Medicare’s ‘Coverage with Evidence Development’: A Barrier to Patient Access and Innovation

Editor’s Note: This perspective was originally published on Health Affairs Forefront on May 1, 2023.

During the George W. Bush administration, the Centers for Medicare and Medicaid Services (CMS) introduced a program known as “Coverage with Evidence Development” (CED) to drive innovation for medical devices by increasing access to new technologies through agency-approved clinical trials. In practice, it has had much the opposite effect, creating barriers that prevent wider access to medical breakthroughs, limiting data for research, and ultimately hampering innovation.

Unfortunately, with the advent of a new class of Alzheimer’s treatments, CMS has now for the first time applied this policy to therapies when used on-label, effectively inserting itself as a “check” on the Food and Drug Administration (FDA).This decision is only the latest in a series of actions CMS has taken to hamstring innovation, which includes slow coverage for CAR-T cell therapy and continuous glucose monitors (to name only two examples) and the repeal of the Medicare Coverage of Innovative Technologies rule, which granted expedited Medicare coverage of FDA-designated breakthrough medical devices, along with continued delays on implementing its replacement. CMS should abandon CED or, at minimum, reform and restrict its use only for off-label applications of therapies.

CED for medical devices or procedures

Since 2005, 27 medical devices or procedures have been subjected to CED. However, only four had their evidence development programs retired and their national coverage retained. CMS ceded coverage of an additional two devices or procedures to the discretion of Medicare’s regional administrative contractors. The remaining 21 items and services continue to be subject to CED, and none have preset time frames for “graduating” from the program and receiving a final coverage determination. Even amongst the products that graduated CED, the time elapsed between initiation and graduation ranged between four and 12 years. Multiple products that were amongst the first to receive CED continue to be required to generate clinical data today, almost 20 years later. As an example, Medicare issued a National Coverage Determination (NCD) requiring CED for PET scans in conjunction with certain cancers in 2005. While Medicare revised this policy in 2013 by deferring coverage decisions to its regional contractors when PET is used for oncologic services, Medicare retains tight coverage restrictions for PET scans when used in conjunction with conditions such as neurological disorders and dementia. For these purposes, PET scans are still covered under CED today despite the fact that hospitals across the US collectively perform more than two million scans per year.

The fact is CED is a never-ending coverage purgatory for innovators, with more than 30 complex steps required simply to establish a program. Once CMS announces coverage of a product under CED, an organization must step in to sponsor a study to collect the evidence. This involves determining investigators, establishing a governing protocol, getting approval from both an institutional review board and CMS, preparing a database or registry in which data can be submitted, determining funding for the study, identifying and enrolling patients, and general clinical practice. The details behind each of these steps are extensive, and mistakes can be costly. For example, failure to incorporate data collection into clinical workflow may make data submission burdensome for physicians, who may overlook data submission and prevent the study from generating sufficient data to encourage adoption of the technology.

Furthermore, the resources required to facilitate CED can inhibit evidence development. It is not always clear who should bear the costs of participation, who should bear the costs of developing systems to collect and input data, or who should be responsible for sharing with data registries. This problem is more serious when multiple commercial actors market a technology; with development of evidence falling victim to a collective action problem where no actor has enough of a stake to assume responsibility. As an example, when CMS placed home oxygen for cluster headaches under CED in 2011, no trials were developed to facilitate data collection. Ten years later, CMS deferred coverage determinations to its regional administrative contractors. This creates inconsistencies in coverage rules and access based on where a Medicare beneficiary lives, as contractors can set different rules for the regions they cover.

Lastly, the long and uncertain time frame for CED chills innovation. Without a set time frame, innovators may be unsure of what requirements must be met to “graduate” from CED and what events may trigger failure. They may also be concerned that failure may trigger an adverse coverage determination by CMS and even threaten FDA licensure.

CED for drugs

The application of CED to drugs is even less appropriate. Fewer than 1 percent of medical devices undergo the two phases of human clinical trials that the FDA requires of drugs. This extensive research process covers safety, dosing, and efficacy, typically involving multiple studies conducted over a period of several years. The fact that drugs must withstand the scrutiny associated with a complete FDA approval process means that by the time drugs are approved by the FDA, safety concerns have already largely been answered, and second guessing by CMS is unproductive. The FDA maintains several tools to continue monitoring for safety concerns post approval as well, including through use of Risk Evaluation and Mitigation Strategies, rendering CMS’s attempts at safety monitoring redundant. Simply put, it is inappropriate for CMS to use CED for any FDA-approved product and especially inappropriate for drugs, given the stricter approval requirements drugs face from the FDA.

Despite this, CMS has been reaching for CED more often with respect to drugs. In 2017, the FDA approved two CAR-T cell therapies, revolutionary cancer medicines that train the body’s white blood cells to identify and attack cancer calls. For two years, these therapies were reimbursed using claim by claim adjudication, in which regional contractors responsible for claims processing on behalf of Medicare made individual determinations of medical necessity based on the patient’s medical record and data submitted in the claim. However, in 2019, Medicare proposed to severely curtail reimbursement for these therapies; limiting reimbursement to the hospital setting and only in cases where the patient was enrolled in a clinical study or data registry approved by CMS. The cancer community justly pushed back on this attempt; the Community Oncology Alliance described the coverage conditions as “overly onerous,” and the Cleveland Clinic noted the risks CED poses to patient access by creating, “burdensome new requirements for coverage,” specifically citing requirements for registry participation. In consideration of the consistent negative stakeholder feedback, CMS did not finalize use of CED in its final NCD for CAR-T cell therapy.

The drawbacks associated with CED are pervasive and were not limited to CAR-T. Recent trends with CAR-T and Alzheimer’s treatments suggest that CMS may attempt to employ CED for more high-cost therapies in a number of fields including oncology, Alzheimer’s, and other cell and gene therapies. Specific to cell and gene therapies, literature questioning the long-term impacts of these therapies may encourage CMS to place them under CED, despite the FDA licensing the therapies as safe and effective. However, even in these circumstances, CED is the wrong remedy, as concerns over a drug’s long-term effects fall once again under the purview of the FDA, which has spent the past few years implementing provisions of the 21st Century Cures Act to incorporate real-world evidence into drug development. Use of real-world evidence can facilitate post-approval safety monitoring by allowing the FDA to reconsider a drug’s approval if it proves harmful to patients. If CMS has concerns about the medical necessity of an item or service, it may be able to employ real-world evidence on an individual basis to understand medical necessity. But it should not attempt to step into the FDA’s shoes by requiring a cumbersome data collection process simply to justify coverage owing to safety concerns on an FDA-approved product.

It’s extremely unusual for CMS to restrict coverage for an FDA-approved drug when used in accordance with the label. Despite rigorous safety screening, CMS based its 2022 coverage decision for a new class of Alzheimer’s drugs less on medical necessity and more on considerations of safety, specifically citing the risk of brain bleeding in its NCD. The FDA is aware of the risk, and warnings concerning this risk appear on the drugs’ labels. However, even in consideration of this risk, the FDA chose to approve two drugs in this class, indicating that the clinical benefits outweigh these safety risks. Yet, despite the FDA’s granting of accelerated approval and the prospect that one of these drugs, lecanemab, could be granted traditional approval, CMS has pledged to cover lecanemab only under the burdens associated with CED, severely curtailing patient benefit.

Numerous stakeholders have pointed out the flaws with this approach. The Alzheimer’s Association specifically asked CMS to reconsider this coverage policy in light of new evidence that the drug lecanemab can reduce the rate of cognitive decline by 27 percent compared with a placebo. These results were also highlighted in a letter to CMS from 20 senators, who also requested reconsideration of CMS’s current coverage policy. Unfortunately, CMS denied these requests, issuing an announcement on February 22 that it would not reconsider its coverage policy for this class of drugs when granted accelerated approval and that it would only cover this class of drugs when granted full approval in the context of CED. This position contrasts with the Veterans Health Administration’s announcement one month later that it would cover lecanemab for patients meeting certain clinical conditions and requirements. With 2,000 patients progressing from mild to moderate Alzheimer’s daily, where no drug exists that can abate the disease, CMS’s unwillingness to change its coverage policy is unacceptable.

CMS further burnished its anti-innovation stance in February by proposing an Innovation Center model that would allow it to pay less for accelerated approval drugs under Part B. The FDA’s decision to grant Aduhelm accelerated approval triggered intense scrutiny of the accelerated approval program, which was originally established to allow for earlier approval of drugs that treat serious conditions and fill an unmet medical need. While details surrounding the new model are yet to be published, cuts to reimbursement for drugs that are granted accelerated approval would be a powerful disincentive against use of this pathway, ensuring that patients suffering serious medical conditions have fewer treatments available and suffer worse health outcomes.

Moving away from CED

To address these concerns, CMS should scrap CED altogether, choosing instead to default to coverage of on-label use for FDA-approved drugs. Where CMS is unsure of the medical necessity of an item or service, it should defer coverage to its regional administrative contractors to make claim-by-claim determinations concerning medical necessity. At minimum, CMS should refrain from placing drugs which receive FDA approval under CED, as it has threatened to do with lecanemab, due to the intense resource requirements and duplication of the FDA’s already strict evidence requirements. CED should not be a tool to second guess the FDA or to cast aspersions on a legitimate approval pathway, such as accelerated approval, which was designed to expedite patient access to treatments for serious medical conditions. The status quo with CED is not acceptable, and the agency should immediately rectify these failings.

Scientific advances are helping innovators to develop new devices and treatments that can meaningfully improve patients’ lives at increasing pace. Unfortunately, regulations surrounding coverage are not experiencing the same innovation. CMS should prioritize reforming or eliminating CED and allow Medicare patients to finally have access to the innovations they are counting on to enjoy their golden years.

Author’s Note

Grogan consults for the pharmaceutical industry, including manufacturers investigating Alzheimer’s treatments.

Grogan, J. (2023). Medicare’s’ Coverage With Evidence Development’: A Barrier To Patient Access And Innovation. Health Affairs Forefront.

Copyright © [2023] Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

Sign up for Schaeffer Center news