Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems; Quality Reporting Programs; Overall Hospital Quality Star Rating; Hospital Price Transparency; and Notice of Closure of a Teaching Hospital and Opportunity To Apply for Available Slots

1. Beginning Eligibility Date for Device Pass-Through Status and Quarterly Expiration of Device Pass-Through Payments a. Background

The intent of transitional device pass-through payment, as implemented at 42 CFR 419.66, is to facilitate access for beneficiaries to the advantages of new and truly innovative devices by allowing for adequate payment for these new devices while the necessary cost data is collected to incorporate the costs for these devices into the procedure APC rate (66 FR 55861). Under section 1833(t)(6)(B)(iii) of the Act, the period for which a device category eligible for transitional pass- through payments under the OPPS can be in effect is at least 2 years but not more than 3 years.

In the CY 2017 OPPS/ASC final rule with comment period, in accordance with section 1833(t)(6)(B)(iii)(II) of the Act, we amended Sec. 419.66(g) to provide that the pass-through eligibility period for a device category begins on the first date on which pass-through payment is made under the OPPS for any medical device described by such category (81 FR 79654). In addition, in the CY 2017 OPPS/ASC final rule with comment period, we finalized a policy to allow for quarterly expiration of pass-through payment status for devices to afford a pass- through payment period that is as close to a full 3 years as possible for all pass-through payment devices (81 FR 79655). We also established a policy to package the costs of the devices that are no longer eligible for pass-through

payments into the costs of the procedures with which the devices are reported in the claims data used to set the payment rates (67 FR 66763).

We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79648 through 79661) for a full discussion of the current device pass-through payment policy.\29\

\29\ To apply for OPPS transitional device pass-through status, applicants complete an application that is subject to the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). This information collection (CMS-10052) is currently approved under OMB control number 0938-0857 and has an expiration date of November 30, 2025. The information collection is in the resubmission process. The 60-day FR notice published on August 21, 2025 (90 FR 40831). The 30- day notice will publish at a future date in the Federal Register before the information collection is formally submitted to OMB for reapproval.

In the CY 2023 OPPS/ASC final rule with comment period, we finalized our policy to publicly post online OPPS device pass-through applications received on or after March 1, 2023, beginning with the issuance of the CY 2025 proposed rule and for each OPPS rulemaking thereafter. We refer readers to the CY 2023 OPPS/ASC final rule with comment period (87 FR 71934 through 71938) for a full discussion of the policy to publicly post OPPS device pass-through applications. b. Expiration of Transitional Pass-Through Payments for Certain Devices

As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires that, under the OPPS, a category of devices be eligible for transitional pass-through payments for at least 2 years, but not more than 3 years. Currently, there are 20 device categories eligible for pass-through payment. These devices are listed in Table 99, previously published as Table 46 of the CY 2026 OPPS/ASC proposed rule (90 FR 33570 and 33571), where we detail the expiration dates of pass-through payment status for each of the 20 devices currently receiving device pass-through payment. BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C 2. New Device Pass-Through Applications for CY 2026 a. Background

Section 1833(t)(6) of the Act provides for pass-through payments for devices, and section 1833(t)(6)(B) of the Act requires CMS to use categories in determining the eligibility of devices for pass-through payments. As part of implementing the statute through regulations, we continue to believe that it is important for hospitals to receive pass- through payments for devices that offer substantial clinical improvement in the treatment of Medicare beneficiaries to facilitate access by beneficiaries to the advantages of the new technology. Conversely, we have noted that the need for additional payments for devices that offer little or no clinical improvement over previously existing devices is less apparent. In such cases, these devices can still be used by hospitals, and hospitals will be paid for them through appropriate APC payment. Moreover, a goal is to target pass-through payments for those devices where cost considerations are most likely to interfere with patient access (66 FR 55852; 67 FR 66782; and 70 FR 68629).

As specified in regulations at Sec. 419.66(b)(1) through (3), to be eligible for transitional pass-through payment under the OPPS, a device must meet the following criteria:

If required by FDA, the device must have received FDA approval or clearance and FDA marketing authorization (except for a device that has received an FDA investigational device exemption (IDE) and has been classified as a Category B device by FDA), or meet another appropriate FDA exemption; and the pass-through payment application must be submitted within 3 years from the date of the initial FDA marketing authorization, if required, unless there is a documented, verifiable delay in U.S. market availability after FDA marketing authorization is granted, in which case CMS will consider the pass- through payment application if it is submitted within 3 years from the date of market availability;

The device is determined to be reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part, as required by section 1862(a)(1)(A) of the Act; and

The device is an integral part of the service furnished, is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted (either permanently or temporarily), or applied in or on a wound or other skin lesion.

In addition, according to Sec. 419.66(b)(4), a device is not eligible to be considered for device pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker).

Separately, we use the following criteria, as set forth under Sec. 419.66(c), to determine whether a new category of pass-through payment devices should be established. The device to be included in the new category must--

Not be appropriately described by an existing category or by any category previously in effect established for transitional pass- through payments, and was not being paid for as an outpatient service as of December 31, 1996;

Have an average cost that is not “insignificant” relative to the payment amount for the procedure or service with which the device is associated as determined under Sec. 419.66(d) by demonstrating: (1) the estimated average reasonable cost of devices in the category exceeds 25 percent of the applicable APC payment amount for the service related to the category of devices; (2) the estimated average reasonable cost of the devices in the category exceeds the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent; and (3) the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device exceeds 10 percent of the APC payment amount for the related service (with the exception of brachytherapy and temperature-monitored cryoablation, which are exempt from the cost requirements as specified at Sec. 419.66(c)(3) and (e)); and

Demonstrate a substantial clinical improvement, that is, substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment, or, for devices for which pass- through payment status will begin on or after January 1, 2020, as an alternative pathway to demonstrating substantial clinical improvement, a device is part of the FDA's Breakthrough Devices Program and has received marketing authorization for the indication covered by the Breakthrough Device designation.

In the CY 2016 OPPS/ASC final rule with comment period, we changed our device pass-through evaluation and determination process. Device pass-through applications are still submitted to CMS through the quarterly process, but the applications are subject to notice and comment rulemaking in the next applicable OPPS annual rulemaking cycle. Under this process, all applications that are preliminarily approved upon quarterly review will automatically be included in the next applicable OPPS annual rulemaking cycle, while submitters of applications that are not approved upon quarterly review will have the option of being included in the next applicable OPPS annual rulemaking cycle or withdrawing their application from consideration. Under this notice-and-comment process, applicants may submit new evidence, such as clinical trial results published in a peer-reviewed journal or other materials, for consideration during the public comment process for the proposed rule. This process allows those applications that we are able to determine meet all of the criteria for device pass-through payment under the quarterly review process to receive timely pass-through payment status, while still allowing for a transparent, public review process for all applications (80 FR 70417 through 70418).

In the CY 2020 OPPS/ASC final rule with comment period, we finalized an alternative pathway for devices that are granted a Breakthrough Device designation (84 FR 61295) and receive FDA marketing authorization for the indication covered by the Breakthrough Device designation. Under this alternative pathway, devices that are granted an FDA Breakthrough Device designation are not evaluated in terms of the current substantial clinical improvement criterion at Sec. 419.66(c)(2) for the purposes of determining device pass-through payment status, but do need to meet the other requirements for pass- through payment status in our regulation at Sec. 419.66. Devices that are part of the Breakthrough Devices Program, have received FDA marketing authorization for the indication covered by the Breakthrough Devices designation, and meet the other criteria in the regulation can be approved through the quarterly process and announced through that process (81 FR 79655). Proposals regarding these devices and whether pass-through payment status should continue to apply are included in the next applicable OPPS rulemaking cycle. This process promotes timely pass-through payment status for innovative devices, while also recognizing that such devices may not have a sufficient evidence base to demonstrate substantial clinical improvement at the time of FDA marketing authorization.

More details on the requirements for device pass-through payment applications are included on the CMS website in the application form itself at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the “Downloads” section. In addition, CMS is amenable to meeting with applicants or potential applicants to facilitate information sharing to support the evaluation of an OPPS device pass-through payment application or discuss general application criteria, including the substantial clinical improvement criterion.

In accordance with section V.B.9. of this final rule with comment period, skin substitutes with an approved Biologics License Application (BLA) will be considered under transitional drug pass-through payment status and skin substitutes with FDA Premarket approval (PMA) or FDA 510(k) clearance will continue to be evaluated under transitional device pass-through payment status. b. Applications Received for Device Pass-Through Status for CY 2026

We received eight complete applications by the March 3, 2025, quarterly deadline, which was the last quarterly deadline for applications to be received in time to be included in the CY 2026 OPPS/ ASC proposed rule. Of the complete applications, we received one application in the second quarter of 2024, three applications in the third quarter of 2024, one application in the fourth quarter of 2024, and three applications in the first quarter of 2025. One application was withdrawn. Two of the applications were approved for device pass- through payment during the quarterly review process: VasQ, which was preliminarily approved upon quarterly review under the alternative pathway effective October 1, 2024, and the SCOUT MDTM Surgical Guidance System which was preliminarily approved upon quarterly review under the alternative pathway effective January 1, 2025. As previously stated, all applications that are preliminarily approved upon quarterly review will automatically be included in the next applicable OPPS annual rulemaking cycle. Therefore, VasQ and the SCOUT MDTM Surgical Guidance System were discussed in section IV.2.b.1. of the CY 2026 OPPS/ASC proposed rule and within this section.

Applications received for the later deadlines for the remaining 2025 quarters (the quarters beginning June 1, September 1, and December 1 of 2025), if any, will be discussed in the CY 2027 OPPS/ASC proposed rule. We note that the quarterly application process and requirements have not changed because of the addition of rulemaking review. Detailed instructions on submission of a quarterly device pass-through payment application are included on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf.

Discussions of the applications we received by the March 3, 2025, deadline are included in section IV.2.b.1. of the CY 2026 OPPS/ASC proposed rule and in this section. We do not include in this final rule with comment period the description and discussion of new device category for transitional pass-through payment status applications

which were included in the CY 2026 OPPS/ASC proposed rule that were withdrawn for consideration for the upcoming calendar year. We also do not summarize or respond to public comments received regarding these withdrawn or ineligible applications.

Comment: One commenter opined that all of the nominated devices included in the CY2026 OPPS/ASC proposed rule meet the criteria for device pass-through. Another commenter encouraged CMS to approve or finalize all qualifying applications that meet the statutory criteria, especially those demonstrating clear clinical improvements. This commenter further noted that the substantial clinical improvement criterion should be applied rigorously and that innovations should earn supplemental payment only if they offer a real patient-care advantage, not merely convenience. This commenter commended CMS's careful scrutiny, particularly in regard to the single-use endoscope application, and urged CMS to continue evidence-based evaluations.

Response: We appreciate the commenters' input. We have taken these comments into consideration in our final determination for pass-through status for the nominated devices included in the CY 2026 OPPS/ASC proposed rule. (1) Alternative Pathway Device Pass-Through Applications

As discussed in the CY 2026 OPPS/ASC proposed rule, we received four device pass-through applications by the March 2025 quarterly application deadline for devices that have received Breakthrough Device designation from FDA and FDA marketing authorization for the indication for which they have a Breakthrough Device designation and, therefore were eligible to apply under the alternative pathway. (a) aprevo[supreg] Cervical ACDF System, aprevo[supreg] Cervical ACDF-X System, aprevo[supreg] Cervical ACDF-X NO CAM System

Carlsmed, Inc. submitted an application for a new device category for transitional passthrough payment status for the -aprevo[supreg] Cervical ACDF system, aprevo[supreg] Cervical ACDF-X system, and aprevo[supreg] Cervical ACDF-X NO CAM system (herein after collectively referred to as the aprevo[supreg] Cervical ACDF System) for CY 2026. Per the applicant, the aprevo[supreg] Cervical ACDF System is designed to stabilize the cervical spinal column and facilitate fusion. The applicant further explained that the personalized aprevo[supreg] Cervical ACDF System devices incorporate patient-specific features to allow the clinician to tailor the deformity correction to the individual needs of the patient and include an aperture for the packing of bone graft. Per the applicant, the aprevo[supreg] Cervical ACDF System includes the following components: (1) aprevo[supreg] implant, which includes two implants with slightly different heights for each vertebral level, (2) aprevo[supreg] insertion instrument, and (3) for the aprevo[supreg] Cervical ACDF-X system only, integrated fixation screws. The applicant further stated that the aprevo[supreg] Cervical ACDF-X NO CAM system does not have a part that blocks screws from backing out.

Please refer to the online application posting for the aprevo[supreg] Cervical ACDF System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP250303GJ8LW.

Comment: The applicant noted that, after FDA authorization, it changed the devices' names from aprevo[supreg] Cervical ACDF system and aprevo[supreg] Cervical ACDF-X system to aprevo[supreg] Cervical ACDF interbody and aprevo[supreg] Cervical ACDF-X interbody, respectively.

Response: We appreciate the applicant's clarification. Based on the information available to us, we referred to the nominated technology as the aprevo[supreg] Cervical ACDF system, the aprevo[supreg] Cervical ACDF-X system, the aprevo[supreg] Cervical ACDF-X NO CAM system, and collectively as the aprevo[supreg] Cervical ACDF System in the CY 2026 OPPS/ASC proposed rule and will continue to refer to the technology as the aprevo[supreg] Cervical ACDF System in this final rule with comment period for clarity and consistency.

Comment: The applicant and a commenter expressed their support for approval of transitional pass-through payment for the aprevo[supreg] Cervical ACDF System, stating that they believe the device meets all the transitional pass-through payment criteria. The applicant also asserted that beneficiary access is at risk if CMS payment policies do not reflect the actual cost of providing custom-made, anatomically- designed interbody fusion device technology, like the aprevo[supreg] Cervical ACDF System, to more Medicare beneficiaries.

Response: We appreciate the commenters' input and support for the aprevo[supreg] Cervical ACDF System application for transitional pass- through payment. We have taken these comments into consideration in our final determination for pass-through status for the aprevo[supreg] Cervical ACDF System.

As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), the aprevo[supreg] Cervical ACDF System received FDA Breakthrough Device designation effective September 15, 2023, under the name aprevo[supreg]-C cervical interbody fusion device. The approved FDA indication for the aprevo[supreg] Cervical ACDF System is:

For use in skeletally mature patients with degenerative cervical conditions including cervical disc degeneration, stenosis, deformity, and/or instability of the cervical spine (C2-T1) at one or more levels. DDD \30\ is defined as discogenic pain with degeneration of the disc confirmed by history and radiographic studies. These patients should have had at least six (6) weeks of non-operative treatment. These devices are to be filled with autograft bone and/or allogenic bone graft composed of cancellous, cortical, and/or cortico- cancellous bone. The aprevo[supreg]-C cervical interbody fusion devices can be used with supplemental fixation, such as an anterior plate, or as a standalone construct to be used [with the] integrated bone screw fixation.

\30\ The Medicare Coverage Database defines DDD as degenerative disc disease. In addition, we believe that DDD is commonly referred to as degenerative disk disease in the healthcare industry.

FDA granted the applicant 510(k) clearance for the aprevo[supreg] Cervical ACDF System on November 15, 2024, with separate indications for the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system (with and without CAM).\31\ We note that while the indication for the FDA Breakthrough Device designation and the indication for the FDA 510(k) clearance for the aprevo[supreg] Cervical ACDF System vary, per FDA, the FDA 510(k) clearance indication is covered by the Breakthrough Device designation. We received the application for a new device category for transitional pass-through payment status for the aprevo[supreg] Cervical ACDF System on March 3, 2025, which is within 3 years of the date of the initial FDA marketing authorization.

\31\ For more information on the aprevo[supreg] Cervical ACDF System's indications, we refer readers to the November 15, 2024, FDA 510(k) clearance letter (K242260) https://www.accessdata.fda.gov/cdrh_docs/pdf24/K242260.pdf.

We stated in the CY 2026 OPPS/ASC proposed rule that it was unclear to us whether the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system (with and without CAM) are different devices such that they should be evaluated separately for OPPS pass-through payment status. We noted that the aprevo[supreg] Cervical ACDF-X system

(with and without CAM) includes additional components, such as the integrated fixation screws, and has a different indicated use as stated in the November 15, 2024, FDA 510(k) clearance letter (K242260). Specifically, based on the FDA 510(k) clearance indication, we noted that a key difference of the aprevo[supreg] Cervical ACDF-X system (with and without CAM)'s interbody implant is that it incorporates integrated screw fixation and may be used as a standalone system for certain indications. We also noted that, for deformity procedures to correct coronal angulation or any use of hyperlordotic correction (>=20[deg]), the aprevo[supreg] Cervical ACDF-X system (with and without CAM) must include supplemental fixation such as posterior cervical screw fixation or anterior plating.

We invited public comments on whether the aprevo[supreg] Cervical ACDF system and aprevo[supreg] Cervical ACDF-X system should be evaluated separately for OPPS pass-through payment status. Separately, we invited public comments on whether the aprevo[supreg] Cervical ACDF System meets the newness criterion at Sec. 419.66(b)(1).

Comment: The applicant and a commenter expressed support for evaluating the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system together for pass-through payment status, stating that two configurations are part of the same system and noting that the difference between these two configurations is limited to supplemental fixation requirements. Specifically, the applicant stated that the aprevo[supreg] Cervical ACDF system requires supplemental fixation that is not provided in the kit, whereas the aprevo[supreg] Cervical ACDF-X system's kit includes interfixation screws. In addition, the applicant noted that the incremental cost of each screw is an additional 1.3 percent of the price of the single- level aprevo[supreg] Cervical ACDF system. The applicant claimed that this difference does not justify a separate pass-through category code.

Response: We appreciate the applicant's and commenter's clarification. We agree with the applicant that the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system should not be evaluated separately for transitional pass-through payment status. Therefore, we will review the aprevo[supreg] Cervical ACDF system and the aprevo[supreg] Cervical ACDF-X system together as the aprevo[supreg] Cervical ACDF System.

Comment: The applicant stated it agreed with CMS that the aprevo[supreg] Cervical ACDF systems are FDA Breakthrough-designated devices that meet the newness criterion. Further, the applicant stated that it submitted its transitional pass-through payment application for aprevo[supreg] Cervical ACDF System on March 3, 2025, which is within 3 years of the FDA marketing authorization date of November 15, 2024.

Response: We appreciate the applicant's input. We received the application for a new device category for transitional pass-through payment status for the aprevo[supreg] Cervical ACDF System within 3 years of the date of FDA 510(k) clearance. After consideration of the public comments we received and our review of the application, we have determined that the aprevo[supreg] Cervical ACDF System meets the newness criterion at Sec. 419.66(b)(1).

With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the aprevo[supreg] Cervical ACDF System meets the requirements at Sec. 419.66(b)(3).

With respect to the aprevo[supreg] Cervical ACDF System, in the CY 2026 OPPS/ASC proposed rule, we questioned whether the aprevo[supreg] insertion instrument, the integrated fixation screws, and/or the CAM components or parts are integral to the service furnished. We noted that, in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005), we stated that we have interpreted the term “integral” to mean that the device is necessary to furnish or deliver the primary procedure with which it is used. For example, a pacemaker is integral to the procedure of implantation of a pacemaker. Given our interpretation of integral, we questioned whether these components and parts of the aprevo[supreg] Cervical ACDF System are integral to the service furnished as it remains unclear which of these components and parts are utilized during the primary procedure and we questioned whether some of these components or parts may be purely additive in nature and not necessary to furnish the service. Specifically, we noted that it is unclear whether other available insertion instruments may be used to implant the aprevo[supreg] implant, and, for the aprevo[supreg] Cervical ACDF-X system, whether any or all of the integrated fixation screws may be replaced with other commercially available screws. In addition, we stated it was unclear whether the CAM is part of the aprevo[supreg] implant, part of the integrated fixation screws, or is a separate part altogether. We stated it was also unclear whether the CAM can be removed and replaced by other products, and whether there are any requirements for its utilization. We stated that we were interested in additional information about these components and parts of the aprevo[supreg] Cervical ACDF System, including how and when they are used, and whether they can be substituted with other products.

We invited public comments on whether the aprevo[supreg] Cervical ACDF System meets the eligibility criterion at Sec. 419.66(b)(3).

Comment: In response to our concerns that all components or parts of the aprevo[supreg] Cervical ACDF System may not be integral parts of the service furnished because it is unclear how and when these components or parts are used and whether they can be substituted with other products, the applicant commented that the aprevo[supreg] insertion instrument, integrated fixation screws, and the CAM components are all part of the 510(k) cleared aprevo[supreg] Cervical ACDF System's kit, are integral to the implant and arthrodesis services furnished, and are not supplies that are incident to the procedure. The applicant stated that the aprevo[supreg] insertion instrument is an FDA class II instrument integral to the device systems and that other commercially available inserters are not FDA-authorized for use with or compatible with the aprevo[supreg] Cervical ACDF System. The applicant also noted that only the aprevo[supreg] insertion instrumentation, cleared by FDA, is authorized to implant the aprevo[supreg] Cervical interbody device, and these instruments are not available to be purchased separately for use with other devices. Further, the applicant stated that other commercially available screws are not authorized for use with or compatible with the aprevo[supreg] Cervical ACDF System; only the FDA-cleared aprevo[supreg] screws are authorized for use with the aprevo[supreg] Cervical ACDF-X system, and therefore, the fixation screws are integral to the device systems. The applicant also noted that these screws may not be purchased separately for use with other devices. Additionally, the applicant stated that the CAM is a non- separable, integral component of the FDA-cleared aprevo[supreg] Cervical ACDF-X system, cannot be removed from the interbody device, cannot be replaced by other products, and is designed to prevent screw backout. The applicant added that, once the integrated fixation screws have been inserted through the interbody device

and properly placed into the vertebral body, the CAM lock is rotated to cover a portion of the fixation screw's head, which is designed to prevent the screw from backing out. The applicant stated that these items cannot be substituted with other items.

Response: We appreciate the applicant's clarification. Based on the information provided in the comment, we agree with the applicant that all components of the aprevo[supreg] Cervical ACDF System, including the aprevo[supreg] insertion instrument, integrated fixation screws, and CAM, are integral parts of the service furnished. After consideration of the public comments we received and our review of the application, we have determined that the aprevo[supreg] Cervical ACDF System meets the eligibility criterion at Sec. 419.66(b)(3).

With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the aprevo[supreg] Cervical ACDF System is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and is (2) not a material or supply furnished incident to a service, and, therefore, is eligible to be considered for pass-through payment.

With respect to the aprevo[supreg] Cervical ACDF System, in the CY 2026 OPPS/ASC proposed rule, we questioned whether the aprevo[supreg] insertion instrument, the integrated fixation screws, and/or the CAM components or parts may be considered a material or supply furnished incident to the service. Specifically, as discussed previously with respect to criteria at Sec. 419.66(b)(3), we noted that it is unclear whether other available insertion instruments may be used to implant the aprevo[supreg] implant and, for the aprevo[supreg] Cervical ACDF-X system, whether any or all of the integrated fixation screws may be replaced with other commercially available screws. In addition, we stated that we are unclear about whether the CAM is part of the aprevo[supreg] implant, part of the integrated fixation screws, or is a separate part altogether, and whether the CAM can be removed and replaced by other products. We requested clarification about each of these components and parts, including how and when they are used and whether they can be substituted with other commercially available products. We questioned whether these components or parts of the aprevo[supreg] Cervical ACDF System may be considered a supply or material furnished incident to a service and excluded from device pass- through payment eligibility under Sec. 419.66(b)(4).

We invited public comments on whether the aprevo[supreg] Cervical ACDF System meets the criterion at Sec. 419.66(b)(4).

Comment: The applicant submitted a response to our concerns that some components or parts of the aprevo[supreg] Cervical ACDF System, specifically the aprevo[supreg] insertion instrument, the integrated fixation screws, and/or the CAM, may be considered a material or supply furnished incident to the service, because, as previously discussed with respect to criteria at Sec. 419.66(b)(3), it is unclear how and when these components or parts are used, and whether they can be substituted with other products. The applicant commented that the components of aprevo[supreg] Cervical ACDF System (insertion instrument, the integrated fixation screws, and the CAM) are part of the 510(k)-cleared aprevo[supreg] Cervical ACDF System and other commercially available insertion instruments and screws are not FDA authorized or compatible with the aprevo[supreg] Cervical ACDF System. In addition, the applicant commented that the CAM is a non-separable component of the aprevo[supreg] Cervical ACDF-X System and cannot be substituted with other items. Finally, the applicant noted that insertion instruments and screws are not available for purchase separately for use with other devices. Therefore, the applicant asserted that the components of aprevo[supreg] Cervical ACDF System are integral to the implant services furnished and are not supplies that are incident to the procedure.

Response: We appreciate the applicant's clarification. Based on the information provided in the comment and our review of the application, we agree with the applicant that the aprevo[supreg] Cervical ACDF System meets the criterion because the referenced components are only intended to be used with the aprevo[supreg] Cervical ACDF System, commercially available insertion instruments or screws cannot be utilized with the device, and the use of these components is necessary and/or required to furnish or deliver the primary procedure(s) with which it is used, and are not supplies incident to the procedure. As such, we have determined that the aprevo[supreg] Cervical ACDF System meets the criterion at Sec. 419.66(b)(4).

In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. Per the applicant, the existing pass-through code C1831 \32\ (Interbody cage, anterior, lateral or posterior, personalized (implantable)) does not appropriately describe the aprevo[supreg] Cervical ACDF System because C1831 was created for the original (lumbar-specific) aprevo[supreg] product. According to the applicant, the aprevo[supreg] Cervical ACDF System device is different from C1831 because (1) the original (lumbar- specific) aprevo[supreg] and the nominated aprevo[supreg] Cervical ACDF System are separate and distinct products that have no overlap in anatomical indications for use or patient population; (2) the original (lumbar-specific) aprevo[supreg] and the aprevo[supreg] Cervical ACDF System are billed with different primary procedure CPT codes, are indicated for a different set of surgical approaches, are typically assigned to different places of service, and are mapped to different payment classifications; and (3) CMS transmittals state that C1831 is limited to lumbar procedures.

\32\ The aprevo[supreg] Intervertebral Fusion Device (IFD) received quarterly approval under the alternative pathway effective October 1, 2021, and final approval in the CY 2023 OPPS/ASC final rule (87 FR 71891 through 71895). CMS established device category code C1831 based on the approval of the aprevo[supreg] IFD. Device pass-through payment status eligibility for C1831 expired effective September 30, 2024.

We noted, in the CY 2026 OPPS/ASC proposed rule, that based on the description provided by the applicant, that the aprevo[supreg] Cervical ACDF System is a personalized interbody cage that is implanted using an anterior surgical approach, and therefore, could be appropriately described by C1831. Specifically, we stated that C1831 may appropriately describe the aprevo[supreg] Cervical ACDF System because it describes any device that is a personalized interbody cage, designed for anterior, lateral, or posterior procedures. We noted that CMS does not establish pass-through device categories for the purposes of describing

specific devices, but rather, device categories which are intended to encompass all devices that can be appropriately described by a category. In this context, we stated that we believed that the aprevo[supreg] Cervical ACDF System may be similar to devices described by C1831 and therefore, the aprevo[supreg] Cervical ACDF System may be appropriately described by C1831.

We invited public comment on whether the aprevo[supreg] Cervical ACDF System meets the device category criterion at Sec. 419.66(c)(1).

Comment: In response to our concerns that the aprevo[supreg] Cervical ACDF System may be appropriately described by C1831, the applicant and a commenter stated that they believe the aprevo[supreg] Cervical ACDF System meets all the criteria for establishing a new device category and asserted that CMS has used C1831 to describe personalized lumbar interbody fusion devices and that C1831 should not be used to describe the personalized cervical interbody fusion device that is the subject of this transitional pass-through payment application. The applicant and commenter further contended that CMS guidance indicates that CMS intended for C1831 to be lumbar-specific. In addition, the applicant noted that there are differences in the FDA indications, applicable CPT codes, and APC assignments for the nominated device and the original (lumbar-specific) aprevo[supreg] device. A commenter stated that the device categories differ in applicable CPT codes, APCs and FDA indications.

The applicant further summarized evidence included in its application to support its assertion that the aprevo[supreg] Cervical ACDF System is substantively distinct and significantly different from the expired device category C1831. The applicant reiterated that it believes that the original (lumbar-specific) aprevo[supreg] and the aprevo[supreg] Cervical ACDF System are separate and distinct products that have no overlap in FDA anatomical indications for use or patient population. The applicant stated that CMS has previously made similar distinctions between device categories with anatomical indications when it created device category codes C1748 (Endoscope, single-use (i.e., disposable), upper GI, imaging/illumination device (insertable)), effective July 1, 2020, and subsequently created both C1747 (Endoscope, single use (i.e., disposable), urinary tract, imaging/illumination device (insertable)), effective January 1, 2023, and C1601 (Endoscope, single-use (i.e., disposable), pulmonary, imaging/illumination device (insertable)), effective January 1, 2024. Additionally, the applicant asserted that CMS previously made distinct device categories for anatomical locations when it created device category codes C1888 (Catheter, ablation, non-cardiac, endovascular (implantable)), effective July 1, 2002, and C1886 (Catheter, extravascular tissue ablation, any modality (insertable)), effective January 1, 2012.

The applicant and commenter also stated that the original (lumbar- specific) aprevo[supreg] and the aprevo[supreg] Cervical ACDF System are billed with different primary procedure CPT codes, are indicated for different surgical approaches, and are assigned to different APCs. Moreover, the applicant noted that anterior lumbar approaches are currently assigned to the Medicare Inpatient Only list and may not be performed in the outpatient setting.

In addition, the applicant and commenter noted that several prior CMS transmittals (#R10997CP, #R11004CP, and #R11801CP) have stated that C1831 is to only be used in lumbar fusion procedures. The applicant and commenter stated that the criteria to apply an existing category to a new device, as stated in Sec. 419.66(f)(2), requires that the new device conforms to CMS guidance relating to the definition of terms and other information in conjunction with the category descriptors and codes. Furthermore, the applicant claimed that no CMS transmittals have stated that C1831 can be appropriately billed with cervical fusion CPT codes. The applicant and commenter asserted that the aprevo[supreg] Cervical ACDF System does not conform to CMS guidance related to the category codes, and therefore, they believe that C1831 is specific to the original (lumbar-specific) aprevo[supreg] and does not apply to the aprevo[supreg] Cervical ACDF System.

Response: We appreciate the commenters' input. After consideration of the public comments we received and our review of the application, we continue to believe that C1831 appropriately describes the aprevo[supreg] Cervical ACDF System, because the aprevo[supreg] Cervical ACDF System is a personalized interbody cage that is implanted using an anterior surgical approach, and C1831 describes any device that is a personalized interbody cage, designed for anterior, lateral, or posterior procedures.

We note that the applicant asserted that the aprevo[supreg] Intervertebral Fusion Device (IFD) (referred to as the original (lumbar-specific) aprevo[supreg] by the applicant) and the aprevo[supreg] Cervical ACDF System are separate and distinct products. We reiterate that CMS does not establish pass-through device categories for the purposes of describing specific devices. Rather, device categories are intended to encompass any device that can be appropriately described by the category, while ensuring that no medical device is described by more than one category in accordance with section 1833(t)(6)(B)(ii)(II) of the Act. When we evaluate a potential pass-through device to determine whether it meets the device category criterion at Sec. 419.66(c)(1), we compare the nominated device to the device category descriptor rather than to the specific device for which the device category was created. Section 419.66(f) states that a device is described by a category if, (1) it matches the long descriptor of the category code established by CMS, and (2) conforms to the guidance issued by CMS relating to the definition of terms and other information in conjunction with the category descriptors and codes. Per the applicant, the aprevo[supreg] Cervical ACDF System is a personalized interbody cage that is implanted using an anterior surgical approach, which matches the descriptor for C1831 (interbody cage, anterior, lateral or posterior, personalized (implantable)). We also believe that the aprevo[supreg] Cervical ACDF System conforms to the guidance issued on C1831 as discussed in the following paragraphs.

We disagree with the applicant's assertion in its application and comment that C1831 is “de facto lumbar-specific” and that CMS intended to limit C1831 to lumbar procedures. We note that CMS establishes the reportable procedure codes for each device pass-through category based on the information available at the time in which the code is established and, unless specified in the descriptor, device category codes are not anatomically specific. CMS has included specific anatomic language in the descriptors of previous device category codes when such language was necessary based on the unique circumstances surrounding the establishment of a particular device category code, as acknowledged in the CY 2025 OPPS/ASC final rule with comment period (89 FR 94137). When CMS established C1831 as a new device category based on the approval of the aprevo[supreg] (IFD) application for transitional pass-through payment status, there were no circumstances which warranted the use of vertebrae-specific language in the long descriptor, as such, none was included (87 FR 71894 and 71895). The applicant acknowledged this in its device pass-

through payment application for the aprevo[supreg] Cervical ACDF System, stating that when CMS established C1831 there was no need to make anatomical distinctions as it was the first and only personalized interbody cage. We agree with the applicant that no vertebral distinctions were warranted because C1831 was established to describe any device that is a personalized interbody cage, designed for anterior, lateral, or posterior procedures. The aprevo[supreg] Cervical ACDF System is a device that is a personalized interbody cage, designed for anterior procedures, and as such we believe that the aprevo[supreg] Cervical ACDF System is described by C1831.

As noted by the applicant and acknowledged, CMS has established anatomically specific device category codes in the past, specifically for endoscopes and some ablation catheters. However, the device category codes referenced by the applicant were intentionally defined with anatomically specific descriptors from their inception (e.g., C1748 (Endoscope, single-use (i.e., disposable), upper GI, imaging/ illumination device (insertable)) followed by C1747 (Endoscope, single use (i.e., disposable), urinary tract, imaging/illumination device (insertable)), and C1601 (Endoscope, single-use (i.e., disposable), pulmonary, imaging/illumination device (insertable)), as well as C1888 (Catheter, ablation, non-cardiac, endovascular (implantable)) followed by C1886 (Catheter, extravascular tissue ablation, any modality (insertable))). The anatomical specificity included in these device descriptors demonstrated our intention that these device category codes be anatomically specific. We further note that the descriptor for C1831 contains no such anatomical distinction within the spinal column, which demonstrates that CMS did not intend C1831 to be anatomically specific within the spinal column as the applicant and commenter believe.

We also disagree with the applicant and commenter's assertion that C1831 does not describe the aprevo[supreg] Cervical ACDF System because the aprevo[supreg] (IFD) and the aprevo[supreg] Cervical ACDF System are billed with different primary CPT procedure codes and assigned to different APCs. First, as previously stated, the procedure codes with which a device category code may be reported are approved when the device category code is established and are based on the current indication of the subject device and information available to us at the time. For the reasons discussed, the list of reportable procedure codes approved for a device category code is not intended to create a de facto determination regarding other devices or exclude devices that may also be appropriately described by the device category code descriptor. It is also not intended to change, restrict, or redefine the device category code in any manner that is inconsistent with the device category code descriptor.

Second and relatedly, the list of procedure codes with which device category codes may be reported is not unalterable. The list of approved procedure codes with which the device category code may be reported can, and do, change as required throughout the device pass-through payment eligibility period. Reportable procedures are updated for many reasons, including FDA approval of a new indication for an existing device or of a new device with an indication that includes additional procedures that are reportable with an existing device category code, necessitating the inclusion of those additional procedure codes in the reportable procedures list. For example, when CMS established C2623 as a device category code effective April 1, 2015, the procedure codes with which C2623 could be reported (HCPCS codes 37224 and 37226) were limited to use in the femoral or popliteal arteries (89 FR 94136). However, based on FDA approval of a new indication for an existing device (a drug-coated balloon catheter for use with dialysis circuit procedures for the treatment of patients with dysfunctional arteriovenous fistulae), CMS added two procedure codes, HCPCS codes 36902 and 36903 (transluminal balloon angioplasty procedures in peripheral dialysis segments), with which C2623 could be reported effective August 25, 2017.\33\ As another example, after we established C1748 as a device category code effective July 1, 2020, we updated the list of procedure codes (HCPCS codes 43260 through 43265 and HCPCS codes 43274, 43276 through 43278) associated with HCPCS code C1748 in 2022 to include transnasal services (HCPCS codes 0652T, 0653T, 0654T, 43197, and 43198).\34\ In line with these examples, had other devices that were appropriately described by C1831 received marketing authorization during the time C1831 was eligible for device pass- through payments, CMS likely would have added the appropriate additional procedure codes with which C1831 could be reported. In this instance, we believe HCPCS codes 22551 and 22554 (the HCPCS codes with which the aprevo[supreg] Cervical ACDF System is reported) could have been included in the list of reportable procedure codes for C1831 either when the device category code was first established or during the device category code status eligibility period, if the nominated device had received FDA marketing authorization. Third, beginning October 1, 2024, upon the expiration of device pass-through payment status for C1831, CMS packaged the payment for the costs of each of the devices described by C1831 into the payment for the costs related to the procedure with which each device is reported in the hospital claims data.35 36 We note that upon becoming packaged for payment, C1831 effectively became reportable with other musculoskeletal procedure codes, including procedure codes for cervical-specific procedures. Additionally, we note that since payment has been packaged for C1831, cervical procedure codes, including HCPCS code 22551 (Arthrodesis, anterior interbody, including disc space preparation, discectomy, osteophytectomy and decompression of spinal cord and/or nerve roots; cervical below C2), one of the two procedure codes with which the aprevo[supreg] Cervical ACDF System may be billed, have been performed and billed with C1831. As such, we believe that the aprevo[supreg] Cervical ACDF System is appropriately described by C1831 and that CMS is already collecting cost data for the nominated device in the appropriate APC. Regarding the APC assignment, while we acknowledge that the aprevo[supreg] Cervical ACDF System and the aprevo[supreg] (IFD) are currently assigned to different APCs, we note that many device category codes are reportable with multiple APCs and HCPCS (procedure) codes, and therefore, we do not agree with the applicant or the commenter that this warrants the establishment of a new device category code. We do not believe, in this case, that the procedure codes and APC

assignments distinguish the aprevo[supreg] Cervical ACDF System from the aprevo[supreg] (IFD) device for purposes of the device category code determination.

\33\ Centers for Medicare & Medicaid Services (2017). Pub 100-04 Medicare Claims Processing, Transmittal 3941, Change Request 10417, dated December 22, 2017. Accessed at https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2017downloads/r3941cp.pdf.

\34\ Centers for Medicare & Medicaid Services (2022). Pub 100-04 Medicare Claims Processing, Transmittal 11305, Change Request 12666, dated March 24, 2022. Accessed at https://www.cms.gov/files/document/r11305cp.pdf.

\35\ Centers for Medicare & Medicaid Services (2024). Pub 100-04 Medicare Claims Processing, Transmittal 12816, Change Request 13784, dated August 29, 2024. Accessed at https://www.cms.gov/files/document/r12816cp.pdf.

\36\ Centers for Medicare & Medicaid Services (2024). Hospital Outpatient Prospective System Quarterly Addenda Updates October 2024, Addendum B. Accessed at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates/october-2024-updated-10/02/2024-0.

Similarly, we disagree with the applicant and commenters' assertion that the CMS transmittals limit C1831 to lumbar procedures. The purpose of CMS transmittals is to describe changes to, and billing instructions for, various payment policies implemented for a specified time period. The guidance for device pass-through category codes is based on the current applicable indications and is not intended to restrict or redefine a device category code descriptor. Since device pass-through payment status expired for C1831, CMS transmittals have appropriately described the changes to, and updated billing instructions for C1831, and explained that C1831 would remain an active code and its payment would be included in the primary service. We believe hospitals are very familiar with the approval and expiration of transitional pass-through status for device category codes and how to correctly report device costs under the OPPS.

We also disagree with the applicant's assertion that the aprevo[supreg] (IFD) and the nominated aprevo[supreg] Cervical ACDF System are separate and distinct products that have no overlap in anatomical indications for use or patient population. We note that a commenter indicated that the device categories differ in FDA indications. While we are not clear to which other device categories the commenter is referring, we believe there is only one relevant device category code, C1831, we believe the FDA indications are similar and note that both aprevo[supreg] devices treat many of the same conditions, including degenerative disc disease, deformity (kyphosis or scoliosis), spinal stenosis, and failed previous fusion, at different levels of the spine.\37\ Moreover, the aprevo[supreg] Cervical ACDF System and the aprevo[supreg] (IFD) appear to be intended for use in the same, or very similar procedures, differentiated only by the section of the spinal column in which the procedure is performed. As such, we disagree with the applicant that the devices have no overlap in anatomical indication and that they treat a different patient population.

\37\ As stated in the CY 2023 OPPS/ASC final rule with comment period (87 FR 71892), the aprevo[supreg] (IFD) is indicated for use as an adjunct to fusion at one or more levels of the lumbar spine in patients having an Oswestry Disability Index (ODI) >40 and diagnosed with severe symptomatic adult spinal deformity (ASD) conditions. These patients should have had 6 months of non-operative treatment. The devices are intended to be used with autologous and/or allogenic bone graft comprised of cancellous and/or cortico-cancellous bone graft. These implants may be implanted via a variety of open or minimally invasive approaches. These approaches may include anterior lumbar interbody fusion or lateral lumbar interbody fusion.

We note that for the purposes of transitional pass-through payments, if we determine that a device is not appropriately described by any of the existing device categories or by any category previously in effect, then we issue a new category code.\38\ Unlike previously established device category codes where CMS has made an anatomical specification based on a clear anatomical distinction in the device indication, such as a ureter and the bronchi, a different indication such as drug-delivery rather than angioplasty, or different mechanisms of action like radiofrequency versus ultrasound, with regard to the nominated technology, we did not believe at the time the code was established, nor do we believe at this time, that such an anatomical distinction is necessary for C1831. As such, we do not believe that the anatomical indications for different regions of the spinal column sufficiently distinguish the aprevo[supreg] Cervical ACDF System from the aprevo[supreg] (IFD) for purposes of the device category code determination.

\38\ For examples, please see our decisions regarding CavaClear Inferior Vena Cava Filter Removal Laser Sheath (88 FR 81718 through 81720), which differed from devices described in C2629 and C1773 by mechanism of action, clinical use, impacted anatomy, and FDA clearance pathway; CERAMENT[supreg] G (88 FR 81723 through 81725), which differed from the device described in C1734 by composition, mechanisms of action, indication for use, intended patient population, associated treatment cases and procedures, and FDA designation and classification; and AGENT\TM\ Paclitaxel-Coated Balloon Catheter (89 FR 94136 through 94137), which differed from devices described in C2623 by indication and type of procedure.

Further, even though the aprevo[supreg] Cervical ACDF System is only placed through an anterior surgical approach and the aprevo[supreg] (IFD) may be placed through multiple surgical approaches, we note that per the device category code descriptor, C1831 is intended to cover all surgical approaches to the spine: anterior, lateral, or posterior. In the CY 2023 OPPS/ASC final rule with comment period (87 FR 71894 through 71895), we updated the device descriptor for C1831, effective January 1, 2023, to include the posterior/ transforaminal approach at the request of the applicant.\39\ Moreover, we declined the applicant's request to remove the anterior and lateral approaches from the descriptor and, instead, stated that the anterior and lateral approaches should remain in the descriptor and clarified our intent that the descriptor address all potential surgical approaches. We note, that while the C1831 descriptor was updated effective January 1, 2023, the anterior surgical approach--the surgical approach for which the aprevo[supreg] Cervical ACDF System is indicated--has been included in the category's descriptor since its establishment and, as previously noted, cervical-specific procedures using the anterior surgical approach have been reported with C1831 in the outpatient setting. HCPCS codes 22630 and 22633 (which can be reported with C1831) and HCPCS codes 22551 and 22554 (the aprevo[supreg] Cervical ACDF System procedure codes) are procedures that can be performed in the outpatient setting.

\39\ Centers for Medicare & Medicaid Services (2023). Pub 100-04 Medicare Claims Processing,Transmittal 11801, Change Request 13031, dated January 20, 2023. Accessed at https://www.cms.gov/files/document/r11801cp.pdf.

Finally, we disagree with the applicant's assertion that the healthcare setting in which procedures utilizing the aprevo[supreg] Cervical ACDF System device and the aprevo[supreg] (IFD)are typically performed has relevance to the device category discussion. We note that both devices may be used in the outpatient setting, as such, we do not believe that the surgical approach or healthcare setting distinguishes the aprevo[supreg] Cervical ACDF System from the aprevo[supreg] (IFD) for purposes of the device category code assignment.

After consideration of the public comment we received and our review of the device pass-through application, we have determined that the aprevo[supreg] Cervical ACDF System does not meet the device category eligibility criterion at Sec. 419.66(c)(1) because it is appropriately described by an existing category or a category previously in effect. Therefore, in this final rule with comment period, we will not address whether the technology meets the other remaining criteria required for transitional pass-through payment for devices. We are not approving the aprevo[supreg] Cervical ACDF System for transitional pass-through payment status for CY 2026 because the technology does not meet the device category eligibility criterion at Sec. 419.66(c)(1).

Comment: The applicant commented that CMS assigned a $0.00 device offset amount associated with the device pass-through payment for the original (lumbar-specific) aprevo[supreg] and requested that CMS be consistent with this policy determination and assign a $0.00 to the aprevo[supreg] Cervical ACDF System device pass-through payment.

Response: We appreciate the applicant's input regarding the device offset amount associated with the

aprevo[supreg] Cervical ACDF System; however, as the device pass- through application for the aprevo[supreg] Cervical ACDF System has not been approved in this final rule with comment period, we will not address the device offset assignment.

Comment: The applicant expressed concern that the placement of the anterior and lateral procedures associated with the original (lumbar- specific) aprevo[supreg] on the IPO list effective January 1, 2022 following the approval of device pass-through payment status for C1831 effective October 1, 2021 prevented CMS from collecting sufficient and proper cost data to assign the procedures to an appropriate APC following the expiration of device pass-through payment status on September 30, 2024. The applicant commented that it was unable to market the original (lumbar-specific) aprevo[supreg] in the outpatient setting due to this change and that limited applicable use of the anterior and lateral surgical approaches and inconsistent coding guidance for the posterior surgical approach disincentivized adoption. As such, the applicant requested that CMS reinstate C1831 to ensure a full 3 years of device pass-through payment status and to capture the necessary cost data.

Response: We thank the commenters for their input. We appreciate the applicant's concern with the timing of the placement of the anterior and lateral procedures on the IPO list, however, we cannot reinstate the pass-through payment status of HCPCS code C1831, neither do we agree we should. Consistent with section 1833(t)(6)(B)(iii) of the Act and Sec. 419.66(g), the period for which a device category for transitional pass-through payments under the OPPS can be in effect is at least 2 years, but not more than 3 years, beginning on the first date on which pass-through payment is made. Once 3 years has passed since a device category first received transitional pass-through payments, the device category is no longer eligible for pass-through payments and we utilize the established policy (first described in the CY 2003 OPPS/ASC final rule, 67 FR 66763) to package the costs of the devices that are no longer eligible for pass-through payments into the costs of the procedures with which the devices are reported in the claims data used to set the payment rates. We note that device pass- through payment status is intended to be temporary, and we consider the cost data to be included in the payment rates regardless of whether the technology's use in the Medicare population has been frequent or infrequent during the time period under which a device was receiving transitional pass-through payments. The C1831 device category was made effective in the OPPS on October 1, 2021, and expired on September 30, 2024, as such, we cannot reinstate the pass-through payment status of C1831 because reinstatement would make the pass-through payment status effective longer than the maximum 3-year period permitted under section 1833(t)(6)(B)(iii) of the Act and Sec. 419.66(g). (b) SCOUT MDTM Surgical Guidance System

Merit Medical Systems submitted an application for a new device category for transitional pass-through payment status for the SCOUT MDTM Surgical Guidance System for CY 2026. According to the applicant, the SCOUT MDTM Surgical Guidance System communicates the location of tumor tissue during a tumor excision procedure. Per the applicant, the SCOUT MDTM Surgical Guidance System consists of the SCOUT MDTM Delivery System, SCOUT MDTM Guide, SCOUT MDTM Handpiece, and SCOUT MDTM Console.

The applicant stated that it is only seeking a new device category for transitional pass-through payment status for the SCOUT MDTM Delivery System component of the SCOUT MDTM Surgical Guidance System. The SCOUT MDTM Delivery System consists of the SCOUT MDTM Reflectors and the SCOUT MDTM Delivery Device, a plastic, molded handle attached to a 16 GA introducer needle with a SCOUT MDTM Reflector preloaded inside. According to the applicant, the SCOUT MDTM Delivery System is used to implant each of the SCOUT MDTM Reflectors, which identify the location of the tumor tissue to be excised and/or the boundaries of the region of tissue to be excised during a separately scheduled procedure. The applicant further explained that there are four unique configurations of the SCOUT MDTM Reflectors, which return a detectable signal within surrounding tissue when illuminated by the micro-impulse radar signal from the SCOUT MDTM Guide and Handpiece used during the tumor excision procedure. Per the applicant, each single-use SCOUT MDTM Delivery System contains one SCOUT MDTM Delivery Device with one preloaded SCOUT MDTM Reflector.

Please refer to the online application posting for the SCOUT MDTM Surgical Guidance System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240830W9M8U.

As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), the SCOUT MDTM Surgical Guidance System received FDA Breakthrough Device designation effective February 1, 2023. The approved FDA indication for the SCOUT MDTM Surgical Guidance System is:

The SCOUT MD Reflectors are intended to be placed percutaneously in soft tissue, (>30 days) \40\ to mark a biopsy site or a soft tissue site intended for surgical removal. Using imaging guidance (such as ultrasound, MRI, or radiography) or aided by non- imaging guidance (SCOUT MD System), the SCOUT MD Reflector is located and surgically removed with the target tissue. The SCOUT MDTM Delivery System is intended only for the non-imaging detection and localization of the SCOUT MD Reflector that has been implanted in a soft tissue biopsy site or a soft tissue site intended for surgical removal.

\40\ The SCOUT MD Reflectors are implanted percutaneously in soft tissue and may remain in place for 30 days or longer.

FDA granted 510(k) clearance for the SCOUT MDTM Surgical Guidance System on February 12, 2024, for the same indication as the one covered by the Breakthrough Device designation. We received the application for a new device category for transitional pass-through payment status for the SCOUT MDTM Surgical Guidance System on August 30, 2024, which is within 3 years of the date of the initial FDA marketing authorization.

We invited public comments on whether the SCOUT MDTM Surgical Guidance System, inclusive of the SCOUT MDTM Delivery System meets the newness criterion at Sec. 419.66(b)(1).

Comment: The applicant reiterated that the SCOUT MDTM Surgical Guidance System received FDA clearance on February 12, 2024, and the application for transitional pass-through payment status for the SCOUT MDTM Surgical Guidance System was submitted on August 30, 2024 which is within 3 years from the date of FDA clearance.

Response: We appreciate the applicant's input. We agree that we received the application for a new device category for transitional pass-through payment status for the SCOUT MDTM Surgical Guidance System within 3 years of the date of FDA 510(k) clearance. After consideration of the public comment we received and our

review of the application, we have determined that the SCOUT MDTM Surgical Guidance System meets the newness criterion at Sec. 419.66(b)(1).

As previously noted, the applicant is only seeking a new device category for transitional pass-through payment status for the SCOUT MDTM Delivery System component of the SCOUT MDTM Surgical Guidance System; as such, the eligibility and exclusion criteria will evaluate SCOUT MDTM Delivery System.

With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the SCOUT MDTM Delivery System meets the requirements at Sec. 419.66(b)(3).

We invited public comments on whether the SCOUT MDTM Delivery System meets the eligibility criterion at Sec. 419.66(b)(3).

Comment: The applicant reiterated that the SCOUT MDTM Delivery System meets all the eligibility criteria.

Response: We appreciate the applicant's input. After consideration of the public comment we received and our review of the application, we agree with the applicant and have determined that the SCOUT MDTM Delivery System meets the eligibility criterion at Sec. 419.66(b)(3).

With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the SCOUT MDTM Delivery System is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and is (2) not a material or supply furnished incident to a service, and, therefore, is eligible to be considered for pass-through payment.

We invited public comments on whether the SCOUT MDTM Delivery System meets the exclusion criterion at Sec. 419.66(b)(4).

Comment: The applicant reiterated that the SCOUT MDTM Delivery System is not a depreciating asset as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1) nor is it a material or supply furnished incident to a service.

Response: We appreciate the applicant's input. After consideration of the public comment we received and our review of the application, we agree with the applicant and have determined that the SCOUT MDTM Delivery System meets the criterion at Sec. 419.66(b)(4).

In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. Per the applicant, the existing pass-through codes C1879 \41\ (Tissue marker (implantable)) and C1819 (Tissue localization excision device) do not appropriately describe the SCOUT MDTM Delivery System because the SCOUT MDTM Delivery System is different than other wire-free localization/fiducial devices used for breast conserving surgery and is the only device that: (1) incorporates application-specific integrated circuit (ASIC) technology customized for use with the SCOUT MDTM Surgical Guidance System; (2) uses radar technology to detect, locate and identify the implanted reflector(s) within 1 millimeter (mm) of accuracy; (3) utilizes up to four uniquely shaped reflectors for a more clearly defined radiographic image of the area of interest to be excised; (4) incorporates differentiated radar signatures and detection cadences specific to each reflector; (5) can detect up to four unique reflectors simultaneously or individually to more precisely identify pre-defined surgical margins; and (6) has no significant MRI artifact. The applicant further explained that the SCOUT MDTM Delivery System includes four distinct implant (SCOUT MDTM Reflector) shapes, each with a unique radar signature that enables clear detection and identification of the multiple localization devices previously placed to mark the desired surgical margins during the excision procedure. Upon review, we stated in the CY 2026 OPPS/ASC proposed rule that we did not identify an existing pass-through payment category that describes the SCOUT MDTM Delivery System.

\41\ Effective July 1, 2013, CMS deleted C1879 (Tissue marker, implantable) because it is described by A4648 (Tissue marker, implantable, any type). Centers for Medicare & Medicaid Services (2013). Pub 100-04 Medicare Claims Processing (Transmittal 2718) in CMS Manual System. Accessed at https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2013-transmittals-items/r2718cp.

We invited public comment on whether the SCOUT MDTM Delivery System meets the device category criterion at Sec. 419.66(c)(1).

Comment: The applicant reiterated that the SCOUT MDTM Delivery System is not appropriately described by any of the existing categories or by any category previously in effect, and that it has not been paid for as an outpatient service as of December 31, 1996.

Response: We appreciate the applicant's input. After consideration of the public comment we received and our review of the application, we continue to believe that there is no existing category or category previously in effect that appropriately describes the SCOUT MDTM Delivery System. Therefore, we have determined that the SCOUT MDTM Delivery System meets the device category eligibility criterion at Sec. 419.66(c)(1).

The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines either of the following: (1) that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (2) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization for the indication covered by the Breakthrough Device designation. The SCOUT MDTM Surgical Guidance System has a Breakthrough Device designation and marketing authorization from FDA for the indication covered by the Breakthrough Device designation (as explained in more detail of the newness criterion) and therefore was not evaluated for substantial clinical improvement.

We invited public comment on whether the SCOUT MDTM Delivery System meets the device category criterion at Sec. 419.66(c)(2).

Comment: The applicant confirmed that the SCOUT MDTM Delivery System received a Breakthrough Device designation from FDA. The applicant also asserted that it believes that, even if the SCOUT MDTM Delivery System did not have Breakthrough Device designation, the device would still meet

the device category criterion at Sec. 419.66(c)(2).

Response: We appreciate the applicant's input. The SCOUT MDTM Surgical Guidance System, inclusive of the SCOUT MDTM Delivery System, has a Breakthrough Device designation effective February 1, 2023, and marketing authorization from FDA effective February 12, 2024, for the indication covered by the Breakthrough Device designation. Therefore, the SCOUT MDTM Surgical Guidance System meets the criterion at 419.66(c)(2)(ii) and is not evaluated for substantial clinical improvement at Sec. 419.66(c)(2)(i). After consideration of the public comment we received and our review of the application, we have determined that the SCOUT MDTM Delivery System meets the device category criterion at Sec. 419.66(c)(2).

The third criterion for establishing a device category, at Sec. 419.66(c)(3), requires CMS to determine that the cost of the device is not insignificant, as described in Sec. 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant stated that the SCOUT MDTM Delivery System would be reported with HCPCS codes as shown in Table 100, previously published as Table 49 of the CY 2026 OPPS/ASC proposed rule (90 FR 33579). [GRAPHIC] [TIFF OMITTED] TR25NO25.130

To meet the cost criterion for device pass-through payment status, a device must pass all three tests of the cost criterion for at least one APC. As we explained in the CY 2005 OPPS final rule with comment period (69 FR 65775), we generally use the lowest APC payment rate applicable for use with the nominated device when we assess whether a device meets the cost significance criterion, thus increasing the probability the device will pass the cost significance test. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). We noted in the CY 2026 OPPS/ASC proposed rule that the applicant utilized the CY 2025 payment rates for the three tests of the cost criterion. For our calculations, we used APC 5071, which had a CY 2025 payment rate of $703.59 at the time the application was received. HCPCS code 19287 in APC 5071 had a device offset amount of $240.56 at the time the application was received.\42\ Per the applicant, an average of 1.95 SCOUT MDTM Reflectors are placed per procedure with a selling price of $550.00 for each single-use SCOUT MDTM Delivery System containing a SCOUT MDTM Delivery Device with one preloaded SCOUT MDTM Reflector. Therefore, according to the applicant, the average cost per procedure for the SCOUT MDTM Delivery System is $1,072.00.

\42\ We noted the applicant selected APC 5072 and an APC payment rate of $1,620.24 for the three tests of the cost criteria. However, for our calculation, we selected APC 5071, which we believe had the lowest applicable APC payment rate of $703.59 found in the CY 2025 OPPS/ASC final rule with comment period, among the APCs related to the HCPCS/CPT codes provided by the applicant. We selected the HCPCS/CPT code level device offset amount of $240.56 related to HCPCS 19287 in APC 5071. We stated that, based on our initial assessment in the CY 2026 OPPS/ASC proposed rule, using the APC payment rate of $703.59 and the device offset amount of $240.56 would result in the SCOUT MDTM Delivery System meeting the cost significance requirement.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The average reasonable cost of $1,072.00 for the SCOUT MDTM Delivery System is 152.36 percent of the applicable APC payment amount for the service related to the category of devices, of $703.59 (($1,072.00/ $703.59 x 100 = 152.36 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that the SCOUT MDTM Delivery System meets the first cost significance requirement.

The second cost significance requirement, at Sec. 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $1,072.00 for the SCOUT MDTM Delivery System is 445.63 percent of the cost of the device-related portion of the APC payment amount for the related service, of $240.56 ($1,072.00/$240.56 x 100 = 445.63 percent). Therefore, we stated in the CY 2026 OPPS/ASC

proposed rule that we believe that the SCOUT MDTM Delivery System meets the second cost significance requirement.

The third cost significance requirement, at Sec. 419.66(d)(3), provides that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $1,072.00 for the SCOUT MDTM Delivery System and the portion of the APC payment amount for the device of $240.56 is 118.17 percent of the APC payment amount for the related service, of $703.59 ((($1,072.00-$240.56)/$703.59) x 100 = 118.17 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that the SCOUT MDTM Delivery System meets the third cost significance requirement.

We invited public comment on whether the SCOUT MDTM Delivery System meets the cost criterion at Sec. 419.66(c)(3).

Comment: The applicant reiterated that the SCOUT MDTM Delivery System meets all three of the cost significance criteria and confirmed that the cost analysis in the CY 2026 OPPS/ASC proposed rule is accurate.

Response: We appreciate the applicant's input. We agree with the applicant and continue to believe that the SCOUT MDTM Delivery System meets the first, second, and third cost significance tests described at Sec. 419.66(d).

As discussed previously in this section, we preliminarily approved the SCOUT MDTM Delivery System application for transitional pass-through payment under the alternative pathway effective January 1, 2025. After consideration of the public comment we received and our review of the device pass-through application, we have determined that the SCOUT MDTM Delivery System meets the requirements for device pass-through status described at Sec. 419.66. We are finalizing approval for device pass-through payment status for the SCOUT MDTM Delivery System under the alternative pathway for devices that have an FDA Breakthrough Device designation and have received FDA marketing authorization for the indication covered by the Breakthrough Device designation.

Comment: The applicant requested that CMS withdraw C1739, the device category code established upon the preliminary approval of the SCOUT MDTM Delivery System application for device pass- through payment status and issue a new HCPCS code with descriptor language including, “radar detectable implantable reflectors”, effective January 1, 2026, to ensure that the SCOUT MDTM Delivery System receives the full 3 years of pass-through status. The applicant asserted that the code descriptor for C1739, “tissue marker, probe detectable any method (implantable), with delivery system,” is overly broad, describes numerous legacy tissue marker systems that the applicant believes are not eligible for device pass-through, and does not appropriately differentiate the SCOUT MDTM Delivery System or other similar systems from the wide range of existing tissue markers currently on the market. The applicant stated it believes this change is necessary so that only those devices truly eligible for device pass-through status can use the HCPCS code and so that the claims data appropriately reflects accurate billing.

The applicant further asserted that the code description for C1739 has allowed thousands of claims to be submitted by hospitals for devices not eligible for pass-through payment, resulting in millions of dollars of waste and abuse. Specifically, the applicant asserted that as of the end of June 2025, over 2,000 claims have been submitted using C1739 for tissue markers which were commercialized before the issuance of C1739. The applicant clarified that not one of those claims have been for the use of the SCOUT MDTM Delivery System, because the device is not yet commercially available. The applicant estimated that those 2,000 claims would have been paid under APC 5071, but for the creation of C1739, and resulted in $2,000,000 of waste. The applicant further projected that continued use of the current descriptor would result in $4,000,000-$5,000,000 of waste by the end of 2025 and could represent as much as $32,000,000 to $64,000,000 of waste over the next 2 years.

Finally, the applicant stated that, under the regulation at Sec. 419.66(a), CMS makes a pass-through payment for a medical device that meets the requirements in paragraph (b) of that section and that is described by a category of devices established by CMS under the criteria in paragraph (c) of that section, and that, further, according to Sec. 419.66(g), the pass-through period begins on the first date on which pass-through payment is made. The applicant asserted that while CMS has been paying for devices submitted using C1739, none of those payments are pass-through payments because CMS has not paid for the SCOUT MDTM Delivery System or any other devices that would be described by a device pass-through category code with an appropriately specific descriptor. Because the device pass-through category code descriptor is overly broad, according to the applicant, the agency has been paying for devices that do not meet the eligibility requirements in paragraph (b) or the criteria for establishing device categories in paragraph (c) and thus, has not been making pass-through payments. As such, the applicant requested that CMS withdraw C1739 and issue a new device pass-through category code effective January 1, 2026 with a descriptor that describes only the SCOUT MDTM Delivery System and any devices legitimately eligible for pass-through status.

Response: Although we acknowledge the applicant's concerns regarding the descriptor for C1739, we do not agree that the device category code should be withdrawn and replaced with a new code effective January 1, 2026, for the following reasons:

First, per the applicant's request prior to CY 2026 rulemaking, CMS revised the descriptor for C1739 to read, effective October 1, 2025: Tissue marker, uniquely detectable and identifiable with probe/sensor, any method (implantable), with delivery system. The short descriptor was also revised to: Marker unique detect w/probe. These revisions were retroactive to January 1, 2025.\43\ We believe that the updated descriptor accurately reflects the devices intended to be described by C1739, inclusive of the SCOUT MDTM Delivery System, and addresses the applicant's concerns that the prior descriptor was overly broad.

\43\ Center of Medicare & Medicaid Services (2025). Pub 100-04 Medicare Claims Processing, Transmittal 13425, Change Request 14223, dated September 22, 2025. Accessed at https://www.cms.gov/files/document/r13425cp.pdf.

Second, we wish to reiterate that device category codes are not device specific; rather, CMS establishes device categories that are intended to encompass all devices that can be appropriately described by the category under Sec. 419.66. We disagree with the applicant's assertion that CMS has not made any pass-through payments for C1739. Any device described by the descriptor associated with a currently payable device pass-through category code qualifies for pass-through payment. The fact that no claims have purportedly been submitted for the SCOUT MDTM Delivery System does not mean that no appropriate pass-through payments have been made for C1739. As such, we believe that appropriate pass-through payments for C1739 have been made in accordance with Sec. 419.66(g).

We further note that, consistent with section 1833(t)(6)(B)(iii) of the Act and Sec. 419.66(g), the period for which a device category for transitional pass-through payments under the OPPS can be in effect is at least 2 years, but not more than 3 years, beginning on the first date on which pass-through payment is made. Once 3 years has passed since a device category first received transitional pass-through payments, the device category is no longer eligible for pass-through payments and we utilize the established policy (first described in the CY 2003 OPPS/ASC final rule, 67 FR 66763) to package the costs of the devices that are no longer eligible for pass-through payments into the costs of the procedures with which the devices are reported in the claims data used to set the payment rates. Moreover, device pass- through payment status is intended to be temporary, and we consider the cost data to be included in the payment rates regardless of whether the technology's use in the Medicare population has been frequent or infrequent during the time period under which a device was receiving transitional pass-through payments.

Finally, we agree with the applicant that the pass-through period begins on the first date on which pass-through payment is made in accordance with Sec. 419.66(g), which we finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79654 and 79655). Therefore, for the purposes of C1739, CMS considers the start of the device pass-through payment status eligibility period to be January 1, 2025, and, as such, CMS does not agree with the applicant that the device category code for C1739 should be withdrawn, and a new code issued effective January 1, 2026. We believe that the updated device category code descriptor for C1739 issued on October 1, 2025, addresses the applicants' concerns and that the necessary cost data will be collected to incorporate the costs for these devices into the procedure APC rate during the device pass-through payment status eligibility period. CMS will continue to monitor utilization and payment trends for C1739 to ensure accurate and appropriate payment. (c) VasQTM

Laminate Medical submitted an application for a new device category for transitional pass-through payment status for VasQTM for CY 2026. Per the applicant, VasQTM is a nitinol implant which is surgically placed outside and/or around an artery and/or vein to provide external support to arteriovenous fistulas created for vascular access by means of vascular surgery. The applicant further explained that VasQTM reinforces the juxta-anastomotic region against increased wall tension in the newly arterialized vein, guides a more laminate hemodynamic profile of flow with its tapered configuration, and maintains the structural integrity of the anastomotic configuration.

Please refer to the online application posting for VasQTM, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2405312T1JR.

As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), VasQTM received FDA Breakthrough Device designation effective June 5, 2020. The approved FDA indication for VasQTM is:

For use as an external support for upper extremity arteriovenous fistulas created for vascular access by means of vascular surgery.

FDA granted De Novo classification for VasQTM on September 26, 2023, for the same indication as the one covered by the Breakthrough Device designation. We received the application for a new device category for transitional pass-through payment status for VasQTM on May 31, 2024, which is within 3 years of the date of the initial FDA marketing authorization.

We invited public comments on whether VasQTM meets the newness criterion at Sec. 419.66(b)(1).

We did not receive public comments regarding whether VasQTM meets the newness criterion at Sec. 419.66(b)(1). We received the application for a new device category for transitional pass-through payment status for VasQTM within 3 years of the date of the FDA De Novo classification. Based on our review of the application, we have determined that VasQTM meets the newness criterion at Sec. 419.66(b)(1).

With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, VasQTM meets the requirements at Sec. 419.66(b)(3).

We invited public comments on whether VasQTM meets the eligibility criterion at Sec. 419.66(b)(3).

We did not receive public comments regarding whether VasQTM meets the eligibility requirements of Sec. 419.66(b)(3). Based on our review of the application, we agree with the applicant, and have determined that VasQTM meets the eligibility criterion at Sec. 419.66(b)(3).

With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, VasQTM is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and is (2) not a material or supply furnished incident to a service, and, therefore, is eligible to be considered for pass-through payment.

We invited public comments on whether VasQTM meets the exclusion criterion at Sec. 419.66(b)(4).

We did not receive public comments regarding whether VasQTM meets the exclusion requirements of Sec. 419.66(b)(4). Based on our review of the application, we agree with the applicant and have determined that VasQTM meets the criterion at Sec. 419.66(b)(4).

In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. Per the applicant, no existing (current or previous) device categories for pass-through payment appropriately describe VasQTM. According to the applicant, pass-through code: C1877 (Stent, non-coated/non-covered, without delivery system) does not appropriately describe VasQTM because VasQTM is not a stent and does not come in contact with blood. The applicant also stated that pass-through code C1768 (Graft, vascular) does not appropriately describe VasQTM because VasQTM is not a dialysis graft, is not permitted to be cannulated, and does not have direct contact with blood. The applicant asserted that pass-through code C1881 (Dialysis access system (implantable)) does not appropriately describe VasQTM because VasQTM is not a dialysis access system, is not

permitted to be cannulated, and does not have direct contact with blood. Upon review, we stated in the CY 2026 OPPS/ASC proposed rule that we did not identify an existing pass-through payment category that describes VasQTM.

We invited public comment on whether VasQTM meets the device category criterion at Sec. 419.66(c)(1).

We did not receive public comments regarding whether VasQTM meets the eligibility requirements at Sec. 419.66(c)(1). Based on our review of the application, we continue to believe there is no existing category or category previously in effect that appropriately describes VasQTM. Therefore, we have determined that VasQTM meets the device category eligibility criterion at Sec. 419.66(c)(1).

The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines either of the following: (1) that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (2) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization for the indication covered by the Breakthrough Device designation. VasQTM has a Breakthrough Device designation and marketing authorization from FDA for the indication covered by the Breakthrough Device designation (as explained in more detail of the newness criterion) and therefore was not evaluated for substantial clinical improvement.

We invited public comment on whether VasQTM meets the device category criterion at Sec. 419.66(c)(2).

We did not receive public comments regarding whether VasQTM meets the eligibility requirements at Sec. 419.66(c)(2). VasQTM has a Breakthrough Device designation effective June 5, 2020, and De Novo classification from FDA effective September 26, 2023, for the indication covered by the Breakthrough Device designation. Therefore, VasQTM meets the criterion at 419.66(c)(2)(ii) and is not evaluated for substantial clinical improvement at Sec. 419.66(c)(2)(i). Based on our review of the application, we have determined that VasQTM meets the device category criterion at Sec. 419.66(c)(2).

The third criterion for establishing a device category, at Sec. 419.66(c)(3), requires CMS to determine that the cost of the device is not insignificant, as described in Sec. 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant stated that VasQTM would be reported with HCPCS codes as shown in Table 101, previously published as Table 50 of the CY 2026 OPPS/ASC proposed rule (90 FR 33581). [GRAPHIC] [TIFF OMITTED] TR25NO25.131

To meet the cost criterion for device pass-through payment status, a device must pass all three tests of the cost criterion for at least one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), we generally use the lowest APC payment rate applicable for use with the nominated device when we assess whether a device meets the cost significance criterion, thus increasing the probability the device will pass the cost significance test. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). We noted that the applicant used the CY 2024 payment rates for the three tests of the cost criterion. For our calculations in the CY 2026 OPPS/ASC proposed rule, we used APC 5183, which had a CY 2024 payment rate of $3,037.01 at the time the application was received. HCPCS code 36821 in APC 5183 had a device offset amount of $49.81 at the time the application was received. According to the applicant, the cost of VasQTM is $4,900.00.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The average reasonable cost of $4,900.00 for VasQTM is 161.34 percent of the applicable APC payment amount for the service related to the category of devices of $3,037.01 (($4,900.00/$3,037.01) x 100 = 161.34 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that VasQTM meets the first cost significance requirement.

The second cost significance requirement, at Sec. 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $4,900.00 for VasQTM is 9,837.38 percent of the cost of the device-related portion of the APC payment amount for the related service of $49.81 (($4,900.00/$49.81) x 100 = 9,837.38 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we

believe that VasQTM meets the second cost significance requirement.

The third cost significance requirement, at Sec. 419.66(d)(3), provides that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $4,900.00 for VasQTM and the portion of the APC payment amount for the device of $49.81 is 159.70 percent of the APC payment amount for the related service of $3,037.01 ((($4,900.00-$49.81)/$3,037.01) x 100 = 159.70 percent). Therefore, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that VasQTM meets the third cost significance requirement.

We invited public comment on whether VasQTM meets the cost criterion at Sec. 419.66(c)(3).

We did not receive any public comments regarding whether VasQTM meets the cost significance criteria as described at Sec. 419.66(d). Based on our findings from the first, second, and third cost significance tests, we continue to believe that VasQTM meets the cost significance criteria specified at Sec. 419.66(d).

As discussed, the VasQTM pass-through application was preliminarily approved for transitional pass-through payment under the alternative pathway effective October 1, 2024. After our review of the device pass-through application, we have determined that VasQTM meets the requirements for device pass-through status described at Sec. 419.66. We are finalizing approval for device pass- through payment status for VasQTM under the alternative pathway for devices that have an FDA Breakthrough Device designation and FDA marketing authorization for the indication for which the device has Breakthrough Device designation. (2) Traditional Device Pass-Through Applications (a) Axoguard HA+ Nerve ProtectorTM

Axogen Corporation submitted an application for a new device category for transitional pass-through payment status for the Axoguard HA+ Nerve ProtectorTM for CY 2026. Per the applicant, the Axoguard HA+ Nerve ProtectorTM is a porcine small intestinal submucosa (SIS) decellularized extracellular matrix (ECM), with a dry coating of sodium hyaluronate and sodium alginate applied to both sides of the device that forms a thin layer of lubricious hydrogel when hydrated. According to the applicant, the Axoguard HA+ Nerve ProtectorTM is designed to be a protective interface between the nerve and the surrounding tissue to minimize the potential for soft tissue attachments and tethering that restricts the nerve's ability to glide and move through the tissue structures during anatomic movement.

Please refer to the online application posting for the Axoguard HA+ Nerve ProtectorTM, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240830YUKGT.

Comment: The applicant expressed its general support for approving transitional pass-through status for the Axoguard HA+ Nerve ProtectorTM. The applicant asserted its belief that the nominated device offers a meaningful advancement for patients with challenging peripheral nerve injuries and that it meets the regulatory criteria for a transitional pass-through payment under Sec. 419.66.

Response: We appreciate the applicant's input. We have taken these comments into consideration in making our determination for pass- through status for the Axoguard HA+ Nerve ProtectorTM.

As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), FDA granted the applicant 510(k) clearance for the Axoguard HA+ Nerve ProtectorTM on April 7, 2023, and then granted a second 510(k) clearance for an expanded indication on October 12, 2023. The approved FDA indications for the Axoguard HA+ Nerve ProtectorTM are:

For the management of peripheral nerve injuries where there is no gap;

For the management and protection of peripheral nerve injuries where there is no gap or following closure of the gap.

We received the application for a new device category for transitional pass-through payment status for the Axoguard HA+ Nerve ProtectorTM on August 30, 2024, which is within 3 years of the date of the initial FDA marketing authorization.

Per the applicant, the OPPS pass-through application for the Axoguard HA+ Nerve ProtectorTM is only for the protection of peripheral nerve injuries where there is no nerve gap, specifically for protecting a nerve following a revision (secondary) carpal tunnel (CT) or cubital tunnel (CuT) nerve decompression procedure.

We invited public comments on whether the Axoguard HA+ Nerve ProtectorTM meets the newness criterion at Sec. 419.66(b)(1).

We did not receive public comments regarding whether the Axoguard HA+ Nerve ProtectorTM meets the newness criterion at Sec. 419.66(b)(1). We received the application for a new device category for transitional pass-through payment status for the Axoguard HA+ Nerve ProtectorTM within 3 years of the date of the initial FDA 510(k) clearance. Based on our review of the application, we have determined that the Axoguard HA+ Nerve ProtectorTM meets the newness criterion at Sec. 419.66(b)(1).

With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the Axoguard HA+ Nerve ProtectorTM meets the requirements at Sec. 419.66(b)(3).

We invited public comments on whether the Axoguard HA+ Nerve ProtectorTM meets the eligibility criterion at Sec. 419.66(b)(3).

We did not receive public comments regarding whether the Axoguard HA+ Nerve ProtectorTM meets the eligibility requirements of Sec. 419.66(b)(3). Based on our review of the application, we agree with the applicant and have determined that the Axoguard HA+ Nerve ProtectorTM meets the eligibility criterion at Sec. 419.66(b)(3).

With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the Axoguard HA+ Nerve ProtectorTM is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets and is (2) not a material or supply furnished incident to a service, and therefore, is eligible to be considered for pass-through payment.

We invited public comments on whether the Axoguard HA+ Nerve ProtectorTM meets the exclusion criterion at Sec. 419.66(b)(4).

We did not receive public comments regarding whether the Axoguard HA+ Nerve ProtectorTM meets the exclusion requirements of Sec. 419.66(b)(4). Based on

our review of the application, we agree with the applicant and have determined that the Axoguard HA+ Nerve ProtectorTM meets the criterion at Sec. 419.66(b)(4).

In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect and was not being paid for as an outpatient service as of December 31, 1996. According to the applicant, no existing device categories for pass-through payment appropriately describe the Axoguard HA+ Nerve ProtectorTM because the existing device categories C1763 (Connective tissue, non-human (includes synthetic)), C1765 (Adhesion barrier), and C1781 (Mesh (implantable)) describe similar, but distinct products. The applicant stated that the existing pass-through code C1763 does not appropriately describe the Axoguard HA+ Nerve ProtectorTM because the devices described by C1763 are used for treating urinary incontinence or for implantation to reinforce soft tissues where weakness exists in the urological or musculoskeletal anatomy, whereas the Axoguard HA+ Nerve ProtectorTM is indicated for the management of peripheral nerve injuries. In addition, the applicant asserted that the existing pass-through code C1765 does not appropriately describe the Axoguard HA+ Nerve ProtectorTM because the devices described by C1765 are bioresorable substances and principally used in spinal surgeries, while the Axoguard HA+ Nerve ProtectorTM is indicated for peripheral nerves. Moreover, the applicant stated that the existing pass-through code C1781 does not appropriately describe the Axoguard HA+ Nerve ProtectorTM because the nominated device is indicated specifically for management of peripheral nerve injuries, whereas devices described by C1781 are for use in hernia repair. The applicant further asserted that C1765 and C1781 do not describe the Axoguard HA+ Nerve ProtectorTM because the device's porcine SIS ECM is not simply resorbed but is remodeled into a meso/epineurium-like tissue, while its sodium hyaluronate and sodium alginate coating reduces friction and promotes nerve gliding.

We noted in the CY 2026 OPPS/ASC proposed rule that based on the description the applicant provided, the Axoguard HA+ Nerve ProtectorTM is a porcine SIS ECM with hyaluronate-alginate coating used for the management and protection of peripheral nerve injuries where there is no gap or following closure of a gap, and thus, could be encompassed by the descriptors C1763 and C1765. Specifically, we stated that we believe that the description the applicant provided for the C1763 category definition is incomplete. The applicant stated that C1763 is indicated for treating urinary incontinence resulting from hypermobility or Intrinsic Sphincter Deficiency (ISD), pelvic floor repair, [or implantation] to reinforce soft tissues where weakness exists in the urological or musculoskeletal anatomy. However, we noted that, in reference to C1763, section 60.4.3, Chapter 4 of the Medicare Claims Processing Manual provides that these tissues include a natural, acellular collagen matrix typically obtained from porcine or bovine small intestinal submucosa, or pericardium. This bio-material is intended to repair or support damaged or inadequate soft tissue. They are used to treat urinary incontinence resulting from hypermobility or Intrinsic Sphincter Deficiency (ISD), pelvic floor repair, or for implantation to reinforce soft tissues where weakness exists in the urological or musculoskeletal anatomy. [This excludes those items that are used to replace skin.] Thus, because the Axoguard HA+ Nerve ProtectorTM is an ECM obtained from porcine SIS and intended to support a damaged or inadequate soft tissue (nerve), we stated that we believe that the pass-through payment category C1763 may appropriately describe the Axoguard HA+ Nerve ProtectorTM.

Additionally, we stated in the CY 2026 OPPS/ASC proposed rule that we believe that the pass-through payment category C1765 may also appropriately describe the Axoguard HA+ Nerve ProtectorTM because the device, as described by the applicant, is designed to be placed on and around neural structures to be a protective interface between a nerve and the surrounding tissue, to minimize the potential for soft tissue attachments, and to ensure the nerve's ability to glide through tissue structures during anatomic movement, and therefore may be appropriately described as an adhesion barrier consistent with devices described by C1765.

We further noted in the CY 2026 OPPS/ASC proposed rule that the two neuroplasty procedure codes that could be used with the Axoguard HA+ Nerve ProtectorTM (CPT[supreg] codes 64718 and 64721) have previously been used with both categories C1763 and C1765 and that FDA has previously approved devices described by C1763 and C1765 and billed using CPT[supreg] codes 64718 or 64721 for neuroplasty and/or transposition of the ulnar nerve at elbow or median nerve at carpal tunnel. We also noted that the inclusion of these neuroplasty devices in categories C1763 and C1765 appears contradictory to the applicant's assertion that the categories are inapplicable for devices indicated for peripheral nerves. In this context, we stated that we believe the Axoguard HA+ Nerve ProtectorTM may be similar to the devices described by C1763 and C1765, and therefore, the Axoguard HA+ Nerve ProtectorTM may be appropriately described by C1763 and C1765.

We invited public comment on whether the Axoguard HA+ Nerve ProtectorTM meets the device category criterion at Sec. 419.66(c)(1).

Comment: In response to our concern that the Axoguard HA+ Nerve ProtectorTM may be appropriately described by C1763 and C1765, the applicant commented that although the Axoguard HA+ Nerve ProtectorTM, on a superficial level, shares some attributes with products billed to those HCPCS codes, the existing codes were established for different materials and clinical uses, and thus, do not accurately describe the nominated device or its intended application. The applicant asserted that a new, distinct device category is warranted. The applicant acknowledged that C1763 (Connective tissue, non-human (includes synthetic)) generally covers acellular collagen matrices derived from animal sources, which sounds similar to Axoguard HA+ Nerve ProtectorTM's extracellular matrix component. The applicant noted, however, that the Medicare Claims Processing Manual's definition for C1763 clarifies that these matrices are “intended to repair or support damaged or inadequate soft tissue” and are typically used for “urinary incontinence (e.g., pelvic floor repair) or to reinforce soft tissues where weakness exists in the urological or musculoskeletal anatomy,” explicitly excluding products used as skin replacements. The applicant further asserted that CMS created C1763 to describe implants like surgical grafts or slings for pelvic floor and orthopedic reinforcement, not nerve protectors. The applicant stated that the Axoguard HA+ Nerve ProtectorTM is indicated for the management and protection of peripheral nerves, which is neither a urological nor a musculoskeletal application. In addition, the applicant asserted its belief that a peripheral nerve's needs (i.e., gliding in a tissue

bed and protection from adhesions) are very different from the structural support typically provided by C1763 devices used in incontinence or hernia repairs. The applicant stated that using C1763 for a nerve protector is a clinical stretch beyond the code's intended scope, even if the base material (porcine SIS) is similar. In response to our statement that some neuroplasty procedures (CPT 64718 and 64721) have previously been billed for devices in the C1763 category, the applicant opined that such practice reflects the absence of a nerve- specific device code rather than a proper fitting of nerve products into C1763. The applicant stated that a new code would eliminate ambiguity and ensure more precise coding for nerve repair technologies.

In regard to the applicability of C1765 (Adhesion barrier), the applicant stated that, although one might consider Axoguard HA+ Nerve ProtectorTM an adhesion barrier since it aims to prevent scar adhesion around nerves, C1765 is defined as a bioresorbable substance placed on or around neural structures, which inhibits fibroblast migration and minimizes scar tissue formation, principally used in spine surgeries (laminectomies, discectomies). The applicant also stated that paradigmatic C1765 devices are spinal dura shields or gels that prevent epidural fibrosis after back surgery. The applicant asserted that the Axoguard HA+ Nerve ProtectorTM differs in both composition and clinical context, as it is a biological matrix implant (not just a synthetic or biochemical barrier), which is used in peripheral nerve surgeries of the limbs, not in the spine. The applicant further added that Axoguard HA+ Nerve ProtectorTM's ECM is intended to integrate into the nerve's outer tissue layer over time (providing long-term support), rather than resorb away like typical adhesion barriers. The applicant added that, as with C1763, any device assigned to C1765 currently receives no transitional pass-through payment, as C1765 was a pass-through category long ago and is now a packaged supply code, and continuing to use C1765 for a new nerve-specific technology would perpetuate the lack of appropriate payment, contrary to the purpose of establishing new device categories for innovations.

The applicant also stated that C1781 (Mesh, implantable) is used for hernia repair, which is different from the Axoguard HA+ Nerve ProtectorTM's indication. The applicant asserted that the Axoguard HA+ Nerve ProtectorTM does not fit any existing mesh or patch category used for general surgical repair because it is a specialized nerve protector and stands apart from surgical meshes used in abdominal or orthopedic procedures. The applicant concluded that, given these distinctions, no existing HCPCS Level II code adequately describes Axoguard HA+ Nerve ProtectorTM's combination of material, function, and clinical indication. The applicant stated that assigning the nominated device to C1763, C1765, or C1781 would not only be inappropriate from a descriptive standpoint but would also fail to facilitate tracking of the device's utilization and outcomes since its use would be obscured under codes that include many other dissimilar products. The applicant asserted that, by creating a new device category and code, CMS will ensure that claims for the Axoguard HA+ Nerve ProtectorTM can be accurately identified, and thus, improve transparency and allow the collection of meaningful data regarding the device's cost and performance during the transitional pass-through period, as intended under Sec. 419.66.

Finally, the applicant also stated that CMS regulations stipulate that a new device category may be established if the device is not appropriately described by any of the existing categories. For these reasons, the applicant believes that the Axoguard HA+ Nerve ProtectorTM meets the device category criterion. The applicant reiterated its belief that the Axoguard HA+ Nerve ProtectorTM satisfies the requirements described at Sec. 419.66(c)(1) regarding distinct category status. According to the applicant, the alternative to establishing a new category code--forcing the device into a category like C1763 or C1765--would continue the current disincentive for adoption, contradicting CMS's goal of enabling access to worthwhile new therapies, whereas creating a new category code would signal to hospitals that the Axoguard HA+ Nerve ProtectorTM is recognized as an innovation and encourage appropriate use in patients who need it. Finally, the applicant stated that finalizing the creation of a new code would accurately describe the device's unique characteristics and clinical use.

Response: We appreciate the applicant's input. We agree with the applicant that C1781 does not appropriately describe the Axoguard HA+ Nerve ProtectorTM. However, based on the information available to us, we continue to believe that C1763 and C1765 may describe the Axoguard HA+ Nerve ProtectorTM. We have taken this into consideration in making our determination for device pass- through payment status for the Axoguard HA+ Nerve ProtectorTM.

The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines either of the following: (1) that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (2) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization for the indication covered by the Breakthrough Device designation. The applicant asserted that the Axoguard HA+ Nerve ProtectorTM represents a substantial clinical improvement over existing technologies in the management of peripheral nerve injuries where there is no nerve gap, specifically in protecting a nerve following a revision (secondary) CT or CuT nerve decompression procedure.

The applicant provided three redacted manufacturer internal reports to support these claims, as well as eight background articles/documents about the predicate device, the Axoguard Nerve ProtectorTM. We noted in the CY 2026 OPPS/ASC proposed rule that the predicate device differs from the Axoguard HA+ Nerve ProtectorTM in that the nominated device has a dry coating of sodium hyaluronate and sodium alginate applied to both sides that forms a thin layer of lubricious hydrogel when hydrated. We stated that the addition of the dry coating of sodium hyaluronate and sodium alginate to the Axoguard Nerve ProtectorTM appears to be the distinguishing feature of the device that is the subject of this application. In addition, the applicant submitted 32 supplemental background articles describing topics including general disease processes and disease prevalence.

The applicant's assertions regarding the substantial clinical improvement criterion are shown in Table 102, previously published as Table 51 of the CY 2026 OPPS/ASC proposed rule (90 FR 33584 through 33588). Please see the online posting for the Axoguard HA+ Nerve ProtectorTM for the applicant's complete statements regarding the substantial clinical improvement

criterion and the supporting evidence provided. BILLING CODE 4120-01-P [GRAPHIC] [TIFF OMITTED] TR25NO25.132

[GRAPHIC] [TIFF OMITTED] TR25NO25.133

[GRAPHIC] [TIFF OMITTED] TR25NO25.134

[GRAPHIC] [TIFF OMITTED] TR25NO25.135

[GRAPHIC] [TIFF OMITTED] TR25NO25.136

BILLING CODE 4120-01-C

After review of the information provided by the applicant, we noted in the CY 2026 OPPS/ASC proposed rule that we have the following concerns regarding whether the Axoguard HA+ Nerve ProtectorTM meets the substantial clinical improvement criterion.

The applicant asserted that the Axoguard HA+ Nerve ProtectorTM demonstrates clinical improvement in: (1) nerve health in an injured tissue bed through less adhesion, extraneural scarring, and inflammatory markers, (2) nerve health in an injured tissue bed through decreased friction between the nerve and surrounding tissue to allow for gliding and to minimize potential for soft tissue attachment, (3) device performance due to its sodium hyaluronate and sodium alginate gel layer that allows for nerve gliding, and (4) sensory and motor symptoms. We noted that the applicant provided redacted internal studies of animal models (Axogen Corporation, 2024; Axogen Corporation, n.d.; Axogen Corporation, 2022) and an abstract (Alsmadi et al., 2025) on Axoguard HA+ Nerve ProtectorTM in rats. We noted that the applicant did not submit studies assessing the Axoguard HA+ Nerve ProtectorTM in humans. Therefore, we questioned whether data from animal studies is sufficient to extrapolate to human populations for the purposes of demonstrating substantial clinical improvement.

For the other claims, the applicant provided only background evidence, specifically retrospective studies, which describe findings for a predicate device, the Axoguard Nerve Protector\TM\, which received FDA 510(k) clearance on January 10, 2014, not the nominated device, the Axoguard HA+ Nerve Protector\TM\. We noted that the applicant stated that the nominated Axoguard HA+ Nerve Protector\TM\ improved on the predicate device, but the applicant did not provide any additional information or evidence to support this claim. We also noted that the application did not include comparative outcome data between the Axoguard HA+ Nerve Protector\TM\ and its predicate device. We stated that we welcome additional information that compares outcome data from the Axoguard HA+ Nerve Protector\TM\ and the predicate device, the Axoguard Nerve Protector\TM\, to help inform our assessment of whether the Axoguard HA+ Nerve Protector\TM\ demonstrates a substantial clinical improvement.

In addition, we stated in the CY 2026 OPPS/ASC proposed rule that we are concerned that the provided evidence did not directly support the applicant's 10 claims that the Axoguard HA+ Nerve Protector\TM\ demonstrates substantial clinical improvement over existing technologies. We noted that no evidence was provided comparing the Axoguard HA+ Nerve Protector\TM\ to other currently available treatments for the indicated condition including autologous flaps/fat pads and xenografts or off-the-shelf wraps that include materials sourced from human amniotic membrane, bovine, porcine, and plants. We stated that we welcome further evidence that compares the Axoguard HA+ Nerve Protector\TM\ to currently available treatments in the clinical setting where it is most likely to be used. To demonstrate substantial clinical improvement over currently available treatments, we stated that we consider supporting evidence, preferably published peer- reviewed clinical trials, that show improved clinical outcomes, such as reduction in mortality, complications, subsequent interventions, future hospitalizations, recovery time, pain, or a more rapid beneficial resolution of the disease process compared to the standard of care. We stated that additional supporting evidence demonstrating these improved clinical outcomes would help inform our assessment of whether the Axoguard HA+ Nerve Protector\TM\ demonstrates substantial clinical improvement over existing technologies.

We invited public comment on whether the Axoguard HA+ Nerve Protector\TM\ meets the device category criterion at Sec. 419.66(c)(2).

Comment: The applicant acknowledged that CMS applies a high evidentiary standard for substantial clinical improvement, typically requiring robust clinical data showing improved patient outcomes such as reduced complications, fewer reoperations, faster recovery, or better functional results compared to the current standard of care. The applicant further acknowledged the concerns CMS

included in the CY 2026 OPPS/ASC proposed rule regarding the Axoguard HA+ Nerve Protector\TM\ application and agreed that demonstrating improved clinical outcomes in patients is essential to meeting the substantial clinical improvement criterion.

In response to our concerns, the applicant commented that it is committed to providing the clinical evidence necessary to satisfy the substantial clinical improvement standard and indicated that it is currently conducting an ongoing prospective, multicenter, open-label, single-arm clinical study\44\ to evaluate the Axoguard HA+ Nerve Protector\TM\ in patients undergoing a first revision cubital tunnel decompression procedure for recurrent or recalcitrant cubital tunnel syndrome. The applicant explained that the study has enrolled 19 study participants with recurrent cubital tunnel syndrome following a failure to maintain the functional improvements from their primary decompression procedure, allowing participants to serve as their own in-patient controls for analysis of the treatment effect of repeating the decompression procedure with the addition of the Axoguard HA+ Nerve Protector\TM\. The applicant noted that the study is currently in the participant follow-up phase, with the intent for each participant to complete 18 months of follow-up. The applicant reported that although the study is not complete, it has completed a planned interim analysis of the study that it believes directly addresses the previous lack of human outcomes data for the Axoguard HA+ Nerve Protector\TM\. The applicant asserted that the preliminary results demonstrate a decrease in pain, improvements in grip strength and sensory testing, and no adverse effects.

\44\ Nerve Protection Evaluation: Revision Cubital Tunnel Syndrome Decompression (COVERED); (NCT06117501).

Specifically, the applicant stated that 84.2 percent of study participants reported a level of none to mild (0-30 mm on 0-100 mm in the Visual Analog Scale (VAS)) pain at 6 months post-operatively. Further, the study found a mean VAS score at first pre-operative visit of 73.6 mm (SD = 18.3) and a post-operative score of 13.5 mm at 6 months (SD = 23.8), representing an 81.7 percent decrease in mean VAS- reported pain. The applicant also stated that, 26.3 percent of participants reported a VAS of zero at the 6-month post-operative timepoint. Moreover, the applicant added that the participants demonstrated functional recovery of the ulnar nerve as measured by improvements in grip strength (68.4 percent of participants) and sensory testing (63.2 percent of participants) from baseline to 6 months. The applicant finally asserted that the study data showed improvement in investigator-rated ulnar neuropathy assessed by the Modified McGowan Classification of Ulnar Nerve Neuropathy and that there have been no second revision procedures performed, no reports of recurrences of ulnar neuropathy, and no safety issues. The applicant noted that these interim findings are descriptive in nature, and the final analysis will be available upon completion of the 18-month follow-up period, database lock, and final statistical review. Finally, the applicant highlighted that, while the study is ongoing and data remains subject to final investigator approval and statistical analysis, preliminary, 100 percent source-verified observations to date are consistent with the FDA-cleared intended use and function of the Axoguard HA+ Nerve Protector\TM\. The applicant stated that it believes that the nominated device meets the substantial clinical improvement threshold, given its novel mechanism addressing unmet need for recurrent nerve compression injuries, and requested that CMS consider the provided clinical data and recognize the Axoguard HA+ Nerve Protector\TM\ as an innovative device offering improved clinical outcomes.

Response: We appreciate the applicant's input; however, we maintain some of our concerns listed in the CY 2026 OPPS/ASC proposed rule (90 FR 33588 through 35589), including the lack of comparative data between the Axoguard HA+ Nerve Protector\TM\ and the predicate device and other currently available treatments for the indicated condition. While the new information from the preliminary findings of the 19-patient clinical trial currently underway may address our concern about the lack of human clinical trial evidence, we believe that the data provided does not sufficiently demonstrate substantial clinical improvement. Specifically, we believe that the preliminary findings may contain uncontrolled confounding variables specific to the study participants' initial procedures that may cast doubt on the validity of the study's outcomes. We note that the new evidence provided is preliminary data gathered during the first 6 months of an 18-month long clinical trial. The applicant specifically stated that these interim findings are descriptive in nature, and the final analysis will be conducted upon completion of follow-up, database lock, and final statistical review. At this time, the provided summary of the preliminary data is insufficient to draw a conclusion that the clinical benefits purportedly resulting from use of the Axoguard HA+ Nerve Protector\TM\ are substantial when compared to existing treatments.

In addition, we note that the small sample size may affect the quality and reliability of the data provided in support of the Axoguard HA+ Nerve Protector\TM\ and may limit the statistical significance and generalizability of the results. Further, we question whether using patients as their own controls for subsequent decompression procedure with Axoguard HA+ Nerve Protector\TM\ demonstrates a substantial clinical improvement when compared to other available treatments. Finally, it is unclear based on the data submitted by the applicant which prior procedures were performed.

For the reasons discussed, we do not believe that the Axoguard HA+ Nerve Protector\TM\ represents a substantial clinical improvement relative to existing therapies currently available. Therefore, after consideration of the public comment we received and our review of the device pass-through application, we are not approving the Axoguard HA+ Nerve Protector\TM\ for transitional pass-through payment status for CY 2026 because the technology does not meet the substantial clinical improvement criterion at Sec. 419.66(c)(2). Because we have determined that the Axoguard HA+ Nerve Protector\TM\ does not meet the substantial clinical improvement criterion, we will not address in this final rule with comment period whether the technology meets the cost criterion required for transitional pass-through payment for devices. (b) LithoVue\TM\ Elite Digital Flexible Ureteroscope System With Pressure Monitoring

Boston Scientific Corporation submitted an application for a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite Digital Flexible Ureteroscope System with Pressure Monitoring (the LithoVue\TM\ Elite System) for CY 2026. Per the applicant, the LithoVue\TM\ Elite System consists of a single-use, disposable flexible ureteroscope (the LithoVue\TM\ Elite Ureteroscope) and a workstation (the StoneSmart Connect Console), that provide real- time intraluminal pressure monitoring in the kidney and ureter during ureteroscopy and can be used in conjunction with endoscopic accessories to perform various diagnostic and therapeutic procedures in the urinary tract. The applicant stated that the distal tip of the LithoVue\TM\

Elite Ureteroscope's shaft includes the working channel, the illumination optics, the digital imaging sensor, and a Micro-Electro- Mechanical Systems (MEMS) pressure sensor for monitoring the real-time intraluminal pressure during ureteroscopy.

The applicant is only seeking a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite Ureteroscope, a component of the LithoVue\TM\ Elite System.

Please refer to the online application posting for the LithoVue\TM\ Elite Digital Flexible Ureteroscope System with Pressure Monitoring, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2503038TF22.

Comment: A few commenters expressed support for approval of transitional pass-through payment for the LithoVue\TM\ Elite Ureteroscope. The commenters expressed their belief that the LithoVue\TM\ Elite Ureteroscope benefits patients by minimizing the post-operative risks of pyelonephritis, urosepsis, and pain.

However, a few commenters expressed that the LithoVue\TM\ Elite Ureteroscope should not receive approval for transitional pass-through payments, because the applicant did not provide sufficiently robust, peer-reviewed clinical evidence that demonstrates a clear benefit to patient outcomes over existing ureteroscopes.

Response: We appreciate the commenters' input and acknowledge the commenters' support for and against the approval of the LithoVue\TM\ Elite Ureteroscope for transitional pass-through status. We have taken these comments into consideration in our final determination for pass- through status for the LithoVue\TM\ Elite Ureteroscope.

As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), FDA granted the applicant 510(k) clearance for the LithoVue\TM\ Elite System on February, 2023. The approved FDA indication for the LithoVue\TM\ Elite System is:

To be used to visualize organs, cavities, and canals in the urinary tract (urethra, bladder, ureter, calyces and renal papillae) via transurethral or percutaneous access routes. It can also be used in conjunction with endoscopic accessories to perform various diagnostic and therapeutic procedures in the urinary tract.

On July 1, 2024, FDA granted the applicant Special 510(k) clearance for the LithoVue\TM\ Elite Ureteroscope (with pressure monitoring) with a redesigned distal tip to improve its durability during a ureteroscopy for this same indication. We received the application for a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite System on March 3, 2025, which is within 3 years of the date of the initial FDA marketing authorization.

We invited public comments on whether the LithoVue\TM\ Elite System meets the newness criterion at Sec. 419.66(b)(1).

Comment: With respect to the newness criterion at Sec. 419.66(b)(1), the applicant reiterated that FDA granted 510(k) clearance for the LithoVue\TM\ Elite Ureteroscope on February 2, 2023. The applicant also noted that it submitted an application for transitional pass-through payment on March 3, 2025, which is within 3 years of the initial market authorization, and therefore, the LithoVue\TM\ Elite Ureteroscope meets the criterion at Sec. 419.66(b)(1).

Response: We appreciate the applicant's input. We agree with the applicant that we received the application for a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite Ureteroscope within 3 years of the date of FDA 510(k) clearance. After consideration of the public comments we received and our review of the application, we have determined that the LithoVue\TM\ Elite System meets the newness criterion at Sec. 419.66(b)(1).

As previously noted, the applicant is only seeking a new device category for transitional pass-through payment status for the LithoVue\TM\ Elite Ureteroscope component of the LithoVue\TM\ Elite System, and as such, the eligibility and exclusion criteria will evaluate the LithoVue\TM\ Elite Ureteroscope.

With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the LithoVue\TM\ Elite Ureteroscope meets the requirements at Sec. 419.66(b)(3).

With respect to the LithoVue\TM\ Elite Ureteroscope, we questioned in the CY 2026 OPPS/ASC proposed rule whether the MEMS pressure sensor is integral to the service furnished. In the CY 2014 OPPS final rule with comment period (78 FR 75005), we stated that we have interpreted “integral” to mean that the device is necessary to furnish or deliver the primary procedure with which it is used. For example, a pacemaker is integral to the procedure of implantation of a pacemaker. Per the applicant, the LithoVue\TM\ Elite Ureteroscope differs from other currently available ureteroscopes, because the device includes the MEMS pressure sensor which is located at the distal tip of the ureteroscope and enables continuous, real-time monitoring of intrarenal pressure (IRP) during ureteroscopy. We noted that neither the FDA 510(k) indication nor the FDA Special 510(k) indication includes the MEMS pressure sensor, and the cleared indications appear to be consistent with the indications for other FDA approved ureteroscopes. In addition, as discussed in more detail in the Sec. 419.66(c)(2) discussion in the CY 2026 OPPS/ASC proposed rule, we questioned whether there is sufficient evidence to support the assertion that continuous pressure monitoring is necessary and/or required to furnish or deliver the primary procedure (ureteroscopy) with which it is used. While we did not question whether the ureteroscope itself is integral to the service furnished, we questioned whether the MEMS pressure sensor, the mechanism which the applicant asserts is the distinguishing feature of the LithoVue\TM\ Elite Ureteroscope, is integral to the service furnished in accordance with Sec. 419.66(b)(3), because pressure monitoring during ureteroscopy procedures appears to be purely additive and not necessary to furnish the ureteroscopy.

We invited public comments on whether the LithoVue\TM\ Elite Ureteroscope meets the eligibility criterion at Sec. 419.66(b)(3).

Comment: The applicant reiterated that the LithoVue\TM\ Elite Ureteroscope is used for one patient only, comes in contact with human tissue, and is surgically inserted during a ureteroscopy procedure.

In response to our concern whether the LithoVue\TM\ Elite Ureteroscope's MEMS pressure sensor is integral to the services furnished, specifically whether continuous pressure monitoring is required to perform ureteroscopy, the applicant commented that it disagrees with our interpretation of integral and believes that the MEMS pressure sensor is an intrinsic part of the LithoVue\TM\ Elite Ureteroscope because it is not a detachable or an adjunctive component. The applicant further stated that the LithoVue\TM\ Elite Ureteroscope's unique pressure sensing capability is the device's key feature and the basis for its substantial clinical improvement claim. Specifically, the applicant asserted that

the ability to measure IRP makes ureteroscopy safer because the surgeon is able (through use of this new technology) to avoid dangerously high IRPs, which the surgeon has no way of detecting with a conventional ureteroscope. The applicant also asserted that CMS's literal application of its example that “a pacemaker is integral to the procedure of implantation of a pacemaker” is overly simplistic and suggests that any feature beyond the basic function of a device could be considered “non-integral.” In addition, the applicant asserted that CMS has previously deviated from this approach when determining transitional pass-through payment status. For example, according to the applicant, pass-through categories distinguish between neurostimulators with rechargeable and non-rechargeable batteries. The applicant noted that different power supplies have different clinical advantages for neurostimulators, but the type of power supply does not affect the basic function of the neurostimulator. The applicant stated that the LithoVue\TM\ Elite Ureteroscope with the MEMS pressure sensor is integral to the ureteroscopy codes listed in Table 54 of the CY 2026 OPPS/ASC proposed rule (90 FR 33597 and 33598) in that it is a ureteroscope with a novel capability (IRP measurement) that allows for fewer complications associated with high (and unchecked) IRP during ureteroscopy.

In contrast, a few commenters stated that they do not believe that the LithoVue\TM\ Elite Ureteroscope with the MEMS pressure sensor is integral to the services furnished. One commenter asserted that the LithoVue\TM\ Elite Ureteroscope is not integral to the procedures listed in the application and uses technology in a manner like device applications previously rejected on this basis. The commenter also stated that it agrees with CMS that the pressure sensor technology that is the basis of the LithoVue\TM\ Elite Ureteroscope application is not integral to the procedures presented in the application. According to the commenter, CMS has consistently applied its interpretation of integral to mean that the device is necessary to furnish or deliver the primary procedure with which it is used. The commenter noted that interested parties rely on consistent and reliable rulemaking to make informed decisions about when to engage with CMS and what to expect. The commenter claimed that CMS made a similar “decision” when it “rejected” the CANARY Canturio\TM\ Tibial Extension (CTE) with CHIRP[supreg] System application in the CY 2025 OPPS/ASC proposed rule after concluding that the CTE implant within the CHIRP[supreg] system was not integral to the arthroplasty procedure identified in the application. The commenter stated that the CHIRP[supreg] System's CTE implant included technology that provided kinematic data, and in this manner, is similar to the LithoVue\TM\ Elite Ureteroscope's pressure sensor providing data. The commenter noted that, in the CY 2025 OPPS/ ASC proposed rule, CMS questioned if the CTE implant was integral to the service provided because the utilization appeared to be purely additive and unnecessary to furnish or deliver the underlying procedure. The commenter stated that the LithoVue\TM\ Elite Ureteroscope pressure sensor is of a similar nature to the CHIRP[supreg] System's CTE implant because ureteroscopy can be completed without IRP monitoring. The commenter expressed its belief that CMS has articulated, in the CY 2026 OPPS/ASC proposed rule, a position on the LithoVue\TM\ Elite Ureteroscope that is consistent with prior rulemaking related to Sec. 419.66(b)(3). Another commenter asserted that monitoring a physiological parameter does not inherently translate to improved outcomes unless accompanied by actionable thresholds and validated interventions. Further, the commenter asserted that without consensus on what constitutes a safe IRP level or how to respond to elevated readings, the utility of the sensor remains theoretical.

Response: We appreciate the applicant's clarification and the commenters' input. First, we agree with the applicant that the LithoVue\TM\ Elite Ureteroscope is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted or applied in or on a wound or other skin lesion. However, we disagree with the applicant's assertion that we deviated from our approach of assessing whether a device is integral regarding neurostimulators with rechargeable and non-rechargeable batteries because neurostimulators require a power source to operate and the batteries are, therefore, integral to the device regardless of how they are charged. We also note that while we did express concerns in the CY2025 OPPS/ASC proposed rule that the CHIRP[supreg] System's CTE implant may not be integral (89 FR 59294), we cannot comment further on the CHIRP[supreg] System's CTE implant because the applicant for that device withdrew the application prior to the final rule and we made no final determination of the eligibility of the CHIRP[supreg] System's CTE implant. We also disagree with the applicant's interpretation of the pacemaker example. Pacemakers are used as an example of a device being utilized in an integral manner for illustrative purposes. The example is not intended to suggest or imply any standard as the applicant asserts. Finally, while we maintain our concern regarding the overall utility of the MEMS pressure sensor, we agree with the applicant that the LithoVue\TM\ Elite Ureteroscope, inclusive of the MEMS pressure sensor, meets the criterion because the MEMS pressure sensor is not a detachable or an adjunctive component to the ureteroscope itself, which we previously agreed is necessary and/or required to furnish or deliver the primary procedure (ureteroscopy) with which it is used. After consideration of the public comments we received and our review of the application, we have determined that the LithoVue\TM\ Elite Ureteroscope meets the eligibility criterion at Sec. 419.66(b)(3).

With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the LithoVue\TM\ Elite Ureteroscope, the component nominated in this application, is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and (2) not a material or supply furnished incident to a service, and therefore, is eligible to be considered for pass- through payment.

We invited public comments on whether the LithoVue\TM\ Elite Ureteroscope meets the exclusion criterion at Sec. 419.66(b)(4).

Comment: The applicant reiterated that the LithoVue\TM\ Elite Ureteroscope is a single-use ureteroscope, is not subject to capital equipment depreciation schedules, and is therefore not excluded under the criterion at Sec. 419.66(b)(4).

Response: We appreciate the applicant's input. After consideration of the public comments we received and our review of the application, we agree with the applicant and have determined

that the LithoVue\TM\ Elite Ureteroscope meets the criterion at Sec. 419.66(b)(4).

In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not paid for as an outpatient service as of December 31, 1996. Per the applicant, the existing pass- through code C1747 (Endoscope, single-use (i.e., disposable), urinary tract, imaging/illumination device (insertable)) does not appropriately describe the LithoVue\TM\ Elite Ureteroscope because the category description does not include the LithoVue\TM\ Elite Ureteroscope's pressure monitoring feature. The applicant also stated that the existing pass-through code C2624 (Implantable wireless pulmonary artery pressure sensor with delivery catheter, including all system components) does not appropriately describe the LithoVue\TM\ Elite Ureteroscope because the nominated device is an insertable ureteroscope that measures IRP, whereas C2624 is specific to sensors that measure pulmonary artery pressure.

We noted in the CY 2026 OPPS/ASC proposed rule that, based on the description the applicant provided, the LithoVue\TM\ Elite Ureteroscope is a single-use, disposable ureteroscope inserted into the urinary tract for imaging and illumination, and thus, could be appropriately described by C1747. Specifically, we stated that we believe that C1747 may appropriately describe the LithoVue\TM\ Elite Ureteroscope because it describes any device that is a single-use (i.e., disposable) endoscope with imaging/illumination capabilities intended for use in the urinary tract to perform ureteroscopy procedures. We noted that the descriptor for C1747 does not reference device features that would exclude the inclusion of a pressure monitoring feature. Further, we noted that the HCPCS procedure codes with which the applicant has stated the LithoVue\TM\ Elite Ureteroscope would be reported are consistent with the HCPCS codes approved for C1747. In this context, we stated that we believe that the LithoVue\TM\ Elite Ureteroscope may be similar to the devices described by C1747, and therefore, the LithoVue\TM\ Elite Ureteroscope may also be appropriately described by C1747.

We invited public comment on whether the LithoVue\TM\ Elite Ureteroscope meets the device category criterion at Sec. 419.66(c)(1).

Comment: In response to our concern that the LithoVue\TM\ Elite Ureteroscope may be appropriately described by C1747, the applicant stated that while C1747 does describe a single-use ureteroscope, the descriptor is too broad and does not include the key feature--IRP monitoring--that makes the LithoVue\TM\ Elite Ureteroscope unique. The applicant stated it strongly believes that the IRP monitoring capabilities that make the LithoVue\TM\ Elite Ureteroscope unique, merit a new pass-through device category.

In contrast, a few commenters stated their belief that the LithoVue\TM\ Elite Ureteroscope is appropriately described by the existing code C1747. One commenter agreed with CMS that the LithoVue\TM\ Elite Ureteroscope is appropriately described by existing device category C1747 and that the presence of the additional feature of a pressure sensor is not, by itself, a reason to exclude the LithoVue\TM\ Elite Ureteroscope from C1747. The commenter also stated that, from its experience with providers, billers, facilities, and other interested parties in the field of urology, C1747 has already been used for the LithoVue\TM\ Elite Ureteroscope. Therefore, the commenter stated it supports a conclusion that C1747 remains the appropriate device category for the LithoVue\TM\ Elite Ureteroscope, and no new device category is warranted.

Another commenter stated that, per the criteria described at Sec. 419.66(c), CMS has previously established this device category in the CY 2023 OPPS/ASC final rule with comment period. Specifically, the commenter noted that CMS approved a device category code for single-use ureteroscopes--C1747 (Endoscope, single-use (that is, disposable), urinary tract, imaging/illumination device (insertable))--and asserted that CMS created this device category for Uretero1\TM\. The commenter also noted that 1 month after C1747 was established based on the approval of the STERIS Uretero1\TM\ device pass-through application, FDA granted the LithoVue\TM\ Elite System 510(k) clearance, on February 2, 2023. The commenter asserted that, therefore, the nominated device has been eligible for transitional pass-through payment for 35 out of the full 36-month eligibility period, which expires December 31, 2025. The commenter stated its belief that the applicant is clearly aware that the LithoVue\TM\ Elite System has already benefited from transitional pass-through status for single-use ureteroscopes.

In addition, the commenter noted that advertisement on the applicant's website recommends billing C1747 for single-use ureteroscopes, including the LithoVue\TM\ Elite Single-Use Digital Flexible Ureteroscope. Furthermore, the commenter stated that, in the new study by Bhojani et al. (2025),\45\ the methods indicate that the authors used claims data to ascertain the study's conclusions. The commenter stated that for the Bhojani et al. (2025) study, the authors queried Medicare claims data submitted with C1747 alongside either CPT code 52353 or 52356. According to the commenter, in using the C1747 data for the Bhojani et al. (2025) study alongside the LithoVue\TM\ Elite Ureteroscope, the authors are demonstrating that this device has previously been identified by the established device category code and has already benefited from its use. Moreover, the commenter noted that the initial LithoVue\TM\ Elite Ureteroscope application cited literature that suggests IRP relevance is limited to kidney stone procedures. The commenter further highlighted that the Bhojani et al. (2025) study only references lithotripsy procedures. The commenter asserted that, despite this, the LithoVue\TM\ Elite Ureteroscope application does not appropriately narrow the associated CPT code set to reflect this clinical specificity; instead, the applicant generalizes the clinical claims to all ureteroscopy procedures. Per the commenter, if the LithoVue\TM\ Elite Ureteroscope pressure sensor were integral to improved outcomes in stone management, as the applicant claims, then the applicable CPT codes should have been refined accordingly, as not all ureteroscopy procedures are performed for the treatment of kidney stones.

\45\ Bhojani, N, Morris, K, White, J, Rojanasarot, S Tran, E.D, Monga, M. (2025). Post-operative infection with a single-use ureteroscope with real-time intrarenal pressure monitoring vs. all other single-use ureteroscopes. Expert Review of Medical Devices, 1- 9. https://doi.org/10.1080/17434440.2025.2557403.

Additionally, the commenter stated that in the CY 2026 OPPS/ASC proposed rule, CMS appropriately acknowledged that the LithoVue\TM\ Elite Ureteroscope may fall within the scope of the existing device category C1747, which includes all single-use ureteroscopes and their associated procedures. The commenter asserted that creating a new device category code without clear differentiation risks redundancy and confusion in coding practices. The commenter further asserted that it may also set a precedent for incremental innovations to seek separate reimbursement pathways

without sufficient clinical justification. The commenter stated that, therefore, it agrees that the LithoVue\TM\ Elite Ureteroscope may be appropriately described by C1747.

Response: We appreciate the applicant's and commenters' input. After consideration of the public comments we received and our review of the application, we continue to believe that C1747 appropriately describes the LithoVue\TM\ Elite Ureteroscope because C1747 includes any device that is a single-use (that is, disposable) endoscope with imaging/illumination capabilities intended for use in the urinary tract to perform ureteroscopy procedures. We also continue to believe that the procedure codes with which the applicant has stated that the LithoVue\TM\ Elite Ureteroscope would be reported are consistent with the CPT codes approved for C1747.

We disagree with the applicant's assertions that the IRP monitoring capabilities that make the LithoVue\TM\ Elite Ureteroscope unique merit a new pass-through device category because the LithoVue\TM\ Elite Ureteroscope is consistent with C1747, regardless of the presence of the additional pressure sensing feature, as a few commenters noted. We agree with the commenter that the nominated device has already benefited from transitional pass-through status for single-use ureteroscopes and that CMS is already collecting cost data for the nominated device in the appropriate APC. Therefore, we have determined that the LithoVue\TM\ Elite Ureteroscope does not meet the device category eligibility criterion at Sec. 419.66(c)(1), because it is appropriately described by an existing category or a category previously in effect.

We conclude that the LithoVue\TM\ Elite Ureteroscope does not meet the device category eligibility criterion to be considered as a device for transitional pass-through payment. Therefore, in this final rule with comment period, we will not address whether the technology meets the other remaining criteria required for transitional pass-through payment for devices. We are not approving the LithoVue\TM\ Elite Ureteroscope for transitional pass-through payment status for CY 2026 because the technology does not meet the device category eligibility criterion at Sec. 419.66(c)(1). (c) VersaVue\TM\ Single-Use Flexible Cystoscope

Boston Scientific Corporation submitted an application for a new device category for transitional pass-through payment status for the VersaVue\TM\ Single-Use Flexible Cystoscope for CY 2026. Per the applicant, the VersaVue\TM\ Single-Use Flexible Cystoscope is used in cystoscopy procedures to diagnose or treat diseases of the lower urinary tract. According to the applicant, the VersaVue\TM\ Single-Use Flexible Cystoscope is a single-use, disposable flexible cystoscope intended to be operated with its compatible display system, the VersaVue\TM\ Tablet (a tablet where the image is present directly on the tablet) or the VersaVue\TM\ Video Box (a standalone imaging transfer system which can be connected to a computer to project live imaging), that provides live imaging of the lower urinary tract.

Please refer to the online application posting for the VersaVue\TM\ Single-Use Flexible Cystoscope, available at https://mearis.cms.gov/public/publications/device-ptp/DEP250211C4HRV.

Comment: A commenter expressed its support for approval of transitional pass-through payment for the VersaVue\TM\ Single-Use Flexible Cystoscope. The commenter stated that single-use, disposable cystoscopes provide clinical benefit in the diagnosis and treatment of lower urinary tract diseases and the elimination of reprocessing steps, not only enhancing safety but also streamlining workflow and improving operational efficiency for providers.

Response: We appreciate the commenter's input. We have taken this comment into consideration in our final determination for pass-through status for the VersaVue\TM\ Single-Use Flexible Cystoscope.

As stated previously, to be eligible for transitional pass-through payment under the OPPS, a device must meet the criteria at Sec. 419.66(b)(1) through (4). With respect to the newness criterion at Sec. 419.66(b)(1), FDA granted the applicant 510(k) clearance for the VersaVue\TM\ Single-Use Flexible Cystoscope on October 6, 2023. The approved FDA indication for the VersaVue\TM\ Single-Use Flexible Cystoscope is:

The VersaVue\TM\ Single-Use Flexible Cystoscope is a sterile, single-use, and flexible device intended to be operated with its compatible display system (VersaVue\TM\ Tablet or VersaVue\TM\ Video Box). The device provides endoscopic procedure and surgical treatment within the lower urinary tract. The Cystoscope is intended to provide visualization via [the] displaying unit. The Cystoscope is intended for use in a hospital environment or medical office environment. It is designed for use in adults.

We received the application for a new device category for transitional pass-through payment status for the VersaVue\TM\ Single- Use Flexible Cystoscope on February 11, 2025, which is within 3 years of the date of the initial FDA marketing authorization.

We invited public comments on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the newness criterion at Sec. 419.66(b)(1).

Comment: With respect to the newness criterion at Sec. 419.66(b)(1), the applicant reiterated that the VersaVue\TM\ Single-Use Flexible Cystoscope received 510(k) clearance from FDA on October 6, 2023, and that it submitted an application for pass-through status on February 11, 2025, which is within 3 years of the initial market authorization.

Response: We appreciate the applicant's input. We received the application for a new device category for transitional pass-through payment status for the VersaVue\TM\ Single-Use Flexible Cystoscope on February 11, 2025, which is within 3 years of October 6, 2023, the date of FDA 510(k) clearance. After consideration of the public comment we received and our review of the application, we have determined that the VersaVue\TM\ Single-Use Flexible Cystoscope meets the newness criterion at Sec. 419.66(b)(1).

With respect to the eligibility criteria at Sec. 419.66(b)(3), the device must be an integral part of the service furnished, be used for one patient only, come in contact with human tissue, and be surgically inserted or implanted, or applied in or on a wound or other skin lesion. Per the applicant, the VersaVue\TM\ Single-Use Flexible Cystoscope meets the requirements at Sec. 419.66(b)(3).

We invited public comments on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the eligibility criterion at Sec. 419.66(b)(3).

Comment: The applicant reiterated that the VersaVue\TM\ Single-Use Flexible Cystoscope is an integral part of a cystoscopy procedure, used for one patient only, comes in contact with human tissue, and is surgically inserted during a cystoscopy procedure.

Response: We appreciate the applicant's input. We agree with the applicant that the VersaVue\TM\ Single-Use Flexible Cystoscope is an integral part of the service furnished, used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted. After consideration of the public comment we received, and our review of the

application, we have determined that the VersaVue\TM\ Single-Use Flexible Cystoscope meets the eligibility criterion at Sec. 419.66(b)(3).

With respect to the exclusion criteria at Sec. 419.66(b)(4), a device is not eligible to be considered for pass-through payment if it is any of the following: (1) equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker). Per the applicant, the VersaVue\TM\ Single-Use Flexible Cystoscope is (1) not considered equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, and is (2) not a material or supply furnished incident to a service, and, therefore, is eligible to be considered for pass-through payment.

We invited public comments on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the exclusion criterion at Sec. 419.66(b)(4).

Comment: The applicant reiterated that the VersaVue\TM\ Single-Use Flexible Cystoscope is not a supply furnished incident to the service, is a single-use cystoscope, is not subject to capital equipment depreciation schedules, and cannot be reprocessed.

Response: We appreciate the applicant's input. We agree with the applicant that the VersaVue\TM\ Single-Use Flexible Cystoscope is not equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets, or a material or supply furnished incident to a service. After consideration of the public comment we received and our review of the application, we have determined that the VersaVue\TM\ Single-Use Flexible Cystoscope meets the criterion at Sec. 419.66(b)(4).

In addition to the criteria at Sec. 419.66(b)(1) through (4), the criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. Per the applicant, the existing pass-through code C1747 (Endoscope, single-use (i.e., disposable), urinary tract, imaging/illumination device (insertable)) does not appropriately describe the VersaVue\TM\ Single-Use Flexible Cystoscope because cystourethroscopy procedures are not encompassed by this pass-through device category.\46\ The applicant also stated that the existing code C1889 (Implantable/insertable device, not otherwise classified) does not appropriately describe the VersaVue\TM\ Single-Use Flexible Cystoscope. We noted in the CY 2026 OPPS/ASC proposed rule that C1889 is not a device pass-through category code and therefore would not describe the VersaVue\TM\ Single-Use Flexible Cystoscope for the purposes of device pass-through status. Upon review, we stated that we did not identify an existing pass-through payment category that describes the VersaVue\TM\ Single-Use Flexible Cystoscope.

\46\ As discussed in section IV.A.2 (New Device Pass-Through Applications for CY 2023) of the CY 2023 OPPS/ASC final rule with comment period, we approved C1747 (Endoscope, single-use (i.e., disposable), urinary tract, imaging/illumination device (insertable)), as a new device category for pass-through status under the OPPS, with an effective date of January 1, 2023. For the full discussion on the criteria used to evaluate device pass-through applications, refer to the CY 2023 OPPS/ASC final rule with comment period, which was published in the Federal Register on November 23, 2022 (87 FR 71929 through 71934). We note that C1747 was established for a ureteroscope that can only be used for a single procedure and cannot be reprocessed. As such, C1747 only describes devices that cannot be reprocessed.

We invited public comment on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the device category criterion at Sec. 419.66(c)(1).

Comment: The applicant commented that FDA first issued the VersaVue\TM\ Single-Use Flexible Cystoscope 510(k) clearance in 2023, that the VersaVue\TM\ Single-Use Flexible Cystoscope was not receiving payment as an outpatient service as of December 31, 1996, and that it is not described by any current or previous device categories. The applicant stated that, in correspondence between Boston Scientific and CMS from September 2023, CMS determined that C1747 (Endoscope, single- use (i.e., disposable), urinary tract, imaging/illumination device (insertable)) does not include cystoscopy or cystourethroscopy devices.

Response: We appreciate the applicant's input. After consideration of the public comment we received and our review of the application, we continue to believe that there is no existing category or category previously in effect that appropriately describes the VersaVue\TM\ Single-Use Flexible Cystoscope. Therefore, we have determined that the VersaVue\TM\ Single-Use Flexible Cystoscope meets the device category eligibility criterion at Sec. 419.66(c)(1).

The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines either of the following: (1) that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment; or (2) for devices for which pass-through status will begin on or after January 1, 2020, as an alternative to the substantial clinical improvement criterion, the device is part of the FDA's Breakthrough Devices Program and has received FDA marketing authorization for the indication covered by the Breakthrough Device designation. The applicant asserted that single- use, disposable cystoscopes, including the VersaVue\TM\ Single-Use Flexible Cystoscope, represent a substantial clinical improvement over reusable cystoscopes.

The applicant provided five documents to support these claims, which included three studies and two FDA communications concerning reusable, reprocessed urological endoscopes. The applicant's assertions regarding the substantial clinical improvement criterion are shown in Table 103, previously published as Table 55 of the CY 2026 OPPS/ASC proposed rule (90 FR 33600 and 33601). Please see the online posting for the VersaVue\TM\ Single-Use Flexible Cystoscope for the applicant's complete statements regarding the substantial clinical improvement criterion and the supporting evidence provided. BILLING CODE 4120-01-P

[GRAPHIC] [TIFF OMITTED] TR25NO25.137

[GRAPHIC] [TIFF OMITTED] TR25NO25.138

BILLING CODE 4120-01-C

After review of the information provided by the applicant, we stated in the CY 2026 OPPS/ASC proposed rule that we had the following concerns regarding whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the substantial clinical improvement criterion.

Overall, we noted that the applicant indicated that the technology does not offer a treatment option for patients unresponsive to or ineligible for currently available treatments, stating that the same patient population could be treated using a reusable, reprocessed cystoscope. Further, the applicant did not claim that the nominated device, the VersaVue\TM\ Single-Use Flexible Cystoscope, offers a substantial clinical improvement over other single-use, disposable cystoscopes available on the market. Specifically, the applicant stated that no claim is being made that a specific disposable device offers a substantial clinical improvement over other disposable devices in the same category. Rather, the applicant stated that it presented evidence to support its claim that single-use, disposable cystoscopes (as a group) demonstrate substantial clinical improvement over reusable cystoscopes. We noted that for the purposes of the device pass-through evaluation process, CMS evaluates the nominated device that is the subject of an application to determine if the device meets the eligibility criteria described in Sec. 419.66.

Further, for the purposes of our substantial clinical improvement evaluation in the CY 2026 OPPS/ASC proposed rule, we considered both reusable, reprocessed cystoscopes and single-use, disposable cystoscopes as available treatment options for this patient population and noted that single-use, disposable cystoscopes appear to be widely accessible and well utilized in the outpatient setting. According to the applicant, of the 2.2 million flexible cystoscopy procedures furnished annually across all payers, 23 percent are performed with single-use, disposable cystoscopes. As discussed in more detail in this section, we stated in the CY 2026 OPPS/ASC proposed rule that we were interested in additional evidence that demonstrates substantial clinical improvement with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope over other available treatment options (both single-use, disposable cystoscopes and reusable, reprocessed cystoscopes). In order to evaluate substantial clinical improvement over currently available treatments to meet the transitional pass- through payment criterion at Sec. 419.66(c)(2), we stated that we consider supporting evidence, preferably published peer-reviewed clinical trials, that demonstrates improved clinical outcomes, such as reduction in mortality, complications, subsequent interventions, future hospitalizations, recovery time, pain, or a more rapid beneficial resolution of the disease process comparing the nominated device to the standard of care (88 FR 81733).

We stated in the CY 2026 OPPS/ASC proposed rule that, first, the evidence provided did not include data demonstrating that the use of the VersaVue\TM\ Single-Use Flexible Cystoscope compared to other available single-use, disposable cystoscopes for this patient population results in substantial clinical improvement. The applicant identified other devices it believes are closely related or similar to the VersaVue\TM\ Single-Use Flexible Cystoscope, including the following: (1) Ambu[supreg] aScope 4\TM\ Cysto manufactured by AMBU A/ S, (2) Ambu[supreg] aScope 5\TM\ Cysto manufactured by AMBU A/S, (3) WiScope[supreg] SingleUse- Digital Flexible Cystoscope manufactured by OTU Medical AnQing, (4) Medical Single Use Flexible Cystoscope manufactured by Shanghai AnQing Medical Instrument Company, and (5) Pusen Single Use Flexible Video Cystoscope System manufactured by Zhuhai Pusen Medical Technology Company. We noted that the VersaVue\TM\ Single-Use Flexible Cystoscope was determined to be substantially equivalent to a legally marketed device, the Ambu[supreg] aScope 4\TM\ Cysto (K193095), which received 510(k) clearance on April 2, 2020.\47\ The

FDA 510(k) summary for the VersaVue\TM\ Single-Use Flexible Cystoscope stated that both devices have the same intended use and similar specifications, and that there are no significant differences. According to the applicant, these five similar devices would also become eligible for transitional pass-through payment under the additional category proposed by the applicant. We reiterated that we consider other single-use, disposable cystoscopes as available treatment options for this patient population and that the devices appear to share similar technological and/or procedural characteristics. We noted that none of the studies the applicant included reference another single-use, disposable device as a comparator against which to evaluate and assess the VersaVue\TM\ Single-Use Flexible Cystoscope. While we found that the source articles provided background information about multiple risks associated with reprocessing reusable devices, we stated that we would welcome additional evidence demonstrating a comparison of the VersaVue\TM\ Single-Use Flexible Cystoscope's performance against other similar single-use, disposable devices. We questioned whether the VersaVue\TM\ Single-Use Flexible Cystoscope offers a substantial clinical improvement over other single-use, disposable cystoscopes currently on the market. We stated that we would welcome evidence that demonstrates substantial clinical improvement with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope over other single-use, disposable cystoscopes.

\47\ U.S. Food and Drug Administration. (2020, April 2). Decision Summary for K193095 [Ambu[supreg] aScope\TM\ 4 Cysto]. U.S. Department of Health and Human Services. https://www.accessdata.fda.gov/cdrh_docs/pdf19/K193095.pdf.

Second, in the CY 2026 OPPS/ASC proposed rule, we questioned whether the supporting evidence submitted by the applicant demonstrates substantial clinical improvement of the VersaVue\TM\ Single-Use Flexible Cystoscope over reusable, reprocessed cystoscopes for this patient population. In the first claim, the applicant asserted that the use of single-use, disposable cystoscopes decreases post-procedure encounters and infections compared to reusable cystoscope devices. However, while Geldmaker et al. (2023) reported some improved clinical outcomes with the use of a specific single-use, disposable cystoscope when compared to the use of a specific reusable cystoscope,\48\ we noted that the study does not assess, evaluate, or review clinical outcomes associated with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope or compare clinical outcomes associated with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope to reusable cystoscopes. Rather, we stated that the evidence provided compared clinical outcomes associated with another device, the single-use, disposable Ambu aS4C cystoscope [Ambu[supreg] aScope 4\TM\ Cysto] to the reuseable Olympus[supreg] CYF-5 V2 Flexible cystoscope. Therefore, we questioned whether the use of the VersaVue\TM\ Single-Use Flexible Cystoscope resulted in substantial clinical improvement as compared to reusable, reprocessed cystoscopes.

\48\ Geldmaker, L.E., Baird, B.A., Lyon, T.D., Regele, E.J., Wajswol, E.J., Pathak, R.A., Petrou, S.P., Haehn, D.A., Gajarawala, N.M., Ball, C.T., Broderick, G.A., & Thiel, D.D. (2023). Conversion to disposable cystoscopes decreased post-procedure encounters and infections compared to reusable cystoscopes. Urology Practice, 12(1), 58-64. https://doi.org/10.1097/UPJ.0000000000000410.

In addition, we noted that, as a retrospective study, Geldmaker et al. (2023) fails to establish that the differences in the observed clinical outcomes are caused by using reusable, reprocessed cystoscopes versus single-use, disposable cystoscopes. We noted that retrospective studies can only suggest associations between variables and cannot establish cause and effect relationships. While the propensity score matching did an adequate job of balancing the two groups (reusable, reprocessed cystoscope procedures versus single-use, disposable cystoscope procedures) and yielded statistically significant results, we questioned whether the propensity score matching variables used in the study adequately account for patient factors that may impact the outcomes, such as the reason for the cystoscopy, positive preoperative UTI, and other comorbid conditions. We noted that data were collected during different time periods (reusable, reprocessed cystoscope data were collected in 2020, and single-use, disposable cystoscope data were collected in 2021), which may introduce systematic errors in the measurement due to retrospective data collection or confounders not accounted for, such as changes in clinical practice between the 2 study years. Further, per the study authors, we noted that urine cultures were ordered more frequently in the reusable cystoscope group, potentially increasing the likelihood of a UTI diagnosis in the reusable cystoscope group. We stated that we would be interested in whether equivalent pre- and post-procedure urine cultures from patients in both groups would have yielded different results. We noted that the evidence is not conclusive to support whether the use of single-use, disposable cystoscopes results in improved clinical outcomes compared to reusable, reprocessed cystoscopes.

Moreover, while not included in the evidence submitted by the applicant in support of the substantial clinical improvement claims for the VersaVue\TM\ Single-Use Flexible Cystoscope, we noted two studies, Anderson et al. (2024) and Johnson et al. (2023), provide notable evidence directly related to the use of single-use, disposable cystoscopes versus reusable cystoscopes.49 50 Anderson et al. (2024), a systematic review (using meta-analyses techniques) comparing the clinical outcomes of all single-use, disposable endoscopes used in urology with those of reusable endoscopes across a range of urological procedures, found that of the seven studies that reported the rate of postoperative infections, none found a statistically significant difference in postoperative infection rates between single-use, disposable endoscopes and reusable endoscopes.\51\ Further, we noted that the Anderson et al. (2024) sub-group analysis of cystoscopes found no difference in overall complication rates or postoperative infection rates between the single-use, disposable cystoscopes and the reusable cystoscope subgroups. Similarly, Johnson et al. (2023) found no statistically significant difference in adverse events in a multicenter, randomized trial comparing single-use, disposable cystoscopes (Ambu[supreg] aScope 4\TM\ Cysto) with reusable cystoscopes for ureteral stent removal in 102 patients.\52\ Given the evidence in these additional studies, we questioned in the CY 2026 OPPS/ASC proposed rule whether the totality of available evidence establishes that the use of a single-use, disposable cystoscope results in substantial clinical improvement when compared to reprocessed cystoscopes, and furthermore, whether the use of the VersaVue\TM\ Single-Use Flexible Cystoscope compared to reusable, reprocessed cystoscopes results in decreased adverse events, including post- procedure encounters and infections. We stated that we would welcome studies that evaluate whether the use of the VersaVue\TM\ Single-Use Flexible Cystoscope results in

substantial clinical improvement over reusable, reprocessed cystoscopes, such as a reduction in mortality, complications, subsequent interventions, future hospitalizations, recovery time, pain, or a more rapid beneficial resolution of the disease process compared to reusable, reprocessed cystoscopes.

\49\ Anderson, S., Patterson, K., Skolarikos, A., Somani, B., Bolton, D.M., & Davis, N.F. (2024). Perspectives on technology: To use or to reuse, that is the endoscopic question--a systematic review of single-use endoscopes. BJU International, 133(1), 14-24. https://doi.org/10.1111/bju.16206.

\50\ Johnson, B.A., Raman, J.D., Best, S.L., & Lotan, Y. (2023). Prospective randomized trial of single-use vs reusable cystoscope for ureteral stent removal. Journal of Endourology, 37(10). https://doi.org/10.1089/end.2023.0134.

\51\ Anderson, 2024, op. cit.

\52\ Johnson, 2023, op. cit.

Third, in the second, third, fourth and fifth claims, the applicant asserted that the use of single-use, disposable cystoscopes avoids post-cystoscopy infections, device malfunctions, and contamination problems associated with reusable devices, and eliminates the need for reprocessing and avoids the risk of infection associated with improper reprocessing. In support of these claims, the applicant provided two retrospective reviews (Lee et al., 2022 and Muscarella, 2022) of medical device reports (MDRs) from the FDA Manufacturer and User Facility Device Experience (MAUDE) database, an FDA News Release (2021, April 1) concerning infection and contamination risks associated with reusable urological endoscopes, and an FDA Update (2025, January 31) communicating the recall of endoscope accessories from Olympus[supreg] reusable urological endoscopes as supporting evidence.53 54 55 56 First, we questioned whether, per the applicant, the avoidance of device malfunctions, contamination problems, and the elimination of the need for reprocessing demonstrates substantial clinical improvement, as these are not clinical outcome metrics. Second, while we concurred that avoiding post-cystoscopy infections is important, we noted that none of the studies the applicant submitted as evidence evaluated or assessed the VersaVue\TM\ Single-Use Flexible Cystoscope and that none of the studies compared clinical outcomes, such as adverse events (including post-cystoscopy infection) associated with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope to clinical outcomes associated with reusable cystoscopes. Third, while these studies discuss potential adverse events from reusable cystoscope procedures, we noted that FDA states that the FDA MAUDE database's MDR data are not intended to be used to evaluate rates of adverse events, evaluate a change in event rates over time, or compare adverse event occurrence rates across devices.\57\ FDA explains that the MAUDE database is a passive surveillance system, and that incidence, prevalence, or cause of an event cannot be determined from this surveillance system alone due to under-reporting of events, inaccuracies in reports, lack of verification that the device caused the reported event, and lack of information about frequency of device use.\58\ FDA further explains that the submission of an MDR itself does not necessarily demonstrate that the device caused or contributed to the adverse outcome or event.\59\ Therefore, we questioned whether these reports can substantiate that the use of single-use, disposable cystoscopes, like the VersaVue\TM\ Single-Use Flexible Cystoscope, would result in substantial clinical improvements over currently available reusable, reprocessed cystoscopes. Fourth, while the applicant asserted that the FDA News Release (2021, April 1) encouraged manufacturers to transition to single-use, disposable devices, we noted that this FDA News Release does not specifically reference single-use, disposable cystoscopes but, rather encouraged manufacturers to transition to devices with features that eliminate the need for reprocessing and provided information to manufacturers on how to modify and validate their reprocessing instructions. As such, we questioned the assertion that this FDA communication encouraged manufacturers to transition to single-use, disposable cystoscopes, such as the VersaVue\TM\ Single-Use Flexible Cystoscope. We further noted that FDA stated that the risk of infection from reusable, reprocessed urological endoscopes was low based on its data.\60\ We also noted that the FDA Update (2025, January 31) communicated a medical device recall of the Olympus[supreg] endoscope accessory (MAJ-891 Forceps/Irrigation Plug) that is attached to the instrument channel port of a certain endoscope, due to the risk of infection that may result from improper reprocessing, but that this communication made no mention of the use of the nominated device or single-use, disposable cystoscopes, instead it appears to be a concern related to a particular reusable device component.\61\

\53\ Lee, J., Kaplan-Marans, E., Jivanji, D., Tennenbaum, D., & Schulman, A. (2022). Post-cystoscopy infections and device malfunctions in reprocessed flexible cystoscopes in a national database. Canadian Journal of Urology, 29(6), 11361-11365. https://pubmed.ncbi.nlm.nih.gov/36495577.

\54\ Muscarella, L.F. (2022, January 28). Contamination of flexible endoscopes and associated infections: A comprehensive review and analysis of FDA adverse event reports. Discussions in Infection Control. https://lfm-hcs.com/2022/01/contamination-of-flexible-endoscopes-and-associated-infections/.

\55\ U.S. Food and Drug Administration. (2021, April 1). FDA is investigating reports of infections associated with reprocessed urological endoscopes: Agency is taking action to remind health care providers about the proper way to clean certain devices for reuse. [FDA News Release]. https://www.fda.gov/news-events/press-announcements/fda-investigating-reports-infections-associated-reprocessed-urological-endoscopes.

\56\ U.S. Food and Drug Administration. (2025, January 31). Update on alert: Endoscope accessories forceps/irrigation plug issue from Olympus. https://www.fda.gov/medical-devices/medical-device-recalls/update-alert-endoscope-accessories-forcepsirrigation-plug-issue-olympus.

\57\ U.S. Food and Drug Administration. (2024, June 6). About the Manufacturer and User Facility Device Experience (MAUDE) database. U.S. Department of Health and Human Services. https://www.fda.gov/medical-devices/mandatory-reporting-requirements-manufacturers-importers-and-device-user-facilities/about-manufacturer-and-user-facility-device-experience-maude-database.

\58\ U.S. Food and Drug Administration, 2024, op. cit.

\59\ U.S. Food and Drug Administration, 2024, op. cit.

\60\ U.S. Food and Drug Administration, 2021, op. cit.

\61\ U.S. Food and Drug Administration, 2025, op. cit.

While the applicant asserted that the use of single-use, disposable cystoscopes avoids risk of infection associated with improper reprocessing, the applicant did not submit any FDA safety communications directly related to single-use, disposable cystoscopes. We questioned whether the evidence provided by the applicant directly supports this claim.

Finally, we noted in the CY 2026 OPPS/ASC proposed rule that the intent of transitional device pass-through payment, as implemented at Sec. 419.66, is to facilitate access for beneficiaries to the advantages of new and truly innovative devices by allowing for adequate payment for these new devices while the necessary cost data is collected to incorporate the costs for these devices into the procedure APC rate (66 FR 55861). Based on the information provided by the applicant, approximately 510,600 units of single-use, disposable cystoscope devices, like those that would be included in the proposed device category for single-use, disposable cystoscopes, are estimated to have sold annually in the U.S. Moreover, the applicant provided that, of the 2.2 million flexible cystoscopy procedures furnished annually, 23 percent are performed with single-use, disposable cystoscopes, further, single-use, disposable cystoscopes are used in at least 500 hospitals and clinics, including 35 to 50 academic medical centers. Based on the information provided in the application, we stated that it appears as though single-use, disposable cystoscopes are widely available and consistently utilized for the purposes of performing cystoscopy procedures in outpatient facilities. As such, we questioned whether the creation of a device pass-through payment category code for single-use, disposable cystoscopes is consistent

with the intent of transitional device pass-through payment and necessary to appropriately incorporate adequate cost data of these devices into the applicable procedure APC.

We questioned whether the evidence submitted by the applicant demonstrates that the use of single-use, disposable cystoscopes results in improved patient outcomes and reduced patient risk compared to the use of reusable devices. Further, we questioned whether the VersaVue\TM\ Single-Use Flexible Cystoscope offers a substantial clinical improvement in the treatment of Medicare beneficiaries over other available treatment and whether a transitional device pass- through category for single-use, disposable cystoscopes is in alignment with the intent of the transitional device pass-through payment program policy.

We invited public comment on whether the VersaVue\TM\ Single-Use Flexible Cystoscope meets the device category criterion at Sec. 419.66(c)(2).

Comment: The applicant provided responses to concerns raised by CMS in the CY 2026 OPPS/ASC proposed rule. In response to the concern that the data provided did not compare the VersaVue\TM\ Single-Use Flexible Cystoscope to other single-use, disposable cystoscopes, the applicant stated its belief that such evidence would not be relevant to this application, and that CMS did not explain why such evidence is necessary or how it could apply to the application under review. Further, the applicant explained that it did not assert that the VersaVue\TM\ Single-Use Flexible Cystoscope offers a substantial clinical improvement compared to other single-use cystoscopes, stating that the substantial clinical improvement claims and evidence provided were in support of the category of single-use cystoscopes compared to reusable cystoscopes rather than the VersaVue\TM\ Single-Use Flexible Cystoscope compared to other single-use, disposable cystoscopes or reusable cystoscopes. The applicant stated its belief that CMS has recognized similar claims for categories of other types of disposable endoscopes, including upper GI endoscopes, ureteroscopes, and bronchoscopes. As an example, the applicant cited language from the Uretero1\TM\ decision in which CMS agreed that the device met the criterion for substantial clinical improvement, which stated that while comparative studies between Uretero1\TM\ and other disposable devices would be helpful, CMS agreed that the evidence demonstrating improved outcomes and reduced patient risk associated with the disposable device in comparison with reusable devices represented substantial clinical improvement (87 FR 71932). The applicant asserted that the VersaVue\TM\ Single-Use Flexible Cystoscope evidence is directly equivalent to the Uretero1\TM\ evidence in both type and claims. Additionally, the applicant asserted that the Uretero1\TM\ decision makes clear that the lack of such evidence comparing the nominated device to other disposable devices does not and should not preclude an applicant from meeting the substantial clinical improvement standard. The applicant stated that CMS should consider the VersaVue\TM\ Single-Use Flexible Cystoscope application using the same standard applied to other recent decisions for disposable devices and determine that the improved patient outcomes and reduced patient risk associated with the disposable nominated device in comparison with reusable devices is a substantial clinical improvement.

Response: We appreciate the applicant's input. However, we maintain our concern regarding the lack of data comparing the VersaVue\TM\ Single-Use Flexible Cystoscope to other single-use, disposable and reusable, reprocessed cystoscopes. First, regarding the applicant's statement that the evidence provided in support of the category of single-use cystoscopes should suffice for a demonstration of substantial clinical improvement, we reiterate that, CMS evaluates transitional pass-through applications using the substantial clinical improvement criterion described at Sec. 419.66(c)(2)(i), which requires CMS to determine if “the device” that has been nominated has demonstrated that “it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment.” The regulatory provision refers to “the” device (singular) being compared to “a device or devices” for purposes of substantial clinical improvement. For the purposes of the device pass-through evaluation process, CMS evaluates the nominated device that is the subject of an application, not a category of devices, to determine if the device meets the eligibility criteria described in Sec. 419.66. The applicant referenced studies comparing the category of single-use cystoscopes to reusable cystoscopes but did not provide evidence that its specific device demonstrates a substantial clinical improvement.

Second, we disagree with the applicant that CMS has recognized similar claims for other types of disposable endoscopes, including upper GI endoscopes, ureteroscopes, and bronchoscopes. For example, while we concluded that Uretero1\TM\ met the criterion for substantial clinical improvement, we note that CMS agreed that the evidence demonstrated improved outcomes for “the disposable device” (singular), i.e., Uretero1\TM\ (87 FR 71932). In response to additional comments, we explain more about our evaluation of the evidence submitted for both applications.

Finally, we disagree with the applicant that the evidence for the VersaVue\TM\ Single-Use Flexible Cystoscope is equivalent to that used for Uretero1\TM\, and, as we previously explained in the CY 2024 and CY 2025 OPPS/ASC final rules with comment period for Ambu[supreg] aScope\TM\ 5 Broncho HD (88 FR 81736) and Ambu[supreg] aScope\TM\ Gastro (89 FR 94182), and as discussed in more detail in our responses to comment, we evaluate all evidence submitted for each device pass- through application as it applies to the nominated device. Due to inherent differences in the devices themselves and the supporting documentation submitted, CMS may have different concerns as they relate to the nominated device. As discussed in the following responses, we continue to believe that the evidence submitted for the VersaVue\TM\ Single-Use Flexible Cystoscope application fails to demonstrate a substantial clinical improvement as required.

Comment: In response to our concerns that the single-use device included in the Geldmaker et al. (2023) study was not the VersaVue\TM\ Single-Use Flexible Cystoscope, the applicant commented that the Geldmaker et al. (2023) study provides important evidence about the impact of disposable cystoscope use on clinical practice and demonstrates one of the substantial clinical improvement claims for single-use cystoscopes. The applicant acknowledged that the device involved in this study was not the VersaVue\TM\ Single-Use Flexible Cystoscope but asserted that this situation is identical to the Uretero1\TM\ transitional pass-through evaluation and approval. The applicant asserted that the Uretero1\TM\ application used a study by Bozzini et al. (2021) to support the claims that Uretero1\TM\ reduced hospitalization rates, antibiotic therapy, complication rates, and post-operative infection rates. The applicant further asserted that the Bozzini et al. (2021) study did not utilize Uretero1\TM\ but the study findings were directly applicable

to the Uretero1\TM\ application. The applicant stated its belief that CMS appropriately accepted that study in support of the Uretero1\TM\ substantial clinical improvement claims, allowing the findings to be directly applicable to Uretero1\TM\. The applicant opined that CMS should apply the same standard to the VersaVue\TM\ Single-Use Flexible Cystoscope application and recognize that Geldmaker et al. (2023) demonstrates the substantial clinical improvement afforded by use of disposable cystoscopes, including the VersaVue\TM\ Single-Use Flexible Cystoscope.

In response to our concerns regarding the Geldmaker et al. (2023) study's design, the applicant commented that the study is a high- quality, retrospective analysis of a large outpatient urology practice's real-world experience following conversion from reusable to disposable cystoscopes and stated that it strongly disagrees with CMS's assessment of the study in the CY 2026 OPPS/ASC proposed rule. Additionally, the applicant asserted that the specific substantial clinical improvement claim addressed by Geldmaker et al. (2023) is the impact that the type of scope has on post-procedural health care resource utilization--that is, whether the type of scope affects unplanned interactions or the incidence of UTIs. The applicant further asserted that a large study population is essential for meaningful findings and this retrospective review allowed the authors to include 1,000 patients.

Regarding our question whether the propensity score matching variables adequately account for patient factors, such as the reason for cystoscopy, positive preoperative UTI, and other comorbid conditions, the applicant stated that the reason for cystoscopy, specifically including UTI, was the basis for the propensity score weighting. The applicant also noted that after propensity-score weighting, the study considered all differences in the reason(s) for cystoscopy to be negligible and collected data from a single institution's integrated electronic medical record. The applicant asserted its belief that the specific focus on equivalent pre- and post-procedure urine cultures suggests that CMS may have misunderstood the intent of the Geldmaker et al. (2023) study. The applicant stated that the study included urine cultures which were only ordered based on post-procedure, patient-reported lower urinary tract symptoms and noted that Geldmaker et al. (2023) found patients in the reusable scope group were three times as likely to have an encounter, which would likely include reporting of symptoms, and therefore, it is not surprising that the group also had more urine cultures ordered. The applicant agreed that systematic urine cultures would have produced different evidence related to the incidence of UTIs, but it would also have eliminated key data on health resource utilization. The applicant asserted its belief that the study was appropriately designed and provides strong evidence that the use of disposable scopes is associated with reduced post- procedure encounters.

Response: We appreciate the applicant's input. However, we maintain our concerns listed in the CY 2026 OPPS/ASC proposed rule regarding the Geldmaker et al. (2023) study. First, the device involved in this study was not the VersaVue\TM\ Single-Use Flexible Cystoscope, and second, the Geldmaker et al. (2023) study has design limitations as discussed. As previously stated, we disagree with the applicant that this situation is identical to the Uretero1\TM\ transitional pass-through evaluation and approval. First, no two applications are identical in nature given the fact that the basic premise of device pass-through is to provide additional payment for novel technologies and, as such, these innate differences for each technology requires a robust evaluation of each application on its own merits. As the applicant indicated, CMS approved Uretero1TM 62 for transitional pass- through payment status in the CY 2023 OPPS/ASC final rule with comment period. We note that we expressed similar concerns relating to the lack of comparative studies between the single-use Uretero1\TM\ device and other disposable devices and indicated that, while we ultimately agreed that the totality of evidence demonstrated improved patient outcomes and reduced patient risk associated with the disposable device in comparison with reusable devices represents substantial clinical improvement, we stated it would have been helpful to see comparative studies (87 FR 71932). The applicant seems to suggest that because we determined that the Uretero1\TM\ device demonstrated substantial clinical improvement despite providing a study which did not include the nominated device as a comparator, that we must similarly determine that the type of evidence submitted for the VersaVue\TM\ Single-Use Flexible Cystoscope represents substantial clinical improvement. We do not believe that this implied approach to application evaluation is appropriate. Rather, we continue to believe that our current process, wherein we evaluate all evidence submitted for each device pass-through application as it applies to the nominated device, is appropriate and consistent with the regulatory requirements. We reiterate that, due to inherent differences in the devices themselves and the supporting documentation submitted, CMS may have different concerns as they relate to the nominated device. In addition, we are not precluded from evaluating evidence, expressing concerns, or making a determination on the applicability or validity regarding evidence submitted in support of an application, simply because that type of evidence has been submitted in support of a previous application.

\62\ In the CY 2023 OPPS/ASC final rule with comment period CMS approved Uretero1\TM\ as a new device category for transitional pass-through payment status and established C1747 as a new device category beginning in January 2023 (87 FR 7129 through 71934) effective January 1, 2023.

Furthermore, we maintain our concerns listed in the CY 2026 OPPS/ ASC proposed rule that the Geldmaker et al. (2023) study has design limitations. Specifically, we note that retrospective studies can only suggest associations between variables and cannot establish causation. While we appreciate the applicant's explanation about the propensity score matching in Geldmaker et al. (2023), we question whether the propensity score matching variables used in the study adequately account for all patient factors that may impact outcomes, such as the reason for cystoscopy and other comorbid conditions. We also maintain our interest in whether equivalent pre- and post-procedure urine cultures from patients in both study groups would have yielded different results, which the applicant agreed would have produced different evidence related to UTI incidence. Finally, we continue to maintain concerns over potential systematic errors in measurement due to retrospective data collection and unaccounted for confounders, such as changes in clinical practice between the 2 study years.

The Geldmaker et al. (2023) study did not assess, evaluate, review, or compare clinical outcomes associated with the use of the VersaVue\TM\ Single-Use Flexible Cystoscope to reusable cystoscopes. Likewise, none of the other evidence provided compared the benefits of the VersaVue\TM\ Single-Use Flexible Cystoscope to currently available treatments, including other single-use cystoscopes. For these reasons, we do not believe that the Geldmaker et al. (2023) study supports a demonstration of substantial clinical improvement.

Based on our review, we continue to believe that the current application lacks sufficient evidence to demonstrate that the VersaVue\TM\ Single-Use Flexible Cystoscope significantly improves clinical outcomes in patients receiving cystoscopy using either reusable scopes or other single-use scopes.

Comment: In response to our request for additional evidence of substantial clinical improvement, the applicant stated its belief that the Anderson et al. (2024) and Johnson et al. (2023) studies, which we identified in the CY 2026 OPPS/ASC proposed rule, have substantial limitations. Specifically, the applicant asserted that while the Anderson et al. (2024) meta-analysis included 12 studies, only 4 of them involved cystoscopes, which makes the subgroup analysis particularly challenging. The applicant also stated that the cystoscope studies were not specifically intended to identify post-procedure complications and that two of the included studies provided no data on those outcomes. Additionally, the applicant noted that only one of the two remaining cystoscopy studies reported the overall complication rate, and the other cystoscopy study reported the post-operative infection rate. Therefore, the applicant asserted that when Anderson et al. (2024) reported a disposable cystoscopes subgroup analysis for each of these outcomes, the study was simply reporting the result of a single study from its meta-analysis. The applicant also noted Anderson et al. (2024) supports the understanding that disposable scope use reduces the risk of infection and explains why data is unavailable to document that conclusion, stating:

The use of single-use endoscopes should reduce the risk of transmission of these important public health infections to a negligible level. However, the absolute risk of transmission of these pathogens with reusable endoscopes is so low that it is unlikely any study will be sufficiently powered to show a difference when compared to [single-use flexible ureteroscopes].

In addition, the applicant stated that the Johnson et al. (2023) study, a multicenter, randomized trial that compared disposable cystoscopes with reusable cystoscopes for ureteral stent removal, found no statistically significant difference in adverse events. The applicant asserted that based on the study design, this outcome is unsurprising and should not be considered evidence that no difference exists in adverse events for single-use versus multiple-use cystoscopes. The applicant noted that Johnson et al. (2023) was a randomized, dual-arm post-market clinical trial that compared single- use cystoscopes (Ambu[supreg] aScope\TM\ 4 Cysto; Ambu A/S) for removal of ureteral stents to routine flexible reusable cystoscopes (combination of digital and fiberoptic). The applicant further opined that, although not explicitly stated, the paper presumably calculated the sample size based on the primary endpoint of stent removal, not to detect any clinical differences and, while Johnson et al. (2023) collected patient-reported adverse event data as a secondary endpoint, the study would have been severely underpowered to detect any group differences in adverse events. The applicant added that the single serious adverse event observed during the study occurred in the standard of care reusable arm and that the authors noted that patients in the reusable cystoscope group reported significantly higher pain with urination post-procedure.

The applicant submitted a new study, Chew et al. (2025), with its public comment. According to the applicant, Chew et al. (2025),\63\ is a retrospective study that compared 30-day health care utilization between patients treated with single-use cystoscopes and patients treated with reusable cystoscopes. The applicant stated that the Chew et al. (2025) study used propensity score matching (1:5 ratio) to control for demographics, comorbidities, clinical history, and prior utilization and performed a pre-defined subgroup analysis in patients aged 65 years. The applicant also noted that of the study's 62,965 eligible encounters, 1,473 (2.3 percent) used single-use cystoscopes and 61,492 (97.7 percent) used reusable cystoscopes. The applicant explained that, after propensity score matching, Chew et al. (2025) compared 1,473 single-use procedures with 7,365 reusable procedures and found that single-use devices resulted in lower 30-day health care utilization (5.2 percent vs. 13.0 percent; hazard ratio (HR)=0.34; 95 percent confidence interval (CI): 0.26, 0.45; phttps://doi.org/10.7759/cureus.91879.

Response: We appreciate the applicant's input. However, we maintain our concerns listed in the CY 2026 OPPS/ASC proposed rule that additional evidence is needed to establish the VersaVue\TM\ Single-Use Flexible Cystoscope's substantial clinical improvement over reusable, reprocessed cystoscopes or other single-use cystoscopes, such as that which shows a reduction in mortality, complications, subsequent interventions, future hospitalizations, recovery time, pain, or a more rapid beneficial resolution of the disease process.

We appreciate the applicant's critique of the Anderson et al. (2024) and Johnson et al. (2023) studies and for sharing the Chew et al. (2025) study. While we agree that all studies have their limitations, we note that Anderson et al. (2024) is reportedly the largest study to compare outcomes of single-use urologic endoscopes to those of reusable endoscopes and presents evidence suggesting that single-use urologic endoscopes provide no improvement with regard to postoperative infection rates or overall complication rates compared to reusable urologic endoscopes. This is contradictory to the applicant's assertions that the VersaVue\TM\ Single-Use Flexible Cystoscope or any other single-use disposable cystoscope represents a substantial clinical improvement compared to a reusable cystoscope.

Moreover, we have concerns regarding the Chew et al. (2025) study. First, similar to our concern with

Geldmaker et al. (2023), Chew et al. (2025) does not compare the VersaVue\TM\ Single-Use Flexible Cystoscope to other single-use or reusable devices, and retrospective studies can only suggest associations between variables, not establish causation. Second, the methodology used by Chew et al. (2025) for selecting and matching cases retrospectively is unclear, specifically, how the 7,365 matched reusable procedures were selected from the potential pool of 62,965. We also question if the study's results demonstrate substantial clinical improvement of single-use cystoscopes compared to reusable cystoscopes. While we acknowledge that Chew et al. (2025) reports an association between single-use cystoscopes and significantly lower 30-day complication rates (cumulative incidence: 1.8 percent vs. 4.3 percent) with a 60 percent relative risk reduction (HR=0.40; 95 percent CI: 0.27, 0.60; phttps://mearis.cms.gov/public/resources.

Comment: In response to our concerns regarding the use of FDA data in support of substantial clinical improvement claims, the applicant asserted that CMS cited two concerns with the use of FDA information in the VersaVue\TM\ Single-Use Flexible Cystoscope application. Per the applicant, CMS cited guidance from FDA about use of MDRs compiled in the MAUDE database and questioned whether a study that includes analysis of that data can be used to demonstrate substantial clinical improvement. The applicant stated that CMS also questioned the appropriateness of an FDA News Release concerning infection and contamination risks associated with reusable urological endoscopes, including cystoscopes, because the release did not specifically mention single-use devices.

The applicant commented that these concerns appear to represent a reversal of CMS's position taken 3 years prior when evaluating the Uretero1\TM\ application. The applicant further asserted that one of the primary studies, Ofstead et al. (2022), used for the Uretero1\TM\ application's literature review included 892 MDRs submitted to FDA, and that CMS raised no concerns about use of MAUDE data in that application.

Regarding the FDA News Release, the applicant stated that FDA encouraged manufacturers to transition to devices with features that eliminate the need for reprocessing and helped manufacturers modify and validate their reprocessing instructions. The applicant opined that single-use devices are not reprocessed, thus eliminating the need for reprocessing. The applicant further commented that the Uretero1\TM\ application included the same release and that CMS noted at that time that the release did not specifically mention single-use devices. The applicant stated that, despite receiving no comments as to whether Uretero1\TM\ met the substantial clinical improvement criteria, CMS approved Uretero1\TM\ for device pass-through and therefore, the applicant inferred that CMS concluded that this concern, while noted, was not significant. The applicant acknowledged that CMS's intent is to evaluate applications by consistently applying the standards for each criterion, and that each pass-through application presents its own unique circumstances, but, according to the applicant, the similarities between the Uretero1\TM\ and the VersaVue\TM\ Single-Use Flexible Cystoscope applications are

overwhelming. According to the applicant, both devices are urological endoscopes, both applications include evidence that is not specific to the nominated device, and both applications include claims of substantial clinical improvement related to avoidance of patient risk, documented in part through analysis of FDA MAUDE data. The applicant stated its belief that this level of evidence appropriately supported the Uretero1\TM\ application and also supports the substantial clinical improvement provided by VersaVue\TM\ Single-Use Flexible Cystoscope and other disposable cystoscopes. The applicant asked that if CMS reaches a different conclusion, the agency provide a detailed rationale as to what requirements have changed since the rulemaking cycle for 2023.

Response: We appreciate the applicant's input. As an initial matter, we note that the requirements under Sec. 419.66(c)(2) have not changed since we revised the alternative pathway provision effective January 1, 2021 (85 FR 86303), and CMS has consistently explained that its approach is to evaluate all evidence submitted for each device pass-through application as it applies to the nominated device (88 FR 81736, 89 FR 94182). In this case, we maintain our concerns listed in the CY 2026 OPPS/ASC proposed rule about whether the use of data that solely rely on MDRs compiled in the MAUDE database can be used to demonstrate that the use of single-use, disposable cystoscopes, like the VersaVue\TM\ Single-Use Flexible Cystoscope, would result in substantial clinical improvement. Additionally, we continue to be concerned that the FDA News Release (2021, April 1) does not specifically reference single-use, disposable cystoscopes or encourage manufacturers to transition to single-use, disposable cystoscopes, such as the VersaVue\TM\ Single-Use Flexible Cystoscope.

With respect to the concern that the use of MDRs compiled in the MAUDE database can be used to demonstrate substantial clinical improvement, we acknowledge that, since the Uretero1\TM\ approval, we have more critically evaluated and questioned the utility of studies and reports using data solely collected from the MAUDE database, which claim associations between infections and devices for the purposes of demonstrating substantial clinical improvement. For example, in our decision for Ambu[supreg] aScope\TM\ Gastro (89 FR 94179 through 94182), we found that the applicant's self-sponsored analyses of FDA adverse event reports and the FDA MAUDE report did not provide evidence on the prevalence of infection, establish a clear relationship between infection risk and reprocessing procedures, or substantiate that single-use disposable scopes, or the nominated device specifically, would be a substantial clinical improvement over currently-available devices. As we discussed in the CY 2026 OPPS/ASC proposed rule, the FDA MAUDE database's MDR data are not intended to be used to evaluate rates of adverse events, evaluate a change in event rates over time, or compare adverse event occurrence rates across devices. Further, FDA describes the MAUDE database as a passive surveillance system, and that incidence, prevalence, or cause of an event cannot be determined from this surveillance system alone due to underreporting of events, inaccuracies, or bias in reports; untimely reports; lack of verification that the device caused the reported event; and lack of information about frequency of device use. Additionally, MDRs submitted to MAUDE have not been independently reviewed and the reported adverse events, by themselves, are not definitive evidence of faulty or defective medical devices. Finally, we note that the MAUDE database lacks the clinical granularity, such as comorbidities, procedure details, or the etiology of an adverse event, needed to calculate the true incidence of any post-cystoscopy complication. These same limitations of the MAUDE database are also acknowledged in the Lee et al. (2022) and Muscarella (2022) articles, which the applicant submitted as part of the VersaVue\TM\ Single-Use Flexible Cystoscope application. For these reasons, we maintain our concerns that data from MAUDE alone cannot substantiate that the VersaVue\TM\ Single-Use Flexible Cystoscope exhibits substantial clinical improvement over currently available devices.

With respect to the MAUDE data included as evidence in the Uretero1\TM\ application, we note that, in addition to 892 MDRs, the Ofstead et al. (2022) study also included five articles describing reprocessing breaches, contamination, infections, or injuries related to fully reprocessed flexible ureteroscopes, as well as conference abstracts. We note that the inclusion of Ofstead et al. (2022), which contained additional studies and data sources, provided evidence other than MAUDE data for the Uretero1\TM\ application. In contrast to Ofstead et al. (2022), the Lee et al. (2022) and Muscarella (2022) articles included in the VersaVue\TM\ Single-Use Flexible Cystoscope application rely solely on MAUDE data and do not evaluate other data or sources. Moreover, the Muscarella (2022) article is not peer-reviewed and is self-published. For these reasons, we maintain our concerns that the use of studies that solely rely on MDRs compiled in the MAUDE database cannot substantiate that the use of single-use, disposable cystoscopes, like VersaVue\TM\ Single-Use Flexible Cystoscope, results in substantial clinical improvement over currently available devices.

Regarding the FDA News Release (April 1, 2021), we note that within the document, FDA does not make specific recommendations for the use of single-use, disposable cystoscopes, including the VersaVue\TM\ Single- Use Flexible Cystoscope, over reusable, reprocessed devices. Rather, FDA stated that its Letter to Health Care Providers issued recommendations for reprocessing and using these devices, such as following the reprocessing instructions and developing schedules for routine device inspection and maintenance. Additionally, FDA stated that it believes the risk of infection from reusable, reprocessed urological endoscopes was low based on its data. We also note that the FDA Update (January 31, 2025) communicated a medical device recall of a specific device component, the Olympus[supreg] endoscope accessory (MAJ-891 Forceps/Irrigation Plug) that is attached to the instrument channel port of a certain endoscope, due to the risk of infection that may result from improper reprocessing; however, it made no mention of, or recommendation for, the use of single-use, disposable devices, including the VersaVue\TM\ Single-Use Flexible Cystoscope, over reusable, reprocessed devices. For these reasons, we maintain our concern that the FDA News Release (April 1, 2021) does not specifically reference single-use, disposable devices, including the nominated device.

In response to the applicant's comment comparing the Uretero1\TM\ application summary with the nominated device's application summary, we note that we expressed a similar concern for Uretero1\TM\, specifically that the FDA advisory letter regarding ureteroscopes did not mention single-use devices and that it was unclear how the news release's recommendations supported Uretero1\TM\'s claims of substantial clinical improvement (87 FR 71932). While we ultimately determined that evidence submitted as part of the Uretero1\TM\ pass-through application was sufficient to demonstrate substantial clinical improvement at that

time, we would like to reiterate, again, that we evaluate all evidence submitted for each device pass-through application as it applies to the nominated device at the time the current application is submitted. As previously noted, we have gained additional knowledge about the limitations of what is reported and included in the MAUDE database.

Based on the totality of the evidence, we do not believe that the applicant has submitted documentation demonstrating that the use of the VersaVue\TM\ Single-Use Flexible Cystoscope results in a substantial clinical improvement compared to other existing technologies. Further, we disagree with the assertion that our acceptance of FDA guidance documents for previous applications controls the outcome of our evaluation of evidence of substantial clinical improvement for the VersaVue\TM\ Single-Use Flexible Cystoscope. The ultimate determination of whether evidence demonstrates substantial clinical improvement for one application is not controlling on future determinations because, due to inherent differences in the devices themselves and the supporting documentation submitted, CMS may have different concerns as they relate to the nominated device. We do not believe our evaluation of the totality of the evidence provided by the applicant, including the FDA data and News Release, represents a change in requirements for evaluating transitional pass-through applications.

Comment: In response to our concern that the utilization data submitted as part of the VersaVue\TM\ Single-Use Flexible Cystoscope application suggests that disposable cystoscopes are widely available and consistently used in outpatient facilities, the applicant commented that neither the statute nor the regulations describe a standard related to whether a device is widely available or consistently used. The applicant stated its belief that CMS has never applied such a standard in the past and should not apply such a requirement to an individual application. The applicant asserted that, while it opposes such an approach, if CMS intends to limit pass-through categories for devices it determines are widely available, then CMS must go through rulemaking to establish that standard.

Further, the applicant stated that it understood the utilization data CMS collects is requested to calculate the estimated total utilization across pass-through items in a given year. Finally, the applicant clarified that some of the marketing data provided on its application was inaccurate and that the Chew et al. (2025) study indicates that, based on review of outpatient hospital claims data, 2.3 percent of encounters involved single-use cystoscopes, rather than the estimated 23 percent initially provided.

Response: We appreciate the applicant's input. The applicant is correct that volume and utilization data are used to calculate the estimated cost of pass-through items. However, we may use any information submitted as part of a device pass-through application for the purposes of evaluating that application, if such information is relevant to other eligibility criteria. In addition, we continue to believe that our approach, including the question raised regarding the creation of a device pass-through payment category code for certain categories of devices, is consistent with both the statutory intent of section 1833(t)(6)(B) of the Act and with the implementing regulation at Sec. 419.66. As explained in the CY 2002 OPPS interim final rule with comment period (66 FR 55852 and 55853) and in other final and proposed rules (see, for example, the CY 2023 final rule with comment period, 87 FR 71886) thereafter, the transitional pass-through payment provision is intended as an interim measure to facilitate beneficiary access by allowing for adequate payment of new, innovative technology while we collect the necessary data to incorporate the costs for these items into the base APC rates. The statute and regulations specifically limit the payment for individual pass-through items to at least 2 years but no more than 3 years, with the intention that the costs for these items should be incorporated into the APC rates for the procedures associated with these items after that period. We believe that in if CMS has already collected cost data in the appropriate APC for devices that would be described by a potential device category code, then establishing such a device category code would be unnecessary and contrary to the intent of the statute. Further, CMS is not establishing a new standard as the applicant suggests; rather, the standard is set by the statute and regulation and our discussion of volume and utilization is part of our review of the evidence to determine compliance with the requirements of Sec. 419.66(c)(2), which we believe is consistent with both the language and intent of transitional pass-through payment provisions. We continue to believe that, consistent with the statute and regulations, transitional pass-through payment should be limited to those new and innovative technologies for which the necessary data to appropriately incorporate adequate cost data of these technologies into the applicable procedure APC have not been collected.

Because of the reasons discussed in this section, the VersaVue\TM\ Single-Use Flexible Cystoscope does not meet the substantial clinical improvement criterion to be considered as a device for transitional pass-through payment. Therefore, in this final rule with comment period, we will not address whether the technology meets the cost criterion required for transitional pass-through payment for devices. We are not approving the VersaVue\TM\ Single-Use Flexible Cystoscope for transitional pass-through payment status for CY 2026 because the technology does not meet the substantial clinical improvement criterion at Sec. 419.66(c)(2). (d) Other Comments

Comment: Multiple commenters recommended CMS calculate the device- related portion of APCs for purposes of determining transitional pass- through payment status eligibility and the device offset using only the cost of the devices replaced by the proposed device pass-through payment status device category. Specifically, the commenters recommended CMS eliminate the evaluation of device pass-through cost significance criteria when a proposed device does not replace any existing devices used in a procedure. For devices that replace some, but not all, of the devices used in a procedure, the commenters requested CMS revise the methodology of device pass-through cost significance criteria to assess the cost of proposed device using only the cost of the devices the proposed device replaces in the associated procedure. For approved pass-through devices, the commenters recommended CMS identify and apply an offset amount that reflects only the costs of the replaced devices for devices that replace only a portion of device-related costs within a procedure. The commenters asserted that the refinement of the device offset calculation would ensure a more accurate and fair evaluation of device costs and reduce unnecessary barriers for a procedure to perform safely and successfully. In addition, one commenter proposed that CMS consider a new policy to set the device offset at the lesser of the APC offset or the HCPCS-level offset for purposes of calculating transitional pass- through payments when insufficient claims data are available to demonstrate that the costs of a pass-through device are meaningfully reflected in the associated APC payment for the procedure. The commenter opined that this approach would prevent excessive and

unwarranted device costs from being deducted from hospital payments.

Response: We appreciate the commenters' recommendations regarding the revision of the methodology for calculating the device-related portion of APCs for the purpose of determining the transitional pass- through payment status eligibility and the device offset of a nominated device. We will continue to consider the issues and any additional public comments related to them.

Comment: We received multiple comments supporting the OPPS transitional device pass-through payment pathway and highlighting the important role the program plays in the treatment of Medicare beneficiaries. One commenter noted that the program bridges the gap between FDA approval of novel devices and their full integration into OPPS rates and encourages manufacturers to invest in innovation without delaying patient access.

Response: We appreciate the commenters' input and ongoing support of the device pass-through payment program.

Comment: We received several public comments requesting changes to the device pass-through payment policies, such as, but not limited to: modifying or removing the requirement that a device be surgically inserted or implanted. We also received multiple public comments requesting updates to the device offset amounts for existing device category codes. In addition, we received comments on devices that were not under consideration for device pass-through payment status for CY 2026.

Response: These comments were outside the scope of the proposals included in the CY 2026 OPPS/ASC proposed rule and we are therefore not addressing them in this final rule with comment period.