For the most part, annual changes in Medicare payment rates don’t directly impact medical device manufacturers. With the exception of the very small number of devices that qualify in any year for the Medicare Inpatient New Technology Add-on or Hospital Outpatient Pass-through (PDF) status, or devices used in the home and classified as “durable medical equipment,” demand for devices is influenced more by the overall financial health of hospitals and physician practices than by any particular reimbursement rate decision or trend in payment levels.
Larchmont Strategic Advisors
Three health care reimbursement developments of interest in the last few days:
I’ve recently encountered a number of articles questioning the usefulness of comparative effectiveness research. For example, Keith Winstein, writing in the Wall Street Journal Feb. 10, details the failure of medical practice to adapt to findings from the Courage trial — reported to great acclaim in the New England Journal of Medicine in 2007 — about the relative effectiveness of drug therapy and stenting in relieving chronic chest pain.
If “Do you have a code?” is the wrong question to ask when assessing the reimbursement prospects of an innovative device, drug, or diagnostic, is there a right one — a single question that can separate the life science reimbursement gold from the technological base metals that insurers won’t likely pay for? Yes there is, and it’s a question I don’t often hear asked in a clear and concise way:
“Can you demonstrate, with evidence strong enough to withstand rigorous review, predictable clinical benefits to a defined patient population?”
Stated even more simply: “Can you prove your technology’s clinical utility?”
When pitching to potential life sciences technology investors, entrepreneurs know that they need to demonstrate a clear path to reimbursement. Angels, VCs and strategic partners don’t want to commit resources to develop something that won’t get adequately paid for in a reasonable timeframe. That makes perfectly good sense. Indeed, I’d argue that the need to assess a technology’s likely reimbursement status begins even earlier than the investment pitch.