The Path to Post-COVID Digital Health Reimbursement
by Ray Johnson
Digital transformation in healthcare was accelerated by the need for telemedicine to provide healthcare delivery under the cloud of COVID-19, the Centers for Medicare & Medicaid Services (CMS) responded by providing emergency reimbursement for these services. According to the CMS Administrator Seema Verma: “…the pandemic accentuated just how transformative it could be, … it’s clear that the healthcare system has adapted seamlessly to a historic telehealth expansion that inaugurates a new era in healthcare delivery.” 1
What lies on the post-pandemic horizon is how CMS, insurers, and health systems can work – hopefully together – to provide clear and consistent guidelines for reimbursement and market access across the continuum of connected health: telemedicine, digital health, and digital therapeutics. An evolving area of focus to watch will be how these entities are able to differentiate among the growing wave of digital therapeutics during the review and approval process.
One area to watch is CMS’ evolving approach to actively pursuing codification of its “Medicare Program; Medicare Coverage of Innovative Technology (MCIT) and Definition of ‘Reasonable and Necessary.’ ” Under this regulation, CMS would provide Medicare beneficiaries with 4 years of reimbursement coverage for medical technologies authorized under FDA’s breakthrough device program. At the end of this reimbursement period, CMS would re-evaluate the technology based on clinical and real-world evidence of improved health outcomes and determine whether to grant permanent coverage.
However, MCIT has been put on hold by the Biden administration to allow more time to review the program. In a New England Journal of Medicine article, proponents of the delay are asking for more detail regarding the definition of “Reasonable and Necessary” and more scrutiny regarding clinical effectiveness and safety. As an example, there will likely be additional discussion around the 4-year window of coverage before reauthorization. By comparison, many pharmacologic interventions go through insurance reauthorization within 6-12 months of the initial approval for reimbursement, and then annual reauthorization after that. 2
Considering the experience that CMS, health insurers, and health systems have with clinical information, prescription utilization, data management, and vendor relations they would seem to be in a prime position to help standardize connected health post-COVID. These population health decision-makers may more broadly look to develop digital health benefit policies (akin to current pharmacy and medical benefit policies) to manage digital health solutions — based on contributions to improving outcomes and value-based care. In fact, a couple of notable pharmacy benefit managers, CVS Caremark and Cigna’s Evernorth, have initiated “digital health formularies” to help manage access to non-traditional, non-pharmacologic digital interventions. It is likely that more will follow suit in the near term – by, if not before, the MCIT program has been finalized.