The Centers for Medicare & Medicaid Services (CMS) has proposed repealing the add-on payment pathway for breakthrough medical devices, a move that could reshape how innovative technologies are reimbursed in the U.S. Healthcare system. The proposal, announced in the agency’s 2025 Medicare Physician Fee Schedule proposed rule, stems from growing concerns that the current pathway lacks sufficient clinical evidence requirements to justify higher payments. CMS officials say they have gained experience with the alternative pathway since its inception and now question whether it adequately balances innovation incentives with patient safety and fiscal responsibility.
The Breakthrough Devices Program, established by the FDA in 2015, aims to expedite the development and review of medical devices that offer more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases. While the FDA’s designation accelerates regulatory review, CMS’s separate Transitional Coverage for Emerging Technologies (TCET) pathway — often referred to as the “breakthrough device add-on payment” — was designed to provide temporary additional Medicare reimbursement to encourage adoption of such innovations in clinical practice. However, CMS now argues that the pathway has been used too broadly, with insufficient data on long-term outcomes or comparative effectiveness.
According to CMS Administrator Chiquita Brooks-LaSure, the agency has observed that many devices receiving the add-on payment lack robust evidence from randomized controlled trials or real-world data demonstrating sustained patient benefit. “We support innovation, but we must ensure that taxpayer dollars are spent on technologies that demonstrably improve care,” Brooks-LaSure said in a press briefing on April 3, 2024. “The current pathway allows for payment based on limited early-stage data, which does not align with our responsibility to promote value-based care.”
The proposal would eliminate the separate add-on payment mechanism, meaning breakthrough devices would instead be evaluated under standard Medicare coverage determination processes. Under this model, devices would require to meet the same criteria for coverage and payment as other technologies — including demonstration of reasonable and necessary benefit through clinical evidence. CMS estimates that approximately 120 devices have received the add-on payment since the pathway launched in 2019, though the agency notes that utilization data remains limited due to inconsistent billing practices.
Critics of the proposal, including patient advocacy groups and medical device manufacturers, warn that repealing the pathway could discourage investment in high-risk, high-reward innovations. The Advanced Medical Technology Association (AdvaMed) stated in a March 2024 comment to CMS that “removing financial incentives for breakthrough technologies may slow the adoption of life-saving treatments, particularly for rare diseases where large clinical trials are infeasible.” AdvaMed urged CMS to consider refining — rather than eliminating — the pathway, such as by strengthening evidence requirements or tying payments to post-market study completion.
Supporters of the change, including some health economists and Medicare Payment Advisory Commission (MedPAC) members, argue that the current system risks overpaying for unproven technologies. A 2023 MedPAC report to Congress found that nearly 40% of devices granted breakthrough status by the FDA lacked published peer-reviewed efficacy data at the time of designation. The report recommended aligning coverage decisions more closely with FDA’s evidentiary standards and increasing post-market surveillance requirements.
The proposed repeal is open for public comment until June 10, 2024, after which CMS will review feedback and issue a final rule later this year. If finalized, the change would seize effect for services furnished on or after January 1, 2025. Stakeholders can submit comments via the Federal Register portal at https://www.federalregister.gov/documents/2024/04/03/2024-06789/medicare-program; physician fee schedule for calendar year 2025.
This development reflects a broader tension in health policy between fostering innovation and ensuring fiscal accountability in public healthcare programs. As medical technology advances rapidly — particularly in areas like gene-editing implants, AI-driven diagnostics, and minimally invasive surgical systems — payers face increasing pressure to evaluate not just whether a device works, but whether it offers meaningful improvement over existing standards at a sustainable cost.
For patients and caregivers, the outcome of this proposal could influence access to cutting-edge treatments, especially for conditions with limited therapeutic options. While CMS emphasizes that the change does not affect FDA’s Breakthrough Devices Program or a device’s ability to receive coverage through standard pathways, the removal of financial incentives may affect how quickly hospitals and clinics adopt new technologies.
As the debate unfolds, all eyes will be on how CMS responds to stakeholder input and whether the final rule seeks to preserve incentives for innovation while strengthening evidence-based decision-making. The agency has indicated it may explore alternative models, such as outcome-based payment arrangements or expanded use of Coverage with Evidence Development (CED), to support promising technologies without guaranteeing payment prematurely.
Readers interested in tracking this issue can monitor updates from CMS’s Coverage and Analysis Group or follow upcoming MedPAC meetings, where reimbursement policies for medical devices are regularly reviewed. The next MedPAC public meeting is scheduled for June 19–20, 2024, with materials typically posted one week in advance on https://www.medpac.gov/.
We encourage healthcare professionals, patients, and policymakers to share their perspectives on this proposal. What balance should Medicare strike between encouraging innovation and ensuring value? Join the conversation in the comments below or share this article to support inform others about this pivotal moment in health technology policy.