Reimbursements
by Nick Damiano, Zenflow Co-Founder & CEO
Regarding reimbursement, it’s very complicated and publicly available information is lacking. That’s why I see it as a big area of need. Many consultants who build up knowledge in this area and buy access to proprietary databases will charge companies outrageous fees of $300-400/hour for advice. Getting even a basic assessment done can cost tens of thousands of dollars.
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On cms.gov you can find fee schedules outlining reimbursement for CMS patients. Private payors are tougher to figure out and decide on coverage individually, but they will often publish their coverage policies as in the attached BPH policy for Anthem. Here is a basic writeup about med device reimbursement process. There are also always great resources and case studies on ebiodesign.org, a resource I consult often.
For the basic process in the US (as far as I understand it), you need to apply to the American Medical Association (AMA) for a Current Procedural Terminology (CPT) code. Specifically, one applies to the Department of CPT Editorial Research and Development. Developing relationships with professional societies (like the AUA for us) can be helpful toward getting this approved. This panel meets 3x a year and decides which new procedures should be covered and which outdated procedures should no longer be covered. Whereas the AMA assigns codes, CMS and commercial payors pay for them.
Next, if needed, one applies to the CMS Coordination & Maintenance Committee for an ICD-10 code. The Director of the CDC’s National Center for Health Statistics (NCHS) and the CMS Administrator make the decision. The result of this is an ICD-10 diagnosis code describing the condition you’re treating. Often these already exist for products entering a market where other treatments always exist.
HCPCS codes may also be needed, and there are three different levels of HCPCS codes. Level I is CPT and level III includes regional and special codes. Level II HCPCS codes include many types. I’m most familiar with C-codes, which often allow for temporary reimbursement before a level I CPT code is assigned.
Ideally companies want to already have well-covered CPT, ICD-10, and/or HCPCS codes that they can use before entering the market, often established by other similar device companies. That will shorten this often long and costly process. Investors are often afraid to back companies that don’t have these, as time until reimbursement coverage can extend years after FDA approval/clearance and costly post-market studies may be required.
Then you need to look at the site of care: OR “hospital", ambulatory surgery center (ASC), or office. The first two are sometimes called “facility” and the office setting is “non-facility”. For facilities, you’ll get an actual dollar amount, sometimes broken down into facility fee (for the institution) and physician fee (for the doc). For non-facility payments, you’ll have to convert from relative value units (RVUs) to actual payment. RVUs are broken down into work RVUs, practice expense RVUs, and malpractice RVUs, but this probably isn’t that important to companies. To get payment from RVUs, CMS publishes a conversion factor every year, usually around $36/RVU. Here is an example of how reimbursement info is presented for the use of healthcare providers by one of our competitors.
Outside the US, good luck finding any information. The processes are even more obscure, but each country (even sometimes each region as in Italy!) has its own reimbursement process. Many countries want to launch first in Europe, but figuring out how you’ll get paid there is an expensive and time-consuming process.
-Nick Damiano, Zenflow Co-Founder & CEO
Thank you to the Medical Device CEOs who shared feedback: Aswin Gunasekar of Zeto, Koji Intlekofer of ShiftLabs, and Dr. med. Sebastian Punyaratabandhu Bhakdi of X-Zell.