5.6 Reimbursement Strategy

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WATCHMAN - The Technology, Need, and Path to Market

WATCHMAN – The Technology, Need, and Path to Market

Getting Started

Creating a reimbursement strategy is so sufficiently challenging and complex that almost all companies will benefit from the services of an expert reimbursement consultant. However, before approaching a consultant, the innovators should perform a preliminary assessment of the reimbursement challenges they face and consider a strategy to address them so that a consultant with a proven track in those target areas can be selected. Large health economic and reimbursement consultancies and/or individuals who previously worked in payer organizations before becoming independent consultants can help with the development of reimbursement strategies. In the U.S., several such firms and consultants are members of the Medical Devices Manufacturers Association (MDMA) and/or the International Society of Pharmacoeconomics and Outcomes Research (ISPOR) and their names are listed on those websites.

Once a reimbursement strategy is defined, following the steps outlined below, innovators must continuously monitor the reimbursement landscape as seemingly minor revisions in policy can require major adjustments to the planned approach.

Assess the Reimbursement Landscape

What to Cover

Repeat the basic reimbursement analysis performed as described in 4.3 Reimbursement Basics, using information gathered on the final solution concept under development and/or competitor/proxy devices. Be sure to understand the mechanics related to codes (existing versus new); coverage decisions (Medicare, large commercial payers, and payers outside the U.S.); reimbursement levels; and the status of technology assessment in the given field. Identify critical gaps in codes, coverage, and reimbursement payments that should be addressed via a reimbursement strategy. Rank payers and technology assessment groups based on expected perception of the company’s technology.

Where to Look

Refer to 4.3 Reimbursement Basics. Revisit CMS Innovator’s Guide to Navigating Medicare, which provides a comprehensive overview of coding, coverage, and payment information, as well as timing/milestones and contact information.

Perform Primary Market Research with Payer Decision Makers

What to Cover

Identify target payers using the 80/20 rule based on the number of lives key payers cover, the number of procedures they would cover, the stringency of the plan review process and the openness of the plan at launch, and the analysis in step 1. Research policies of any new payers identified. Identify key contacts within each payer organization (either through independent searches, by engaging a reimbursement consultant, or through referrals by KOL since medical directors in health plans can have links to KOLs). Interview medical directors and health policy analysts about their receptivity to the new technology.

Where to Look

Search online for a list of major payers in the company’s target geographies. Work with KOLs and reimbursement consultants to facilitate introductions to target payers and medical directors willing to be interviewed. In addition, refer to the following resources:

Evaluate Strategic Options

What to Cover

Think strategically about the best approach to achieving reimbursement for the product. Determine whether existing codes, coverage, and reimbursement levels are adequate or whether new codes and/or modifications in coverage and reimbursement are needed. Questions to consider include: Are existing codes, coverage, and reimbursement levels directly applicable? Is the current reimbursement level appropriate for the pricing strategy? Do the payers perceive a significant need that the product addresses and that justifies any required changes in coverage and reimbursement? Think about these questions from the perspective of both private and public payers. The same conclusion may not be reached for all payers. Determine whether new codes are needed and whether coverage determinations need to be modified for all or some payers.

Where to Look

Utilize the results from the primary and secondary research performed in steps 1 and 2. Compare existing payment levels to pricing considerations from 5.7 Marketing & Stakeholder Strategy. Convene a payer advisory board, if appropriate. And leverage resources such as Ryan Saadi, Daniel Grima, and Nicole Ferko, The Science of Commerce: Succeeding in the Changed Medical Device Market (ECON Publishing, 2012) to determine the best approach in the current environment.

Develop Evidence

What to Cover

Identify studies and publications used to support reimbursement for proxy devices. Determine studies, including specific clinical and economic endpoints, needed to support the reimbursement strategy. Consider primary and secondary data collection, clinical trial studies, database studies, registries, etc. Prioritize studies based on their costs and likelihood of influencing reimbursement decision makers. Develop a preliminary economic model and use it to identify gaps in available data. Share the model with consultants and KOLs to verify its strengths and weaknesses. Include studies in the clinical trial design plan.

Where to Look

  • Results from Steps 1 and 2
  • Payer Advisory Board
  • Technology Assessment Reports and Coverage Policies for Proxy Devices
  • PubMed – For studies performed for proxy devices and used successfully to support reimbursement.
  • CPT Background and Categories of CPT Codes– The American Medical Association’s website summarizes requirements for new CPT codes.
  • Requirements for New Technology Payments – If the procedure will be performed as part of an inpatient hospital stay, then a new technology add-on payment application can be submitted—this is a supplemental sum to augment the standard MS-DRG code when the new device is used. In the outpatient setting, transitional pass-through payments of new technology APCs can be sought. See the “New Medical Services and Technologies” page on the CMS website.
  • National Coverage Determination Requirements– The Medicare website has documents on “Medicare Program; Revised Process for Making Medicare National Coverage Determinations” and on “Factors CMS Considers in Opening a National Coverage Determination.”
  • EUCOMED Reimbursement for Medical Devices

Organize Information into a Reimbursement Strategy

What to Cover

Prepare a reimbursement dossier and education material for payers and advocacy groups. Involve KOLs. Educate and communicate with specialty societies, the AMA, CMS, local Medicare carriers, private payers, and payers outside the U.S. Initiate coding, coverage, and reimbursement initiatives. Identify contacts in each key constituency and map them to specific reimbursement plans. Determine priority order for targeting payers and the appropriate sequence and timing of all activities. Determine requirements in terms of consultants and in-house expertise necessary to execute the plan. Develop a preliminary plan for supporting reimbursement post launch.

Where to Look

Take stock of decisions made in steps 3 and 4. Network with KOLs, clinical advisors, and reimbursement consultants. Review timeline for similar tactics for proxy device.