Over the last few years, medical device companies have learned that in order to get financing at any level it is not only necessary to establish efficacy and potential economic benefits, but also necessary to understand a strategy for obtaining reimbursement for these benefits. A medical device company, to obtain financing, must show value to the party making the payment, not to another party in the use of the technology.
At MassMEDIC’s November 7th conference discussing markets for medical devices, it was suggested that one way to prove efficacy might be to target a smaller cohort notwithstanding the fact that one’s device might have general applicability. Proof of efficacy in the smaller cohort, and obtaining a reimbursement code, may be easier if focus is narrowed.
Noting that the United States is an outlier in the world’s healthcare universe, spending a disproportionate amount per person on healthcare, it was also noted that the value of a medical device in the United States market is higher by definition. Spending one day in a Unites States hospital is three or four times more expensive than one day in a European hospital. The United States also has an unusual model in that doctors are paid separately, which increases the likelihood that individual doctors will support new devices.
Some key take-aways with respect to the reimbursement system in the United States:
Reimbursement depends upon the setting, with different codes and different rates for the same procedure dependent upon whether that procedure is performed in a doctor’s office, a hospital ambulatory setting, or a hospital inpatient setting.
In the coming year, new ICD-10 codes, with far greater granularity, will be introduced in the United States, with mandatory usage beginning October 1, 2015. This will have huge impact on hospitals. (Coding for doctor offices and for outpatient treatment will continue to be under the CPT system.)
For a variety of reasons, many medical devices these days are first introduced in Europe, in the UK or Germany or Nordic countries. Most of Europe is on a single payer system. We thus have an anomaly: the value of medical devices is highest in the United States but the preferred path of introduction nonetheless is moving toward Europe in any event, by reason of ease of regulatory clearance and obtaining payment.