The ACA remains viable this week, after the latest effort to repeal and replace Obamacare was thwarted by the Senate. The rejection of the most recent ACA replacement iteration was met with relief by many for myriad reasons (resulting in an abysmal CBO score), some of which include increasing the amount of uninsured Americans by 22 million, the gutting of Medicaid by $772 billion over the next ten years, and an undersized budget for contending with America’s opioid epidemic.
During these partisan healthcare reform efforts, medical device therapies face uncertainties and hardships when introducing products to market. Payment and reimbursements for new devices are bound by rigorous process restraints, which could stall utilization if coverage becomes limited and cost-sharing becomes too great a burden for payers.
To position their product for universal adoption and commercial success, brands must create a thoughtful blueprint aligning FDA approval, clinical data, and plans for timely payment very early on in their device’s inception, and implement the three-pronged requirements of reimbursement. Establishing a commercialization roadmap for a new or improved medical technology which includes payment and reimbursement design jockeys brands for quicker approval, adoption, and sales growth.
The necessity of strategy
Despite what some companies might mistakenly assume, creating an effective and innovative therapy approved by the FDA isn’t the starting point for widespread utilization; strategic reimbursement planning should be rooted before FDA approval. In doing so, medical devices can immediately initiate sales following the conclusion of the regulatory approval process, or in some cases guarantee a higher level of reimbursement than comparable therapies in the marketplace.
Delaying reimbursement consideration can result in negative consequences, such as prolonged remittance and stunted utilization. Therapy efficacy alone is not enough to ensure reimbursement; a new technology is not necessarily reimbursed for a greater amount, or sometimes even covered at all by private insurers and Medicare. A successfully executed reimbursement pathway can take as long as years, so manufacturers need to draft a game plan for payments sooner rather than later.
After working with the FDA to craft use phrasing for coverage, device manufacturers address the concerns of policymakers and payers. In concert with reimbursement planning, evidence of positive outcomes should be accepted from the medical community to ensure coverage, proper coding must be assigned, and payment design mapped out.
This is the three-pronged attack of reimbursement strategy: 1) coverage 2) coding 3) payments. Supported by clinical outcome data, these considerations must comprise the critical planning for medical device market success.
Depending on the therapy, coverage challenges can look a bit different but the goal is the same: universal coverage. “Coverage” applies to the terms in which private payers and the Centers for Medicare & Medicaid Services (CMS) will remit payment for devices.
Medicare addresses coverage using a National Coverage Decision (NCD). An NCD will only cover a small population of new technologies which are not currently defined by regulations but have amassed a large amount of clinical data. In the absences of an NCD, Medicare contractors can opt for Local Coverage Decision (LCD) considerations for devices which do not fit into established regulations.
The importance of coding
Coding is the universal language spoken by CMS, payers, physicians, and facilities. A therapy’s code denotes payment, and without it payment and reimbursements cannot be rendered for the device. Codes are alphanumeric and generated to indicate services for claim forms. Ideally, new devices can use an existing code for claims, but sometimes they will have to obtain a new one.
Value-based reimbursements and patient-centered care are changing the healthcare landscape, including therapy pricing internalizations. Devices must prove effectiveness, in conjunction with medical procedures that are covered by a single payment to the facility for a procedure. Facility and physician practice payments for devices determine product sales.
The CMS services (the largest third-party payer) limits technology coverage to what is deemed “reasonable and necessary” for treatment. Devices included in the bundled-payment system can circumvent “full reimbursement” challenges, even if a new technology.
But being a bifurcated approval system, FDA clearance does not guarantee Medicare bundled-payment approval, or reimbursement requirements. It can take much longer to get CMS coverage approval than it did to obtain FDA clearance. To avoid device adoption roadblocks, some small device and wearable manufacturers choose to bill directly to consumer post-prescription, rather than rely on providers to aggressively seek reimbursement. Operational direct-to-consumer (DTC) billing gives brands the ability to drive their pricing, claims, and billing processes. Additionally, managing their own supply and payment process gives companies real-time data into sales performance.
Clinical data is imperative to obtaining reimbursements and gaining the approval from the medical community to drive sales for a new device. Coverage clearance is contingent on the evidence of successful outcomes from clinical trials, which must be published and prove “added value” over existing technologies. This data must be provided well before CMS vets the new device, or commercialization will be postponed.
Not just clinical data is required; in February, 2013, Medicare passed the Sunshine Act for Medical Device Companies. This act requires all device therapies submit annual reports to CMS which detail spending on device education and physician payments to obtain reimbursement for their product.
Coding, coverage, and payments must all be drafted in a strategic reimbursement plan in the early phases of device adoption and growth projection. Brands will need to demonstrate clinical outcomes which prove both medical necessity of the product, as well as the added value compared to similar existing technologies. The more carefully planned and supported the roadmap toward reimbursements before FDA clearance, the quicker the device is ready for sales opportunity and revenue generation for manufacturer.