4.3 Reimbursement Basics

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Factors to Consider When Establishing Reimbursement in the US

John Hernandez, Vice President of Global Health Economics and Outcomes Research at Abbott Vascular, explains how getting a new technology reimbursed is an evidence-based process, but also depends on the support the company can engender.

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Timeline for Establishing Reimbursement in the US

John Hernandez, Vice President of Global Health Economics and Outcomes Research at Abbott Vascular, outlines a rough timeline for obtaining reimbursement codes and payment categories for a new technology in the U.S.

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New Technology Payment Mechanisms Outside the US

John Hernandez, Vice President of Global Health Economics and Outcomes Research at Abbott Vascular, comments on useful payment mechanisms for new technologies in German, France, and the United Kingdom.

Getting Started

As described, understanding reimbursement in the U.S. and around the world can be challenging, particularly for those innovators new to the medical field. However, the following process can be used to help the innovator effectively come up to speed and prepare a reimbursement analysis for the concepts under consideration.

Identify Payer Mix

What to Cover

Determine the primary payer(s) providing coverage in the area of interest and understand the mix of services by payer.

Where to Look

The payer mix can be identified by looking at relevant payer claims databases and/or consulting with providers.

Confirm Location of Procedure

What to Cover

Determine the setting in which the procedure will be performed.

Where to Look

Based on what is known about the innovation, determine the most appropriate setting for the procedure. Use the following sources to benchmark the settings used for similar or related procedures and to justify the determination:

  • PubMed – PubMed is a database of the U.S. National Library of Medicine that includes more than 16 million citations from MEDLINE and other life science journals back to the 1950s.
  • Up-To-Date Up-to-Date is a database of evidence-based clinical information.

Research Coverage Decisions and ICD-10/CPT Codes

What to Cover

For the most similar and relevant existing procedures, research the coverage decisions made by Medicare and private insurance, as well as any technology assessment decisions. Determine when, how, and why they received reimbursement and any technology assessment recommendations. Identify the relevant ICD-10 codes for the procedure and associated diagnoses, as well as the assigned CPT codes for each procedure. (Note: Keep in mind that there may be multiple relevant CPT codes. Conversely, some devices may not be assigned a CPT code(s) and/or may not have been awarded reimbursement coverage. If an appropriate CPT code cannot be identified in this step, proceed to the next step.)

Where to Look

  • CMS Innovator’s Guide to Navigating Medicare – This document provides a comprehensive overview of coding, coverage, and payment information, as well as timing/milestones and contact information.
  • Private Insurance Medical Policy Websites – Such as Regence, Wellmark, or Aetna.
  • Medicare Site – Be sure to search for both local and national coverage of Medicare decisions.
  • Technology Assessment Sites – Be sure to identify all technology assessment reports generated by the Blue Cross Blue Shield Technology Evaluation Center, NICE in the U.K., and other related technology assessment groups.
  • Encoder Pro Code lookup software that gives users fast search capabilities across all multiple code sets, plus Medicare and commercial payment and coding information (offered for a fee).
  • MediRegs Coding Suite A custom search engine designed to facilitate coding research, as well as other reimbursement-related tools (offered for a fee).
  • Existing Solution Research – Solution analysis completed as part of 2.2. Existing Solutions may include technology assessment data for the different treatment options.

Investigate Reimbursement Information for Non-Covered Devices

What to Cover

If no coverage decision information or CPT codes are available, look for reimbursement-related information on manufacturer websites. Often, manufacturers will provide status updates on their progress toward receiving reimbursement to educate potential customers and keep them interested in their devices. They also might include information detailing the CPT codes they are pursuing for reimbursement, the time frame within which they expect to receive reimbursement, the process for appealing coverage decisions, and/or the number of appeals that have been won if reimbursement has been granted on an exception basis. (Note: If candidate CPT codes are identified in step 3 but not in step 2, go back to step 2 and research those codes and their relevant coverage decisions.)

Where to Look

  • Device Manufacturer Websites – Companies such as Abbott, Boston Scientific, and Medtronic offer general reimbursement assistance on their website for certain practice areas (e.g., for cardiac rhythm management). Similar information can be found by searching other sites for major manufacturers. Guidelines are often provided by product or treatment area to help physicians choose the most appropriate code(s) for obtaining appropriate reimbursement.
  • HCPCS Physician Fee Schedule– Download the latest fee schedule from Medicare’s website.

Identify Payment Categories (MS-DRGs, APCs) and Reimbursement Rates

What to Cover

Find the Medicare payment categories and reimbursement rates. Be sure to account for physician and facility reimbursement using the resources listed below.

Where to Look

  • Medicare Physician Fee Schedule Look Up – Use this tool to help calculate physician payments. Multiply the RVU for the appropriate CPT code by the conversion factor to get the Medicare payment to the physician. If the procedure is performed in a facility setting, use the RVU listed under the fully implemented facility total. Otherwise, use the fully implemented non-facility total or use the resource below.
  • Medicare Hospital Outpatient Prospective Payment System – The OPPS is available online on the Medicare website. Search for the HCPCS code in the document, find its corresponding APC code, and then obtain the national average facility payment level.
  • Cost of Procedures Covered by APC and Number of Procedures Performed – This Excel file lists, in APC order, the proposed name, payment status indicator, relative weight, payment rate, and copayment amount(s) for the proposed APC groups.
  • Ambulatory Surgical Center File– Search by HCPCS code. This file contains data for ASC services billed in the previous year, including services that were added under the revised ASC payment system
  • Hospital DRG File– Next, look at the Hospital DRG file. Be sure to download the final version of the list of all DRGs. Using this file, identify the DRG and its “relative weight.” Next, this will need to be multiplied by a base payment rate that consists of a labor and non-labor component. Access these files from the Medicare website under Acute Inpatient – Files for Download.
  • Online Medicare MS-DRG Grouper and Payment Calculator This online DRG grouper and payment rate calculator enables users to identify MS-DRG assignments and national base DRG payment levels for inpatient services.

Identify Number of Procedures

What to Cover

Identify the number of procedures performed per year, reimbursement per procedure, and payer mix.

Where to Look

  • HCUPnet– A free, online query system based on data from the Healthcare Cost and Utilization Project (HCUP). It provides access to health statistics and information on hospital stays (inpatient encounters) at the national, regional, and state levels.
  • Medicare Part B Physician/Supplier Extract Summary File This file summarizes the number of procedures, total submitted charges, and total payments by HCPCS code. The file can be ordered from the Center of Medicare and Medicaid Services.
  • Other Databases – As part of transparency initiatives under the Affordable Care Act, Medicare has created a database comparing the charges for the 100 most common inpatient services and 30 common outpatient services called Medicare Provider Charge Data.