CMS Coverage Determination Guide: From NCD to LCD to Real Reimbursement

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FDA authorization and Medicare coverage are different events with different timelines, decision criteria and decision-makers. A commercial model built on "FDA clears it, payers will follow" skips the second decision. Understanding how Medicare coverage is decided is essential for any plan that depends on Medicare payment.

The gap between authorization and national Medicare coverage can run a year or more, and commercial payers make their own decisions on their own timelines.

National vs Local Coverage Determinations

National Coverage Determinations (NCDs) apply across Medicare nationwide and are issued by CMS. Local Coverage Determinations (LCDs) are issued by Medicare Administrative Contractors (MACs), each covering a defined region. Where there is no NCD, coverage is decided locally, through an LCD or claim by claim.

Requesting a National Coverage Determination

Anyone, including a manufacturer, can ask CMS for an NCD by submitting a formal written request with supporting evidence, and CMS says the process generally takes nine to twelve months from when it formally accepts a request. Local coverage is a separate, contractor-by-contractor process. Which route matters more depends on the device's evidence base, how urgently it needs coverage, and how uniform coverage needs to be across regions. For Breakthrough Devices, CMS has also proposed a faster national pathway, RAPID; see our article on RAPID.

MolDX and Molecular Diagnostics

MolDX is a joint operating agreement among four MACs (Palmetto GBA, Noridian, WPS Government Health Administrators and CGS Administrators), covering seven Medicare jurisdictions, that share the same policies and procedures for molecular diagnostic tests. For a molecular test billed in those jurisdictions, MolDX requirements shape the route to Medicare coverage, and a submission that doesn't meet them can delay coverage.

Hospital Outpatient PPS and the APC

For procedures performed in hospital outpatient departments, the Outpatient Prospective Payment System (OPPS) and its Ambulatory Payment Classifications (APCs) set payment. Annual updates, and especially packaging policies that fold a device's cost into a procedure payment, can change device economics from one year to the next.

New Technology Add-On Payment

The New Technology Add-On Payment (NTAP) is an additional inpatient payment for new medical services and technologies that meet newness, cost and substantial clinical improvement criteria. A technology generally stays eligible for about two to three years after it reaches the market, until Medicare's inpatient payment groups reflect its cost. Breakthrough Devices have been able to qualify without meeting the substantial clinical improvement criterion; the FY 2027 inpatient final rule ends that alternative pathway for applications beginning in FY 2028, with devices designated Breakthrough by September 30, 2026 still able to use it for FY 2028 and FY 2029. A plan that counts on NTAP also needs a plan for when it ends.

Commercial Payer Coverage

Commercial payers make their own coverage decisions, may apply different criteria from Medicare, and move on their own timelines. Modeling commercial coverage simply as a reflection of Medicare status can overstate early payer access.

Reimbursement strategy is not a byproduct of FDA authorization. It is a parallel discipline with its own frameworks, timelines and decision-makers, and it is easier to build alongside product development than after launch.