How does payer reimbursement impact a product’s success in the marketplace?
GS: Simply put, without reimbursement the marketplace will not utilize the product or service to its fullest potential, which impacts all phases of the product life cycle – from early investments to optimizing revenue.
Can you briefly explain the current reimbursement system in the US and how providers get paid?
GS: While reimbursement is transitioning from paying for volume (more procedures = more revenue) to value (paying for outcomes), it is still largely a fee-for-service (FFS) model. However, some noticeable evolution from the FFS system to a value-based system continues each year as payers update their policies; such as bundled payment models and accountable care organization incentives. Most providers get paid by utilizing specific codes representing products or services listed on a fee schedule (e.g., physician fee schedule, durable medical equipment (DME) fee schedule) or group of codes that are combined to form a capitated or prospective payment system (e.g., inpatient diagnosis-related group (DRG) or Patient-Driven Payment Model (PDPM) in skilled nursing facilities (SNFs)).
What are some common reimbursement myths and/or mistakes?
GS: Assuming that there’s a code that represents your product – As a consultant, the first question I am often asked is “what code should I use for my product”? It’s not that simple. We have to take a few steps back and ask a client to provide much more information regarding the three broad and interrelated categories of coverage, coding and reimbursement. Without delving into all aspects of a market access and reimbursement strategy, there is no simple answer.
Falling prey to the “FDA approval = reimbursement” myth. I get to learn about new developing technologies on an almost daily basis. Healthcare is in good hands with all these innovators creating new solutions. However, a long standing myth in the medical device space is that with FDA approval soon comes reimbursement. Unfortunately, in most cases, that is not true. FDA approval only provides for safety and efficacy while payers will also want to understand how your product changes physician behavior, improves outcomes for patients, and whether it provides a cost benefit over existing products. The bottom line is that payers require more information than what may have been planned for when seeking FDA approval.
Mistakenly believing that your new product will be reimbursed much higher than your competitors’ – Payers will determine that based on your clinical evidence and it could be true. However, as a first step, payers will attempt to find a comparable product and slot you under that code with an existing reimbursement amount that may be much lower than anticipated.
When should a medtech manufacturer begin focusing on their reimbursement pathway, and how can reimbursement landscapes or assessments be of value?
GS: The easy answer is as early as possible based on resources and funding. Oftentimes, in order to secure additional funding from investors in small organizations or company leadership in larger organizations, revenue projections are necessary. Without a landscape assessment that can provide the organization with reimbursement scenarios, companies are often left to their best guess, which is no way to plan for the future.
Also, you’ll want to engage a market access and reimbursement professional prior to filing with the FDA because they can work alongside your medical affairs and regulatory team to ensure the payer perspective (mentioned earlier) is represented in the clinical evidence collected by your clinical studies, which helps facilitate coding and payment decisions with payers.
How can a medtech manufacturer establish appropriate coding for their product and influence decision-making in their favor?
GS: Clinical and economic evidence also forms the basis for your KOL, Technology Assessment, Patient Advocacy, professional society and political strategies should you need to work with the American Medical Association on a new CPT code strategy or CMS for a new HCPCS code.
What role does health economics data play in reimbursement decisions?
GS: Health economics (HECON) data helps clients develop data-driven solutions and analysis frameworks that can clearly articulate their value story in support of coverage, coding and reimbursement. HECON is an integral part of all decisions throughout the life cycle of the product from initial framing pre-FDA to marketing to the changing healthcare environment over time.