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The Reimbursement Sales Process

To ensure the long-term success of a new technology, medtech manufactureres must integrate reimbursement planning into their sales processes.

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When preparing for the launch of a new product, medical device manufacturers should also evaluate whether their technologies will have a foundation to build on two to three years down the line. Companies that rely on typical consultative sales behavior may find that the long-term prospects for their technologies are not promising.

Nevertheless, proper sales force management and activities can contribute to the success of a new medical device and ensure that the technology will have a place in the market. In order to achieve such long-term success, medical device companies' sales forces should spend time learning about the reimbursement process for their companies' technologies.

A successful sales message is no longer simply about the clinical benefits of a product or technology. Providers—both physicians and hospitals—also want to know what payment mechanisms will accompany any new medical device. Accordingly, before introducing a new product into the marketplace, medical device companies and their salespeople need to understand how coverage, coding, and payment for the product will occur. By clarifying reimbursement details and being able to share coverage, coding, and payment information with customers, medtech companies can lay a foundation for the long-term success of their products.

In spite of the apparent importance of the reimbursement process, however, many in the medtech industry view that process as being obscure and mysterious. In turn, this perception results in reluctance to understand the details of the process adequately. Without clarity on these issues, the success of a newly launched technology can lag significantly behind a company's forecasts. For a start-up company, a launch may also not meet the expectations of the venture capital firms investing in the company.

The Business of Healthcare

In medical device firms, management personnel often separate sales and reimbursement responsibilities and concerns—but in reality, the two overlap. Sales concerns include issues related to product adoption, clinical issues such as safety and efficacy, and competition, to name a few. Reimbursement concerns include issues related to coding, claims payment, and payer acceptance. These concerns are inextricably linked, requiring an ongoing dialogue between manufacturers, healthcare providers, and payers (see sidebar 70).

In today's competitive healthcare environment, getting healthcare professionals and their facilities to adopt a new device often means that the manufacturer's sales force must operate at an enterprise sales level—positioning the manufacturer as a strategic partner for its customers. Large, multinational medical device corporations may have an easier time positioning themselves as prospective partners, but the imperative to do so exists for large and small companies alike. Achieving this level of interaction requires a business dialogue with the customer, meaning that the sales team must learn to ask the right business questions.

In order to approach healthcare providers and administrators from a business standpoint, medical device companies must develop a thorough understanding of the business model as viewed by both the target practicing physicians and the payer community. Given that each new medical device is associated with specific providers, patient populations, payer mixes, and sites of service, each new device presents a unique set of reimbursement challenges. Thus, it is crucial that the manufacturer develop an appropriate action plan specific to the new technology.

A technology-specific action plan can help medical device companies, physicians, and payers navigate the complexities of coverage, coding, and payment for a new product. Such an approach greatly increases the likelihood of long-term adoption for a new technology.

Reimbursement Action Plan

An appropriate reimbursement action plan addresses several elements, including the following.

  • Payer mix and market segmentation. The target patient populations for a new technology and the payers that cover them, including Medicare, private payers, and other entities.
  • Coverage. Policies used by payers to establish medical necessity. With new technologies, coverage may need to be established.
  • Coding. The various coding systems used to identify diagnosis, hospital procedures, physician procedures, and equipment.
  • Payment. The amount of money a physician or hospital receives for providing services.
  • Site of service. A significant factor in determining cost. New technologies sometimes enable a procedure to be performed in an outpatient setting rather than a more intensive inpatient setting.

A company needs to understand each of these elements and the interactions among them so it can maximize the return on the company's sales time. Once the circumstances surrounding the new technology are identified and documented, an action plan needs to be developed. This information should be integrated into the sales process and become part of the message that is shared with customers.

Bringing the reimbursement and sales processes together requires holding specific reimbursement training for a manufacturers' sales team. Some medtech companies are currently implementing such training programs with the help of their reimbursement personnel, who can help to explain the details of the company's reimbursement action plan to the sales force. Once sales personnel understand reimbursement issues, they will be equipped to invest the time and energy necessary to operate an effective reimbursement sales process (see sidebar).

Earlier Sales Transitions

Over the years, sales force behavior in the medical device industry has undergone a number of transitions, evolving from one model to another in response to the emerging needs of the marketplace. A previous sales-model transition offers examples of the steps that must be taken to successfully change a company's sales model.

Years ago, many medtech companies successfully altered their standard sales processes to make use of a model focused on capital equipment sales. In order to make this transition, sales representatives had to become fluent in healthcare providers' business practices and comfortable with a longer sales cycle. The longer sales cycle involves the following steps.

  • Gathering information about individual departments in a hospital.
  • Identifying key individuals involved in purchasing decisions.
  • Understanding the hospital's committee and decision-making processes.
  • Negotiating the evaluation of the product, including acceptable objectives and outcomes.
  • Bringing all the elements and individuals together to secure a commitment to purchase the equipment.

Once the sale is made, it is followed up by multiple interactions between the manufacturer and customer, forming the basis of a consultative partnership. The methodical completion of all of the above steps can easily span 12-18 months. This sales mentality has come to be known as enterprise sales.

Just as some companies previously changed their sales behavior to a capital equipment model, medtech companies must now consider the need to transition to a reimbursement sales process. In today's healthcare marketplace, such a process is vital to putting a new medical device on the road to successful adoption.

Building a Reimbursement Sales Process

Armed with a reimbursement action plan, a sales representative can strategically pursue the steps involved in a reimbursement-focused sale. During this process, the sales representative works in conjunction with physician champions to favorably influence payer acceptance of new technologies.

Figure 1. Timelines of the capital equipment and reimbursement sales models for new medical device technologies, in months. A 15-month schedule is typical for local health plan offices; national payers may take slightly longer.
(click to enlarge)

The steps involved in a reimbursement sales process are similar to those in a capital sales process (see Figure 1). The following sections describe key considerations for each of the steps associated with a reimbursement sales process.

Profile the Account. A good account profile includes a customer's clinical concerns as well as all related business concerns. A profile should consider such issues as the location at which the technology will be utilized. Manufacturers need to evaluate whether treatment will take place in an inpatient, outpatient, or physician's office setting. If the treatment is facility-based, a good profile should indicate whether the physicians have the capabilities to introduce a new technology. This can be determined by assessing whether the physicians have previously introduced other new technologies to their practices and, if so, whether they have a successful track record in implementing new procedures.

Selecting the right physician champions for a new technology is critical to the success of a reimbursement sales process. Although it takes energy to work with a physician champion, payers prefer to hear about new technology from local healthcare providers. The right physician champion is one who is willing to commit time and patience to introducing new technology. Expectations, a timeline, and required physician actions should be clearly specified. The manufacturer's main role in this process is to support physicians' efforts with the necessary documentation.

In addition, an account profile should recognize other parties involved in the implementation of a new technology. The profile should outline a list of meetings that need to be scheduled with various parties at the hospital, including representatives from a facility's payer relations or reimbursement departments.

Review the Process and Steps. The next step in a reimbursement sales process is to review the information gathered while profiling the account. This usually requires a meeting with several individuals from the facility. People present at the meeting should include a physician champion of the technology, the chief financial officer of the facility, a coding and reimbursement manager, a payer relations manager, a director of value analysis, a new-technology manager, and an individual from the facility's procedure area, such as the operating room or outpatient surgery department.

The purpose of this meeting is to analyze the impact that the new technology would have on the facility. The prospective customer institution will want to understand what current procedures the new technology will replace, how it will fit with existing payer contracts and payment levels, and where the procedure will be performed. The goals of the individuals gathered at the meeting will be to discuss any unique circumstances at the institution and find a way to proceed to the next step.

Conduct Evaluation. Following a meeting of all the stakeholders in a new technology, the physicians must then identify and treat appropriate patients. Physicians must take care to choose good candidates for the new technology to ensure that outcomes match the results of the manufacturer's published trials. In a sense, this step is a duplication of the clinical trial, but on a smaller scale. It enables payers to verify that the technology will produce expected outcomes outside of the clinical trial.

In some cases, physicians may want to communicate with the medical director or medical policy analyst at the local health plan in advance in order to agree on the number of patients who will be treated. The outcomes will be summarized and reviewed with the plan at a later date.

Summarize Outcomes. Following the evaluation, patient outcomes are summarized and presented to the health plan. Participants of earlier meetings may need to reconvene to assist with preparation of the data. Cost and resource data should also be summarized for the payers. Advantages that the new technology offers—such as a move to a less invasive site of service, reduced use of staffing and resources, the less invasive nature of the new technology, or decreased recovery-room time--should be included in the summary.

In some cases, a new technology might require increased staff and resources, meaning it will cost more than comparable procedures. In this case, the clinical justification in the form of improved patient outcomes should be documented and presented. While this process is likely to be handled by the manufacturer's reimbursement team, a sales team that is aware of the advantages of the new technology it is selling—as well as payers' reactions to those advantages—will be better able to relate to the business needs of potential customers.

Establish Payer Awareness. In this step, outcomes information is reviewed with the medical director or medical policy analyst in order to come to an agreement as to whether patients can be treated and claims can be processed. This step may require a face-to-face meeting with the local physician and the payer, in which the physician could talk through his or her experience with the new technology.

Finalize Coverage, Coding, and Payment. If the previous steps are carried out to the satisfaction of all parties involved, finalizing coverage, coding, and payment is the culmination of the reimbursement process. For the process to be complete, the payer must have an understanding of the new technology, appropriate patient selection criteria must have been described, a method for coding the claims must be agreed on (even if, in the absence of an existing CPT or other code, an unlisted CPT code is used for a period of time), and payment must be established based on comparable procedures.

When all these steps have finally come together, all parties have worked together over a significant period of time to establish the new technology. Such collaboration helps ensure ongoing adoption of the new technology.

Securing a Place in the Market

Establishing new medical devices in today's healthcare market requires a sophisticated process that focuses a company's sales activities on more than simply numbers sold. In a reimbursement sales process, a manufacturer and physician join forces to educate the market about the appropriate place for a new technology. In such a procedure, the term customer takes on a broader meaning to include institutions where the new technology will initially be implemented, physicians who may adopt the technology as it continues to gain a foothold, and the payers who will determine the level of reimbursement that the new technology will receive.

The activities of a sales force in the reimbursement sales process are not typical revenue-generating activities. However, if the process is implemented correctly, sales and revenue will be an indirect result. The reimbursement sales process results in an understanding among payers regarding the appropriateness of a new technology, a method to process claims, and a payment level for those claims.

Reimbursement sales activities are different from typical consultative sales activities or rehearsed sales pitches that attempt to pass for consultative behavior (see Table I). Perhaps the most significant advantage of a reimbursement sales process is that it helps a manufacturer build a foundation for its product, thereby building a foundation for increasing sales in subsequent years. Traditional sales processes often strive to attain sales goals at the expense of laying a proper foundation for the future of a technology. Without such a foundation, a company may enjoy one or two years of increasing sales. But ultimately, sales may begin to falter if providers encounter resistance at the payer level.

Consultative Sales
Enterprise Sales
Contact existing or familiar customers.
Identify or profile early adopters or key opinion
     leaders; these contacts may not be existing
     customers.
Assume customer has an understanding of
     business or reimbursement issues.
Conduct a dialogue among all affected parties;
     explore new areas.
Assume reimbursement because it is
     negative and will detract from positive
     nature of sales call.
Salesperson and customer jointly identify actions
     that will be mutually beneficial.
Reimbursement issues are difficult to
     understand so are not addressed.
Cultivate customers to help educate the market
     about the new technology.
Table I. Characteristics of a traditional consultative sales model versus those of an enterprise sales model, in terms of salesperson behaviors.

Conclusion

To ensure a successful future for new devices, the behavior of a manufacturer's sales team must change with the evolving marketplace. History has shown that sales teams are capable of such evolution. Years ago, sales representatives at certain medtech firms embraced a new process for capital equipment sales. By learning their customers' processes and managing the multiple steps of a sale, they found greater success than with traditional sales tactics. Today, medical device manufacturers need to evolve further by adopting a sales process that addresses the payers and the business side of medicine.

Karl Florence is senior director of managed care for Dexcom Inc. (San Diego), a company that manufactures a continuous glucose sensor for the management of diabetes.

Copyright ©2007 MX
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