“Designing for CMS” becomes an essential part of any new product development process, which needs to be implemented 16 to 24 months before drafting specific U.S. Market Entry plans.
Medicare patients will now get reimbursed for medical devices that the FDA designates as a breakthrough technology. A medical device is a breakthrough technology if it fulfills the following criteria
Coding: Is there an HCPCS (Healthcare Common Procedure Coding System, administered by the Center for Medicare and Medicaid Services (CMS) code that describes the device or how physicians will use it?
Coverage: Do most private healthcare insurance companies and Medicare (the U.S. Federal Health insurance program for +65 years old Americans) cover the procedures enabled by the device, and under what clinical circumstances?
Payment: Will caregivers and hospitals get paid enough to encourage the adoption and acquisition of the product without creating a cost burden that would discourage government and private insurance coverage?
Most MedTech companies located outside of the U.S. have a limited understanding of the importance of these questions. And they are especially conducive to start-ups and small company innovators, which are an essential part of the MedTech ecosystem. However, some early product definition decisions might be extremely counterproductive when seeking coding, coverage, and payment for the U.S. later in the product life cycle.
A particularly easy way to illustrate this is when recognizing that the clinical “Intent of Use” of a new product is an attribute that emerges relatively early in the development process. In our last newsletter, we explained how “designing for FDA” is a best practice that will influence the selection of an Intent of Use to optimize the regulatory position. For instance, in identifying the correct predicate device in the 510(k)-application process.
Also, if the coding and coverage criteria are not taken into account, one might end up missing the opportunities for coding and coverage. At times just simple wording variations change the game. Similarly, the technological characteristics of the product might have a profound impact on the regulatory pathways in terms of “Substantial Equivalence” (SE is used to identify “Predicates Devices” which are existing legally marketed medical devices) and on the cost structure of the product.
Therefore, while setting the cost design objectives upfront in the product development cycle in order, it is necessary to give detailed attention to reimbursement payment values in the U.S. as well as their projections in future years. Potentially avoiding pricing struggles downstream in the market introduction process. At a time of heightened national awareness of the importance of health care innovation to quality patient care, this will also help support an innovation ecosystem and bring value to the health care system.
This illustrates how “Designing for CMS” becomes an essential part of any new product development process, which needs to be implemented 16 to 24 months before drafting specific U.S. Market Entry plans.