Helping Med-Tech Firms Negotiate the Coverage Maze
Interview by JIM STOMMEN
Contributing Editor
Judy Rosenbloom is the founder and president of JR Associates, a Los Angeles-based medical device reimbursement consulting company. JR Associates specializes in strategic coding, coverage and payment solutions for device manufacturers, venture capital firms and healthcare practitioners.
She has particular expertise in reimbursement positioning for medical device manufacturers' emerging and current technologies based on her relationships and successful reimbursement outcomes with providers and payers, as well as her own experience as a former business owner and provider of cardiovascular and diagnostic imaging services. Her focus is on building the rationale for linking a technology's clinical value with the reimbursement environment.
Judy has worked with the Center for Medicare & Medicaid Services, health plans, and specialty associations on behalf of clients, is a frequent speaker at national and international conferences and has served on various organizational boards.
BB&T: It seems that the way companies approach reimbursement questions has changed fairly dramatically compared to say, 10 years ago, maybe even five years ago. Has that been your experience?
Rosenbloom: Yes it has. In the past, the companies' approach on reimbursement was more or less that it's nice to know about it, but they weren't real familiar with what they needed to know. Today, I find that most companies are very focused on reimbursement. They may not have a good understanding of the “nuts and bolts“, but they know that they need a good perspective about the implications. They get asked about reimbursement by their investors, and they also understand in general that they have to start planning for it, so their approach has really changed. Ultimately, they understand that reimbursement becomes part of the value proposition.
BB&T: It certainly has changed over the 15-plus years that I have been covering med-tech. Certainly over that period of time the attention paid to reimbursement has changed. When I first started going to medical industry conferences, reimbursement very rarely would be a topic, and now it has gotten to the point where there almost always is something about reimbursement on these conference agendas. It really has changed dramatically to the point where companies now realize that they have to do their reimbursement planning pretty much in lockstep with their product approval planning.
Rosenbloom: I agree. Actually, reimbursement has become a common and frequent topic within medical conferences for industry and as well as for physicians and allied health professionals. I get invited to speak about reimbursement at those conferences, and not necessarily just coding and billing, but overall – what are the issues, how should medical professionals look at getting their new technologies paid? It's pretty interesting that it has gone from reimbursement being just an afterthought to today where it actually drives the decisions for adoption of new technologies, from the perspective of industry, the providers, and the payers.
BB&T: That's a good point, because it always did have that afterthought feel to it, and “drives“ is certainly a great description of what's happening to it today. I have this image of med-tech executives today throwing their arms up and exclaiming: “Oh my God, we have to do something about reimbursement.“
Rosenbloom: The way I look at reimbursement is that it has to start with the assumption that the product has to be good – that's the given. If the product doesn't work, then it will not be able to get sold or widely adopted, regardless of reimbursement. So my assumption is that the product will work, that it has some clinical value to it, and ultimately the decision to adopt falls heavily upon the opportunity for reimbursement. The other side of that story is if no reimbursement is available, but the clinical benefit is strong, adoption will occur, albeit slower. Plus there will be efforts to show other beneficial economics.
BB&T: Given the new attention being given reimbursement in the product-development process, what are the most important steps for companies to take early on?
Rosenbloom: They really need to understand the existing landscape, and what I mean by that is what are the competitive technologies or the ones they will either be an adjunct to, or what are they changing? So we have to look at that landscape and we really have to understand certain trends – in the past and where it is today. That includes looking at the three components that we always talk about: coverage, codes and payment. And we have to understand the future – what is going to happen at CMS, other payers, and the overall healthcare industry that could affect how this technology is going to get reimbursed?
BB&T: How do you assess existing CMS reimbursement policies and looking ahead, what changes do you see coming and how might those impact the ability of medical device companies to move from ideas to concepts to approved, reimbursable products?
Rosenbloom: It's a step-by-step process that has many different components. For CMS, you have to look at the big picture on the national level – what kind of policies are in place, perhaps coverage policies already in place that would either allow this technology to be reimbursed or might actually limit it being reimbursed. If there are no specific statements about that technology, then we start to look at the local coverage policies that Medicare carriers are able to put in place. We also look at the private payers, because they have different opinions, and they may have policies in place that CMS doesn't have in place – it's a pretty wide picture that has to eventually be scaled down. From coverage, then we move to look at some of the regulations as to what will happen in the future. We look at the Federal Register and the proposed and final rules for payments for the various sites of service, and we look at some of the rules, regulations and initiatives that we know are being discussed. We look at MEDPAC discussions to see how that may impact future technologies; we look at all the different agencies and what kind of relevant information is being talked about. Imaging, for example. If there's a new technology coming out in imaging, we know that there has been great discussion that CMS and other payers are trying to limit utilization of imaging. We know that by experience, so we focus on the nuances and use our depth of understanding to gather material on those policies for the purpose of identifying trends and profiles.
Then we look at the codes. We look at the competing technologies to see what those codes are and whether the existing code structure would support the new technology. Then we have to ask the question, do we want it to support the technology – what are the pros and cons about that, and is there something we can do if it doesn't? And then the next step is the payment process. The code may be available, but perhaps the payment is not adequate enough for what this company is planning with its technology. That has to do with the different site of services: What is the payment in the hospital outpatient setting? What is the payment in the inpatient setting? Home health? Wherever the technology may fall, we have to look at all of those angles and really spell out the implications to each provider type and site of services.
BB&T: There seems to be even more attention now on the payment angle, because there can be vast differences between company expectations and the actual payment level.
Rosenbloom: There is a constant push and pull about value pricing. So a company may have a technology and may price it at a level far more expensive than the existing technology, as there is some clinical evidence that it does do what it is supposed to do better than the existing technology. But the evidence doesn't necessarily demonstrate that it will change the patient outcome. There is a belief by some companies that, if there is some evidence, then they should be able to price it higher, but that isn't how it works. CMS specifically pays based on resources used, so it really is a matter of cost – what are the costs? You won't necessarily get anything more unless the technology is very different than the existing technology today, and can change a standard of practice. There is a pretty high bar to meet that criteria.
BB&T: Could you touch on how you work with companies on reimbursement issues today, and how that may have changed in recent years?
Rosenbloom: I would say, generically speaking, that often when I did a reimbursement assessment at a company in the past, it would depend on whose hands it ended up with. The actual information might have ended up on the shelf and may not even have been used as a part of the business or commercialization plan. Typically, many companies did not integrate the reimbursement assessment into all the different elements of the business, such as marketing, such as sales – it was never used as a tool.
Today, I end up working with many of the different divisions within a company to make sure that the reimbursement activities are integrated into all elements of the business. So that has to do with regulatory, marketing, planning for sales, product launch and overall advocacy efforts. A lot of my work today starts as a foundation, to give the company the landscape, and I am then taking them through the steps of what has to happen to prepare for launch and/or to do whatever advocacy effort is needed. I find that to also be applicable with companies who have to address issues with payers and CMS as their current technology is being brought into question, as to their clinical evidence or codes.
BB&T: The whole dynamic of gathering evidence to support coverage decisions seems to have undergone rapid change in recent years. How have those changes helped companies receive positive coverage decisions, and conversely, how do they make the task even more difficult?
Rosenbloom: I think better clarity as to what level of evidence is needed should make obtaining reimbursement easier long-term. CMS made a first step in developing the pathway for coverage with evidence development. But realistically, for smaller companies with technologies that may incrementally improve care, the pathway is not necessarily as relevant. Companies would be better able to support clinical trials if it was easier, practical, and clearer as to what clinical evidence would be accepted by payers depending upon the technology. That understanding could help companies in their decision-making if a clinical trial would be cost-effective and determine the level they need to gather the clinical evidence.
If payers would take away the murkiness of what is investigational and be more transparent with their process, the pursuit of coverage would be attainable. But the process to get to that clinical evidence and to reach the point that payers are willing to accept that there is clinical evidence, that is very challenging, and it is very limiting to many companies because it's very expensive. And that required level of evidence takes away from the opportunity for the company to get a new technology out into the marketplace as quickly as they want it to be. So, on one hand the requirement for the clinical evidence makes sense, because you definitely want to prove and validate that the technology does what it is supposed to do and that there is a change in outcomes. On the other hand, it really limits the company's ability to financially succeed and advance the technology to the next generations of products.
BB&T: Is it helpful, especially in the case of smaller companies, that the VCs who back them are more and more tuned into the fact that there is more required in terms of clinical evidence and so they are more comfortable with funding through the gathering of that evidence?
Rosenbloom: Yes, I think it's very helpful. I think any company that is involved with investors definitely benefits from having that community better understand what they are up against and what the challenges are. It makes for better expectations, and it also helps create a partnership of being able to create the benchmarks for what the company has to accomplish. Theoretically, the company being successful will not just be based on numbers, but will have some good technology milestones that will help the investors feel comfortable that they have made a good decision.
I have been involved with some companies where I was brought in to do reimbursement assessments because the investors felt that it was very important. That demonstrated to me that they were very committed to the success of the company and that they felt they needed some direction on reimbursement and what they had to achieve. VCs are far more educated about these things now. I appreciate my conversations with them on reimbursement issues. It is adding some depth to the thoughtfulness of the investment, and I think it makes for wiser investment.
BB&T: Achieving national coverage decisions seems to traditionally been the “Holy Grail“ of reimbursement. Is that still true, or have companies adjusted to the reality that coverage decisions tend to be on the local level?
Rosenbloom: I'm not sure I agree with you that it was the Holy Grail. If successful, it certainly was a big “Wow,“ but over the years most companies do not want to approach getting a national coverage decision because the bar is so high and, unless they have some sort of very innovative technology that really requires national to take a look so there can be a widespread introduction of that technology. In general, most companies are staying away from national coverage decisions and looking more toward local decisions; a strategy that I agree with.
BB&T: Do you see the day coming when CMS will start using pre-authorization or pre-certification for some of the more costly procedures it covers? If so, how will that affect the companies you work with?
Rosenbloom: I'm having trouble visualizing that. I believe the government doesn't have enough money or resources for CMS or their contractors to do that, so I just suspect that will not be the way they move forward.
BB&T: Congressional micromanagement of CMS is a relatively recent phenomenon. How does that impact companies in their dealings with the agency?
Rosenbloom: I think that with the introduction of healthcare reform, Congress will always be involved. A big problem with the issues of CMS and management is that there hasn't been a leader in place, there hasn't been a permanent director in many years. So they really do not have the opportunity for direction, for vision, and the agency is just doing their job the best that they can. But the opportunity for a leader to move the agency forward and be able to respond to Congress as well as be able to make its own recommendations for changes, is necessary.
BB&T: It's too bad that the private sector threw so much money at Mark McClellan. He was the prototype for administrator of the agency.
Rosenbloom: He worked very hard to create a vision, and we're living with some of it today. He opened the door for more and more transparency and open discussion.
BB&T: Certainly there is a lot of that vision still out there to be adopted, but it's something for other leaders to follow.
Rosenbloom: Right, and they have to set up an infrastructure to be able to respond to the changes. I think the CMS people are very thoughtful people, and they have a very tough job. They don't have enough money for what they need to do, and they don't have a leadership group that can respond and move forward. Once that is in place, I think we will begin to see how CMS (and perhaps the private payers) will develop a vision.
BB&T: For domestic sales, achieving reimbursement status from private insurers long has represented the so-called “other shoe.“ How are medical-product companies dealing with those questions these days? And how do technology assessments work within the broader reimbursement framework?
Rosenbloom: It seems to me that the private insurance companies have gained a great deal of momentum and power as to whether a technology will advance or not. In the past, CMS would create the benchmark. They're still powerful in that regard, but the private payers have raised the attention to new technology and they are making rules that are impacting everybody as well.
Companies are paying very close attention to the private payers. In fact, they are hiring people – what they call field reimbursement people – to go to private payers and help explain the technology and give them background and be good resources for the insurers to help make decisions about coverage. So there is a big commitment by many companies to work with the private payers – they recognize they are very important. And now with healthcare reform and universal healthcare per se, they will become even more important.
The medical directors that I work with who are responsible for new technology review and coverage take it very seriously. They really do look deep into the clinical evidence, and they turn to technology assessments as a major form of reference. So technology assessments are becoming more and more important. They do impact coverage decisions and, for the most part, if there are negative technology assessments, especially across the board, there will likely be non-coverage by a majority of payers.
There are exceptions, and that has to do with the level of standards of practice or if certain technologies and procedures are meeting an unmet need and there is not an alternative to help a patient. Those technology assessments are the starting point as to how payers look at coverage. They also look at the published clinical evidence, and look to the specialty societies for opinions and positions.
BB&T: Getting reimbursement approvals in international markets is yet another animal. What do companies need to do additionally to commercialize their products elsewhere?
Rosenbloom: It's important to understand that while reimbursement is very different outside of the United States and is different in every country, it's important to first define what the company has in the U.S. – what kind of clinical evidence, because the clinical evidence here in the U.S. and outside the U.S. is something that will be examined. It's important to look at the similarities in coding structures. Companies have to clearly look for reimbursement consultants and experts in those countries where they want to sell their products. They need a level of commitment outside of the U.S., but the starting point is really understanding the agencies, looking for the consultants and understanding that some form of what is acceptable reimbursement in the U.S. could be applied in some form outside the U.S.
Looking at it from the other direction, if you're a company that is outside the U.S. and planning to come into the U.S., you can do the same thing – use the available information that you're currently using outside the U.S. and be able to use that in coming into the U.S. market.
BB&T: Is there a question I haven't asked that you wish I had?
Rosenbloom: I think the bottom line is that companies really need to understand that reimbursement is a moving target. Most of us working in this field are more educated than ever, and we can use our experience to move things forward. It's not just a nice perfect box – there are lots of alternatives, lots of caveats, and what may have worked in the past may not always work today, especially in today's changing environment. All of this must be integrated into every part of the business. Make sure reimbursement is not an afterthought – make the goal of reimbursement part of the technology and clinical evidence development. Codes and payments will follow.