Medicare is removing flexibilities that have allowed medical devices designated as “breakthroughs” by the Food and Drug Administration to leapfrog qualifications for extra payments.

Until now, alternative pathways have allowed authorized breakthrough devices to qualify for supplemental payments without proving their novelty or substantial clinical improvement over alternatives. In its rule for inpatient hospital payments, the Centers for Medicare and Medicaid Services finalized a proposal to repeal those pathways for both inpatient and outpatient settings, starting in fiscal year 2028.

Such payments are meant to incentivize hospitals to use new, transformative technology while it’s still expensive, and give its makers time to prove their value. Requiring breakthrough devices to demonstrate substantial clinical improvement, the rule reads, “ensures that additional Medicare payments are used to support Medicare beneficiaries’ access to innovations that are demonstrated to improve outcomes compared to the currently available treatment.”

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