Two Last-Minute HHS Rulings Impact FDA, CMS

Executive Summary:  There's wide awareness of an August 2020 HHS ruling that FDA can't regulate LDTs. But in the past couple weeks, add two more Trump-era HHS rulings to the list. One affects CMS use of "Coverage with Evidence Development (CED; see heading #2), one affects CMS rules that depend on "clearance or approval" of devices before CMS rules kick in (see heading #3).

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#1. HHS-FDA-LDT

Everyone who follows policy at the FDA, and/or in diagnostics, recalls the week in August 2020 when HHS released a short paragraph on its website, announcing that FDA could not enforce controls on lab-developed tests, whether of the COVID type or other LDTs.  (Here).  The decision in August built on a lengthy memo by General Counsel of HHS in June 2020, which basically accepted years of arguments from industry that FDA could not regulate LDTs, at least not without formal notice and comment regulations. (Zip file here). The June 22 memo came from Robert Charrow, General Counsel (GC) of HHS.

But Wait, There's More.

#2. HHS Nixes "CED"

See also HHS Advisory Opinion 21-03 that appears to "cancel" Coverage with Evidence Development, used in the National Coverage Decision process for years and (previously) enshrined in CMS policy documents and even discussed in Federal Register policymaking.  

The January 14, 2021 opinion is online at HHS here and I've put a cloud copy here.

Basically, Medicare law blogs Medicare from covering things that are less than "reasonable and necessary," and services under an NCD CED clinical trial are less than reasonable and necessary, hence, under CED.  CMS has stated its authority is a clause of statue allowing CMS to pay for services in support of AHRQ studies.  Therefore, every CED opinion (web page here) makes a nod to supporting AHRQ studies.  As signed by Robert Charrow, he acknowledges that while the statute does not define "AHRQ supported studies" the links between AHRQ and CED NCDs have been too thin to support a reasonable interpretation of "Supported by AHRQ."  

Note that in a decision posted January 19, after Charrow departed but before the Biden inaugural (head-spinning), CMS issued a new decision (on mitral valves) that includes CED, despite the January 14 HHS memo.  Mysteries of CMS.   

#3. FDA Posts Guidance on Digital Health & AI, HHS Proposes to Nix FDA Review

For this topic, which got submerged in the Capitol protests and election news, I'll defer to an excellent article at MedCityNews by Elise Reuter (here).

Basically, in the last year, FDA has created a new Digital Health Center of Excellence - here. And FDA has just released a major guidance and goal document on regulating digital health and AI - here, dated January 2021.

But on January 15, HHS published in the Federal Register (86 FR 4088) a lengthy list of device categories, including many in digital health, that HHS proposed to withdraw from FDA regulation (e.g. move to Class I).  See Federal Register here, comment open until circa March 14 (60 days).

The main argument HHS uses - the rule is signed by the head of HHS, not the head of FDA - is that the device categories in question (like AI-assisted radiology) have not had injury and flaw complaints in the FDA's MAUDE database of device malfunctions.

OK. I'm all in favor of deregulation, but a few thoughts.

1. Were reviews really pointless?  The assertion is that the current reviews are regulating nothing, since there are no complaints. Isn't this a little like saying this intersection, with a stoplight, hasn't had any accidents in 3 years, so we can remove the stoplight?
2. Authorization regulates claims.  Regulated devices, both 510(k) and PMA, have restrictions on advertising and labeling claims. Class I devices don't; nobody worries about the labeling claims of a tongue depressor.
3. FDA-CMS Interactions.  CMS has been proposing rules that are predicated on FDA clearance or approval, like special coverage for breakthrough devices (acronym MCIT) or special pricing rules for Advanced Diagnostic Laboratory Tests that are "FDA cleared or approved."  

Pulling categories from review could effect these and other tangential policies.