Differentiating the Needs of Key Stakeholders to Obtain Reimbursement for New Technologies
BY KELLI HALLAS, AUGUST 9, 2005
By Kelli Hallas
Vice President of Field Reimbursement Services
Emerson Consultants, Inc.
[Editor's note: We welcome consultant Kelli Hallas as a guest blogger.]
In order for new technologies to receive reimbursement in today's healthcare market, they must show substantial clinical improvement, quality of life improvement, and/or an economic benefit.
One common mistake made by the orthopedic industry is the assumption that meeting the requirements of the FDA in a clinical trial also satisfies the requirements of the payers (insurance companies & Medicare) and results in reimbursement. Not true! The needs of the payers are quite different than those of the FDA, and if a company wants their technology to be granted reimbursement (coverage, code, payment), they must identify and satisfy these requirements.
One such example from the cardiac industry is the introduction of the drug-eluding stent. The manufacturer held meetings with CMS early on in the product development phase to explain the technology and solidify that the data being collected in the trials would be sufficient to obtain coverage and payment. Verification was sought to be assured that the clinical data met CMS' coverage criteria, and that the economic data being collected was sufficient to justify payment for the technology.
Industry understands the importance of the clinical data collection process for FDA approval, but it lacks the understanding of what types of clinical and economical data is critical to the payers. At a minimum, the cost of the procedure needs to be understood and submitted to CMS (Medicare) and payers. This data can be obtained through the collection of itemized procedure bills (UB92) from the hospital during the clinical trial. It is also important to collect the costs of complications, adverse events, and follow-up care during the clinical trial because they add to the cost of the treatment. Sponsors of clinical trials should include language in their contracts with hospitals involved in the clinical trial that they will be collecting this cost data. This information will substantiate the cost of the procedure to the payer and justify the payment amount being requested.
From a clinical perspective, CMS requires new technologies to show "substantial clinical improvement". The Charite artificial disc has been denied a new technology add-on payment because it did not meet this criterion. Furthermore, CMS denied J&J's attempt to get the Charite reassigned to a higher paying DRG because of the lack of Medicare (MedPar) data. We have learned from this decision the importance of designing clinical trials to show substantial clinical improvement and have Medicare aged patients enrolled in the trial if appropriate.
When payers evaluate a new technology to determine if they are going to cover it or not, they set their own criteria for selection. Some of these guidelines include the following key drivers:
- The technology must have FINAL approval from the appropriate governmental bodies.
- Scientific evidence must permit conclusions concerning the effect of the technology on health outcomes.
- The technology must improve the net health outcomes.
- The technology must be as beneficial as any currently established alternatives (better than or equal to the gold standard).
- The improvement must be attainable outside of the investigational setting.
- Peer-reviewed, published US journal data must be available preferably from a multi-centered, double blind, controlled, US study.
If clinical safety and efficacy have been established, and additional economic data has been requested, companies can show cost benefits to their technology through the collection of historical cost data. This historical, or actuarial data, can show procedure and complication costs for the current gold standard or competing technologies. Companies can compare the actuarial data to their technology's cost data to show an economic benefit.
Focusing on the needs of the payers and the FDA are two components of the reimbursement cycle. It is imperative to also communicate with, and receive the support of, medical professional societies. Many times the payers reach out to the professional societies for assistance in establishing coverage and payment guidelines for new technologies and procedures.
In summary, it is critical to develop a reimbursement strategy early on in the product development cycle. It is critical to understand exactly what needs to be done and what the strategy is to address the needs of each of the three stakeholders who can impact the reimbursement of the technology: the FDA, the Payers (CMS), and the Professional Societies.
Emerson Consultants, Inc. offers strategic reimbursement, clinical, regulatory, and marketing consulting to the medical device industry. For more information contact
kellih@emersonconsultants.com.
