The Reimbursement Top Ten Checklist: Understanding How Coverage, Codes and Payment Impact the Success of a New Medical Technology

The product design is flawless. The clinical trial endpoints were met. FDA has given the green light to begin marketing. Manufacturing has ramped up and can accommodate distribution deadlines. The plan is perfect; what could possibly go wrong?

Bottom line is this…no matter how unique or innovative a product, no matter how fine-tuned your internal processes, no matter how great the initial demand, in order to be successful in today’s marketplace, everybody needs to be paid. As the spine and orthopaedic industries continue to invent and innovate, it is more critical now than ever before to ensure that these emerging technologies are appropriately reimbursed.

The past decade has witnessed the establishment of reimbursement as a critical influencer to the success of a technology. Suddenly, navigating the maze at FDA seems elementary when compared to the reimbursement conundrum. This presents new challenges for both spine and orthopaedic device manufacturers.

Payors, both government and commercial, have become more stringent with their coverage guidelines. What was considered reasonable and necessary in the past is now under scrutiny for long-term data and cost-effectiveness outcomes. Medicare has been tasked by the Federal government to contain costs. As a result, our end-user customers suffer. Hospitals, Ambulatory Surgery Centers and physicians have experienced steadily declining payments.

Companies that understand these challenges, and take a proactive approach of integrating the reimbursement strategy into the business plan during the development phase, will be well positioned for success. Build it and they will come has become an anomaly in the spine and orthopaedics industry. Even some of the most promising technologies have failed because of lack of reimbursement.

There is often a stark contrast in the perception of what companies think they know about reimbursement and what they really understand. Not all new technologies will have favorable reimbursement at the onset. This is to be expected, so don’t panic. A well-thought-out reimbursement plan, considering the needs of the key economic stakeholders, will position a technology for future success in this cost-conscious healthcare environment.


So, where do you begin the reimbursement due diligence to formulate your plan for a new medical technology? What are the critical factors to identify and incorporate into the strategy? What are the main elements that are imperative to know? The checklist below highlights those key drivers of reimbursement that will determine the current reimbursement landscape of a medical technology.

More importantly, this information will define the reimbursement strategy and allow companies to have a well-designed strategic reimbursement plan early, impacting success in the future.

1. Who are the key stakeholders?

  • Specific setting of care
  • Healthcare professional
  • Insurance entity

Who will be purchasing, using and paying for the product or procedure?

2.  Are there existing codes? What are they?

  • CPT® (Current Procedural Terminology)
  • ICD-9-CM (International Classification of Diseases - 9th Revision Clinical Modification)
  • HCPCS (Healthcare Common Procedure Coding System)

If so, have the codes been validated as appropriate for use to report the new technology through the appropriate entities? Codes are never determined in a boardroom. If you are not sure, seek the advice of the Professional Society, American Medical Association or CMS.


3.  What is the payment?

  • Physician (Relative Value Units/RVU)
  • Hospital Outpatient Department (Ambulatory Payment Classification/APC)
  • Ambulatory Surgery Center (APC)
  • Hospital Inpatient (Diagnosis Related Group/DRG)
  • Equipment and Supplies (Durable Medical Equipment Prosthetics, Orthotics and Supplies/DMEPOS)
  • Labs and Test (Clinical Laboratory and Diagnostics Fee Schedule)

4. Who is the target patient population and what is the associated payor mix?

  • Medicare
  • Commercial insurance
  • Medicaid
  • Workers' Compensation
  • Federal or State

5. Is there competition?

  • Like product on the market today
  • Existing procedure that will be replaced with the new technology

 

6. How is the competition paid?

7. What is the cost of the new technology and competition?

  • Manufacturer's price of technology
  • Cost to perform procedure inclusive of new technology
  • Competitors price for technology
  • Cost to perform procedure inclusive of competitors technology

8. Are there existing coverage decisions, either positive or negative, impacting the new technology or the competition?

  • Medicare (national and local)
  • Non-Medicare

Review the coverage decisions of both payor entities. Government and commercial plans may have different coverage provisions. It is also critical to know the anticipated patient population.

9. Is there published data available for the new technology and competition?

  • Peer-reviewed journals
  • Technology assessments
  • Professional society guidelines

Payors and the societies require well-designed clinical studies. Randomized, controlled, multi-centered U.S. studies are preferred. If there is no data available, develop the publication strategy to meet the needs of the key stakeholders as well as the company milestones.


10.    Will current payment be adequate to cover the cost of the procedure with the new technology incorporated?

  • Review cost analysis
  • Create stakeholder financial model with anticipated payor mix

Costs and charges are not the same. It is imperative to know the cost of a procedure to your target customer. Sources are available to the public that contain procedure cost and utilization data. If adding technology to an existing procedure, incorporate the cost of the technology into the procedure’s current cost. If replacing a component of a procedure, or providing other cost savings (reduced procedure time, reduction in follow up treatment, shorter ALOS) incorporate those reductions into the procedure cost.

This article is for information purposes only. This article cannot be reproduced without the consent of the author. Emerson Consultants, Inc. is a full service CRO and provides strategic reimbursement, clinical, regulatory and market development consulting to the medical device and biologics industry.

Kelli Hallas is the Executive Vice President of Reimbursement at Emerson Consultants, Inc. in Minneapolis. With over twenty years of experience in the Medical Device sector, she has developed and implemented strategic initiatives for both start-up and established companies in the areas of reimbursement, sales and marketing and clinical research. In addition, Kelli has worked with the Centers for Medicare and Medicaid Services and the American Medical Association to establish new coding categories for emerging technologies. Contact the author at This email address is being protected from spambots. You need JavaScript enabled to view it..

Emerson Consultants, Inc.
www.emersonconsultants.com

OMTEC 2011 Speaker

Continue learning from Ms. Hallas during OMTEC 2011 by attending her lectures on Wednesday, June 15 and Thursday, June 16.

June 15 Lecture: The Fundamentals of Reimbursement: Understanding how Coverage, Coding and Payment Impact a Medical Technology

This presentation will discuss:

•The three drivers of reimbursement: coverage, coding and payment
•How reimbursement impacts a technology
•The importance of well designed clinical studies and data to reimbursement
•Key reimbursement questions to ask yourself pertinent to your medical technology

At the conclusion of the program, attendees will actively participate in creating a reimbursement Top Ten Checklist that will incorporate the key elements of reimbursement. This checklist can be incorporated into a strategic plan for any technology to have a positive impact on reimbursement for marketing or fundraising purposes.

June 16 Lecture: The Secret to a Successful Product Launch: The Integration of the Reimbursement, Clinical, Regulatory and Marketing Strategies

This presentation will discuss:

•Why it is critical to integrate strategies early
•How to integrate four completely unique strategies
•How successful integration will impact your business
•When and what to integrate in the process

At the conclusion of the program participants will create a blueprint that will identify strategic initiatives by product phase. This blueprint can be incorporated into their unique product strategic plans to positively impact their medical technology.

Learn more and register online at www.omtecexpo.com.