Medical device manufacturing is an extremely competitive market with companies often investing huge amount of money on new technologies.

Often, companies believe any new technology will automatically be eligible for higher level of reimbursement. But it is observed that each product has to get the nod from the regulatory authorities with each country having a separate set of regulatory laws and system for covering medical devices for reimbursement.

Any error in the implementing process will have a negative impact on the regulatory or clinical strategy. This makes it important to develop a reimbursement strategy in parallel with the development of the regulatory and clinical strategy for new medical devices.

Medical Device Reimbursement Strategy:

To develop a successful reimbursement strategy, medical device companies need to be well versed with the medical billing and coding language. As billing codes such as CPT and ICD are used for settlement of payment for the procedures.

In the US, a FDA approval for a device does not ensure reimbursement. The insurance company will consider a myriad of factors covered in their policies before making the final decision. The major players among the medical device commercialization in the U.S. include Medicare and large commercial insurers such as Aetna, Anthem, Cigna, Humana, and United Healthcare.

Commercial insurers frequently follow CMS’s (Centres for Medicare & Medicaid services) lead when it comes to coverage decisions. It is a US federal agency providing inputs by analysing the data from medical records to eliminate instances of fraud and abuse. This has lead to companies initially attempting to obtain CMS coverage and accordingly formulate their strategies to maximize the potential of commercial success and coverage.

In many situations, new technology is billable under existing codes, but it does not cover all costs associated with the technology. Consequently, making it difficult for hospitals and providers to come forward and adopt it.To overcome this, companies are required to understand payers considerations when issuing a new coverage policy or modifying an existing one.

For example, Medicare policy decisionswould influence to a greater degree on devices used primarily for elderly patients. Similarly, CMS provides with the option of applying for a new technology add-On payment (NTAP) to cover the cost of new medical technologies provided in the inpatient setting.

On approval, CMS pays 50% of the cost of the new device or technology along with the full DRG payment. In addition, it’s also important to be aware of the relevant stakeholders, who efficiently support the adoption of new technologies.

These stakeholders coordinate with medical device companies and providers to provide fair and equitable coverage for their innovative products. These include patients, healthcare providers, professional medical societies, the coding agencies and Payers.

CONCLUSION:

Reimbursement for new medical device or technology is a complicated endeavour. Companies are suggested to initially target a small number of payers based on member enrolment, their receptiveness to new technologies, and the stringency of their review policies.

Further to this, they can gradually expand to other payers as adoption rate increases, instead of obtaining coverage from the hundreds of commercial insurers. Besides, it is essential to understand which payers represent what percentage of the patient groups and what products would be used frequently for that age group when developing a reimbursement strategy.

-Tejaswini Hiremath
Research Analyst
Infoholic Research