Domestic and International Medical Device Reimbursement

Transcription

1 Diverse Intelligence Solutions Growth Fuel New Thinking & Innovation Domestic and International Medical Device Reimbursement Deborah Schenberger, Ph.D. OMTEC, 2009

2 Overview Challenges of reimbursement The roles of governments United States Canada Europe NOT COVERED=International in Asia, South America The role of private insurers Developing a global strategy for reimbursement Regulatory classifications Primary and secondary payer effects Conclusions and Discussion

3 Challenges to Int l Reimbursement I have a CE Mark and/or FDA clearance. Now what? How do I get my device on the national approved list? How can I find out how much I will be reimbursed? If I have a new technology, how do I get it approved for use at a research hospital? What s the situation outside of the US and EU? Reimbursement is a complex issue, so this talk is an introduction discussing some of the nuances.

4 Reimbursement in the USA Technically, the US does not provide public healthcare (at least not right now!). However, Medicare and Medicaid are federally run healthcare subsidies governed by CMS (Centers for Medicare & Medicaid Services) CMS is both a regulator and a purchaser of medical devices. Private insurers are not bound by CMS decisions, but typically do not deviate from them. FDA (Food and Drug Administration) is separate government agency, but CMS only reimburses FDA approved medical devices.

5 Dealing with CMS Processes 5 billion claims each year! Agency uses a coding system to process claims, which then dictates amount of reimbursement. Thus CODING classification is very important, as reimbursement varies significantly for different codes. Prior to approaching FDA, companies should know under which category they want their device coded. Try to put together a strong case to fit new devices under existing code rather than wait for a new code to be designated/negotiated.

6 CMS Reimbursement Coding CODE DEFINITION MEANING CPT ICD HCPCS HCPCS Level II Current procedural technology International classification of diseases Healthcare common procedure coding system Healthcare coding system supplement An American Medical Association coding of procedures for each product Diagnosis code for diseases from WHO. Medicare uses Rev 9. Others use Rev 10. Subclassification of product codes maintained by CMS Prosthetic devices, durable medical equipment and some procedures by CMS DRG Diagnosis related group In hospital patient classification system used by Medicare

7 CMS Designation of Patient Need CMS considers the greatness of patient need and medical necessity. FDA only validates safety and efficacy If existing alternative treatment gives similar or only slightly inferior results, but is much cheaper, it s tougher to get CMS to approve a new procedure or device. But if there are NO alternatives or the device works extremely well in comparison, approval is granted quickly if patient need is great

8 National vs. Regional CMS Approval Each region has its own Medicare branch Manufacturers can apply at national CMS or at each branch separately If approved nationally, device is approved for reimbursement at all branch locations If NOT approved nationally, the device cannot be considered at any of the branch locations Many manufacturers choose to deal with CMS region by region, as it is lower risk and approval will vary

9 Private Insurers in USA If CMS approves a procedure or device, private insurers will also Private insurers will often cover the cost of additional items: More controversial procedures More expensive alternative procedures or devices shown to have better outcomes Orphan drugs New devices Due to the shear number of private insurers, obtaining approval can be costly and timeconsuming

10 Reimbursement in Canada Universal publicly funded health insurance Based on taxation defined by the Canada Health Act (CHA). Each province receives allocation that it uses to set up a healthcare payment system for the province. Provincial insurance systems are service based reimbursement Each province has its own unique service classification codes that determine approval for reimbursement

11 Province Health Plans PROVINCE Alberta British Columbia Manitoba New Brunswick Northwest Territories Nova Scotia Nunavut Prince Edward Island Quebec Saskatchewan Yukon NAME OF PLAN Alberta Health Care Plan Medical Services Plan Manitoba Health Medicare NWT Health Care Insurance Plan Medical Service Insurance Nunavut Health Care Plan Medicare Assurance Maladie (RAMQ Medicare) Saskatchewan Medical Care Insurance Plan Yukon Health Care Insurance Plan

12 Canada s Private Insurers Abouth half of Canadians also have private insurance to supplement government plan Faster service Covers more procedures and medical devices Provinces approve devices, but then physicians or hospitals determine reimbursement amount! Often, the profit margin created for the physician by using a given device is used as partial justification of the reimbursement.

13 Reimbursement in the EU 27 member nations and decisions on reimbursement are made at national or hospital level Health Technology Assessment, made up of all member nations, attempts to harmonize which devices are used: Promotes cost effective technologies Eliminates harmful or ineffective interventions Each EU country has its own tax based public insurance and coverage varies widely between countries.

14 Reimbursement of Medical Devices Each country has independent control over pricing as well as which devices will be reimbursed. All rely on evidence based medicine and the CE Mark to demonstrate safety and efficacy. Manufacturers will often low ball the cost of their device to get exclusive rights to a particular market. Getting added to the national reimbursement list of each country can be extremely challenging. Important to develop a reimbursement strategy.

15 Private Insurers in the EU UK has 20% of healthcare coming from nongovernment sources. Italy has 40% Each insurer has a different reimbursement schedule: Luxembourg, France, and Belgium payments are made by public insurance and third party indemnity payers Germany and The Netherlands follow similar approach, with third party payers providing structured indemnity insurance and benefits in kind

16 Coding and Classifications for EU Medical devices are classified by the Organization for Economic Cooperation and Development (OECD) Other countries then add their own classifications: UK has Medical Device Agency France has the Health Care Product Safety Agency Germany has the Federal Institute of Medicinal Products and Medical Devices These agencies not only review products, but set prices and evaluate new devices and technologies

17 Negotiations in EU Reimbursement negotiations in EU are more political than in USA Often lengthy negotiations and are dependent on agreed upon volume. If volume is exceeded, product prices are further reduced Time needed for negotiations depends on country: Spain is 2 to 4 years Italy requires product registration, then sets prices based upon comparison with other countries UK is fastest average time to approval

18 Germany s Model Converted to a diagnosis related group reimbursement For each diagnosis, certain devices are approved If a device is not listed, hospital may not be reimbursed Special exception for innovative medical devices Incentive program for innovative medical devices Supplemental reimbursement for trying new devices Simplifies approval process to make it easier for hospital to try new technologies May be a model implemented by other countries, as it rewards giving the best treatment available

19 Conclusions Reimbursement is a complicated, time consuming endeavor. Best to develop a strategy prior to approaching FDA and Notified Bodies Identify markets where reimbursement will be most readily secured. Consider risks of each strategy. Do a thorough analysis on competitive treatments and be prepared to demonstrate the superiority of your device. Find out how others are classifying their devices and how much they are being reimbursed.

20 Questions?

21 THANK YOU! Domestic and International Medical Device Reimbursement Deborah Schenberger, Ph.D. Nerac Analyst