Coverage Analysis for Investigational Device Exemption (IDE) Studies

A Medicare coverage analysis (MCA) for clinical trials evaluates which tests, procedures, and interventions will be associated with a clinical trial. This analysis results in a budget and plan for invoicing third party payers and sponsors. Clinical trials for devices differ from interventional trials for drugs in a few key ways that can impact the process of conducting a coverage analysis.

While drug trials often involve a local review by the institution to document the qualification of a clinical trial, device trials with an FDA letter dated effective January 1, 2015, are reviewed at the national level by CMS. Prior to this change, devices with an FDA letter dated prior to January 1, 2015, sponsors and sites had to wait for IRB approvals and fully executed agreements in order to submit documents to the local Medicare contractor.

Medicare authorizes payment of the routine costs of care furnished to its beneficiaries in certain categories of Investigational Device Exemption (IDE) studies. However, there are a few items that Medicare excludes. These includes costs for items:

  • paid for by the sponsor
  • identified as free in the informed consent document
  • not ordinarily covered by Medicare
  • solely to determine trial eligibility or for data collection or analysis

The CMS approval process applies to category A and B trials. The category of the device, as assigned by the FDA, determines what is reimbursed by Medicare.

  • Category A devices are experimental or novel. Medicare will cover only the routine costs of care, but not the device itself.
  • Category B devices are non-experimental, or a similar device may already be in the marketplace. Medicare may cover the costs of care and the device.

To identify the “routine costs of care,” it is important to understand the protocol in detail. Devices may require surgical interventions that include a hospital stay, thus complicating the billing process. Analysts must review the ICD billing codes that may be referenced, including both hospital and professional fees.

To be considered for coverage, CMS requires documentation that covers similar issues as a drug intervention trial. CMS requires the submission packet to include:

  • Request letter that describes the scope and nature of the study
  • Complete FDA approval letter for your Category A or B IDE
  • IDE study protocol that includes descriptions CMS wants to see:
    • Method and timing of release of results on all prespecified outcomes, including release of negative outcomes and that the release should be hastened if the study is terminated early
    • How Medicare beneficiaries may be affected by the device under investigation
    • How study results are or are not expected to be generalizable to the Medicare beneficiary population
  • Institutional Review Board (IRB) approval letter
  • The National Clinical Trial (NCT) number
  • Any supporting materials

The sponsor may sometimes submit the packet to CMS for reimbursement. After that, the investigator or study site should be in contact with their Regional Medicare Administrator (MAC) to receive acknowledgement of receipt and receive further information on obtaining billing and coding information.

CMS does not provide detail about which clinical items are approved for reimbursement. Despite receiving CMS approval for an IDE study, sites are accountable for negotiating the contract with the sponsor and for billing appropriately. An accurate and detailed coverage analysis ensures correct billing and avoids costly financial errors. More importantly, it reduces the risk of non-compliant billing, which can have significant negative repercussions.  The analysis is an essential component of a study start-up process and conducting it in a timely way can avoid start-up delays.

Further resources

Medicare Coverage Related to Investigational Device Exemption (IDE) Studies (CMS)



FDA Releases Draft Guidance for Medicare Coverage of Investigational Devices

The FDA recently released a draft guidance policy categorizing investigational device exemption (IDE) devices. The guidance was developed to assist the Centers for Medicare & Medicaid Services (CMS) in determining whether or not an IDE device should be covered (reimbursed) by CMS. The guidance has significant implications for research sites and investigators who are responsible for developing research budgets.

In 2013, CMS published a final rule that, among other things, categorized devices based on risk.

  • Category A devices are those “…for which ‘absolute risk’ of the device type has not been established (that is, initial questions of safety and effectiveness have not been resolved) and the FDA is unsure whether the device type can be safe and effective.”
  • Category B devices are those “…for which the incremental risk is the primary risk in question (that is, initial 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 premarket approval or clearance for that device type.”

CMS uses FDA’s category definitions in evaluating whether or not an IDE device receives Medicare coverage. Medicare may cover an investigational device and routine care services provided in an FDA-approved Category B IDE study if CMS determines prior to the submission of the first related claim that the Medicare coverage IDE study criteria are met. Medicare may cover only routine care items and services furnished in an FDA-approved Category A IDE study, but not the device itself if CMS determines that Medicare coverage IDE study criteria are met. In other words, Medicare cannot cover device expenses for studies that FDA has categorized as Category A.

Since then, the FDA has received a number of IDEs which do not easily fit into the two main categories or any of the eight sub-categories. These often refer to early feasibility studies, or EFS, which evaluate early stage devices in a small population. These can be new devices or approved devices that have been modified for a new use and may pose significant risk.

Once the FDA determines that the sponsor has provided enough information justifying a clinical trial, it will use the suggested criteria to assign a device to a CMS Category A or B when the IDE is approved or approved with conditions.

Category A

FDA intends to consider a device to be in Category A if one or more of the following criteria are met, and if available data on the proposed device or its intended use do not resolve questions of safety and effectiveness.

  • No Premarket Approval (PMA), 510(k) clearance or de novo request has been granted for the proposed device.
  • The proposed device has different characteristics compared to a legally marketed device.
  • The proposed device is being studied for a new indication or new intended use

The FDA intends to consider a device Category B if one or more of the above criteria are met and additional non-clinical and/or clinical data on the proposed device resolve questions of safety and effectiveness.

FDA categorizes IDE devices based on whether available data demonstrate that initial questions of safety and effectiveness have been resolved. The guidance document describes the criteria that will be used to help determine the appropriate category for a device to be studied. It also describes when it is appropriate to change the device category from Category A to Category B.

It is important for research professionals to understand these categories in order to make the correct determination of whether or not to bill insurance for the device. Additionally, clinical trial coordinators need to be prepared to obtain CMS, or a local Medicare contractor, approval prior to enrolling patients or the institution risks not being reimbursed for the device or the services provided. This can have significant implications for clinical trial budgeting.

To read the full draft guidance, click here.