Coverage eligibility determinations are based on the Social Security Act - Section 1862 (a)(1)(A), which states that CMS allows payment for medical items and services that are “reasonable and necessary
for the diagnosis and treatment of illness or injury or to improve the functioning of a malformed body member.”
“Reasonable and necessary” have been historically interpreted to mean:
- Safe and effective
- Medically necessary and appropriate
- Not experimental
Technically, devices undergoing clinical trials for FDA approval were not eligible for reimbursement until 1995, when FDA and CMS entered into an interagency agreement.
FDA agreed to give CMS information to assist in making reimbursement decisions by classifying new technology as either Category A or Category B devices. This designation will be made on the Investigational Device Exemption (IDE) approval letter.
Definitions and coverage guidelines are listed below.
Definition of "Category A" Device
“Innovative devices believed to be in class III for which absolute risk of the device type has not been established (e.g., initial questions of safety and effectiveness have not been resolved and the FDA is unsure whether the device is safe and effective.”1
Coverage for "Category A" Devices
In the original 1995 interagency agreement, Category A devices were not covered. Updated coverage guidelines went into effect on January 1, 2005, and Medicare now allows coverage for routine costs of clinical trials involving IDE Category A devices used in the diagnosis, monitoring, or treatment of an immediately life-threatening disease or condition.
Definition for "Category B" Device
“Nonexperimental and/or investigational devices believed to be in classes I or II or devices believed to be in class III where the incremental risk is the primary risk in question (i.e., underlying questions of safety and effectiveness of that device type have been resolved) or it is known that the device type can be safe and effective because, for example, other manufacturers have obtained FDA approval for that device type.”2 These devices include:
Devices, regardless of the classification, under investigation to establish substantial equivalence to a predicate device; or
Class III devices whose technological characteristics and indications for use are comparable to a PMA-approved device, or;
Class III devices with technological advances compared to a PMA-approved device (generational changes), or;
Class III devices that are comparable to a PMA-approved device which are under investigation for a new indication for use (with no significant modifications to the device required), or;
Pre-amendments Class III devices that become subject of an Investigational Device Exemption (IDE) after FDA required premarket approval, or;
Non-significant risk device investigations for which FDA required the submission of an IDE.
Coverage for “Category B” Devices
Procedures and services classified under Category B must fit within existing Medicare provisions to be a covered service. For example, hearing aids classified under Category B would not be covered because Medicare excludes hearing aids.
In addition, Category B devices must be considered “medically necessary” to be eligible for coverage.
Resources
For a more information regarding coverage for Category A and Category B devices, refer to the resources listed below:
NOTE: The information on this website is provided as background information only. Reimbursement strategy relies on more information and context than can be provided on one website. Therefore, Regulatory and Clinical Research Institute, Inc. specifically disclaims liability or responsibility for the results or consequences of any actions taken in reliance on information from this website.
1 Medicare Benefit Policy Manual Chap 14 Medical Devices
2 IDE Guidance Memorandum #95-2, Sept. 15, 1995
