Dive Brief:

• AdvaMed has shared recommendations for how it believes Medicare can change its existing pathways to improve coverage and payment for digital health devices.

• In a white paper written with health policy consultancy CapView Strategies, AdvaMed identifies changes to the durable medical equipment (DME) category that could update coverage of software and revisions to the physician fee schedule that may increase the swath of consumers who can use digital health products.

• The medtech lobbying group said the changes are needed for Medicare to realize the potential of a sector projected to be worth $500 billion by 2026 and eliminate a lag between the advent of new technologies and reimbursement for them.

Dive Insight:

AdvaMed made its recommendations after identifying perceived shortcomings with the current system, citing the example of continuous glucose monitors to make its case for change. CGMs received CMS coverage in 2017, years after they entered the market and, AdvaMed contended, began being widely used by patients. As the industry group sees it, that lag is evidence of the need for CMS to modernize its policies.

CEO Scott Whitaker during a press call Thursday said the COVID-19 pandemic has served as a catalyst for use of digital health platforms and tools, including telemedicine and remote patient monitoring. While CMS has taken "meaningful" actions to facilitate greater access to these technologies, Whitaker encouraged the agency to make those regulatory changes permanent once the public health emergency is over and to "go even further."   

The implications of delayed coverage of digital health products will increase as the sector grows and addresses more health problems, according to the medtech lobby. The report suggests CMS can avoid those delays using its existing regulatory authority. 

Some of the proposed changes build on CMS’ coverage of CGMs, which it classes as DME alongside home-use devices such as wheelchairs. AdvaMed sees opportunities to broaden the definition of DME and thereby enable more digital health products to fall into the category. Notably, the current definition prohibits coverage of "smart" devices and software.

AdvaMed wants CMS to create a DME pathway for software that serves a medical purpose and runs on devices that satisfy the durability requirements of the category, such as laptops and smartphones. The trade group is also pushing for automatic assignment and payment of codes for breakthrough-designated digital health technologies that meet the DME requirements. 

AdvaMed tackles coverage issues that affect inpatient and outpatient hospitals. AdvaMed said the New Technology Add-on Payment (NTAP) methodology created to encourage uptake of new, potentially expensive technologies fails to accurately assign value to digital health devices, limiting their use by inpatient hospitals. The trade group wants CMS to clear that barrier to access by lowering the cost threshold to receive payment under the NTAP requirements. 

In outpatient settings, AdvaMed sees transitional pass-through payments as a key barrier to access, again because in its view the system fails to see the true value of digital health technologies. The trade group wants CMS to lower the cost thresholds. 

Other topics addressed in the white paper include the need to incentivize the use of digital health technologies in Alternative Payment Models and how well standardized methods can show the value of new devices to Medicare Advantage plans. 

In the longer term, AdvaMed wants CMS to permanently adopt some of the flexible ways of working it put in place in response to COVID-19, for example by considering using waivers to grant Medicare coverage to more digital health technologies. AdvaMed sees opportunities for CMS to act now but, if barriers to access prove insurmountable, said legislative changes may be warranted. 

There are signs the current administration may be amenable to increasing digital health coverage. Last year, CMS Administrator Seema Verma said the pace of change in government “is painfully slow” in a speech outlining how her organization is trying to "foster innovation." Verma cited Medicare’s refusal to pay for a glucose meter because it could be used with an app as an example of the sort of barrier CMS is trying to eliminate under her leadership.