5.6 Reimbursement Strategy

Chapter 5.6
Additional Resources

Creating a reimbursement strategy is challenging and complex.  As discussed in Chapter 5.6, most companies will benefit from the services of an expert reimbursement consultant.  However, before approaching a consultant, the innovator should perform a preliminary assessment of the reimbursement landscape.  The steps below have been excerpted from the chapter and are presented with active web links to assist innovators in getting started.

Assess the Reimbursement Landscape
  1. 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 proxy devices. Be sure to understand the mechanics related codes (existing versus new); coverage decisions (Medicare, large commercial payers, 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.
  2. Where to Look – Refer to 4.3 Reimbursement Basics.

Perform Primary Market Research with Payer Decision-Makers
  1. What to Cover – Identify 10 to 15 target payers based on the number of lives they cover, the number of procedures they would cover, 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. Use the questions in Table 5.6.6 in the book as the basis for each discussion.
  2. Where to Look – See Appendix B in the book for a preliminary list of major U.S. payers. 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
  1. What to Cover – Determine whether existing code, 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.
  2. 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.

Develop Evidence
  1. 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.
  2. Where to Look
    • Results from Steps 1 and 2
    • Exhibit 1 from Book (for different types of economic models)
    • 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 Pass Through Payments – If the procedure will be performed as part of an inpatient hospital stay, then an application for a DRG add-on can be submitted—this is a supplemental sum to augment the standard DRG code when the new device is used. See CMS’s “Application for New Medical Services and Technologies Seeking to Qualify for Add-On Payments Under the Hospital Inpatient Prospective Payment System for Federal Fiscal Year 2009.”
    • National Coverage Determination Requirements – Medicare’s 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.”

Organize a Timeline and Develop a Budget for Reimbursement Tactics at Launch
  1. 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.
  2. Where to Look – Take stock of decisions made in step 3 and 4. Network with KOLs, clinical advisors, and reimbursement consultants. Review timeline for similar tactics for proxy device.

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