Except for breakthrough devices and qualifying infectious disease drugs, the footwork for getting Medicare's new technology add-on payment (NTAP) can be more challenging than that needed to win FDA approval. It could be even tougher for products that use artificial intelligence (AI) or that follow a subscription model for pricing.
In evaluating San Francisco-based Viz.ai Inc.’s request for a fiscal 2021 NTAP for its Contact radiological computer-assisted triage and notification software system, which is intended to speed identification and treatment of a stroke, the Centers for Medicare & Medicaid Services (CMS) questioned “whether the use of AI, an algorithm, or software, which are not tangible, may be considered or used to identify a unique mechanism of action.”
It also noted the “unique circumstances to determining a cost per case for a technology that utilizes a subscription for its cost.” Viz.ai’s system is available through a subscription model, which means the cost per patient would depend on how many cases a particular hospital handles.
“Newness” and cost are two of the components required, on the traditional path, for the add-on payment that makes innovative drugs and devices more accessible in their first years on the market. The third component of the traditional NTAP path is that the product must demonstrate significant clinical improvement over existing treatments and it must be generalizable to the Medicare population. That requirement may demand more data than what’s needed for FDA approval or clearance.
Because of the newness consideration, CMS limits NTAPs to the first three years of a product’s life – typically measured from the date of FDA approval or clearance. Since NTAPs are part of the annual Inpatient Prospective Payment System (IPPS) rule that goes into effect each Oct. 1, the timing of the rule may make it so a product isn’t given an NTAP until a year or two after it’s been approved or cleared. As a result, it may qualify for only one year of the add-on payment.
Of all the new requests for NTAPS for fiscal 2021, Viz.ai’s Contact is the oldest technology; it received the FDA clearance on the de novo path in February 2018. However, it wasn’t commercially available until October 2018. (See New NTAP requests for fiscal 2021, below.)
Another aspect of “newness” is that a product cannot be “substantially similar” to existing technologies, including in its mechanism of action. That’s what has CMS second-guessing itself on AI. “We are unclear as to whether the streamlining of hospital workflow would represent a unique mechanism of action. … It is unclear to CMS how Contact shortens time to treatment via AI if the CT machine still performs the scanning and clinicians are still needed to view the images to diagnose an LVO [large vessel occlusion] and perform a full patient evaluation for the best course of treatment,” the agency said in its proposed fiscal 2021 IPPS rule.
Looking beyond Viz.ai’s request, CMS also is questioning how updates to AI, an algorithm or software would affect an already approved technology or a competing technology. For instance, could software changes for an approved technology be considered a new mechanism of action? And if there are approved competing technologies, would an improved algorithm by one competitor represent a unique mechanism of action if it produces the same outcome as the original technology?
Those are some of the questions CMS is seeking comment on before it makes a determination on the new NTAP requests it received on the traditional path. It also is seeking comment on its proposed determinations for several requests on the alternative NTAP path, which is open to products the FDA has designated as breakthrough devices or approved as qualified infectious disease products.
On the alternative path, CMS only considers the cost component, which considers whether a new technology would be inadequately paid under the existing Medicare-severity-diagnosis related group system. Sponsors must demonstrate that the average standardized charge for inpatients receiving the technology exceed the cost threshold.
The proposed IPPS also includes CMS’ decision on whether to continue or discontinue fiscal 2020 NTAPs. According to the rule, that decision is based on when the FDA approved or cleared the product. For those products granted another year of the add-on payment, the maximum amount would remain unchanged. (See Proposed fiscal 2021 action on current NTAPs, below.)
Comments on the NTAP proposals, as well as the rest of the IPPS, are due by July 10.