These days, it often seems the main struggle for medical device companies is not earning FDA regulatory clearance, but rather, securing reimbursement from CMS and private payers. With that in mind, there are few in the industry who don't feel they could use some more knowledge about how best to face reimbursement challenges.
MD+DI caught up with Edward Black, founder and president of St. Paul, MN-based Reimbursement Strategies, LLC for his insights on the medical device reimbursement environment today. Through an e-mail exchange, slightly edited below, Black gave us his takes on our biggest questions.
If you'd like more reimbursement tips from Black, register for the BIOMEDevice San Jose conference, held December 7-8, 2016. He'll be part of a panel discussing reimbursement trends impacting connected devices.
MD+DI: What key factors should companies keep in mind about reimbursement as they build a new medical device?
Edward Black: First, get a reimbursement assessment early--while still in the product design phase. Understand how your device may or may not fit within current payment methodologies such as DRGs, resource-based relative value scale (RBRVS), or bundled payments. Find out sooner rather than later about prospects for coding, coverage, and payment--the holy grail of reimbursement. Then develop a reimbursement strategy. Without one you don't have a business plan and all venture capitalists now require it before they will invest.
Second, identify the clinical problem first--design accordingly. Retrofitting technology from another application with hopes of making it suitable as a covered medical device rarely works. Large health plans are more sophisticated than you may think.
MD+DI: What are the must-haves CMS and private payers look for when deciding whether to cover a new device?
EB: Health plans no longer give technology companies the opportunity to bully and brow-beat them into favorable coverage decisions. The value of key opinion leaders and staff has been declining. It is now all about the evidence. How well does it work in real life practice, what treatment will it replace, what is the risk of it being used off-label, and is it more cost effective than current treatment/diagnostic methods both in the short and long term? Medical coverage decision makers will look at the same data differently. You need to understand their pain.
MD+DI: What is your top tip for improving a device's likelihood of reimbursement coverage?
EB: Make certain the device has clinical utility in real world practice. Medtech companies spend hundreds of thousands of dollars on clinical trials at the best university-based medical centers and with the most highly skilled practitioners. Once they are covered, these new devices get used by physicians and other practitioners of all skill/knowledge levels. Make sure your clinical results are consistently reproducible and achieve real world outcomes among all the practitioners who will use them. Keep in mind, too, that payers are looking for clinical solutions that cross therapies, i.e., use of a new device vs. an expensive drug.
MD+DI: Do medical device companies have to run cost-effectiveness studies to get reimbursed?
EB: The first gate technologies must pass is clinical effectiveness. Cost effectiveness studies can be helpful when a new technology can deliver non-inferior results less expensively or when results are superior, but costs are higher. If costs are comparable to the existing standard of care your device needs to be demonstrably better. Payers often will not invest the time to analyze new devices that cannot identify a clinical or economic advantage. Value = Benefit/Cost. The same product can have much more value if the cost is lower.
MD+DI: What's your best advice to a company who is having reimbursement challenges?
EB: If your problem is getting coverage for your device, put yourself in the shoes of a health plan medical director. You need to feel their pain. Understand their perspective, anticipate their objections, and know that health care delivery issues are often regional--not national. And, realize that like all of us they have their own biases. Different technology assessors will look at data differently. Positive coverage can take a long time and a lot of resources. Companies spend huge resources on marketing to hospitals and physicians, but often don't consider who's paying the bill. Think about how you would market to a payer--the process and the messaging are completely different.
MD+DI: Is there any recourse for a company whose medical device has already been denied reimbursement coverage by CMS or a private payer?
EB: Companies could consider working with specific payers and providers on pilot programs to establish the clinical or economic benefits of their device. A successful pilot could lead to a better opinion of the device. But be realistic. There remains tremendous growth in the medtech industry and health plans are under tremendous pressure to constrain costs for their members. You need a really strong case and specific objectives to be successful with a pilot program. Your product may have to be on a cash (patient pay) basis until you can make a compelling case for coverage.
MD+DI: Is reimbursement easier to secure in any countries outside the United States (OUS)? If so, which ones?
EB: Reimbursement pathways OUS are generally easier to navigate because they are often single-payer, government-based systems rather than the complex government/private payer environment in the U.S. (Remember that Medicare is a national program, but coverage decisions are made by the local Medicare Administrative Contractors, thereby yielding coverage decisions that vary across the country.) We have addressed medtech conferences in Norway, Sweden, Denmark, the UK, Germany, Japan, and Canada and every country is confronting the same problems--aging populations, fast developing new technologies to be constantly evaluated, costs increasing greater than GDP, and an overall affordability problem. The economics of healthcare are a worldwide phenomenon. It's not easy anywhere, but manageable. Like a gymnast on a balance beam--the pathway is often very narrow and any misstep can take you out of the competition so plan and step very carefully.
MD+DI: How do you expect the reimbursement environment in the United States to change in the next 10 years?
EB: It won't get any easier. Even an appeal of the Patient Protection and Affordability Act won't change the fundamental issues confronting healthcare in the United States. We have a multi-class system limiting access; we can't afford current costs and those costs are likely to worsen; waste and inefficiency still drive much of our healthcare. For new technologies they must enable better outcomes than the current standard of care, have the same outcomes with lower cost, be consistently reproducible in real world practice, and be targeted more toward chronic disease. Beware of promoting technological solutions to healthcare problems that could be better resolved by healthier lifestyles.
MD+DI: What can device companies be doing now to proactively prepare for coming reimbursement changes?
EB: The fundamental issues confronting health care have not changed for many years. It is only that the Patient Protection and Affordable Care Act has emboldened health plans to enforce what they've been saying for years--prove your therapies/devices work better than today's standards, help us reduce costs, target solutions toward our problems (chronic disease vs. poor lifestyle decisions). Government and private don't want to ration care, but they will pay for rational care.
|Learn about the latest medical device technologies at the BIOMEDevice San Jose conference, December 7-8, 2016.|
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