Developing an In-House Reimbursement Paradigm

Effective reimbursement strategies start with open communication channels in-house.

Debbie Brandel, Barbara Grenelland 1 more

October 1, 2008

11 Min Read
Developing an In-House Reimbursement Paradigm


(click to enlarge) Effective reimbursement strategies encompass a wide range of communication methods with payers and providers.

One of the most frustrating aspects of coverage and reimbursement for medical devices may not be the payers. In fact, you may not have to look any further than down the hall. One of the topics that frequently comes up in our discussions with medical device manufacturers, big and small, is how most other parts of the organization do not understand the insurer's perspective. Many personnel responsible for coverage and reimbursement at a medical device company have been on the receiving end of a frantic call from a sales staff that was being bombarded with questions by customers on the effect of a Medicare cut or a negative coverage decision.

The person in the company responsible for reimbursement issues often has to be the naysayer in the room with the product development or R&D staff, telling them that there is little or no chance that the insurers will pay for the newest development. Given the pervasiveness of the problem, is there a solution or is it inevitable? This article describes ways in which reimbursement professionals can eliminate some of the obstacles within their organizations so that more time can be spent waging the reimbursement battle with the outside world.


The first task is to educate the other parts of the organization about the reimbursement function at the company and to explain why it is important. Reimbursement professionals should not assume that others are familiar with what they may consider to be rudimentary knowledge.

Begin with the premise that many departments of the company do not understand how private payers and Medicare make coverage and reimbursement decisions. Therefore, other employees cannot be expected to focus on these issues until they become a problem.

Fellow employees should be familiar with the importance of the economic argument (i.e., how a new device will save the insurer money, or, at worst, not cost them any more than existing modalities). There is also a need for comprehensive clinical trial data and the need to incorporate the appropriate provider incentives such as additional reimbursement. But these issues are often considered as afterthoughts. The objective is to educate the various sectors of the organization on the extent to which coverage and reimbursement have a direct effect on the company's ability to reach its goals—that way it is much easier for the reimbursement professional to function on a day-to-day basis and to obtain the necessary resources and support.

A way to convey these concepts is to develop a presentation that succinctly explains the decision-making process for both Medicare and the private payers (see the sidebar, “Understanding the Medicare Decision-Making Process”). Include a description of how these issues affect the company's products and use specific examples from past experience whenever possible. Schedule a series of meetings to present to each of the key departments in the organization. Be sure to clearly identify the reimbursement professional's role in the process, how this role supports the department's goals, and how the professional can provide the necessary support to have more-effective discussions with the payers. If there are specific issues that the company is trying to address, consider arranging a meeting with a medical director who has private payer experience to explain a director's perspective firsthand. Medical directors are generally approachable and are often especially responsive if a company enlists the support of customers that are participating providers in the payer network.

Like Medicare, private payers are concerned with the efficacy of the technology and the extent to which it will result in a significant benefit compared with current technologies (see the sidebar, “Understanding the Decision-Making Process by Commercial Payers”). The payers are also concerned with how the new technology will affect the bottom line. Recent consolidations and conversions to for-profit status for many of the large national payers have increased the pressure on healthcare insurers to adhere to a policy of ensuring shareholder value. For example, technologies that represent only marginal or no improvement to health outcomes and potentially add to medical claims expenses are unlikely to receive a favorable response from the payers.

Manufacturers must also understand how the new technology will be incorporated into the reimbursement methodology used by the insurer to pay its providers. For example, in some cases, a new device involves a completely new procedure that requires a separate current procedural terminology code for billing purposes. As separately reimbursable items, such devices have a direct effect on the payers' bottom line and, as a result, receive the greatest degree of scrutiny from the payer in making a coverage and reimbursement decision.

At the other end of the spectrum are the devices that augment or improve an existing procedure but are unlikely to involve any separate reimbursement from the payer. For example, a new surgical tool might represent a significant advance in the procedure but may not require any change in reimbursement. The provider would continue to be paid the same amount of money regardless of whether the new device is used. In such cases, the providers must be convinced that the new device will enable them to provide the service more effectively or more efficiently. In many situations, the opportunity for additional reimbursement is not as clear, and manufacturers may have to undertake a significant lobbying effort of the payers to convince them of the benefit of providing additional reimbursement. In the case of a technology such as computer-aided diagnosis, for example, it is up to the manufacturers and the providers to demonstrate how this type of technology can save costs in the long run (and therefore be eligible for additional reimbursement).

It is important for all departments of an organization to understand these nuances and to hear from the payers directly. Including your colleagues in meetings with the payers will help them understand how the payers think. The other parts of the company will have the validation they need to react to payer concerns and invest more time and energy in coverage and reimbursement. At the same time, a meeting can open the door for an ongoing dialogue with the individuals who make the decisions that affect the company's products.

Internal Communication

Developing effective communication strategies throughout the organization is the key to a more successful internal reimbursement function and, at the very least, a less stressful one. It is essential to ensure that communication is flowing both into and out of the reimbursement group. Information flowing out can cover a variety of topics, including:

  • General healthcare reimbursement trends and developments such as U.S. healthcare spending data and reports, private payer news and developments such as consolidations and mergers, and trends in healthcare policy (e.g., consumer-driven healthcare and disease management).

  • Medicare coverage and reimbursement developments, including new local or national coverage decisions.

  • Medicare and Medicaid regulatory developments (for example, the recently released Medicare Inpatient Payment Rule for 2009), including an analysis of its implications for company products and services.

  • Congressional actions such as new legislation, appropriations, or pending bills that would affect the company (e.g., the Deficit Reduction Act of 2005, which brought sweeping changes to the Medicare and Medicaid programs).

  • New rules and policies issued by private payers or their agents (e.g., radiology benefits managers, pharmaceutical benefits managers, disease management companies).

Internal communications can include simple periodic e-mail broadcasts or newsletters as well as the development of an intranet Web site. Ideally, periodic on-site meetings should be arranged to facilitate discussion and encourage ongoing dialogue among the various parts of the company.

Figure 1.(click to enlarge) Typical reimbursement communication channels.

Regardless of which methods are ultimately selected, several issues must be considered at the outset in deciding how and what to communicate. First, keep in mind how the information will be received by the company and how it can be used. Certain developments, such as new coverage decisions, can be critical information that the sales staff should know about as quickly as possible. However, information cannot be received in a vacuum—a working relationship needs to be established with whoever receives the data so that a plan of action can be developed when appropriate. No company wants to create a situation in which multiple parties are contacting payers in an uncoordinated fashion.

Second, consideration must be given to the time and resources required to maintain the communication form selected. Periodic e-mails and newsletters typically require less time than a formal intranet or Web site. Although an intranet system or Web site can be a highly effective means of communication, it must be updated regularly to provide any benefit. The company may want to outsource the development of a Web site or hire a dedicated internal webmaster, particularly if customers or other outside personnel will have access to the site.

Providing a vehicle for information to flow into the reimbursement group is equally important. The sales staff, for example, is often the first to hear about new or potential policies in their local markets. Existing customers are often the first to hear about new developments in local coverage and reimbursement decisions. Effective methods of capturing and communicating such information are essential. In addition, customers are also an excellent source of data for developing economic arguments or for finding evidence to make the case for coverage to a specific payer.

External Communication

Strategies for communicating with the outside world (i.e., prospective and existing customers) are equally important. In fact, an effective external communications strategy can help improve understanding within the organization and reduce the size of your inbox. A Web site with relevant, timely information on Medicare and private payer policies can help answer provider questions that would otherwise end up on the reimbursement group's desk. In addition, it serves as a resource that sales staff can point to during the sales cycle and that both customers and staff can continue to rely on for up-to-date information. The key is to make the site user-friendly, accessible, and accurate, which requires an ongoing commitment of both time and resources.

One market segment that is often overlooked in terms of an external communications strategy is the payer community. In addition to keeping in mind the needs of the company and its customers, it is vital to keep the payers informed of new developments. Payers have a long list of issues that they are constantly addressing, such as contract negotiations with their providers, changes in benefit design and premium increases, implementation of new reimbursement methodologies, etc. Therefore, it is important to prioritize the types of issues brought to their attention. Major developments in technology, such as the introduction of a new CT or PET technology or a new type of stent, would be appropriate, particularly because such technology is likely to have a significant effect on utilization and claims expense. Keeping the payers informed also establishes a more collaborative relationship rather than an adversarial one, in which policies are developed without the benefit of the most recent information. When appropriate, newsletters can be shared with the payers on a periodic basis.

Most payers will welcome the opportunity to receive information if it is concise and consistent with their area of responsibility. It will afford reimbursement professionals the opportunity to follow up with occasional calls or e-mails to let the directors know that they are available to address any questions or concerns or to provide more information.


Establishing the lines of communication, and a periodic, reliable source of information, goes a long way toward making the reimbursement function more efficient. The process begins with getting other sections of the company involved and maintaining lines of communication. At a minimum, it eliminates some of the burden that exists in a more free-flowing, ad hoc system and helps to strengthen relationships both inside and outside the organization.

Debbie Brandel is a principal with Preferred Health Strategies (PHS; Rye Brook, NY). She can be reached at [email protected]. Barbara Grenell is the president of PHS. She may be reached at [email protected]. Lovett is a principal with PHS. Contact him at [email protected].

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