Medicare Billing Codes For Digital Therapeutics: A Path Forward

Although the Centers for Medicare and Medicaid Services (CMS) currently has the statutory authority to interpret and modernize its Medicare benefit categories to include digital health technologies and there have been multiple efforts to lobby CMS to include PDTs within the Durable Medical Equipment benefit category, the agency has yet to act. Dissecting the implications of CMS coding and billing mechanics on the diffusion of PDTs and considering alternative regulatory pathways in the design of future payment rails may lay the groundwork for a path to federal coverage for digital therapeutics. Claims-based reimbursement for a given medical device requires FDA clearance or approval, prescription by a qualified provider, and a compendium of clinical evidence with reimbursement set by the payer. Some providers have received claims-based reimbursement for use of PDTs indirectly through service-based billing codes that compensate time spent reviewing digital therapeutics data; however, direct CMS billing codes for the products themselves remains a relatively new and malleable process.

Covering PDTs under the service route of claims-based reimbursement to date has largely been achieved by HCPCS Level 1 codes, more commonly known as Current Procedure Terminology (CPT) codes, which cover health care procedures and services. In the case of PDTs, CPT codes reimburse licensed providers for their time setting up and monitoring data generated by patient interactions with PDT products. PDT manufacturers, seeking independent product reimbursement, have argued that HCPCS Level II codes are better suited for PDTs since the products themselves are not a clinical service and not typically used in a clinical setting. Although this code will make it easier for commercial payers to process billing for PDTs as a medical benefit, it also introduces new concerns with pricing a future Medicare physician fee schedule for these products. Multiple PDT manufacturers have lobbied CMS for individual HCPCS codes unique to each of their FDA-cleared products; however, CMS responded by saying that, at this time, the new A9291 code alone should be sufficient for billing purposes.

Although either a new Medicare benefit category or a revised interpretation of existing benefit categories to incorporate digital health technologies is eventually likely, the federal reimbursement conversation to date has tiptoed around the development of concrete evidence standards for CMS coverage and policy frameworks to value and price these products in the Medicare physician fee schedule. To avoid both facing a glut of FDA-cleared products awaiting CMS review despite insufficient data and delaying patient access to novel treatments, it will be crucial for CMS to clarify evidence standards for PDT coverage. CMS can take advantage of infrequently utilized regulatory pathways to both supplement the evidence base for PDTs and help guide the development of a fair, cost-effective fee schedule for these products in line with the level of clinical value they provide to patients. Given the differences in evidence standards between the FDA and CMS as well as the less thorough evidence base supporting most device clearances by the FDA relative to pharmaceuticals, CMS occasionally employs a performance-based risk sharing arrangement known as Coverage with Evidence Development (CED), which typically conditions CMS coverage of a drug, device, or diagnostic on the completion of another randomized controlled trial showing reasonable clinical benefit.

The highest value capture for PDT manufacturers may arguably be as virtual care providers collecting claims-based reimbursement of PDTs directly via product-level HCPCS codes and indirectly via service-level remote monitoring CPT codes or alternatively, via packaging both PDTs and remote monitoring over the course of the treatment course into a bundled payment solution for payers. A legislative mandate funding CMS to test value-based payment rails for medical devices in the same fashion as they have for inpatient global payments and performance-based reimbursement through innovation models at the Center for Medicare and Medication Innovation would also provide flexibility for the agency to collect granular outcomes and cost data for novel medical devices and directly compare them to current standards of care.