As new technologies continue to emerge, what do we need to know about healthcare reimbursement and designated coverage? Brian Carey from the Life Sciences Coverage & Payment Group at the law firm Foley Hoag shares information on reimbursement and provides his perspective on current policies.
The field of healthcare technology is rapidly growing, and new medical products and services continue to emerge into clinical practice. But with developing technology comes the challenge of bringing these tools to market, an end-to-end commercialization process that includes research and development, clinical trials, data collection and analysis, the regulatory pathway, and reimbursement.
While many believe one of the biggest obstacles in this process is getting FDA approval, but this approval doesn’t guarantee commercial success. Government and commercial payers have their own predetermined rules for every individual service and technology, which has a direct impact on reimbursement, meaning that the technology has to provide both a clear medical benefit and more value than the traditional standard of care.
To share information on reimbursement and provide his perspective on current policies, Elise Wilfinger is joined by Brian Carey, Co-Chair of the Life Sciences Coverage & Payment Group at law firm, Foley Hoag.
Evaluating The Framework for Reimbursement: Services Covered & Guidelines for Determination
Mr. Hoag began by explaining what reimbursement means, breaking it down into three elements: coding, coverage, and payment:
- Coding: An identifier assigned to a particular technology so it can be billed on a claim form
- Coverage: Process to measure clinical necessity and establish eligibility criteria for the patient
- Payment: Method for determining the amount to pay for a new technology
While the criteria are similar, decisions and eligibility can be based off of setting of care and payer type, specifically Medicare compared to commercial.
It’s important measure whether or not the technology will be separately payable. The payment for a drug, biologic, medical device, or molecular diagnostic can be separate from any other procedure performed on the patient, but for an inpatient stay, these separate costs can be bundled.
Medicare, in particular, covers a variety of services, but like most payer types, it depends on the technology. Physician-administered drugs tend to be covered under Medicare, but an early cancer screening tool may not be. Every technology requires a clinical evidence assessment to determine if it’s a medical necessity.
To better make these determinations, there are two Medicare guidelines to look at: the National Coverage Determination (NCD) and Local Coverage Determination (LCD). NCDs are made through an evidence-based review process, and if the service isn’t covered at the national level, Medicare contractors determine coverage through LCDs.
Exploring Dynamic Relationships in Payer Reimbursement
There are several overlaps between these two areas. For example, the Breakthrough Device Designation (BDD) program to expedite the development and review of potentially lifesaving medical devices so they’re available sooner. Since it’s inception, the FDA’s Center for Devices and Radiological Health (CDRH) granted BDD status to 617 since its inception in 2015, and 33 percent of those occurred in 2021, signifying a growing focus on assigning this BDD status.
On top of the FDA, government policies have also had a role in payer reimbursement. The development of new technologies has led to several challenges, but according to Mr. Hoag, these challenges are the same, regardless of whether or not payment is being made by a commercial payer or a private payer. Policies are often siloed, but commercial insurers typically follow the CMS framework, using the same billing codes and payment methods as Medicare Advantage, so the rule of thumb is to establish Medicare Advantage coverage first, and then expand to commercial and Medicaid.
Ms. Wilfinger concluded by saying that while the lag between FDA Breakthrough Device Designations, FDA marketing authorizations and approvals, and payer reimbursement for such devices aren’t new, emerging challenges in the area of reimbursement are coverage delays and inadequate payment. As technology continues to grow and break into the field, these obstacles are necessary to overcome to lead to better outcomes.