Medicare Ends Breakthrough Device Payment Pathways
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- CMS finalized a rule in its inpatient hospital payment policy removing flexibilities that allowed FDA-designated 'breakthrough' medical devices to qualify for supplemental Medicare payments without proving novelty or substantial clinical improvement over alternatives.
- The change repeals those alternative pathways for both inpatient and outpatient settings and takes effect in fiscal year 2028.
- Under the prior framework, authorized breakthrough devices could skip the requirement to demonstrate substantial clinical improvement, gaining supplemental payments more easily.
- The supplemental payments are intended to incentivize hospitals to adopt new, transformative technology while it remains expensive, giving manufacturers time to establish value.
- CMS wrote that the change 'ensures that additional Medicare payments are used to support Medicare beneficiaries' access to innovations that are demonstrated to improve outcomes compared to the currently available treatment.'
Why it matters: Device makers who previously leveraged the FDA breakthrough designation for near-automatic supplemental Medicare payments must now build evidence of substantial clinical improvement over existing treatments — a higher bar that takes effect in fiscal year 2028 and could delay hospital adoption of newly authorized technologies whose manufacturers haven't yet generated comparative data.
