FDA Releases New Cybersecurity Premarket Guidance and Study Shows 10 Year Delay Before a New CPT Code is Reimbursable
On April 8, 2022, the US Food and Drug Administration published a new draft guidance, “Cybersecurity in Medical Devices: Quality System Considerations and Content of Premarket Submissions,” replacing the 2018 draft guidance. In the new draft, the FDA provides clarification on several topics, as well as introducing new expectations around Threat Modeling, Software Bill of Materials, TPLC maintenance, and annual cybersecurity testing.
2022 marks the first time in nearly 70 years companies won’t be able to claim all expenses for research and development in the same tax year that the money was spent. Many medtech and life sciences companies object to the change, arguing it could hurt innovation and thereby slow development of life-saving or life-changing products. Under previous tax law, companies could expense all R&D costs spent that year on the same year’s taxes. The new law however requires those costs be amortized over five years. That translates into smaller numbers expensed each year. This law change was a provision, just now going into effect, from the 2017 tax reform legislation.
Pear Therapeutics (Nasdaq:PEAR) announced today that it received STeP designation from the FDA for its Pear-010 product candidate, a prescription digital therapeutic (PDT) candidate to provide a neurobehavioral intervention (virtual reality-delivered pain reduction) to patients 18 and older with acute postoperative and acute postprocedural pain. FDA’s Safer Technologies Program (STeP) voluntary program exists for certain medical devices and device-led combination products that are reasonably expected to significantly improve the safety of currently available treatments and diagnostics.
(Mass Device 4/13/22)
In one of his first public addresses since becoming commissioner of the US Food and Drug Administration (FDA) for the second time, Robert Califf outlined some observations about the state of play in the healthcare sector, as well as some of his priorities surrounding data and evidence generation. Califf said that the “evidence fabric” needs to be woven together to fill the gap between FDA approval and the appropriate use and coverage of new products. “If we had such a system, at least for medical products, we’d advance and pay for effective technology and effective practices more quickly and eschew ineffective technologies earlier and more completely,” he said.
Researchers from Northwestern University worked with the American Medical Association, the organization that controls Common Procedural Terminology (CPT) codes, in order to characterize the process of adding new CPT codes. The results of the study show a significant delay of around 10 years before a new CPT code is fully reimbursable. The existence of a fully reimbursable CPT code made clinicians 9x more likely to use a procedure. These data suggest that the slow pace of the CPT approval process hampers medical innovation and is a significant block to patient access for new procedures and technologies. In the light of recent lightning speed innovations around COVID, these delays seem even more unacceptable. The researchers conclude that the process is in urgent need of increased scrutiny and modernization.
The Office of Inspect General (OIG) released a new report stating that Medicare Advantage plans use prior authorization as a mechanism to delay/deny access to services. Providers also are subjected to wrongfully rejected payments. The analysis revealed that 13% of treatment denials and 18% of payment rejections were incorrect based on Medicare coverage requirements. When patients or practices disputed these errors, they were typically corrected by the insurer. A statement from the American Medical Association agrees that these findings reflect the experience of their members. The Centers for Medicare and Medicaid services supports the reports recommendations that new guidance, standardizations, and audit protocols should be enacted to reduce these potentially harmful errors.
(Fierce Healthcare 4/28/22)
Two prescription digital therapeutic companies have recently publicly disclosed their financials as a result of SPAC mergers: Pear Therapeutics and Akili. Analysis of both companies reveals similar issues as they pioneer this new market. Both have been operating at a net loss, accumulating deficits of over $200M. Reimbursement barriers are cited as one of the main challenges to wider adoption of prescription digital therapeutics, and both companies have been very active in proposing solutions and building a portfolio of efficacy research. The results of this lobbying can be seen in a new HCPCS code and regional coverage victories. All eyes are on these companies as they continue to navigate this process.
(MedTech Dive 4/11/22)
The pandemic accelerated an existing movement toward homecare, outpatient, and ambulatory treatment. This change was fueled by healthcare payment and reimbursement changes and it puts new levels of pressures on the financial situation of hospital systems. Exceptions to this trend are academic medical centers – that typically provide higher levels of specialty care, and hospitals in areas with strong population growth, including Texas, Arizona, Utah, and Idaho.
(Healthcare Dive 4/16/22)
The Centers for Medicare and Medicaid Services (CMS) published their proposed rule in April, which included plans to increase inpatient hospital payments by 3.2% for FY2023. The American Hospital Association protested that this increase was not large enough considering inflation and the rise of expenses such as salaries. The group did express appreciation that CMS will use two years of data to calculate payments, instead the past method of using just one year’s worth of data.
(MedTech Dive 4/19/22)
The Simbex Regulatory and Reimbursement Recap is a monthly briefing for news in the regulatory and healthcare reimbursement space relevant to Simbex areas of expertise. The briefing is curated by Amaris Ajamil, PhD, RAC, Simbex Senior Quality Assurance/Regulatory Engineer, and Angela Smalley, PhD, Simbex Centers Project Leader, Project Evaluation. A story’s inclusion does not imply endorsement by Simbex.