BB&T Washington Editor and BB&T Staff Reports

The ongoing budget struggles were presumed to offer a potentially sharp cut to the budgets of a number of federal agencies and programs in fiscal 2012, but the lobbying on behalf of FDA seems to have paid off with the announcement in November that FDA will not only avoid a loss of appropriated monies, but will see a net increase of $50 million in taxpayer dollars. Most of that increase will go toward food safety and bioterrorism programs.

The Alliance for a Stronger FDA (Washington) listed the details of the agreement between House and Senate conferees in a fact sheet, which would put $323 million into operations at the Center for Devices and Radiological Health at FDA for fiscal 2012, an increase of $1 million over the amount provided in fiscal 2012 via the continuing resolution. Nancy Bradish Myers, President of the Alliance and President of Catalyst Healthcare Consulting (McLean, Virginia), said in a statement that the Alliance s members are grateful to the conferees for assuring that FDA has the funds to continue its mission. She noted that FDA must continue to be a national priority so we can advance medical progress, improve patients lives, and assure Americans have a safe food supply.

FDA inks IDE guidance for public comment

FDA s Center for Devices and Radiological Health published a draft guidance for investigational device exemptions, and indicates that much of the intent behind the guidance is to provide industry and agency with an adaptive mechanism for device trials that allows tweaks to both device and study designs. The accompanying notification in the Federal Register says that responders have until Feb. 8, 2012 to make their views known.

In the overview section of the draft, which mentions no predecessor guidance, FDA says that the document introduces new approaches to facilitate timely device and clinical protocol modifications during an early feasibility study while still requiring compliance with the IDE regulations. Among the provisions to be found in the guidance is a greater range of types of modifications that can be made under a five-day notification without prior FDA approval as compared with other types of studies, as well as a contingent approval process that permits changes contingent upon acceptable nonclinical test results without requiring additional FDA action. However, FDA apparently would like to also engage industry in an interactive review of IDE supplements as well.

The guidance explicitly acknowledges one of the pivotal elements of device flight, namely that the agency intends for this policy to facilitate initiation of clinical studies in the United States earlier in the device development process than has historically occurred.

One of the routine complaints heard in Washington and at medical conferences recently is that even as device lag allows residents of other nations access to devices unavailable to Americans, pivotal studies have increasingly commenced outside the U.S., a trend that has captured even some of these earlier clinical studies. This particular passage implicitly acknowledges some of the pressure behind a new piece of legislation, the Premarket Predictability Act of 2011 (H.R. 3209), which was introduced in 2011 by Rep. John Shimkus (R-Illinois) in an effort to force FDA to streamline the IDE process.

The draft specifies that other than pivotal trials, device makers can avail themselves of three trial types, including an early feasibility study intended to provide initial insights into device features such as safety associated with implant procedures and challenges associated with operator technique. FDA says that this kind of study can be deployed when device changes are expected and when, due to the novelty of the device or its intended use, a clinical study is expected to provide information that cannot be readily provided through additional non-clinical assessments.

FDA says that early feasibility studies need not include definitions of success or a data analysis plan, but an application for such a study should include reports of prior investigations, including any data that supports an expectation of acceptable clinical use. Among these data are bench and animal testing, but data on basic device safety should also be included and may cover biocompatibility, sterility and electromagnetic compatibility.

The draft mentions computational modeling as one way to support an early feasibility analysis, including durability analyses for chronic implants when the boundary and loading conditions are known, although computer modeling may also serve to simulate iterative design modifications in the absence of compelling data on boundary and loading conditions. FDA gives the example of the use of computer modeling for magnetic resonance compatibility to simulate worst-case scenarios that cannot be replicated in an animal model and cannot be tested ethically in humans.

Eucomed calls for greater standardization across NBs

One of the peculiarities of med-tech regulation in Europe is the seemingly pan-European regulatory model, a perception that is belied by the multiple notified bodies (NBs) that are responsible for device application reviews. Eucomed (Brussels, Belgium) published a paper calling for a less fractured EU device regulatory system, including a call for precise and mandatory requirements for the designation of notified bodies.

Eucomed s paper, which was posted Nov. 23, 2011, at the association s website, spells out six recommended areas of action, including a section titled Only the Best Notified Bodies. In this section, Eucomed argues that the current approach has been a success not only in terms of ensuring safety, where evidence shows it to be equivalent to the U.S. system, but also in terms of access.

The problem in the association s eyes is that crucial areas of the notified body approach show signs of weakness due to the largely voluntary and national approaches rather than on consistent, mandatory EU-level rules and standards. The fix for this, the paper says, would be to develop precise and mandatory requirements for the designation of notified bodies and EU-wide accreditation standards that would cover competence, training, staffing, transparency and expertise.

The paper cites a severe lack of coordinated exchange of information on adverse events as well as considerable variations in terms of responses to incidents as the justification for a better defined legal framework on vigilance and greater harmonization across national boundaries for surveillance. To that end, Eucomed recommends a centralized reporting and surveillance system based on the EU portal for reporting of key data and situation assessment. Key points for this feature would include at least the possibility to exchange information between various entities, such as national surveillance authorities, distributors and customs authorities, but appropriate security and data protection measures are also called for, the paper says.

Eucomed remarks that many nations are gravitating toward harmonized standards at the international level, but that the participation of Europe s competent authorities has fallen behind and now seriously trails that of other regions regulators, such as the FDA. The recommendation here is that EU s existing standards should continue to prevail as a core vehicle to ensure the safety and performance of devices, but the predicament points to a need to re-position Europe s competent authorities at the forefront of international safety standards in medical technology.

With regard to the fourth area, titled Consistent Implementation of Guidelines, Eucomed asserts that the process of revising the Medical Device Directives lacks pace and legal certainty, but when the directives were rolled out, the outcome sheds light on severe disparities in the way and the extent to which the guidelines are implemented among member nations. To address this situation, Eucomed recommends that the current guideline process actively involve and commit the member says to uniform implementation, but the association also expresses a preference for an upgrade to the EC s medical device expert group from one operating in a voluntary capacity to one that functions as an advisory committee under the future revised legal framework. This committee would be charged with establishing and overseeing a consistent guidance development process.

Eucomed says that the lack of transparency associated with device applications and with surveillance has led to doubts and subsequently decreased levels of public trust in CE marks and surveillance, hence a recommendation for the establishment of a single EU database with appropriate elements available to the public. This database would include an unspecified level of information on devices on the market including unique device identifier information, as well as data on vigilance and surveillance.

The last section of the paper holds to the de-centralized approach at work in the EU, but claims that this approach suffers from disparate implementation across national boundaries. To address this, the association recommends audits of notified bodies to ensure a comparable, high level of quality across the EU, as well as coordinated vigilance systems and more extensive horizon scanning and foresight intelligence on potential health concerns.

CMS holds on pass-through for CY 2012 OPPS

The Centers for Medicare & Medicaid Services let it be known in early November 2011 that it was not persuaded by industry to loosen the standards for new technology pass-through payments for the calendar year 2012, and the final rule for hospital out-patient and ambulatory surgical center (ASC) payment, published in the Federal Register, indicates the agency will stick to its guns.

CMS had noted in the proposed rule that three codes for pass-through payments are in effect for CY 2012, and that it saw no problem with its administration of this mechanism. According to the proposed rule, the number of pass-through codes in effect at any time reflect the quality of applications, a phrase that also appears in the final rule.

One of the features of the final rule of interest to device makers is the discussion of adjustments made to OPPS payment for no cost/full credit and partial credit devices. CMS reminds the reader that implantable device failures have in recent years led to several field actions on and recalls of such devices, in response to which industry has sometimes offered devices without cost to the hospital or with credit for the device being replaced.

The agency says that among the policies in place for CY 2012 is a decision to continue the existing policy of reducing payments for explanted and replaced devices by 100% of the device offset amount when a hospital furnishes a specified device without cost or with a full credit, and by 50% of the device offset amount when the hospital receives a credit of 50% or more from the manufacturer.

CMS notes that it had implemented a policy in 2007 to reduce the payment by the estimated portion of the APC payment when the manufacturer provides the device at no cost or at full credit. This requires the use of the FB modifier in the provider s records. When the replacement device is more expensive than the explanted item, the hospital is instructed to report as the device charge the difference between its usual charge for the device being implanted and its usual charge for the device for which it received full credit.

The rule points out that CMS amended this policy in 2008 to include cases in which hospitals receive partial credits of 50% or more of the cost of the device, a scenario requiring the use of the FC code.

Regarding CY 2012, CMS says that it continues to believe it is appropriate to reduce the APC payment in cases in which the hospital receives the device at partial or no cost, but part of the reasoning at CMS is that the beneficiary s co-payment is affected by the arithmetic and hence it is equitable that the beneficiary cost sharing reflects the reduced costs in these cases.

One commenter to the proposed rule apparently made the argument that the FC modifier should be used when the manufacturer refunds the full cost of the explanted device, but charges full fare for the replacement. CMS responded to this by stating that making the full APC payment would result in significant overpayment because . . . we use only those claims that reflect the full cost of devices in rate-setting for device-dependent APC codes. CMS also said that when a hospital incurs a cost for a device upgrade, the difference between the cost of the replacement unit and the full credit extended by the manufacturer for the explanted item would likely be much less than the full cost of the device that is included in the device-dependent APC payment rate. The agency says that the manufacturer is on the hook for the cost of the procedure needed to replace the explanted device, but also remarked that while in some cases a hospital might end up with a loss on the situation, it would not be appropriate to pay a higher rate because averaging is inherent in a prospective payment system.

As for the details, CMS says that the device offset percentage for insertion/replacement of permanent pacemaker and electrodes (APC 0089) will be 71% for no cost/full credit situations, and 36% for partial credit cases. The ratios were a bit higher for APC code 0107, insertion of a cardioverter defibrillator unit, at 89% for no cost/full credit and 45% for partial credit. For implanted drug infusion devices (APC 0227), the percentages are 81% for no cost/full credit and 41%. for partial credit.

One point of controversy over the scheduled payments was for implantation of cochlear units under CPT code 69930. CMS indicates that cost data from CY 2010 indicates an average cost of a shade under $29,000, which the document says is about 6% less than the $30,730 drawn from data for the previous year.

Several commenters apparently claimed that the proposed payment level for cochlear implants was 12% less than was paid in CY 2011, and that the fee for 2012 does not cover a hospital s total cost. The argument was essentially while that median cost for the entire procedure may have dropped, the costs some unspecified number of components of the related APC code (0259) either remained the same or increased.

CMS responded to the effect that the median cost for APC 0259 is calculated using only those single bills that reflect the full cost of the cochlear implant device, and that the payment schedule for CY 2012 appropriately reflects hospitals relative costs.

CMS to cover obesity screening and counseling

Public health advocates probably cheered upon hearing that the Centers for Medicare & Medicaid Services has agreed to cover preventive services to reduce obesity, a coverage decision intended to complement the Million Hearts Initiative undertaken jointly by CMS, the Center for Disease Control and Prevention, and other HHS agencies, according to the CMS statement.

CMS recently opted to cover cardiovascular disease prevention services, also under the Million Hearts Initiative program, which is intended to reduce the numbers of heart attacks and strokes in the U.S. by one million in the next five years. The CMS statement notes that the obesity prevention service coverage adds to Medicare s existing portfolio of preventive services that are now available without cost sharing under the Affordable Care Act.

Then-CMS administrator Don Berwick, MD, said in the statement that obesity is a problem for Americans of all ages, and prevention is crucial for the management and elimination of obesity in our country.

According to CMS, more than 30% of men and women in the Medicare population are estimated to be obese, and the statement points out the link between obesity and many chronic diseases, including those that disproportionately affect racial and ethnic minorities such as cardiovascular disease and diabetes.