To Cover or Not to Cover, That is the Question
When developing a medical device, it is easy to get caught up in the technical details, the inevitable hiccups that happen while trying to make the device work. Too often, innovators are so involved in development that they forget to stop and ask themselves, “If this works, who will pay for it? Will it be reimbursed?” This oversight can be catastrophic — not just to funding potential, as these questions are top-of-mind for investors, but also for market adoption and attractiveness for acquisition.
Welcome to the world of Nic Anderson, health economist, market access expert and former payer for the largest healthcare provider in the Intermountain West. With over a decade of hands-on experience in payer perspectives, Nic spends his days helping startups and SMEs develop robust, rational market access strategies that help optimize the likelihood of coverage and, ultimately, commercial success.
Dispelling Common Myths
Reimbursement and pricing are complex, nuanced subjects, particularly in a landscape that is moving towards value-based care. Here, Nic dispels some common reimbursement myths and provides insight into why doing your due diligence on the payer perspective should be an integral part of every device innovator’s development plan:
Myth 1. There is an existing reimbursement code for my device, so I should be fine.
A reimbursement code is like a phone number in a phone book — just because it’s there doesn’t mean someone will ever use it. Codes are nomenclature and little more. New codes are released to payers annually but payers aren’t obligated to reimburse for the goods and services identified by those codes.
Myth 2. Similar technologies are being reimbursed for similar indications, so we’ll piggy-back off them.
Unless a new technology is commoditized, this statement is likely untrue. If a new technology is released to the market de novo, a health economic, reimbursement and market access strategy needs to be developed. If your product is another pacemaker, coronary stent or foley catheter, you may be okay from a reimbursement standpoint but you may still need novel health economics and market access data.
Myth 3. The issue of reimbursement can wait until after design lock.
Years ago I did a review on a fantastic diagnostic test in the oncology space. The company all but refused to illustrate the clinical utility of their test and was convinced that the majesty of their innovation would speak for itself. Evidence of clinical validity was abounding but clinical validity is rarely sufficient to warrant reimbursement. The product has treaded water ever since. Payers want proof of improvement in health outcomes relative to the standard of care. Tackling these issues and incorporating them into the product development plan early pays dividends.
Taking a Deeper Dive
Nic’s unique perspective springs from his seven-year tenure on the value assessment committee (VAC) of an integrated delivery network, which provides both healthcare services and a health insurance plan. Effectively serving as the nexus between the provider and the payer, each of which have different priorities, this VAC was tasked with reviewing clinical trial data and health economics evidence to determine whether reimbursement was in the best interest of both parties.
When making reimbursement decisions, not only does the specific code come into play, but also the category of code — CPT, HCPCS or DRG, representing the procedure, service or diagnosis associated with a product.
One of the many questions a value assessment committee will pose is, “Will the product be utilized in an inpatient or outpatient setting?” Alone, the answer to this non-trivial question will impact the level and quality of evidence the committee will require to even consider reimbursement. Must a new product really undergo a randomized, double-blind, multicenter clinical trial? Must a Decision Analysis Tree-model be created by a group of PhD Health Economists, or will more basic cost effectiveness research suffice?
Payers generally require a value dossier from a company before they perform their own health technology assessment on the product. Value dossiers typically include a summary of the data supporting the clinical, economic, and humanistic value of the device, as well as background information on the indication for which the device will be used. If this deliverable isn’t up to snuff, an ostensibly wonderful innovation will wind up like the 108 of 150 I reviewed throughout my tenure: reimbursement denied.
What a tragedy it would be for a product to develop all the way through FDA clearance, only to be buried in the graveyard of good ideas. A well-crafted market access strategy consisting of health economics, evidence of clinical utility and proper coding will grease the skids for reimbursement. Succinctly communicating all that data to payers is the name of the game. Without reimbursement, market adoption will flounder and commercialization will fail, full stop. That’s about the only straightforward thing when it comes market access.
