CMS Proposes Repealing Breakthrough Device Payment Pathway

The Centers for Medicare and Medicaid Services (CMS) announced a proposal on April 15, 2026, to repeal a payment pathway that allows medical devices with an FDA breakthrough designation to qualify for supplementary payments without proving a substantial clinical improvement over existing alternatives.

This regulatory shift targets the financial incentives that currently support the adoption of advanced medical technologies. By removing these flexibilities, CMS may reinstate a higher evidence bar for reimbursement, which could shift financial risks from the government back onto healthcare providers and manufacturers.

The Role of Supplementary Payments

Access to life-saving technologies is often limited by the financial feasibility of their implementation. When the cost of a new medical device exceeds the standard reimbursement rate provided by Medicare, hospitals may be reluctant to adopt the technology to avoid sustaining financial losses.

To mitigate this, Medicare has maintained a system since 2001 to provide extra payments for innovative devices. To qualify for these supplementary payments under the long-standing rules, a device must meet three specific criteria:

• The device must be new and different from currently available options.
• The device must offer a demonstrable clinical improvement over existing alternatives.
• The device must be especially costly to implement.

However, since 2021, devices that received a breakthrough designation from the Food and Drug and Administration (FDA) were granted more lenient requirements. For these specific devices, the requirement to prove clinical improvement was waived, meaning they only had to demonstrate that they were expensive to qualify for the extra payments.

Historical Context of Coverage Repeals

The current proposal follows a pattern of CMS reassessing the balance between rapid innovation and patient safety. On November 12, 2021, CMS rescinded the Medicare Coverage of Innovative Technology and Definition of Reasonable and Necessary (MCIT/R&N) final rule.

The MCIT/R&N rule would have allowed expedited Medicare coverage for up to four years for certain FDA-designated breakthrough devices following market authorization. CMS rescinded this rule due to concerns that the provisions were insufficient to protect Medicare patients.

Although we continue to be in favor of enhancing access to new technologies, we are mindful that they may have unknown or unexpected risks and must first ensure such technologies improve health outcomes for Medicare beneficiaries. The Medicare program needs to implement policies that balance access and appropriate safeguards.

CMS Administrator Chiquita Brooks-LaSure

At the time of the 2021 rescission, CMS noted that the clinical studies required for FDA market authorization might not adequately account for the differences in clinical profiles, medical condition complexities, or associated treatments found within the diverse population of Medicare patients.

Impact on Medical Innovation

The proposed rollback announced on April 15, 2026, highlights a central tension in Medicare reimbursement policy: the need to encourage the development of breakthrough tools versus the necessity of scientifically sound clinical evidence.

For hospitals, these supplementary payments are often the deciding factor in whether to adopt a new technology or continue using older, potentially less effective methods. If the pathway for breakthrough devices is repealed, manufacturers will once again be required to prove that their devices provide a substantial clinical improvement to secure the necessary funding for hospital adoption.

While CMS seeks to ensure that the program covers technologies based on evidence and safety protections, the agency has also indicated a desire to explore coverage process improvements. Reports indicate that CMS is proposing a novel replacement for the previously rescinded pathway to expedite the reimbursement of breakthrough devices.

The outcome of this proposal will determine whether FDA breakthrough designation continues to serve as a shortcut to financial viability or if the burden of proving clinical superiority will return as a mandatory requirement for supplementary Medicare funding.