Building a successful business requires people to pay for what you’re selling. In healthcare, those who pay are often insurers (both government and private) who need to approve your technology or associated procedure before they will 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.
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.
Te Whatu Ora - Health New Zealand continue to make procurement decisions on medical devices not yet managed by Pharmac. This is an evolving situation due to Pharmac’s ongoing expansion.
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.
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.
Healthcare providers use groupings and code sets for reimbursement that vary depending on the care setting. Diagnosis Related Groups (DRGs) are used for prospective bulk payment of hospital stays, Ambulatory Procedure Classifications (APCs) are used for hospital outpatient and ambulatory care settings, while HCPCS and CPT codes are used for billing individual procedures and services in various settings. The John Hopkins' Library Reimbursement Toolkit provides links to further resources.
Considering CPT codes, a reimbursement strategy could include examining what existing codes may apply to a health technology for billing, or determining if a new code is needed, and what evidence would be required to gain adoption of the health technology (for example, clinical evidence and added value). You can read more about CPT codes and strategy considerations 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 American Hospital Association explores current and emerging payment models here.
You can read more about selling healthcare solutions in the US here covering resources put together by NZTE. Other helpful resources are included in the table on the right, and you can read the latest HTA blog on the topic here. The recordings of HTA reimbursement events are available on the HTA webinars page.
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 ‘a multidisciplinary field that addresses the health impacts of technology, considering its specific healthcare context as well as available alternatives' - HTA International, 2013.
Health technology assessments and other health economic analyses are used by health systems in many countries, including in NZ and the US. For further reading, key examples from the UK and Australia are provided below.
You can watch a recording of the HTA's December 2022 webinar, Global Trends in Health Technology Assessment, here.
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.
Browse more resources on our Articles & Reports page:
From time to time the HealthTech Activator will offer virtual and face-to-face courses and other events covering different aspects of reimbursement strategy.
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