Medical Device Reimbursements

Updated: Oct 22, 2018

by Tom Hughes, Regulatory and Clinical Research Institute (RCRI)

Until recently, the main focuses of medical device companies were designing devices and earning regulatory clearance for their new technologies. How times have changed. While innovative design and FDA approval are important for market entry, reimbursement is now a top concern for medical device CEOs, their investors and other stakeholders.

Continued increases in the cost of healthcare are driving stakeholder interest in reimbursement. Investors want to know up front whether there will be coverage, coding and payment before they risk investing in new technologies. Payers increasingly expect new technologies to demonstrate better outcomes at equal or lower costs before they pay for them. More hospitals are establishing value analysis committees to evaluate all new products prior to allowing them to enter a hospital or clinic setting. Physicians are interested in products that not only help their patients but also meet quality metrics imposed by government and private payers. Perhaps most importantly, patients are becoming more educated and prefer interventions that improve quality of life at the lowest cost possible.

Make reimbursement a priority.

With reimbursement planning, medical technology companies can boost the chances of market success for new technology. Planning a reimbursement strategy should begin early in the product development phase. Early planning can contribute to device design considerations that take advantage of reimbursement requirements. Also, early planning can save time, money, and effort by adding clinical and economic value endpoints to regulatory approval studies for a new technology.

Conduct an assessment. Develop a strategic plan.

Making reimbursement a priority is a simple two-step process. First, conduct an assessment to understand the existing reimbursement landscape for the new technology. Second, use the assessment to develop a plan to take advantage of payment opportunities or to address gaps in reimbursement such as the need for evidence development, coding initiatives or obtaining payment from payers.

Conduct a reimbursement landscape assessment.

A reimbursement landscape assessment is a snapshot of the current coverage, coding and payment landscape for a particular technology or procedure. It tells innovators what reimbursement challenges and opportunities exist for the adoption of their product. While individual assessments will vary depending on the technology, common elements include determining payer coverage status (i.e. Medicare, private payers, etc.); identifying existing coding used by providers, hospitals, homecare, etc.; determining payment assigned to existing codes; assessing evidentiary needs to show improved outcomes/cost-effectiveness of new technology; and preparing findings and recommended action steps.

Develop and implement a strategic reimbursement plan.

The information obtained from the landscape assessment should be used to develop an effective reimbursement strategy and timeline. A well-designed strategic plan should help companies gain clarity on what reimbursement initiatives need to be completed and when. Below are examples of key elements to consider when developing a strategic reimbursement plan:

In summary, reimbursement is a major focus for healthcare stakeholders in today’s cost-conscious healthcare environment. Companies that begin early to understand the reimbursement pathway for their new technology and conduct a well-conceived reimbursement strategy based on a thorough reimbursement assessment will be positioned to succeed in this changing marketplace.

Tom Hughes is an attorney and senior principal advisor for health economics and reimbursement for Regulatory and Clinical Research Institute (RCRI), Minneapolis, Minn.