New legislation would allow for reimbursement of prescribed digital therapeutics under Medicare, which proponents argue could increase access to these emerging treatments. Still, others say it’s new technology, and the wrong reimbursement model could tamper innovation and increase patient costs.
The Access to Prescription Digital Therapeutics Act of 2022, introduced in the U.S. Senate in March, aims to amend the Social Security Act to provide Medicare coverage and reimbursement for prescription digital therapeutics.
The legislation defines a prescription digital therapeutic as a product, device, app or other technology that primarily uses software; has received clearance or approval by the FDA; “has a cleared or approved indication for the prevention, management or treatment of a medical disease, condition or disorder”; and is exempt from Section 801.109 of the Federal Food, Drug, and Cosmetic Act, meaning a device that can safely be used without direct medical supervision.
Jennifer Mathieu, vice president of policy and government relations at the Academy of Managed Care Pharmacy (AMCP), said the bill is just a starting point to allow for reimbursement of prescription digital therapeutics by Medicare and, subsequently, Medicaid. These options for reimbursement would increase access to prescription digital therapeutics.
Andy Molnar, CEO of the Digital Therapeutics Alliance (DTA), agreed, saying the bill is a step toward the proper coding and benefits category for Medicaid and commercial payers.
Then, in mid-December, the Senate introduced a bill that would require the Administrator of the Centers for Medicare and Medicaid Services to provide guidance on coverage of prescription digital therapeutics under Medicaid and the State Children’s Health Insurance Program (CHIP).
But John Torous, director of the digital psychiatry division at Beth Israel Deaconess Medical Center, argued talk of reimbursement for these prescribed therapeutics is premature, even if it has good intentions.
“When we look at the hard numbers and details, we don’t have any evidence that this increases access to care, let alone increases access to high-quality care,” Torous said.
Rachel Goodman, partner at Foley & Lardner and a member of the law firm’s healthcare practice group and national telemedicine and digital health industry team, said there may also be concerns about technology deserts, where patients lack access to a computer or reliable internet. However, the potential benefits still outweigh those concerns.
“Ultimately, people of the Medicare population can have trouble accessing care because of transportation and any number of other reasons,” Goodman said. “So, the idea that they would actually, with sufficient instruction, be able to access care from home is going to promote access to care.”
Rep. Mike Thompson (D-CA) told MobiHealthNews he’s a firm believer that the act, which he sponsored in the House, will allow for increased access to care, particularly for mental health conditions.
A report released in September by the Centers for Disease Control and Prevention (CDC) shows rising demand for mental health treatment, with 20.3% of adults receiving any treatment for their mental health in 2020, an increase from 19.2% in 2019. That number rose again in 2021 to 21.6%.
“Brain-related illness is a huge issue. Mental health is a huge issue. And I want to do everything I can to make sure that folks that suffer from mental health and related problems get all the help they can possibly get,” Thompson said. “This is a new type of medicine, and it has enormous potential. And the work that can be done with this type of treatment can really save people a lot of grief. And I think it saves a lot of money as well.”
The cost burden for patients
Allowing for reimbursement could enable more healthcare providers to prescribe these alternative treatment methods. Still, it’s yet to be determined how much they’ll receive and whether that cost will affect patient options.
The bill states that no later than one year after its enactment, the Secretary of the Department of Health and Human Services will establish a payment methodology, which may consist of a one-time payment or periodic payments.
If companies are not reimbursed enough for their prescription digital therapeutics, low returns could stifle innovation, said Marisa Greenwald, healthcare partner at consultancy EY-Parthenon.
“In healthcare and life sciences, innovators need to be able to flourish and have kind of blank R&D canvases to interact with possible stakeholders. But I think some degree of regulatory reimbursement backbone is really important to spur widespread adoption,” she said. “So while I agree that this legislation might curtail innovators that haven’t quite figured out how to crack or gather support from a reimbursement lens, I think, ultimately, they’ll have to. And so I think this, to me, is a necessary force function.”
The lower the reimbursement rate, the more likely patients are to adopt this technology, and physicians as well, Foley & Lardner’s Goodman said. The higher the price, the more innovation will occur. It’s a balancing act.
Still, many companies have developed prescription digital therapeutics without the promise of reimbursement, so there is optimism about continued innovation driven by necessity.
More innovation and more competition are needed, Torous said. But he’s also concerned about the cost transfer to patients, mainly because not all therapeutics have shown extraordinary results.
“When you really sit down and look at [prescription digital therapeutics], sometimes it is not always what it appears to be or what they claim it is,” Torous said. “And I guarantee you, if [the bill] passes, it’s not going to give us a starting point. We’re going to be told that this is now something that you have to pay a lot of money for.”
However, the prescribed therapeutics eligible for reimbursement will have backing behind them, as FDA-cleared devices must show reasonable assurance of safety and efficacy.
“If Medicare and Medicaid won’t pay for it, then it’s going to land in the hands of the wealthier people who have commercial insurance. And that’s good that someone will have access to it, but I’m not here just to get access to people that can technically already just pay for it out of pocket,” the Digital Therapeutics Alliance’s Molnar said. “I’m here to ensure that healthcare is provided to everyone, particularly the less fortunate, because that’s who digital therapeutics can really help.”
Corey McCann, president and CEO of Pear Therapeutics, agrees. In 2017, Pear received FDA De Novo clearance for its prescription digital therapeutic called reSET, intended to treat substance use disorder using cognitive behavioral therapy. The company later scored 510(k) clearance for reSET-O for opioid use disorder and Somryst for chronic insomnia.
“I think you’ll see many payers who won’t move until CMS moves, even though they have full ability to move and do what’s right for their patients,” McCann said.
Payers may be willing to cover prescribed digital therapeutics if they’re less expensive than prescription drugs, Kelly Arduino, the industry leader of the healthcare practice at consulting firm Wipfli, said. Still, they’re going to proceed cautiously.
Rep. Thompson said he’s still pursuing a cost analysis that, once received, will determine how the process moves forward.
Reconfiguring FDA regulation
Prescription digital therapeutics eligible for reimbursement under the act will need to be cleared by the FDA and prescribed by a healthcare provider. However, there’s skepticism about the FDA’s current capabilities to oversee these software-based solutions.
In September, the agency published findings from its Software Precertification Pilot Program, in which it explored innovative approaches to its own regulatory oversight of Software as a Medical Device (SaMD).
In its key findings, the FDA noted its regulatory framework, enacted more than 40 years ago and incrementally updated, is not optimized for regulating SaMDs or medical device software.
SaMD is increasingly used throughout the healthcare sector, and these devices are developed and validated differently than traditional hardware-based devices. They can also be updated after deployment for enhancements or efficiency.
The FDA concluded, “The faster cycles of innovation and the speed of change for medical device software would benefit from a new regulatory approach.”
Arduino said a multifaceted group that includes developers, providers, insurance companies and the FDA could help regulate these platforms, or the industry could start contemplating how to regulate itself.
This month, the Digital Therapeutics Alliance and other industry partners released a 28-page document titled “Setting the Stage for a Fit-For-Purpose DTx Evidentiary Standard,” providing in-depth analysis and recommendations regarding digital therapeutics, including concepts for regulatory pathways.
The document intends to help set evidentiary standards for digital therapeutics and provide guidance and expectations on the types, quality and timing of clinical trials needed for implementation. DTA and its partners concluded that healthcare decision-makers should adopt a new approach specifically for digital therapeutics.
This evidentiary pathway could incorporate aspects of existing pharma and medical device frameworks and include digital therapeutics’ purpose and structure, including the evolution of technology, usability and engagement.
“I actually believe that evidence is the key to build acceptance around these solutions, not only for the individual ones, but even as an industry, as a field. So, the idea that we’re working together to establish and suggest to the world what is good for us, I think is incredibly important,” Dario Motti, digital health product family lead at Roche, said during a panel discussion.
Rep. Thompson said the act is just the beginning of the process, and a lot of the open-ended questions will be answered as it moves forward.
Digital health literacy
One significant obstacle for the legislation has been educating lawmakers about digital therapeutics, said Rep. Thompson and the AMCP’s Mathieu.
“The biggest challenge we’ve encountered both as AMCP as well as the broader coalition is education. Truly, the question we get is, ‘What is a prescription digital therapeutic?'” Mathieu said. “So, really our biggest role throughout 2022 has been to educate members of Congress. Once we’ve helped them understand exactly what it is and how it benefits patients, we’ve had a very positive response to the bill.”
Torous said the need for digital health literacy extends beyond legislatures to the public, who will ultimately be partially liable for paying for these therapeutics should the bill pass.
“I would almost argue that we need a bill to support digital health literacy for Americans to make sure everyone can equitably benefit from these as the ground layer before we begin talking about [making it mandatory],” Torous said.
Pear’s McCann argues improving digital health literacy is a role for companies that offer these treatments.
“It’s the job of the companies to educate clinicians and educate patients as to how [prescription digital therapeutics] fits into mainstream medical care. And I think what you currently have is a very, very lumpy reimbursement environment, and so companies aren’t able to resource educating patients and educating clinicians,” McCann said. “I think what we’re looking for is a more regular reimbursement environment, like what is seen in the drug world, so that companies can then go out and solve the last mile issues of making the products mainstream medical treatment.”
The bipartisan and bicameral bill has now been dual referred to the Ways and Means Committee and Energy and Commerce Committee.
“The lead person in Energy and Commerce is Congresswoman [Doris] Matsui, and we have talked at length on this bill. And I know she’s pretty excited about the possibilities, and we’re continuing to talk to and educate our colleagues,” Rep. Thompson said. “And as I said, when you bring something new forward, there’s a bit of time it takes to get people to understand it and to accept it.”