Reimbursement Report

HCT/P Regulation and Third-Party Reimbursement

By Elizabeth Brown, MD

Comprehensive and unwieldy payer policies for wound care, the tiered system of FDA regulation of human cells, tissues, and cellular and tissue-based products, and the use of brand specific names in HCPCS coding have created a challenging reimbursement environment.

Note: Regulatory approval by FDA is considered a critical goal by manufacturers and their investors, which is understandable, since there can be no commercialization without it. However, adequate payer reimbursement is clearly the final goal. Without it, commercialization stalls. The following blog is the third in a series of posts that examines the relationship between reimbursement and regulatory approval. Last month’s blog focused on the 510(k) process. The following discussion focuses on FDA regulations regarding Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps).

Human cells, tissues and cellular or tissue-based products (HCT/Ps) are defined by FDA as “articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion or transfer into a human recipient.” Examples of HCT/Ps include bone, ligament, skin, and heart valves. Skin substitutes are a common type of HCT/P. Traditionally, FDA had very limited regulatory authority over HCT/Ps, but became involved in response to the threat of infectious diseases transmitted through human tissue. In 1997, FDA created a tiered system of regulation, similar in concept to the tiered system of medical device regulation of 510(k) and PMA approval. This regulation became effective in 2005.

The lowest tier of regulation solely focuses on the issue of infectious disease transmission and simply requires that the providers of HCT/Ps register and list the HCT/Ps supplied, comply with requirements for donor screening and “current good tissue practice.” No clinical data is required. HCT/Ps falling into this category, referred to as “361 HCT/Ps” must meet all of the following criteria:

  • Minimal manipulation;
  • Intended for homologous use;
  • Its manufacture does not involve combination with another article; and
  • The product does not have a systemic effect.

If the HCT/P does not meet the above requirements, it is subject to additional regulation as a drug, medical device or biologic product. Within the category of medical devices, the product may be regulated through the familiar 510(k) or PMA process, while drugs are regulated through the new drug application (NDA) process. Biologics are regulated through a biologic licensing application (BLA), which is similar in concept to the NDA process.

One key issue for manufacturers is the interpretation of the term “minimal manipulation.” If the product falls into this category, it can then be commercialized without any supporting clinical information, while other categories will require increasing clinical data ranging from that required in the 510(k) process to the most stringent requirements of a PMA, NDA or BLA.

This tiered system has produced confusion among payers, particularly regarding skin substitutes, a field that includes dozens of HCT/Ps. Payers typically have large unwieldy policies addressing the general issue of either wound care or skin substitutes. For example, the Aetna policy on wound care addresses over 100 different products and includes examples of every category of HCT/P regulation, ranging from DermaGraft, a composite HCT/P regulated as a PMA device, to DermaMatrix, a “361 HCT/P” that did not require any clinical studies prior to commercialization. The unfortunate tendency is for the payers to apply the highest level of evidence to all categories of skin substitutes. Additionally, the individual policy statements address the wound care products by trade name, as opposed to organizing similar products together and considering them collectively.

Finally, many of the skin substitutes have individual HCPCS codes. While these codes are intended to be used for billing purposes, an unintended consequence is that payers have assumed that having distinct HCPCS codes indicates that products are biologically distinct, thus warranting separate product by product consideration. This issue is particularly problematic for acellular dermal matrices (ADMs), an allograft of human skin that has been processed to create a dermal scaffold by removing the epithelial layer and other cellular components. ADMs are used both externally on wounds, such as diabetic ulcers, and also internally for soft tissue repair, including breast reconstruction. FDA has determined that ADM processing still falls within the definition of “minimally processed,” and thus regulation of ADMs does not require clinical data. There are a variety of suppliers of ADMs, each with their own brand name. In addition, several of the ADMs have their own HCPCS code for billing purposes.

ADMs have been used for decades in wound care and most would consider them a standard of care, in part reflected by FDA’s regulation limited to donor screening and good donor tissue practice. However, most payers have continued to consider ADMs individually, demanding a high standard of data, either randomized trials of wound care with and without an ADM, or, even further, requiring comparative trials of different suppliers of ADMs. This latter evidence requirement is similar in concept to requiring comparative trials within other categories of implanted devices, such as pacemakers or joint prostheses.

Comprehensive and unwieldy payer policies for wound care, the tiered system of FDA regulation of HCT/Ps and the use of brand specific names in HCPCS coding create a challenging reimbursement environment. In the past, payers may have considered allografts as surgical tools that were a component of a larger medically necessary surgical procedure. However, the current environment has prompted payers to consider products like ADMs as distinct technologies, each requiring its own evidence base. Similar to all other FDA regulatory pathways, the payer bottom line is the clinical data. However, there certainly is a role for payer education to sort out the confusion around wound care technologies and advocate for the appropriate evidence requirement for the enormous variety of HCT/Ps.

About The Author

Elizabeth Brown