original categorization
decision, together with any information and rationale that it believes
support recategorization. The FDA notifies both HCFA and the sponsor of
its decision.
(c) Request to HCFA. If the FDA does not agree to recategorize the
device, the sponsor may seek review from HCFA. A device sponsor must
submit its request in writing to HCFA. HCFA obtains copies of relevant
portions of the application, the original categorization decision, and
supplementary materials. HCFA reviews all material submitted by the
sponsor and the FDA's recommendation. HCFA reviews only information in
the FDA record to determine whether to change the categorization of the
device. HCFA issues a written decision and notifies the sponsor of the
IDE and the FDA.
Sec. 405.215 Confidential commercial and trade secret information.
To the extent that HCFA relies on confidential commercial or trade
secret information in any judicial proceeding, HCFA will maintain
confidentiality of the information in accordance with Federal law.
Subpart G--[Amended]
2. The authority citation for subpart G continues to read as
follows:
Authority: Secs. 1102, 1151, 1154, 1155, 1869(b), 1871, 1872,
and 1879 of the Social Security Act (42 U.S.C. 1302, 1320c, 1320c-3,
1320c-4, 1395ff(b), 1395hh, 1395ii and 1395pp).
3. In subpart G, a new Sec. 405.753 is added to read as follows:
Sec. 405.753 Appeal of a categorization of a device.
(a) HCFA's acceptance of the FDA categorization of a device as an
experimental/investigational (Category A) device under Sec. 405.203 is
a national coverage decision under section 1862(a)(1) of the Act.
(b) HCFA's acceptance of the FDA categorization of a device as an
experimental/investigational (Category A) device under Sec. 405.203 is
an aspect of an initial determination that, under section 1862 of the
Act, payment may not be made.
(c) In accordance with section 1869(b)(3)(A) of the Act, HCFA's
acceptance of the FDA categorization of a device as an experimental/
investigational (Category A) device under Sec. 405.203 may not be
reviewed by an administrative law judge.
Subpart H--[Amended]
4. The authority citation for subpart H continues to read as
follows:
Authority: Secs. 1102, 1842(b)(3)(C), and 1869(b) of the Social
Security Act (42 U.S.C. 1302, 1395u(b)(3)(C), 1395ff(b)).
5. In subpart H, a new Sec. 405.877 is added to read as follows:
Sec. 405.877 Appeal of a categorization of a device.
(a) HCFA's acceptance of the FDA categorization of a device as an
experimental/investigational (Category A) device under Sec. 405.203 is
a national coverage decision under section 1862(a)(1) of the Act.
(b) HCFA's acceptance of the FDA categorization of a device as an
experimental/investigational (Category A) device under Sec. 405.203 is
an aspect of an initial determination that, under section 1862 of the
Act, payment may not be made.
(c) In accordance with section 1869(b)(3)(A) of the Act, HCFA's
acceptance of the FDA categorization of a device as an experimental/
investigational (Category A) device under Sec. 405.203 may not be
reviewed by an administrative law judge.
B. 42 CFR part 411 is amended as set forth below:
PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE
PAYMENT
1. The authority citation for part 411 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
2. In Sec. 411.15, the introductory text is republished and new
paragraph (o) is added to read as follows:
Sec. 411.15 Particular services excluded from coverage.
The following services are excluded from coverage.
* * * * *
(o) Experimental or investigational devices, except for certain
devices--
(1) Categorized by the FDA as a non-experimental/investigational
(Category B) device defined in Sec. 405.201(b) of this chapter; and
[[Page 48425]]
(2) Furnished in accordance with the FDA-approved protocols
governing clinical trials.
3. In Sec. 411.406, paragraph (e) is revised to read as follows:
Sec. 411.406 Criteria for determining that a provider, practitioner,
or supplier knew that services were excluded from coverage as custodial
care or as not reasonable and necessary.
* * * * *
(e) Knowledge based on experience, actual notice, or constructive
notice. It is clear that the provider, practitioner, or supplier could
have been expected to have known that the services were excluded from
coverage on the basis of the following:
(1) Its receipt of HCFA notices, including manual issuances,
bulletins, or other written guides or directives from intermediaries,
carriers, or PROs, including notification of PRO screening criteria
specific to the condition of the beneficiary for whom the furnished
services are at issue and of medical procedures subject to preadmission
review by a PRO.
(2) Federal Register publications containing notice of national
coverage decisions or of other specifications regarding noncoverage of
an item or service.
(3) Its knowledge of what are considered acceptable standards of
practice by the local medical community.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: September 11, 1995.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: September 12, 1995.
Donna E. Shalala,
Secretary.
Note: This addendum will not appear in the Code of Federal
Regulations.
Addendum--Criteria for Categorization of Investigational Devices
Category A: Experimental/Investigational
Category A devices include the following:
(1) Class III devices of a type for which no marketing application
has been approved through the premarket approval (PMA) process for any
indication for use. (For pre-amendments1 Class III devices, refer
to the criteria under Category B).
\1\Pre-amendments devices are devices that were marketed before
the enactment of the 1976 Medical Device Amendments to the Food,
Drug, and Cosmetic Act; that is, in commercial distribution before
May 28, 1976.
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(2) Class III devices that would otherwise be in Category B but
have undergone significant modification for a new indication for use.
Category B: Non-experimental/Investigational
Category B devices include the following:
(1) Devices, regardless of the classification, under investigation
to establish substantial equivalence to a predicate device, that is, to
establish substantial equivalence to a previously/currently legally
marketed device.
(2) Class III devices whose technological characteristics and
indications for use are comparable to a PMA-approved device.
(3) Class III devices with technological advances compared to a
PMA-approved device, that is, a device with technological changes that
represent advances to a device that has already received PMA-approval
(generational changes).
(4) Class III devices that are comparable to a PMA-approved device
but are under investigation for a new indication for use. For purposes
of studying the new indication, no significant modifications to the
device were required.
(5) Pre-amendments Class III devices that become the subject of an
IDE after the FDA requires premarket approval, that is, no PMA
application was submitted or the PMA application was denied.
(6) Nonsignificant risk device investigations for which the FDA
required the submission of an IDE.
Note: Some investigational devices may exhibit unique
characteristics or raise safety concerns that make additional
consideration necessary. For these devices, HCFA and the FDA will
agree on the additional criteria to be used. The FDA will use these
criteria to assign the device(s) to a category. As experience is
gained in the categorization process, this addendum may be modified.
[FR Doc. 95-23132 Filed 9-13-95; 4:00 pm]
BILLING CODE 4120-01-P