Medical Device Reimbursement:

Using Data to Drive Strategy

An interview with Frederick Cahn, Ph.D., Chief Executive Officer of BioMedical Strategies

With more than 30 years of experience in all aspects of product development, including scientific research, marketing, and clinical studies, Dr. Cahn helps medical device companies bring their products to market quickly and profitably.

• How early in the process should a product marketer be thinking about reimbursement?

  The marketer should be thinking about reimbursement as early as possible in the process. Yet beyond timing, a more relevant issue is who should be involved and at what stage. If the product is to be successful in the market, it is essential that a marketing professional who is familiar with reimbursement be part of the product team prior to clinical trials. For example, if a company is developing a new technology then the team must be sure that they are focusing on a clinical situation where reimbursement will be favorable. Scientists and clinicians may not be thinking about cost and payer issues and the marketer can be very helpful in guiding the team at this early stage.

• What are the steps to developing a reimbursement strategic plan?

  One of the critical success factors is ensuring that the design controls are implemented correctly. The marketer who is part of the product team should be familiar with the design control process and have input into it. The issues that the design controls address include manufacturing issues, quality control, and design requirements that meet the needs of the end user such as a surgeon or emergency room physician. What does the product have to do to have clinical utility? What are the engineering concerns? How well is the prototype meeting plans? Answers to these questions and more will have implications for the reimbursement of the product and should be carefully evaluated in the earliest stages.

• What makes an effective reimbursement assessment?

  It is important to understand the issues for all of the stakeholders in the system: the clinicians, the facility administration, the patients and the payer. They all have their own distinct motivations. While some technologies may be valuable because they save the clinician time (and possibly reduce cost), others improve outcomes. Technologies may increase or decrease hospital Length of Stay. These advantages must be well documented. A product that has negatives for any of the key stakeholders will face reimbursement and/or market resistance.

• How would a manufacturer ensure that economic data it is collecting is appropriate and valuable?

  As with clinical safety and efficacy studies, patient populations and clinical outcomes are important. However, economic outcomes are additional considerations. Defining costs is a problem, such as whether to include fixed and indirect costs or to consider reimbursement. The study also needs to identify a credible source for the economic data.

  It is important to consider the point of view of the audience, for example facility, patient, physician, the setting (teaching hospital, clinic, outpatient facility, etc.), and the time horizon of the study. For example, a study of hospital costs may use “admission to discharge” as the time period to study.

  The marketer on the team should be familiar with Centers for Medicare and Medicaid Services (CMS) policies that impact the product. A complete competitive analysis should be conducted that looks at current treatments and how treatment is going to be impacted by the new technology. Additional questions to consider include: Will there be an added cost to the procedure? Who/what will reduce cost if the technology is adopted? What is the doctor or end user’s attitude toward the technology? For an inpatient product, what is the effect on Length of Stay? The goal of the planning process at this stage is what would be expected for product performance in a peer-reviewed publication.

• How is the data and assessment used to influence payer policy?

  It is used in applications for new codes, such as CMS’s HCPCS (Healthcare Common Procedure Coding System) or applications for pass through payments under the Inpatient or Outpatient Prospective Payment Systems, and presentation to local or regional carriers to support coverage decisions.