Tracking a path to financial success

Building a successful business requires people to pay for what you’re selling. In healthcare, those who ultimately pay are insurers or funders (both government and private) who need to approve your technology before they pay for a healthcare provider to use it in a service.

Reimbursement is the process whereby a healthcare provider is paid for providing a service, and healthtech innovators need to consider any requirements for reimbursement (for example, demonstrating added value) or risk a lack of product uptake, even if safety and efficacy requirements are met.

The reimbursement landscape differs by country, and a reimbursement strategy for target markets should be considered early in development, as it impacts everything from research and development (R&D) and clinical studies to marketing plans and pitching to investors.

New Zealand Overview

In NZ, Pharmac manages the public funding process for medicines and some medical devices. Read more about medicines and medical devices contract negotiation and other elements of the funding process here.

Pharmac’s role is expanding to include the management of all public funding decisions for medical devices. Read more about Pharmac’s growing role in medical devices here.

The 20 District Health Boards (DHBs) and their associated organisations, including NZ Health Partnerships, continue to make procurement decisions on medical devices not yet managed by Pharmac. This is an evolving situation, due to Pharmac’s ongoing expansion and the work to establish Health NZ.

NZ has more than 70 private hospitals
listed by the Ministry of Health. As one of NZ’s major private insurers, you can read more about Southern Cross Health Insurance’s health technology assessment process here.

MedSafe maintains a directory of consultants that can provide market access support. You can explore the listings here.

A doctor listening through a stethoscope.

Complex Multipayer Example: US

The US is an example of a multi-payer reimbursement landscape that’s more complex than that of NZ. Multiple public and private insurers provide coverage to most of the population. The Centers for Medicare and Medicaid Services (CMS) is the main public, and largest single insurer in the US, and you can read more about the Medicare coverage determination process here.  

Healthcare providers use diagnosis-related groups and code sets for administration and billing purposes. The CMS provides an overview of codes here. As an example, CPT codes describe procedures and services, and are widely used by both public and private insurers. Read more from the American Medical Association here

Considering CPT codes, a reimbursement strategy could include examining what existing codes apply to a health technology, or determining if a new code is needed, and what evidence would be required to gain coverage from payers for the coded procedure that uses the health technology (for example, clinical evidence and added value). You can read more about this case here.  

The CPT example referenced above is a fee-for-service model, but it is not the only payment model in an evolving US reimbursement landscape. The University of Illinois Chicago provides an overview of US healthcare reimbursement processes and models, and the American Hospital Association explores current and emerging payment models here.

Other helpful resources referenced in the HTA's November 2021 US medical device reimbursement tutorial are included in the table on the right. The recording of the tutorial will be available on the HTA webinars page soon.

Health Technology Assessment

An area of ongoing development in healthtech reimbursement is the tools used to assist payers in decision making. These tools include the health technology assessment, which can be defined as ‘the systematic evaluation of properties, effects, and/or impacts of healthcare technology’.

The health technology assessment or similar tools are used by payers and supporting organisations in many countries, including in NZ and the US. For further reading, key examples from the UK and Australia are provided below.

  • The National Institute for Health and Care Excellence (NICE), based in the UK, has a role to improve public health outcomes through guidance, advisory, and use of standards. Read more here.
  • In Australia, the Therapeutic Goods Administration (TGA), Medical Services Advisory Committee (MSAC), and other committees perform health technology assessments to advise the Department of Health. Read more here.

For a discussion on healthtech reimbursement in the US versus Asia Pacific, see this webinar from the MedTech Innovator.

Two men working on a healthtech prototype

Find out more

Many innovators will be targeting global healthcare markets with their technology. The links below contain information to help you gain a better understanding of reimbursement strategies and requirements offshore.

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