Retinal Implants and Medicare Reimbursement Policies for Breakthrough Treatments in Ophthalmology

Novel medical devices intended to treat diseases of the eye, such as retinitis pigmentosa and glaucoma, could greatly improve patient care and health outcomes. A number of factors influence the research and development process of these investigational therapeutics.¹ Specifically, given the significant upfront investments required to develop new devices, reimbursement and payment policies of large payers, such as the Centers for Medicare and Medicaid Services (CMS), play an important role in product development and commercialization. The Centers for Medicare and Medicaid Services granted the first ophthalmic device, a retinal prosthesis, an incentive payment through the New Technology Add-on Payment (NTAP) program. In this Viewpoint, we consider how innovative reimbursement pathways may impact the pace of ophthalmological research and development.

Under the Inpatient Prospective Payment System, Medicare reimburses hospitals with a fixed prospective payment for each hospitalization, also known as diagnosis-related groups, and updates these payment levels based on claims data from the preceding 2 years to account for changing practices and costs. However, this system can discourage health care professionals from adopting new technologies, as they may be reimbursed at a price far below the actual incurred costs. For example, in the 1990s, researchers observed that rates of cochlear implantation remained low and companies were exiting from cochlear implant development—despite Food and Drug Administration (FDA) approval and a favorable coverage decision by Medicare—ostensibly as a result of underpayment.²

In 2001, CMS established the NTAP program to ensure that Medicare beneficiaries have access to breakthrough treatments. Through this program, CMS agreed to bridge up to 50% of the gap between a new technology’s costs and the existing payment for a condition until payment levels are recalibrated. To qualify for this temporary incentive payment, CMS requires that the technology be new (defined as within 3 years of FDA approval) and the existing Medicare payment level be inadequate to cover the cost. In addition, CMS requires that the new technology be a “substantial clinical improvement” over existing services, meaning it significantly improves clinical outcomes compared with existing treatments or offers a treatment option for patients unresponsive to, or ineligible for, currently available treatments.

In August 2013, CMS awarded an NTAP add-on payment of $72 029 for a retinal implant (Argus II Retinal Prosthesis System) intended to provide electrical stimulation of the retina to induce visual perception. The retinal implant had been evaluated in a pivotal clinical trial enrolling 30 patients and had gained FDA approval as a Humanitarian Use Device, a regulatory pathway for devices intended to treat rare diseases.³ The evidence from the pivotal study suggested that the retinal implant could improve visual function.⁴ For example, at 12 months, 15 of 16 patients (94%) and 10 of 16 patients (63%) could perform the object localization and direction of motion tests, respectively, with the device system on compared with none with the system off. With the system on, 8 of 30 patients (27%) scored between 2.9 and 1.6 logMAR at least once. In regard to safety, 4 patients required “significant intervention,” namely intraocular surgery or explant of the device, although all serious adverse events were resolved. After considering these data, in September 2012, the FDA Ophthalmic Devices Advisory Committee voted unanimously that the probable benefits of the retinal implant outweighed the risks associated with its use. In its decision, CMS concurred and ruled that the retinal implant constituted a substantially improved treatment option for patients who are profoundly blind owing to retinitis pigmentosa.

Second Sight Inc, the developer of the Argus retinal implant, received FDA approval nearly 2 years after submitting its Humanitarian Device Exemption application in May 2011, and the NTAP add-on payment was applied for in the 2014 fiscal year. As innovators may not realize that Medicare payment is not automatically forthcoming after FDA approval, there are often delays between FDA approval of a new treatment and Medicare coverage or incentive decisions. Recognizing the costs that could accrue from coverage delays, CMS and FDA established a parallel review pilot program for concurrent review of medical devices for FDA approval and Medicare national coverage decision. In August 2014, CMS and FDA approved the first device—a noninvasive colorectal cancer screening test—through this program.

New initiatives to speed the regulatory approval of medical devices are on the horizon. For example, in April 2014, the FDA commenced a pilot program for expedited premarket approval of medical devices intended to meet unmet medical needs.⁵ As key stakeholders evaluate ways to accelerate the development of safe and effective therapeutics, it is an opportune time to consider how reimbursement models can be similarly modernized. Like the parallel review pilot for national coverage decisions, CMS could consider a similar pathway (to minimize the delay between FDA approval and NTAP add-on payment decisions. For example, currently, developers must file their NTAP applications before CMS publishes its proposed regulations or wait a full year until the next cycle opens. A coordinated review program may even be more attractive for developers than the existing parallel review pilot, as a failure to receive an incentive payment would not rule out the possibility of later receiving Medicare coverage, although failing to receive a positive national coverage determination could jeopardize reimbursement altogether.

In the case of the retinal implant, CMS expressed concern that the pivotal trial was not adequately designed to assess the long-term effectiveness or safety of this procedure. When there are evidence gaps or uncertainty, CMS could consider sharing the cost burden of conducting confirmatory postapproval clinical trials for qualifying treatments. Medicare can grant coverage with evidence development, which allows temporary reimbursement for promising new technologies while new evidence is generated such as a mandatory prospective clinical trial or registry. Applying this model to promising medical devices granted incentive payments could reduce the financial burden on innovators while also ensuring that patients and clinicians have access to rigorous evidence supporting the use of these devices. Medicare could also harmonize the design of these trials with any postmarketing studies mandated by the FDA.

Finally, as highlighted by the lengthy development timeline of the retinal implant, the discovery, development, and approval of novel therapeutics remain a time- and resource-intensive process. Beyond modifying reimbursement incentive programs, any policy changes must be coupled with improved understanding of the importance of visual health to accelerate and sustain ophthalmological innovation.⁶ Given the increasing public health and economic burden of visual impairment,⁷ it is critically important that stakeholders—policymakers, payers, and physicians—ensure that patients have timely access to breakthrough treatments that could halt or reverse sensory loss and adequately incentivize developers to develop these treatments.

The approval of the Argus retinal implant for an NTAP add-on payment marks a new chapter in efforts to ensure that patients have access to therapeutics with the potential to substantially improve ophthalmic care and health outcomes. In light of ongoing efforts to make reimbursement decisions more efficient, CMS should leverage its influence as a large payer to promote the development of breakthrough devices such as through coordinating FDA review with NTAP decisions. In cases where there are evidence gaps, CMS could couple any incentive payments with coverage with evidence development-like policies to ensure that increased expenditures are for reasonable and necessary treatments and that covered devices are truly safe and effective for use in the intended patient populations.