CMS Proposes to Eliminate Alternative Payment Pathway for Breakthrough Medical Devices
Key Insights
The Centers for Medicare and Medicaid Services (search) has proposed repealing the alternative pathway for new technology add-on payments for breakthrough devices, effective fiscal year 2028.
Under the proposal, breakthrough devices would need to demonstrate substantial clinical improvement over existing technologies to receive additional Medicare payments, removing a key advantage established in 2020.
Industry group AdvaMed (search) opposes the change, stating the alternative pathway has worked well since implementation by the first Trump administration.
The Centers for Medicare and Medicaid Services (search) has proposed eliminating a streamlined payment pathway for breakthrough medical devices, potentially creating new barriers for innovative technologies seeking Medicare reimbursement. The proposal, included in the 2027 Inpatient Prospective Payment System proposed rule, would repeal the alternative pathway for new technology add-on payments beginning in fiscal year 2028.
Policy Reversal Targets Breakthrough Device Payments
Under the current system established in 2020, medical devices with FDA breakthrough designation can receive new technology add-on payments without demonstrating substantial clinical improvement over existing technologies. The proposed rule would eliminate this advantage, requiring all devices to meet the same three eligibility criteria: being new, costly, and demonstrating substantial clinical improvement over existing technologies.
The CMS originally created the alternative pathway to support transformative devices that could provide more effective treatment or diagnosis for life-threatening conditions. The breakthrough device program was designed by the FDA to speed patient access to such technologies.
Agency Cites Evaluation Concerns
The CMS justified the proposed change by citing concerns about the limited evaluation process for both inpatient new technology add-on payments and device pass-through payments under the Outpatient Prospective Payment System. The agency is also proposing to repeal the alternative pathway for OPPS pass-through payments.
"After further consideration, we believe it is in the best interest of Medicare patients to refine our approach," the CMS wrote. "By requiring all technologies to demonstrate that they offer a substantial clinical improvement as part of our evaluation process, we believe we will be better able to make evidence-based decisions on which technologies should receive these additional payments."
Industry Opposition and Impact Scale
Industry trade group AdvaMed (search) expressed disappointment with the proposed policy reversal. In a statement to MedTech Dive, AdvaMed said the alternative pathway policy "has worked well" since its implementation by the first Trump administration, adding "it would be disappointing if this progress were rolled back."
The scale of potential impact is significant. The FDA granted 164 breakthrough device designations in fiscal 2025 alone. As of December 31, the Center for Devices and Radiological Health (search) had granted a total of 1,226 breakthrough device designations, including devices originally designated under the expedited access pathway program.
Implications for Medical Innovation
AdvaMed (search) noted that the current NTAP policy helped establish the role CMS can play in incentivizing medical innovation. The proposed elimination of the alternative pathway could potentially slow the adoption of breakthrough technologies in Medicare settings, as manufacturers would face higher evidentiary requirements to secure additional reimbursement.
The proposed rule represents a shift toward more stringent evidence requirements for breakthrough devices, aligning their reimbursement pathway with conventional medical technologies despite their FDA designation as potentially transformative innovations.