From Research to Revenue: Coverage and Reimbursement for Life Sciences Products - Coverage and Reimbursement Recommendations from the MEDCAC

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By Demetrios L. Kouzoukas, Anna D. Kraus, and Katherine Sauser, Covington & Burling

The Medicare Evidence Development & Coverage Advisory Committee (MEDCAC) has a significant role in determining Medicare coverage policies. This advisory body works with the Centers for Medicare & Medicaid Services (CMS) to determine whether new treatments and technologies are effective and whether they should be paid for by Medicare. The recommendations of this body can be very important for private insurance coverage as well, because many private payers take their cues from Medicare regarding coverage and reimbursement.

Origins of MEDCAC

The MEDCAC was established to provide independent guidance and expert advice to CMS on specific clinical topics. The MEDCAC is intended to supplement CMS’s internal expertise and to allow an unbiased and current deliberation of “state of the art” technology and science.1 The MEDCAC is composed of 100 experts in various medical and health-related fields. Topics are referred to MEDCAC for many reasons, including: significant controversy among experts, existing studies that are deficient in some way, public policy concerns, or need for public input. When an issue is referred to MEDCAC, it convenes a panel of up to 15 members to consider the issue. The MEDCAC is advisory in nature, with the final decision on all issues resting with CMS.2 The Office of Clinical Standards and Quality (OCSQ) is the unit within CMS that issues national coverage decisions, sets quality standards for Medicare and Medicaid providers, leads CMS's quality measurement and improvement activities, and manages Medicare's Peer Review Program.

To aid in its decision-making, MEDCAC may solicit a technology assessment (TA) report from the Agency for Healthcare and Research Quality (AHRQ).3 The AHRQ is a sister agency of CMS within the Department of Health & Human Services. AHRQ often contracts with universities or other entities to do TA reports. A TA report usually consists of a review of the scientific literature on a given topic. TA reports are posted on the AHRQ website for public comment. Public comments are also posted online, as is the “disposition of comments,” wherein the report authors respond to commenters.

MEDCAC may also recruit non-MEDCAC members who have relevant expertise to provide additional input to panel members and may invite experts to make formal presentations at a meeting.4 Generally, presenting experts are chosen by a CMS team that does not solicit nominations or suggestions. For others who wish to give input at a scheduled MEDCAC meeting, there is a public comment period during the meeting at which attendees may speak. Attendees who have contacted CMS prior to the meeting may address the panel and present information relevant to the agenda during the scheduled public comment period. There is also an open comment period. CMS provides guidelines for speaking at MEDCAC meetings.5

MEDCAC Voting Process

The MEDCAC voting process consists of two steps: (1) An evaluation of the sufficiency and quality of the evidence regarding the intervention and (2) An evaluation of what that evidence, if sufficient to support any conclusions, demonstrates about the effectiveness of the intervention as compared to standard, already-known, alternatives.6

— Quality of Evidence Assessment

The quality of evidence assessment evaluates both the validity of available evidence and the evidence’s general applicability to the Medicare population. Questions regarding effectiveness of an intervention are then addressed only when MEDCAC demonstrates, as a threshold matter, at least “intermediate confidence” that there is adequate evidence to make a determination regarding whether the technology or innovation being evaluated is an improvement over existing treatments. Intermediate confidence is defined as a mean vote of 2.5 on a scale of 1 to 5 (1 = low confidence, 5 = high).7 Types of evidence that MEDCAC considers in determining whether there is sufficient evidence include: results of scientific studies such as clinical trials (most valuable type of evidence; see below), peer-reviewed scientific literature, recommendations of expert committees, unpublished data submitted to FDA, and patient testimony.

Clinical trials are considered the most rigorous type of evidence. The best clinical trials, as considered by MEDCAC, are randomized and controlled, have appropriate endpoints established before the trial starts, enroll a representative sample of patients, are conducted in clinical practice in the patient population of interest, and evaluate interventions as typically used in routine practice. In assessing clinical trials, MEDCAC considers the following: the closeness of the effects measured in the study to their true values, whether there are statistically significant results (confidence interval), whether the study design is likely to lead to bias and how large the bias is likely to be, how applicable the results are to the Medicare population, the similarity of study population and setting where they receive care to the real-world population, and whether studies use “relative risk reduction” to extrapolate results from younger and healthier populations.

— Determination That Evidence Is Insufficient

MEDCAC will not assess or discuss net health outcomes of the intervention if evidence is insufficient. If such a determination is made, MEDCAC will explain the insufficiency and assess the possibility of developing better evidence and the timing of doing so. If evidence regarding an intervention is insufficient, CMS may encourage studies to provide adequate evidence to assess effectiveness, approve Medicare coverage of the new technology in the context of a clinical trial only, or go ahead and make a coverage decision based on best available evidence.

— Effectiveness of Intervention Assessment

Once MEDCAC has determined that there is sufficient evidence to evaluate a new technology, the committee will then answer “Key Questions.” CMS staff and MEDCAC’s chair and vice-chair draft the Key Questions.8 The Key Questions ask the MEDCAC members to express their confidence that the intervention is effective for various populations and in various settings, on a scale of 1 to 5 (1 = low confidence, 5 = high). To determine whether an intervention is effective, MEDCAC conducts a comparison of the intervention with standard alternatives with regard to quality of life, morbidity, mortality, diagnostic accuracy (for diagnostic interventions) or impact on disease management, and other health outcomes as appropriate (such as re-hospitalizations). At the end of the meeting, the MEDCAC members fill out score sheets indicating their answers to the Key Questions. The scores from each individual, as well as the average scores for all voting MEDCAC members, are reported to CMS and posted online sometime after the meeting.

CMS Responses to the MEDCAC Findings

— Potential for National Coverage Decision (NCD)

National Coverage Decisions (NCDs) are made by CMS and provide uniform national instruction to Medicare Administrative Contractors (MACs) regarding whether a particular item or service is covered. MACs administer the Medicare program on a regional basis. NCDs are made through a formal, evidence-based process, with opportunities for public participation. (The vast majority of items and services covered by Medicare are not the subject of NCDs. In the absence of an NCD, an item or service may be covered at the discretion of the MACs, as described below.)

CMS used the factors outlined in the guidance document “Factors CMS Considers in Opening a National Coverage Determination”9 to vet topics and generate a non-exclusive list of “Potential NCD Topics.”10 Those factors include: 1) a significant number of inquiries from the public, providers, or patients; 2) new evidence or a reexamination of previously available evidence; 3) inconsistent or conflicting local coverage policies; 4) program integrity concerns; 5) substantial clinical advances; 6) technologies for which rapid diffusion could have a significant programmatic impact; or 7) significant uncertainty about the health benefit, patient selection, or appropriate facility and staffing requirements for a new technology. These factors are similar to the factors used in making the decision to refer a topic to MEDCAC for evaluation.

In addition to initiating an NCD from the list of Potential NCD Topics or otherwise on its own initiative, CMS may initiate an NCD in response to requests from the public.11 For NCDs requiring no external TA, CMS will issue a final decision no more than six months after receipt of the completed request for decision. For NCDs requiring either an external TA or MEDCAC review, the time period for a decision is extended an additional three months to allow time for the TA or MEDCAC review. The proposed decision will then be posted on the CMS website, and a public comment period will open for 30 days. Comments will be reviewed, and a final decision will be issued no more than 60 days after the expiration of the comment period.12

— Case-by-Case and Local Coverage Decisions

It is possible that the MEDCAC’s finding of a lack of conclusive evidence for or against coverage of an intervention may prompt MACs to issue a local coverage decision (LCD). Private insurers may be similarly influenced by the MEDCAC finding, issuing a coverage decision in light of a MEDCAC decision. An LCD sets forth a policy on coverage that governs in the geographic region serviced by the MAC. LCDs are issued in a much more informal and unpredictable manner than NCDs, with much less evidence at hand. MACs may elect to provide coverage on a case-by-case basis, by paying or rejecting claims that are submitted, or they may elect to issue local coverage determinations. The local coverage determinations made by the MAC govern in the region until CMS issues an NCD on the item or service.13

Whether to provide coverage and reimbursement for new clinical interventions is a decision CMS must confront constantly as medical technology evolves and improves. The MEDCAC is intended to be a resource to assist CMS in making those decisions, and the outcome of a MEDCAC evaluation can be very influential in either causing CMS to make a coverage decision or to make a determination that further evidence and study is needed.

Demetrios L. Kouzoukas is of counsel at Covington & Burling LLP and a member of the Health Care, Food & Drug, and Election & Political Law Practice groups. Most recently, Mr. Kouzoukas served as Principal Associate Deputy Secretary of the U.S. Department of Health and Human Services (HHS). In that role, he was responsible for regulatory policy across HHS, with particular emphasis on Medicare & Medicaid reimbursement, food and drug regulation, and health information technology. Mr. Kouzoukas oversaw the programs and operations of the Centers for Medicare and Medicaid Services, Food and Drug Administration, and several other HHS agencies. He can be reached at or 202-662-5057.

Anna D. Kraus is of counsel at Covington & Burling LLP and chairs the firm’s Health Care practice. She regularly advises clients on Medicare reimbursement matters, particularly those arising under Medicare Part B and Medicare Part D. Ms. Kraus also has extensive experience with the Medicaid Drug Rebate program. In addition, she is an expert in health information privacy issues, including those arising under the Health Insurance Portability and Accountability Act (HIPAA). Prior to joining Covington, Ms. Kraus was Deputy General Counsel to the U.S. Department of Health and Human Services. She can be reached at or 202-662-5320.

Katherine Sauser is an associate at Covington & Burling LLP, where she practices in the areas of health care and antitrust. She can be reached at or 202-662-5638.


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