Will 1998 Be the Year of Reimbursement?

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An MD&DI  March 1998 Column

To realize the full potential of the FDA reforms, manufacturers now need to smooth the reimbursement process as well.

Each year MD&DI surveys medical device industry executives to gauge the business climate for the coming year. Considering the robust U.S. economy and the continued favorable demographics, it's logical to presume ongoing growth in 1998. In fact, for the second straight year, nearly 60% of executives called the business climate good or excellent and forecast double-digit gains for the coming year.

Interestingly enough, while FDA is often maligned as a source of frustration for many companies, far fewer firms experienced problems with FDA in 1997 than in the past. With the passage of the FDA Modernization Act, industry executives can be even more optimistic about the future business benefits of streamlined FDA decision-making processes.

To ensure these benefits, though, industry needs to keep an eye on how FDA actually implements the new law. As Thomas Britten, president of Scimedx Corp. (Denville, NJ), told me: "There are sections from the 1976 Medical Device Amendments that still are not in place. We need to make sure all the stipulations get implemented and work with Congress on CDRH funding so there won't be an excuse to impose user fees."

If 1997 was the year of FDA reforms, 1998 promises to be "the year of reimbursement and market access issues," said Thomas Loarie, chairman and CEO of KeraVision, Inc. (Fremont, CA), at the Medical Device Executive Forum in Anaheim, CA, in January. HCFA now spends an average of 864 days to decide on product reimbursement. While the agency underwent a major restructuring in 1997, industry must take the initiative to work with HCFA to streamline the processes that continue to keep medical device products from market and to learn what types of information HCFA finds helpful. Manufacturers are used to answering FDA's "Does the product do what it claims to do?" question; now industry must learn how to respond to HCFA's query, "Is it good medicine?"

And though breakthrough technologies tend to face the greatest hurdles winning coverage on a national level at HCFA, even more-common devices can find it difficult obtaining coverage regionally or locally. Just as the new Modernization Act has set time limits for FDA to approve devices, it would be beneficial for HCFA and private insurers to have to publish and then abide by set coverage review times.

Complicating dealings with HCFA, in 1998 manufacturers will need to familiarize themselves with the Medicare Reform Law that was passed last August. This law changes most of the rules for reimbursement for most medical device purchasers. Trade organizations for the industry, such as HIMA and MDMA, can provide plenty of background on this subject.

To have the most impact on FDA and HCFA, manufacturers need to join forces to educate these groups about industry concerns. By joining and being active in one or more of the national trade organizations representing the industry, manufacturers create a united, strong voice. Both HIMA and MDMA currently are acting in the industry's behalf to further develop cooperative relationships between industry and the professionals at FDA and HCFA.

This year may very well be another good year for the medical device industry. But to ensure a bright future, manufacturers must address new challenges just as vigorously as they have old ones. To realize the full potential of the FDA reforms, manufacturers now need to smooth the reimbursement process as well.

Stacey L. Bell

[email protected]

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