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We explored the what, why and when of United States medical device reimbursement in an online workshop on June 7. This blog highlights some insights from the event. A recording of the workshop is available on the HTA webinars page.
Many Kiwi medical device companies plan to launch in the United States (US) market from the beginning of their commercialisation journey. As well as gaining regulatory approval, the success of a US launch also depends on a sound reimbursement strategy and early consideration to the development of the supporting evidence that’s commonly needed to demonstrate safety and efficacy.
Our online workshop was presented by Julie Garfield of TTi Health Research & Economics. It explored the components of reimbursement, key considerations for developing a reimbursement strategy, and debunking of common myths about US reimbursement.
Some of the key insights from the latest HTA event on this topic are:
Regulatory approval from the US Food and Drug Administration (FDA) considers safety and efficacy and provides permission for a medical device to be marketed. Reimbursement considerations may include demonstrating improved outcomes and economic benefits, and these are often needed for a product to be adopted by healthcare providers (and paid for by insurers or government payers).
It’s important for medical device companies to think about regulatory and reimbursement requirements throughout their commercialisation journey.
Many coding systems exist, and they vary depending on the site of service (i.e. inpatient or outpatient settings). Codes are used to track utilisation, establish reimbursement rates, and facilitate communications between providers and payers.
See the workshop recording for more information on CPT codes and other systems (including Diagnosis Related Groups, DRGs), and the process and rationale for applying for new CPT codes.
Coverage refers to a payer’s criteria for paying for a coded service or procedure. The fundamental consideration for coverage is:
“Is a service or procedure medically necessary to diagnose or treat the patient’s condition?”
‘Medically necessary’ is somewhat subjective, and there were notable exclusions and considerations discussed in the workshop.
Finally, payment is the amount paid to a provider or facility for a service or procedure, and there are different approaches depending on the setting and payer. These include all inclusive prospective payments based on DRGs for inpatient hospital settings, and Ambulatory Payment Classification (APC) for payments in outpatient settings.
Around 35% of US citizens are publicly insured (mostly Centers for Medicaid and Medicare Services, CMS), and 55-60% are privately insured (mostly through employers) with many different plans and providers.
Different payers have different demographic mixes, so it’s important to consider a device’s target demographic. For example, Medicare (a large public insurer) is predominantly used by elderly patients, and so a device primarily used by the elderly might focus on a Medicare reimbursement strategy.
Some payers are also vertically integrated (both payer and provider), such as Kaiser Permanente, and targeting these organisations for new product launches by outlining clear health system or economic benefits may also be a strategy.
There are reimbursement considerations throughout product and company development:
The workshop ran through some common myths about reimbursement. Here are the key takeaways:
1. Understand the building blocks of reimbursement and how they will apply to a product
2. Consider reimbursement early and throughout the product life cycle
3. Innovative technologies with regulatory approval should not expect automatic reimbursement
4. A reimbursement strategy may take effect over years and is a process
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You can watch the recording of this workshop on the HTA Webinars page.
For further information about reimbursement and links to other resources, see the HTA Reimbursement Strategy page.
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