Originally Published MDDI June 2005NEWSTRENDS

Erin Bradford

June 1, 2005

2 Min Read
Reimbursement Hinges on Perceived Value

Originally Published MDDI June 2005


Erin Bradford

Drapkin urges early planning for device

Innovations in medical device technology and techniques have grown by leaps and bounds in the last few years. But as everyone knows, there will be very little acceptance of a new product if it doesn't receive adequate reimbursement and coverage.

Navigating the reimbursement maze can be tricky at best; at worst, a company can find itself with no code or an unsuitable code, few payers willing to cover the technology or procedure, and inadequate reimbursement for the device. Therefore, it is important to develop a comprehensive reimbursement plan early in a product's design, said Jacob Drapkin at a Frost & Sullivan Executive Summit in San Francisco in March. Drapkin is director of reimbursement and healthcare economics at Ethicon Endo-Surgery (Cincinnati).

“Not every new technology will require an assessment,” said Drapkin. Manufacturers must convey the technology's value proposition. It should be within the capabilities of a support staff to perform the function, and it should be accessible by large population groups.

Creating a reimbursement management system can be difficult, but the potential payoffs are large. Without a plan, a manufacturer may find itself facing delays in product adoption. Confusion on the part of the payer may lead to insurance denials. An uninsured product makes adoption of the technology more difficult and might even result in a disillusioned customer base. Coverage planning enables manufacturers to educate the payers, physicians, and consumers.

The first thing to do, said Drapkin, is perform a comprehensive coverage assessment. It is important to identify the payer and understand its policies on coverage, coding, reimbursement, setting, and use. Frequent communication is imperative. “Don't be afraid to call the payers and talk to them,” Drapkin advised. “Find out what's important to them. Ask them what kind of economic data they are looking for.”

Payers always want more evidence, Drapkin noted. Explain where the technology is going to fit into the market and who will benefit from it. Be open about the total cost of the care. Include any pre- or postoperative savings that will emerge. If a surgical treatment will have a patient back to work in three days instead of two weeks, include that data.

Even then, a favorable reimbursement decision is not a given. “You must understand how to articulate value to individual stakeholders,” said Drapkin. The concept of value is key. “Stakeholder value equals perceived benefits minus perceived cost,” he continued. “You need to show them what they are getting. If your technology saves a patient from another procedure that costs thousands of dollars, value is being delivered.”

Copyright ©2005 Medical Device & Diagnostic Industry

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