Medicare Coverage of Breakthrough Devices: Closing the Gap for Patients & Innovation

Ensuring access to safe and effective medical technologies is paramount to improving patient lives. A central challenge, however, lies in bridging the gap between FDA approval and Medicare coverage, a hurdle that can delay or deny patients access to potentially life-altering treatments. The debate over whether Medicare should automatically cover FDA-designated breakthrough medical technologies is gaining momentum, with recent legislative efforts signaling a potential shift in policy.

In 2016, Congress attempted to address this issue with the 21st Century Cures Act. This legislation established the Food and Drug Administration’s (FDA) breakthrough devices program, designed to expedite the review of promising new medical devices addressing critical unmet needs. Breakthrough designation signifies that a device demonstrates a substantial improvement over existing alternatives, offering significant advantages for serious or life-threatening conditions. The program provides increased interaction with FDA scientists and, where appropriate, more flexible clinical trial designs to accelerate development.

The “Valley of Death” and Delayed Access

Despite the FDA’s efforts to accelerate innovation, a significant barrier remains: Medicare coverage. Even after a device receives FDA authorization, confirming its safety and efficacy, Medicare may not cover it, effectively limiting access for many patients. This discrepancy creates what innovators call the “valley of death,” a period where promising technologies languish due to reimbursement uncertainties. A study conducted by researchers at the Stanford Mussallem Center for Biodesign revealed that, on average, it takes 5.7 years after FDA authorization for a breakthrough technology to achieve even minimal Medicare coverage. This delay can have profound consequences for patients suffering from serious conditions.

This lengthy process isn’t simply a bureaucratic inconvenience; it actively disincentivizes the development of novel therapies. In a competitive global landscape, the United States risks losing its leadership in medical technology innovation if innovators are discouraged from pursuing groundbreaking advancements. The current system can inadvertently favor incremental improvements over truly transformative technologies, as the latter face greater uncertainty regarding reimbursement.

Legislative Momentum and Bipartisan Support

Recent legislative efforts aim to address this critical gap. Last year, a bill focused on accelerating Medicare coverage for breakthrough technologies secured an overwhelming 37-3 vote in the House Committee on Ways and Means. A corresponding bill in the Senate is currently under consideration. This bipartisan support underscores the widespread recognition of the demand to streamline access to innovative medical technologies.

Addressing Concerns About Cost and Coverage

Critics of the proposed legislation often raise concerns about potential increases in healthcare costs. However, these concerns are largely unfounded. Although the FDA has enrolled over 1,000 devices in the breakthrough program, only 160 have been authorized in the last decade, demonstrating the rigorous standards applied by the agency. Only a tiny fraction of these authorized technologies would be eligible for Medicare coverage under the proposed bills.

The Stanford Mussallem Center for Biodesign study found that only 64 technologies authorized by the FDA between 2016 and 2019 met existing Medicare benefit categories and required new coverage consideration. Even this relatively small number – approximately 16 technologies per year – is unlikely to significantly strain the Medicare Trust Fund. The potential clinical benefits and cost savings associated with these technologies, such as reduced complications and shorter hospital stays, are too not factored into these cost projections.

The Congressional Budget Office estimated the cost of the legislation at $100 million annually over ten years. This represents an infinitesimal fraction of the CMS budget of over $1.5 trillion for fiscal year 2025. The legislation does not mandate automatic coverage for all FDA-authorized breakthrough technologies. Instead, it requires technologies to fall within established benefit categories and undergo a CMS review to ensure they do not pose undue risks.

A Targeted Approach to Innovation

The proposed legislation also includes a four-year temporary coverage period, during which additional data would be collected to assess the technology’s long-term value. This allows CMS to suspend coverage if concerns arise. This targeted approach aims to expedite access to safe and effective technologies while maintaining appropriate safeguards. The breakthrough program, coupled with legislative efforts to address the “valley of death,” represents a powerful strategy for expanding the toolkit available to healthcare providers and improving patient care.

The current system risks stifling innovation and potentially ceding leadership in medical technology to other nations, such as China. Incentivizing the development of transformative technologies, rather than solely focusing on incremental improvements, is crucial for advancing patient care and maintaining a competitive edge.

What’s Next for Medicare Coverage of Breakthrough Devices?

The fate of this legislation remains uncertain, but the broad bipartisan support suggests a strong possibility of passage. If enacted, it would represent a significant step towards ensuring that Medicare beneficiaries have timely access to cutting-edge medical technologies. The process will involve continued dialogue between Congress and the Centers for Medicare & Medicaid Services (CMS) to refine implementation details and address any remaining concerns. Stakeholders will be closely monitoring CMS guidance and coverage decisions in the coming months and years to assess the impact of the new policy.

Josh Makower, M.D., is the Yock family professor of medicine and bioengineering at the Stanford Schools of Medicine and Engineering, and the Byers family director and co-founder of the Stanford Mussallem Center for Biodesign, a center dedicated to training the next generation of medical technology innovators to advance patient health outcomes and access.