The Centers for Medicare and Medicaid Services (CMS) is eliminating alternative payment pathways for medical devices with an FDA "breakthrough" designation. Starting in fiscal year 2028, these devices will no longer automatically qualify for supplemental payments and must instead demonstrate substantial clinical improvement over existing technologies to receive them. The rule aims to ensure extra payments support innovations with proven benefits for patients.
Medicare payment policy changes
- ▪Supplemental payments are designed to incentivize hospitals to adopt new, expensive, and transformative technology
- ▪The Centers for Medicare and Medicaid Services (CMS) is eliminating alternative pathways that allowed 'breakthrough' medical devices to qualify for extra payments
- ▪The rule change, finalized in the CMS rule for inpatient hospital payments, repeals these pathways for both inpatient and outpatient settings
Breakthrough device designation
- ▪Previously, FDA-authorized breakthrough devices could qualify for supplemental payments without proving novelty or substantial clinical improvement over alternatives
- ▪The Food and Drug Administration (FDA) can grant a 'breakthrough' designation to certain medical devices
Clinical benefit requirements
- ▪CMS stated the new rule ensures extra payments support innovations proven to improve outcomes compared to current treatments
- ▪Under the new rule, breakthrough devices must demonstrate substantial clinical improvement to qualify for supplemental payments
Implementation timeline
- ▪The elimination of the alternative payment pathways for breakthrough devices will begin in fiscal year 2028
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