Remarks by Administrator Seema Verma at the Medical Device Manufacturers Association Annual Meeting 

(As prepared for delivery – May 2, 2019)

Thank you, Paul, for that kind introduction, and it’s a pleasure to be with all of you today. Earlier this year, we at CMS set forth 16 strategic initiatives, one of which is Fostering Innovation. This spans across the agency -- reducing burden through Patients over Paperwork, regulatory reform, and enhancing access to new transformative technologies. Today, I’m pleased to discuss our plan for Fostering Innovation as we focus on overhauling and modernizing CMS’s policies for new technologies.

At CMS, we understand that relentless innovation is a crucial driver in creating value across all industries. As Thomas Edison noted, “There’s always a way to do it better—find it.” Healthcare and technology, of course, are no exceptions.

Our vision is ambitious yet achievable: to protect and secure Medicare and ensure beneficiaries have access to the latest medical technologies. There is no greater need for innovation than in American health care. Today’s innovation and technology will be drivers for reducing costs, improving quality, and increasing access to health care for all Americans for years to come.

Think about it, in recent years—thanks to improved diagnostics and therapies, tools, and technologies—healthcare has witnessed a myriad of innovations designed to extend and improve the quality of our lives.

For example, we need only look at the history of hip replacement surgery. Not long ago, this surgery involved an expensive multi-day hospital stay, lengthy and often exceedingly painful rehab, and a device implant that was susceptible to wear and tear. Today, a patient can have a very different journey: more durable materials, coupled with advances in peri-operative management, have led to shorter hospital stays, lower costs, and improvements in outcomes such as lower surgical revision rates.

Or perhaps a patient is having symptoms indicating a heart attack. Innovative, high-tech tools such as pocket-sized ultrasound connected to a mobile phone can help physicians make a rapid diagnosis and potentially reduce expensive and unnecessary hospital stays.

Undoubtedly, innovation—coupled with the American free market—is the fuel that powers the engine of progress and creativity. That’s why the Trump Administration wants to do everything we can to promote, enhance, and assist it.

Unfortunately, we’re all too aware of the problem. When I came to CMS, I inherited outdated government rules and regulation that stifle innovation and access to innovative treatments. For CMS, as the largest payer in the country, we have a particularly outsized effect on the market. And our often arcane and outmoded regulations around coverage, coding, and payment can lead to unpredictability for innovators. In many cases, it isn’t enough for an innovator to wind their way through the maze of regulations. Because Medicare is set up with defined benefit categories set in law, innovations often can’t be covered or paid for by Medicare without an act of Congress. Meanwhile, there continues to be an ongoing discussion of Medicare for All, a complete government takeover of healthcare. Sitting where I sit, and seeing – on a daily basis – all the problems faced by patients in accessing innovative technology, it’s hard to imagine anyone could advocate for such a takeover. Let me be clear: government run healthcare will stall innovation and risk the development and adoption of new technology. Medicare for All leads to innovation for none.

The advent of novel medical technologies requires CMS to remove barriers to ensure safe and effective treatments are readily accessible to beneficiaries without delaying patient care. In essence, keeping new technologies and treatments moving from bench to bedside—and into the hands of those who need them most.

Currently—as many of you are aware—when it comes to new technology, the CMS process generally involves three elements. One aspect is coverage. CMS coverage decisions are guided by laws and procedures that determine whether CMS makes a National Coverage Determination to cover a new therapy nationwide…or, Medicare Administrative Contractors (or MACs) may make individual Local Coverage Determinations to cover a therapy in their region, leading to inconsistent access.

Another element is coding. Coding decisions are based on whether a new code needs to be developed, or whether an existing code can adequately describe the new therapy.

A third element is payment. CMS makes payment decisions for a new therapy through the Medicare payment systems, with a different decision on how each new therapy is reimbursed. For example, if a new therapy is provided to a beneficiary as part of a hospital stay, Medicare pays for it according to the relevant DRG. This may also include the possibility of a new technology add-on payment (or NTAP) if, for example, the cost of a medical product is significantly more than the current payment. But if a new therapy can be provided in a beneficiary’s home and meets certain criteria, it may be considered Durable Medical Equipment (or DME).

With the remarkable number of transformative technologies coming to market — many with unprecedented price tags — Medicare must develop new frameworks that will support tomorrow’s innovations and endure the test of time.

Simply put, our goal is to get new innovations to our beneficiaries concurrent with FDA approval by (1) removing government barriers to innovation and (2) harmonizing CMS coverage, coding, and payment processes.

That’s exactly what the Trump Administration has been working to do since day one—and we’ve already witnessed substantial accomplishments when it comes to changing outdated and harmful regulations around new technology.

For example:

We’ve undertaken painstaking efforts to unravel – one by one – government-imposed tangles to ensure access to specific technology. This includes a situation where Medicare refused to pay for a glucose meter because the meter could also be used with an app. In another situation, Medicare started paying for disposable insulin pumps more than a decade after private sector insurance had already begun covering it.

We announced that we would consider validated commercial payments in determining payments for certain innovative DME without predecessors in our fee schedule composed in the mid ‘80s, which the Medicare law requires as the starting point for DME payment. And we’re looking for other opportunities to make sure Medicare is getting the best deal for 2020…not 1986.

We’ve advanced proposals to bring telehealth services, remote communication services and monitoring, and care management in the physician fee schedule to all Medicare beneficiaries, not just those in rural areas. We are leveraging for the first time certain technologies that have long been available in the private marketplace. This is a historic advancement designed to improve access for all Medicare beneficiaries.

We also redesigned the LCD process as part of our Patients over Paperwork initiative to ensure a clear roadmap to local coverage. Patients over Paperwork is an agency-wide effort to solicit input from stakeholders on policies that are outdated, redundant, or overly burdensome, and to make updates in response. We believe these changes clarify and simplify the process, helping to ensure that manufacturers get appropriate therapies and medical devices to patients more efficiently. These improvements respond to stakeholders’ suggestions for more transparency, including multiple opportunities for engagement with CMS and our MACs.

We are advancing efforts to lower drug costs while increasing competition and encouraging the development of biosimilars in the United States. In 2018, we changed reimbursement for biosimilars, allowing each biosimilar for a reference product to be coded separately—adding pricing predictability for biosimilar innovators and encouraging their development.

And last week we announced significant payment policy changes to support broad access to transformative technologies, including certain antimicrobial drugs and CAR-T cell therapy. These include an increase to the NTAP, which provides hospitals with additional payments for cases with high costs involving new technologies.

We’ve proposed to modernize payment policies for medical devices that are granted FDA Breakthrough Devices Program designation to expedite their entry into the market. This includes waiving the requirement for “substantial clinical improvement,” which is one of the criteria that must be met for CMS to make additional payments. For devices granted Breakthrough-designated FDA approval, real-world data regarding outcomes in different patient populations is often limited at the time of approval, making it hard for innovators to meet this requirement. Waiving this requirement would provide additional Medicare payment for the technologies for a period of time while real-world evidence is emerging, so Medicare beneficiaries don’t have to wait for access to the latest innovations. After devices have been on the market for two years, they would still have to demonstrate evidence of “substantial clinical improvement” to receive the third year of add-on payment. We’re also considering waiving this requirement for similar “pass through” payments.

Additionally, CMS is soliciting comment on what constitutes “substantial clinical improvement.” This will help innovators better understand how we evaluate applications for NTAP under our payment policies.

These are great first steps, but our work is not done. It’s a vision of fostering innovation to lower cost and improve quality. Ultimately, we want to transform health care to deliver better value and results for Medicare -- and all Americans -- through competition and innovation.