1333 H Street, NW
Suite 400
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P: (202) 354-7171

June 13, 2017
Via Electronic Transmission
Ms. Seema Verma
Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Room 445-G
Hubert H. Humphrey Building
200 Independence Ave, SW
Washington, DC 20201

Re: Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care
Hospitals and the Long Term Care Hospital Prospective Payment System and Proposed
Policy Changes and Fiscal Year 2018 Rates (CMS-1677-P)
Dear Administrator Verma,
On behalf of the Medical Device Manufacturers Association (MDMA), a national trade
association representing the innovative sector of the medical device market, I am pleased to
provide the following comments to the proposed changes to the Hospital Inpatient Prospective
Payment System (IPPS) for fiscal year 2018 (FY 2018). MDMA represents hundreds of medical
device companies, and our mission is to ensure that patients have access to the latest
advancements in medical technology.
We appreciate this opportunity to comment on the FY 2018 Hospital IPPS proposed rule
published in the Federal Register on April 28, 2017.1 MDMA commends the Centers for
Medicare and Medicaid Services (CMS) for its ongoing efforts to improve the accuracy of
payments under the IPPS.
Our comments are divided into two sections, one in response to the Request for Information
(RFI) on CMS Flexibilities and Efficiencies and the other in response to specific proposals in
the FY 2018 IPPS proposed rule.

1

82 Fed. Reg. 19796 (April 28, 2017).
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 I.

Response to Request for Information
A. The criteria for new technology add-on payments (NTAPs) should be revised
to ensure that Medicare beneficiaries have timely access to new and
innovative technologies.

It is essential that payment rates for Medicare Severity Diagnosis Related Groups (MS-DRGs)
that reflect use of innovative medical devices be adequate to cover hospitals’ costs. These
devices often are crucial components of the patient’s treatment – and at times, they are the
treatment – and protecting beneficiary access to effective care requires adequate reimbursement
under the IPPS.
MDMA respects the process through which CMS evaluates new technologies for assignment to
MS-DRGs and eligibility for NTAPs to ensure Medicare beneficiary access. However, we
remain concerned that CMS’s overly stringent criteria for NTAPs will continue to discourage
manufacturers from applying for these payments. CMS’s narrow interpretation of the statutory
criteria for granting new technology add-on payments has made it very difficult for new
technologies to qualify. In fact, the criteria are so steep and the process so opaque that many
companies, especially small companies, cannot afford to undertake the process at all. We urge
CMS to use its regulatory flexibilities to revise the NTAP review criteria to reduce burdens on
stakeholders and improve quality of care for beneficiaries.
MDMA and other stakeholders have requested changes to this process numerous times in recent
years. In the proposed rule, CMS notes the agency received a general comment in response to
the FY 2018 New Technology Town Hall meeting notice regarding criteria used to determine
substantial clinical improvement.2 This commenter recommended the agency broaden the
criteria applied in making substantial clinical improvement determinations to require, in addition
to existing criteria, consideration of whether the new technology or medical service meets one or
more of the following additional suggested criteria: (1) results in a reduction of the length of a
hospital stay; (2) improves patient quality of life; (3) creates long-term clinical efficiencies in
treatment; (4) addresses patient centered objectives as defined by the Secretary; or (5) meets such
other criteria as the Secretary may specify. CMS does not address these comments, however, but
says, as it has in the past, that it will address them in a future rulemaking. MDMA recognizes
that the criteria for demonstrating that a technology is a substantial clinical improvement are
unclear, and we urge CMS to take into account the impact on patient access and ensure that any
proposed changes to these criteria align with Congressional intent for new technologies.
In addition, we urge CMS to carefully consider the following recommendations to improve the
efficiency and accuracy of the NTAP review process and to support continued beneficiary access
to innovative technologies:


CMS should accept external data in addition to CMS data regarding costs for new devices
to ensure that these technologies can qualify for add-on payments and to transition those

2

82 Fed. Reg. at 19871. CMS received a similar comment prior to the FY 2017 proposed rule. 81 Fed. Reg. 24946,
25034 (April 27, 2016).
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 technologies that have been approved for new technology add-on payments to the correct
MS-DRG when the new technology payment period ends.


CMS must ensure that when a medical device enters the market, it is mapped into the
appropriate MS-DRG before being considered for a new technology add-on payment, as
required by the statute.3



CMS should deem a device to satisfy the substantial clinical improvement criterion if it
was granted a Humanitarian Device Exemption or priority review, based on the fact that
it represents a breakthrough technology that offers significant advantages over existing
approved alternatives, for which no alternatives exist, or the availability of which is in the
best interests of Medicare beneficiaries.



CMS should ensure that new technologies receive the protection intended by Congress by
making add-on payments for qualifying technologies for two to three full fiscal years.



CMS should compare applicants for add-on payments to marketed products only, not to
products still in development.



CMS also should recognize important differences in products’ mechanisms of action
when evaluating whether a new technology is substantially similar to an existing
technology.



When CMS has questions about the data submitted and the analytical methods used,
CMS should contact applicants early in the agency’s review of NTAP applications so that
the applicant can work with the agency to resolve these concerns or clarify its analysis
before the proposed rule is released. This would simplify CMS’s review, potentially
narrow or revise the questions raised in the proposed rule, and facilitate more meaningful
public comments on whether a new technology satisfies the criteria for new technology
add-on payments.

CMS also should increase the marginal payment rate for new technologies from 50 percent to 80
percent. This change would be consistent with the outlier payment methodology and would
improve beneficiaries’ access to innovative treatment options.
B. CMS should provide provisional coverage to ensure timely access to
innovative devices.
MDMA urges CMS to implement a revised approach to coverage for innovative devices that
would reduce burdens on beneficiaries, providers, and manufacturers, while improving collection
of clinical evidence and improving the quality of care. We call this approach “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
3

Social Security Act (SSA) § 1886(d)(5)(K)(ix).
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 Food and Drug Administration (FDA) while the manufacturer voluntarily collects additional data
on the technology. This approach would accelerate Medicare beneficiaries’ access to new
technologies, reduce providers’ burdens of seeking coverage and reimbursement, and relieve
manufacturers of uncertainty about these issues, which would encourage further development in
innovative treatments.
Operationally, PACER would function as follows:


Upon a manufacturer’s request, CMS would consider any newly FDA-approved/cleared
device to be reasonable and necessary for a limited period of time while the manufacturer
collects additional data on the device in the Medicare population.



CMS would grant any codes and set payment as needed to facilitate adequate
reimbursement during the provisional coverage period. CMS could work to align
provisional coverage with new technology add-on payments under the IPPS and passthrough or new technology Ambulatory Payment Classification (APC) status under the
outpatient prospective payment system, for example.



CMS will limit provisional coverage to a period of time, defined at the time the request is
approved, that allows for collection and analysis of postmarket data. The length of time
for provisional coverage could vary according to the type of technology and the amount
of evidence available at the time of FDA approval.



At the end of the limited provisional coverage period, CMS or its contractors could then
conduct a national or local coverage analysis on the device to determine whether to
continue to cover it for the studied population and indication. This analysis could be
implemented by CMS or the MACs through existing mechanisms such as a national
coverage determination (NCD). Coverage would continue until CMS or the MAC
completes its coverage analysis.



CMS would encourage Medicare Advantage and private payers to implement parallel
policies to cover eligible new technologies.

PACER would give new devices the benefit of a presumption of coverage to support data
development by the sponsor on use of those devices in the Medicare population. CMS has the
legal authority to implement this policy pursuant on its authority to interpret the requirement that
items and services be “reasonable and necessary for the diagnosis or treatment of illness or injury
or to improve the functioning of a malformed body member.”4 MACs also could apply this
approach under their authority at SSA § 1869(f)(2)(B) to make determinations under section
1862(a)(1)(A).
MDMA strongly supports PACER and urges CMS to adopt this approach to improve access to
new technologies.

4

SSA § 1862(a)(1)(A).
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 MDMA also looks forward to the release of CMS-3344-P, Expedited Coverage of Innovative
Technology (ExCITe) currently under review by the Office of Management and Budget.
MDMA is hopeful that ExCITe could achieve many of the same goals as PACER and welcomes
the opportunity to collaborate with CMS to ensure that any expedited coverage mechanism
optimizes access to innovative technologies for Medicare beneficiaries.
C. CMS should instruct MACs to rescind all local coverage determinations
(LCDs) that presumptively deny coverage for Current Procedural
Terminology (CPT®) Category III Codes
The American Medical Association creates Category III CPT codes to describe emerging
technologies and services. Many MACs automatically deny coverage of these codes, regardless
of the evidence in support of the services they describe. In fact, MACs have denied coverage of
Category III codes even though CMS has found the technology used in the service to be a
substantial clinical improvement that meets the criteria for NTAP or other add-on payments.
These LCDs typically provide no justification for denying coverage of these services.
This practice inappropriately and unnecessarily denies beneficiaries access to medically
necessary services. Furthermore, this practice imposes administrative burdens for physicians and
providers who must challenge these non-coverage policies to obtain coverage for appropriate
care for their patients.
MDMA urges CMS to reduce these burdens on beneficiaries and providers by clarifying that all
LCDs must be based on the merits of the item or service in question and not solely based on the
type of code assigned to an item or service. Specifically, CMS should instruct all MACs that
routine non-coverage of all Category III CPT codes is inappropriate and such policies should be
immediately discontinued. CMS also should continue to work toward implementation of section
4009 of the 21st Century Cures Act, which requires MACs to provide certain information,
including a summary of the evidence considered, for all LCDs at least 45 days before an LCD’s
effective date.
D. CMS should review the Value Based Purchasing (VBP) Program to ensure
that it truly promotes high-value care.
Although MDMA shares CMS’s goal of encouraging hospitals to provide care more efficiently
and reducing costs, we remain concerned that the administration’s designing of a quality measure
that seeks to achieve these objectives could unfairly penalize hospitals for developing improved
standards of care. These concerns are particularly salient with respect to the use of episodebased measures that assume a certain standard for cost of care associated with a hospital
admission for a particular diagnosis or surgical procedure. Measures that focus solely on cost of
care without consideration of overall quality create incentives for hospitals that are misaligned
with the overall program objectives. Because the medical needs of beneficiaries are not static
and vary from patient to patient, a single standard is likely not appropriate for all admissions.
Furthermore, the use of innovative medical devices by hospitals to provide the highest quality of
care may result in increased costs during an admission but would likely reduce other downstream
costs in the long term and lead to reduced complications, reduced readmissions, and/or improved
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 recovery time. Appropriate measures must recognize variations in patients’ conditions, must
account for the innovative technologies needed to treat them effectively, and must support
hospitals’ investments in new technologies to improve quality and efficiency of care.
We urge CMS to work with hospitals and other stakeholders to ensure that existing and future
episode-based measures align with the objectives of creating efficiency and economy in the
Medicare program and to appropriately tailor measures in the Hospital VBP Program to support
these objectives.
II.

Comments on FY2018 IPPS Proposed Rule
A. CMS should take care to recognize important differences in technologies’
mechanisms of action when reviewing applicants for NTAPs.

As explained in our comments in response to the RFI, MDMA has long been concerned that the
criteria used to evaluate applicants for NTAPs are too narrow and burdensome. We are
particularly concerned that CMS’s discussion of the current set of applicants indicates that the
agency views technologies as being similar despite differences in their mechanism of action.5
For example, the LIVANOVA PERCEVAL and EDWARDS INTUITY devices use novel
deployment mechanisms that offer ease of implantation that are substantially different from
existing valve technologies. Failing to recognize this and narrowly viewing the mechanism of
action only as the opening and closing of the valve creates barriers to achieve a new mechanism
of action for cardiac valve technologies. As such, we fear CMS’s narrow application of this
element of the newness criterion could preclude NTAP approval for deserving new technologies.
That outcome is in direct conflict with Congressional intent to expedite access to new
technologies. While we are encouraged that new technologies continue to seek these payments
(with six NTAP applications for FY 2018), we believe CMS should do more to ensure that these
technologies are reviewed and reimbursed appropriately, as discussed in our comments in
response to the RFI.
B. CMS should finalize its proposed MS-DRG assignments for total ankle
replacement.
MDMA appreciates CMS’s solicitation of stakeholder input regarding annual IPPS updates.
Accurate MS-DRG assignment is imperative to ensure beneficiary access to medically necessary
services. For example, CMS again received two requests this year to reassign total ankle
replacement (TAR) procedures to a different MS-DRG. After further review of the request by
CMS’s clinical advisors, CMS is proposing to reassign the following TAR procedures from MSDRG 470 to MS-DRG 469 even if there is no Major Complication or Comorbidity (MCC)
reported for FY 2018: 0SRF0J9; 0SRF0JA; 0SRF0JZ; 0SRG0J9; 0SRG0JA; and 0SRG0JZ.6 To
reflect these MS-DRG reassignments, CMS is proposing to change the titles of MS-DRGs 469
and 470:
 Proposed retitle of MS–DRG 469: ‘‘Major Hip and Knee Joint Replacement or
Reattachment of Lower Extremity with MCC or Total Ankle Replacement;’’
5
6

82 Fed. Reg. at 19881.
Id. at 19830.
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 

Proposed retitle of MS–DRG 470: ‘‘Major Hip and Knee Joint Replacement or
Reattachment of Lower Extremity without MCC.’’

MDMA supports these proposed changes and believes these revisions will provide more accurate
and appropriate payment rates to hospitals to cover the differences in hospital costs for TAR
compared to total hip arthroplasty and total knee arthroplasty, ensuring Medicare beneficiary
access to TAR as a safe and effective alternative to arthrodesis of the ankle when medically
appropriate. We encourage CMS to finalize this proposal.
C. CMS should provider greater clarity about implementation of International
Classification of Diseases, Tenth Revisision, Clinical Modification (ICD-10CM) section “X” codes.
MDMA has been a strong supporter of the conversion from ICD-9-CM to ICD-10-CM, including
the creation of the new Section “X” codes to identify new medical services and technologies,
because the newer, more robust coding system will allow for recognition of more technologies,
procedures, and variations in patients’ conditions on Medicare claims, which in turn will support
greater specificity in MS-DRGs.7 However, we need to better understand how the new Section
“X” codes will be used and applied, and we encourage CMS to provide greater transparency
about how the agency develops and applies these new codes.
III.

Conclusion

MDMA appreciates this opportunity to comment on the FY 2018 IPPS proposed rule. We urge
CMS to consider our recommendations carefully and make the changes necessary to ensure that
Medicare beneficiaries have access to state-of-the-art care. As always, MDMA looks forward to
working with the agency in the future to improve access to the best and innovative technologies
that our industry has to offer.

Sincerely,
/s/ Mark Leahey
Mark Leahey
President and CEO
Medical Device Manufacturers Association

7

80 Fed. Reg. 24324, 24421 (April 30, 2015).
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