A Quick Way to Prepare for Securing an Investment

Learn how to systematically prepare for your next investments.   Join medical device growth expert, Ron (Rani) Shifron for this Seminar.
For details and registration click here.

 

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A Shortcut to Medical Device Reimbursement in the UK

This is the third article in this series.  The previous two articles – A Shortcut to Medical Device Reimbursement in Germany and in France, may be downloaded here:
* Germany: http://www.mediclever.com/resources/5.pdf
* France: http://www.mediclever.com/resources/8.pdf

1. The Problem
You developed a new and innovative medical device that provides substantial clinical benefits in a cost effective manner.
You know the UK has one of the largest medical device markets in the world, positioned alongside France as the second largest in Europe behind Germany.
You plan on getting your product approved in Europe and complete the CE mark process relatively quickly and you already signed agreements with local UK distributors.

The only problem – will your device be reimbursed, or in other words, will the UK National Health Service (NHS) pay for it?
Since your device is new, there are probably no existing reimbursement mechanisms (codes, coverage and payment rates) into which it could fit.  On the other hand, in order to apply for the development of new reimbursement mechanisms, your device should first be in wide use by UK physicians for the local patient population.  But since your device doesn’t currently fit into any reimbursement mechanisms, physicians are
reluctant to use it, and therefore it will never reach a wide user base to justify the creation of new reimbursement mechanisms…

Sounds like a Catch-22, right?

Luckily, the NHS operates an Innovation Procurement Plan designed to encourage the quick uptake of innovative new technologies.  Similar to the USA Centers for Medicare & Medicaid services (CMS) “Health Care Innovation Awards” program, the UK’s NHS understands that “innovation must be central to the NHS”, indicating that innovation will be driven regionally by strategic health authorities (SHAs) with a legal duty to promote innovation; and that front-line innovation will be supported through the creation of substantial new innovation funds held by SHAs.

In this article, we will try to describe the requirements, the relevant decision makers and the overall process that may help you leverage this plan to expedite the commercialization of your product in the UK market.
But first, we provide a short description of the NHS below.
2. The UK Healthcare System

* The United Kingdom of Great Britain and Northern Ireland (commonly known as the UK) consists of England and the devolved administrations of Northern Ireland, Scotland and Wales, each with varying powers.

* Population: 62 million.

* Type of Healthcare System: Single Payer / national health service (NHS).

Public health system: England provides public healthcare to all of its permanent residents.  Public healthcare is free at the point of need.  The responsibility for providing NHS healthcare services in England is divided between 10 Strategic Health Authorities.

SHAs issue guidelines for healthcare in their region, verify appropriate distribution of funds and carry out regional plans and projects to improve public healthcare.  In addition, each SHA is responsible for the Primary Care Trusts (PCTs) in its region.

PCTs examine local needs and negotiate with healthcare providers to provide health care services to the local population.  PCTs have their own budgets and set their own priorities, within the overriding priorities and budgets set by the relevant SHA and ultimately the national Department of Health (DH).

PCTs provide a range of community health services, including: funding for general practitioners, medical prescriptions, and commissioning of hospital and mental health services, as such they are considered key stakeholders in healthcare decision making.
Altogether, there are 151 PCTs in England.
3. National Innovation Procurement Plan
As mentioned above, the NHS is interested in encouraging the diffusion of innovation into the healthcare system and has launched a package of proposals to promote this.  One of them is the National Innovation Procurement Plan which seeks to bring clarity and coherence by organizing the adoption of technology-led innovation at the regional level.  Supporting this legal duty, an Innovation Fund has been created worth £220m over five years.  This fund will support faster innovation and more universal diffusion of best practice – innovation will be encouraged, recognized and rewarded.

a. Process
(1) Medical device companies, usually partnered with local healthcare providers, may submit details of specific medical technologies that can contribute to the NHS by downloading a submission form from the DH website and submitting details of innovative technologies using the email address that appears there.
(2) NICE (National Institute for Health and Clinical Excellence)  – analyzes and prioritizes submitted technologies according to their potential to increase the quality of care provided to patients, whilst reducing the overall cost of care for the NHS.  The NICE Implementation Collaborative (NIC) supports implementation of NICE guidance within each SHA.
The prioritized list is then shared to inform the technology selection process with:
(3) NTAC (NHS Technology Adoption Centre) – formed in 2007 following recommendations by the Health Care Industries Taskforce who recognized that the NHS, despite the potential of innovative healthcare technologies to improve health outcomes and productivity, is slow to adopt healthcare technology when compared to health care systems in other developed countries.  NTAC was commissioned by the DH to support NHS regional Innovation Leads to facilitate the selection of high impact technologies for wide adoption across their regions. Working with key regional influencers, NTAC helps individual NHS organizations to deploy the selected technologies
(4) Regional Innovation Leads – each SHA holds a legal duty to promote innovation, raising the profile of innovation and encouraging a more rapid adoption of innovation throughout the health service.  ‘Innovation leads’ are employed in each SHA to deliver this requirement.
(5) Commercial Support Units (CSUs) are being created in each region, and as part of their role, will support their innovation lead by providing a key interface between industry and the NHS.

b. Application
All companies that make in-scope submissions will be offered an initial meeting with the iTAPP team (now, NICE). This meeting will be used to clarify any queries relating to the submission and to:
* Gain a deeper understanding of the potential benefits for patients and taxpayers.
* Explain how the program operates.
* Agree any next steps.
Technology submissions will be made up of three sections:
* Management Case: To demonstrate the overall benefits and challenges of adopting the proposed technology.
* Clinical Case: To demonstrate the clinical benefits offered by adoption of the proposed technology.
* Financial Case: To demonstrate the costs and savings applicable to adoption of the proposed technology.

c. Prioritization
The process does not provide a pass/fail approach to inclusion of technologies on the list.  Instead, all technologies remain on the list so that they can be re-categorized and reprioritized in response to changing circumstances.  Technologies are categorized on the list as follows:
* Level 3: On the market, with sufficient evidence for wide adoption
* Level 2: On the market, without sufficient evidence for wide adoption
* Level 1: Not yet on the market
* Level 0: Out of scope (ie not a medical technology)
* Level -1: Pending categorization
* Level -2: Withdrawn by manufacturer

Levels 1, 2 and 3 represent a pipeline of innovative medical technologies. The overarching aim of iTAPP (now, NICE) to realize benefits from technology adoption earlier than would otherwise be the case, supports high impact technologies to move through the pipeline more quickly.
Within each category, technologies are prioritized based on an impact scoring calculation, as follows:

Low:
* Benefitting population: < 250k
* Net financial savings: < £250k
* Deployment timescale: 3 yrs

Medium:
* Benefitting population: 250k – 2.5m
* Net financial savings: £250k – £2.5m
* Deployment timescale: 2 yrs

High:
* Benefitting population: > 2.5m
* Net financial savings: > £2.5m
* Deployment timescale: 1 yr

In each case, high scores 3, medium scores 2, and low scores 1.  To calculate the total score, the scores are multiplied together.  This gives a maximum score of 27 and a minimum score of 1.  Advice is sought from National Clinical Directors at the Department of Health to enable a clinical perspective to be added to each technology.
The list of all technologies, indicating their level and primary benefit, can be downloaded from the DH website.

As can be noted, the device’s score is not affected by the number of UK physicians that currently use the device for the local population.
4. The Strategy
Each of the SHAs publishes calls for applications for its regional innovation fund.  Prior to submitting an application, we recommend taking the following Steps.

a. Step 1 – Reimbursement Landscape Report
The purpose of this Step is to understand the current reimbursement landscape for the company’s device.  It includes:
* Identification of relevant coding systems, available coverage policies, limitations and guidelines, relevant payment mechanisms and payment rates, outside of the National Innovation Procurement Plan.
* Identification of existing reimbursement mechanisms that could be utilized or compared to the company’s device, regardless of the National Innovation Procurement Plan.  Recommendation on whether new mechanisms will have to be developed and if so, which mechanisms.
* Identification of the main decision makers and their specific incentives and a description of the typical path towards obtaining third-party reimbursement, including milestones and typical timelines.

b. Step 2 – Plan Evidence
Following the completion of Step 1, the company should clarify what ‘evidence’ needs to be developed in order to receive high prioritization according to the above mentioned criteria of: (1) Benefitting population; (2) Net financial savings; and (3) Deployment timescale.  This step includes:
1) Development of a Value Story, indicating specific claims that explain how the use of the new device promotes the above criteria in comparison with the current alternatives.
2) Development of an Economic Model, quantifying the economic benefits and allowing for sensitivity analysis.
3) Verification of available clinical data supporting the clinical and economic claims in the above Value Story and Economic Model.  If needed, the addition of reimbursement related aspects to any planned clinical study protocols.
4) Presentation of the above Value Story, Economic Model and existing/planned clinical data to relevant stakeholders within the NHS.  It is important to verify, in advance, that these stakeholders understand the benefits and would agree to provide funding for the new device, should the generated data support the claims in the Value Story and Economic Model.
In case of negative feedback consider changing the Value Story, Economic Model, clinical data or product.  Repeat this step until receiving positive feedback from the relevant stakeholders.

c. Step 3 – Generate Evidence
Perform clinical study/ies to substantiate the claims in the value Story or verify that existing clinical data supports them.  Compile the Value Story, Economic Model and clinical data to a Dossier.

d. Step 4 – Establish Support / Demand
Use the developed dossier to:
1) Convince the relevant healthcare providers in the clinical and economic benefits of using the new device.
2) Convince the local key opinion leaders to provide lectures, write articles and issue supportive letters highlighting the benefits of using the new device.
3) Similarly, convince the relevant medical societies and organizations to provide position statements.
Add these documents to the dossier.

e. Step 5 – Implementation
Use the developed dossier as a sales tool and apply for funding from the Innovation Fund.
5. Conclusion
According to an assessment conducted by PwC, the UK, with its largely single-payer, government-controlled system, ranks third in ease of reimbursement and significantly above European countries such as Germany and France.  The NHS’s focus on innovation may make it even easier for smaller companies, introducing their first product into the market.
It should be noted that in order to prepare a winning application, a great deal of preparatory reimbursement related work should take place, in advance.  This preparatory work should result in the development of evidence, supporting the required criteria for high prioritization on the list of new devices, which are candidates for funding from the Innovation Fund.
Amir Inbar, CEO
Mediclever Reimbursement Consultants
www.mediclever.com
amir@mediclever.com

 

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A Shortcut to Medical Device Reimbursement in France

This is a second article in this series.  The first article, “A Shortcut to Medical Device Reimbursement in Germany”, can be downloaded at: http://www.mediclever.com/resources/5.pdf

You plan on getting your product approved in Europe and complete
the CE mark process relatively quickly.
You know France presents the 2nd largest market for medical
devices in Europe and you already have a few French physicians interested in using your product.  But, how can you get the French payers, aka health insurance funds (caisses d’assurance maladie)
to pay for it – fast?

Here is one possible, intermediate mechanism, designed to serve
as a gateway for introducing innovative medical devices into the French inpatient reimbursement system.

 
1. The Problem

Reimbursement for a hospital inpatient stay in the US is determined
according to a Medicare Severity Diagnosis Related Group (MS-DRG).  Similarly, reimbursement for a hospital inpatient
stay in France is determined according to a Homogeneous Group of Stay (Groupe Homogène de Séjour, GHS).

In both cases, if a new device does not fit into an existing DRG/GHS the hospital may not be properly reimbursed for its added cost and thus may not want to use it.
On the other hand, forming a new GHS code to reflect the added
costs associated with your new device requires data collection of procedure utilization.  But since your device doesn’t currently fit into one of the French GHS codes, hospitals are reluctant to use it, and therefore it will never reach sufficient utilization to justify the creation of a new GHS code.

 
Sounds like a Catch-22, right?

 
To encourage entry of new and innovative technologies into the French healthcare system, innovative devices may be added to the “add-on list” (“liste en sus”), which provides hospitals with the required financial incentive to use a new device, before it is properly reimbursed under the GHS system.  However, it seems as if most US medical device companies are unaware of this mechanism that could shorten their time-to-market and even increase their chances of influencing the payment rate of a relevant GHS code in the future.

 
In the next part I will provide a short description of the French
GHS system, and then discuss the liste en sus mechanism in detail.

 
2. French GHS System
The French DRG system, or GHS system, groups several parameters
to classify each patient’s stay in a Homogeneous Group of Patients (Groupe
Homogène de Maladies, GHM
).

Thereafter, each GHM is associated with its financial counterpart, the
GHS.
The GHS system is a ‘leaning system’, relying on quantitative
data supplied to the Technical Agency of Information on Hospitalization (Agence
technique de l’information sur l’hospitalisation, ATIH
) by ~45 reporting

hospitals throughout the year.  The data
gathered during 2011 is applied in the 2013 GHS catalog.

3. Liste en Sus
To get listed on the liste en sus, the product needs to get
listed on France’s list of reimbursable products (Liste des Produits et
Prestations Remboursables, LPPR
), under the product’s trade name (rather

than under a general description).
The validity of the request for inclusion on the LPPR is
evaluated by the national Committee for the Evaluation of Medical Devices and Health
Technologies (Commission Nationale d’évaluation des Dispositifs Médicaux et
des Technologies de Santé, CNEDiMTS
), which bases its decision in

particular on the dossier requesting reimbursement that is typically submitted
by the manufacturer.
The device’s reimbursement tariff, in addition to the hospital GHS
tariff, is then negotiated between the healthcare products pricing committee (Comité
Economique des Produits de Santé, CEPS
) and the manufacturer.

Inclusion using the brand name is intended to be temporary.  In fact, as soon as a competitor appears for
the innovative product, inclu­sion using the generic description form could be
justified.

4. Application for Inclusion on the Liste en Sus
In the case of an initial request for inclusion, the guidance of
CNEDiMTS is based in particular on assessment of the product’s Expected Service
(Service Attendu, SA) and, if sufficient, on assessment of the Improvement
of Expected Service (Amélioration du Service Attendu, ASA).

 
4.1 Assessment of the expected service (SA)
Assessment of the SA is by indication and is essentially based
on an assessment:

 

  • of the risk/benefit ratio;
  • of the role of the device within therapeutic strategy;
  • of its benefit to public health

4.2 Assessment of improvement of expected service (ASA)
If the expected service is sufficient to justify listing for
reimbursement, the guidance of CNEDiMTS will also be based on the ASA in
relation to a comparable product, considered to be the current gold standard,
whether or not this gold standard is reimbursed.  This assessment classifies the added clinical
value as major (I), substantial (II), moderate (III), minor (IV) or absent (V)
for each indication for which the committee considers that there is evidence to
justify listing.

 

4.3 Setting the Tariff
Determination of the tariffs mainly takes into account SA, and
ASA, when appropriate additional studies requested, tariffs and prices of
comparable procedures or products, as well as services included on the list,
the volume of anticipated sales and predicted and real conditions of use.
According to the law, the whole process should not take more
than 6 months.  However, some companies reported
much longer time periods.

4.4 Maintaining the Listing
To remain on the list with the assigned level of reimbursement,
the manufacturer should resubmit its applications every three years in order to
demonstrate real-life data generated by post marketing studies, supporting
claims that were used at the basis of the initial application.
If the post marketing study is either not performed, or
incomplete, or there is insufficient evidence to show that the product performs
as well in actual life, the so-called “service rendu” rating may drop, and with
it the reimbursement level.

 
5. Statistics
Out of the 148 reviews provided by CNEDiMTS during 2009, 76
(51.3%) were provided for products submitted for the first time, 12 (8.1%)
concerned requests for modifications, 51 (34.5%) concerned renewals and 9
(6.1%) were classified as other requests[1].
Out of the 88 reviews that concerned first submittals and modification
requests, 62 were granted a ‘sufficient’ SA grade, while 26 were granted a ‘non-sufficient’
SA.   For the assessment of improvement
of expected service (ASA), only 2 products received ASA level I (major) and 4
received ASA level II (substantial).

 

6. Benefits and Disadvantages
6.1 Benefits:
* Inclusion on the liste en sus could lead to immediate
increase in procedure and sales volume.
* As opposed to the equivalent NUB process in Germany, the
manufacturer and not each individual hospital, negotiates the added
reimbursement, which is then applicable for all hospitals, for up to 3 years.
6.2 Disadvantages:

* The process requires review of at least two separate agencies
(CNEDiMTS and CEPS), which lengthens the process and requires substantial
resources from the manufacturer’s side.
* On an annual average, only 3 to 4 new products receive an ASA
level of I or II that justifies separate reimbursement.

 

7. Summary
The French healthcare system is trying to cope with the built-in delays of integrating innovative diagnostic and therapeutic treatments into the system.  Similar to the French liste en sus, comparable reimbursement mechanisms exist in Germany, the UK and in some regions of Italy.  Utilizing these mechanisms can help US companies obtain reimbursement in Europe faster and bring their products to market sooner.

 
To verify the existence of relevant GHS codes, to develop the appropriate dossier for inclusion in the liste en sus or for the inclusion of your product under any reimbursement mechanisms in the US and Europe, please contact:
Amir Inbar, CEO, Mediclever Ltd.
www.mediclever.com
amir@mediclever.com


[1] HAS Annual Report 2009
(http://www.has-sante.fr/portail/upload/docs/application/pdf/2011-02/has_rapport_activite_2009_2011-02-25_11-31-57_229.pdf)

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Health Technology Assessment goes online

Pharma IQ is pioneering new HTA discussion platform with launch of the first ever HTA Online event – Global HTA and CER Forum, which will take an innovative form of 12 online session over the course of August.

Health Technology Assessment has recently observed an unprecedented global  expansion. Clinical and cost effectiveness are assessed for pharmaceuticals in Australia, Canada and the UK, while clinical benefit is the main focus in France and Germany for new drugs. CER is rapidly gaining momentum in the US to inform federal funding decisions, while commercial US payers use clinical and economic evidence in formulary listings.

Over 12 speakers from 10 countries, including 5 HTA agencies, will deliver 13 presentations:

• National Institute for Health and Clinical Excellence  (NICE)

• Patented Medicine Prices Review Board (PMPRB)

• Spanish Agency for Health Technology  Assessment (AETS)

• Roche Products

• GlaxoSmithKline

• HIQA

• Office of Health Economics

• F. Hoffmann-La Roche

• Amgen

Key topics to discussed by expert panel include:

  • Speeding the reimbursement processes with first-hand input from prominent HTA bodies: NICE, OHE and HIQA
  • Exploring the efforts of standardisation of HTA in Europe
  • Implementing a best practice approach to value-based pricing
  • Analysing the finer points of performance-based reimbursement and its impact
  • Aligning HTA strategies with insight from leading pharma and biotech companies:  GSK, Roche and Amgen
  • Designing product development programmes to maximise reimbursement success

The online form of the event is meant to help to reach the global audience and enable experts from Europe to have a live discussion with their colleagues in US, Canada and Australia without the need to leave their desk.

In response to the fact that we operate in a time of reduced budgets and time, this conference takes place 100% online, therefore no travelling expenses or timing conflicts would occur’ says Andrea Charles, Global HTA and CER Forum Director. ‘What’s more, if someone misses a session, it can always be accesses online as a recorded version of live session. It also means that now we can easily access global audience and industry experts from United States will be able to network easily with their colleagues from Europe without the need of leaving their desk or home’.

To find out more about how Global HTA and CER Forum plans to bring together word-wide renowned experts in the field, or to join the online discussion, visit the event website: www.htaforumonline.com

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Reimbursement of Implants in Belgium

Recently, a few companies selling implantables in the Belgian market faced reimbursement difficulties due to new regulations requiring the listing of their products in the Belgian publication list of notified products. As of July 1st, implants that are not published will not be reimbursed by the compulsory health insurance.

To adjust to these changes, we wanted to share with you the steps that should be taken by any company selling implantables in the Belgian market.

  • To get listed, each company or its distributor, should fill in a form that can be accessed via this link: https://www.riziv.fgov.be/webprd/appl/pimplants/
  • The required details include: the product’s name, the distributor’s and manufacturer’s name and the target price in Euro.
  • Once the National Institute for Health and Disability Insurance (NIHDI) verifies the application, the products are published on the website and may be reimbursed in Belgium.

Mediclever’s team of European reimbursement experts can work with your company to prepare an application that matches your company’s interests (instead of the distributor’s).

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Chrissie Fletcher, Director and Head of International Biostatistics at Amgen, joins Pharma IQ to discuss the way forward for Health Technology Assessment.

Chrissie Fletcher joined Pharma IQ to talk about Health Technology Assessment. In this comprehensive podcast, she discussed how she sees health economists and statisticians interacting going forwards, why there is so much emphasis on reporting for reimbursement and whether she expects pharma companies will try and do this more in-house, in the future. She also offered her thoughts on health economists who don’t have a statistical background, how she sees the HTA evolving and its place in the next 5-10 years.

According to Chrissie, reporting for reimbursement is becoming more important because it is what all the clinical trial programmes form the basis of, the evidence that they’re going to try and use to demonstrate the clinical effectiveness of the products, also the safety, as well as the cost effectiveness. In order for this to be really successful there is a clear need for transparency. ” We want to be sure that all the information that we generate throughout our drug development process is visible, it’s published in a timely fashion. And of course in order to make sure that we minimise any publication bias, we want to make sure all results, whether they’re positive or negative, are actually published” says Chrissie.

Chrissie has also mentioned that Health Technology Assessment has been evolving for number of years and the importance is continuing to increase. She discussed in details a couple of areas: the concept of the relative effectiveness or so called comparative effectiveness research:  ” On the health sector Health Development Agency (HDA) side, this is now becoming more and more important, but Health Technology Assessment is more local. The regulatory approach has often has a very specific regional focus and I’ll say the European Medicines Association for Europe and the Food and Drug Administration for the US. But HDA people in the UK in Australia and in Canada are very local. So there has been some kind of a disconnect to some degree in terms of what the regulators focus on and what the payers focus on.”

If you want to listen to the full interview, you can download it from HTA Forum website: http://bit.ly/gBT8uJ

The interview has been conducted in relation to Pharma IQ’s Health Technology Assessment conference, taking place 05 – 07 April, 2011 in London. If you want to find out more, please go to: www.htaforum.com

Posted in Pharmaceuticals, Reimbursement in Europe, Reimbursement in the US | 3 Comments

Mediclever’s Reimbursement Blog Added to Technorati

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The Reimbursement Checklist

In many cases, I was asked by the CEO of a medical device company the following question: “OK, I heard a lot of theory regarding reimbursement, but what is the actual process we should follow”?

This post aims to provide an overview of a typical reimbursement process, step-by-step.  It is relevant for any company that develops a new medical device and plans to launch it in the US and/or Europe.

The process can be segmented into 4 main Steps:

1. Collecting data; 

2. Planning how to generate the required evidence;

3. Generating the required evidence;

4. Implementation.

Step 1 – Collecting DataReimbursement Data

The process of ‘collecting data’ includes the Reimbursement Landscape Report.

In the Reimbursement Landscape Report we:

a.   Analyze the relevant market/s, providing numbers of currently conducted procedures, type of Payers (insurance companies) that finance them and overall spending.

Find out whether there are any existing codes, coverage policies and payment mechanisms that could be utilized or compared to, by the new medical product.

This enables us to:

b.   Define the most relevant Decision Makers for the reimbursement of the new product (mainly healthcare providers or Payers).

c.   Formulate an initial reimbursement strategy for the new product in the selected markets (Europe, US).

Step 2 – Planning Planning for Reimbursement Evidence

At this stage, we will plan the required ‘evidence’ for the reimbursement of the new product:

a.   Value Story: Lay out the clinical AND economic benefits of using the new product, from the identified Decision Maker’s perspective.

b.   Economic Model: Quantify the economic benefit, allow for sensitivity analysis and later on, use it as a sales tool.

c.   Reimbursement Related Parameters: Integrate in the clinical study protocol.

d.   Decision Makers’ Feedback: Verify with our network partners, representing relevant Decision Makers, that they will indeed finance the use of the new product if the claims in the Value Story are proven according to the presented clinical study protocol.

Equipped with a ‘green light’ from the relevant Decision Makers, the company may proceed to Step 3.

Step 3 – Generating EvidenceReimbursement Evidence

Now, the clinical trial may be conducted and the resulting ‘evidence’, substantiating the claims in the Value Story, should be published.

The Clinical Evaluation Report (CER) should also be prepared, based on official European guidance. CER may also be useful for US submissions.

* Boxes in blue indicate activities lead by Mediclever.  Boxes in green indicate activities which are lead by the company.

Step 4 – Implementation

  • In case existing reimbursement mechanisms (Codes, Coverage, Payment) were allocated in the Reimbursement Landscape Report, we will compile the Value Story, Economic Model and the published ‘evidence’ into a dossier that would be used to convince Healthcare Providers to purchase the new product.
  • Otherwise, after verifying a sufficient user-base and support from the medical community, we will apply for new codes, coverage policies and favorable payment rates.

 Reimbursement Process USA Europe

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A Shortcut to Medical Device Reimbursement in Germany

You plan on getting your product approved in Europe and complete the CE mark process relatively quickly.  You know Germany presents the largest market for medical devices in Europe and you already have a few German physicians interested in using your product.  But, how can you get those German Sickness Funds (Payers) to pay for it – fast?

Here is one possible, intermediate mechanism, designed to serve as a gateway for introducing innovative medical devices into the German Inpatient reimbursement system.

1. The Problem

Just as in the US acute care hospital inpatient stays are reimbursed according to Medicare Severity Diagnosis Related Groups (MS-DRGs), in Germany they are reimbursed according to German Diagnosis Related Groups (G-DRGs).

In both cases, if your new device does not fit into an existing DRG, the hospital may not get paid for using it and thus may not want to use it.  On the other hand, forming a new DRG code for your device (in the US or in Germany) requires data collection of procedure utilization.  But since your device doesn’t currently fit into an existing DRG, hospitals are reluctant to use it, and therefore it will never reach sufficient utilization to justify the creation of a new DRG code.

Sounds like a Catch-22, right?

To encourage entry of new and innovative technologies into the German healthcare system, there is a short-term, intermediate reimbursement mechanism, called NUB, which provides hospitals with the required financial incentive to use a new device, before it is properly reimbursed under the G-DRG system.  However, it seems as if most US medical device companies are unaware of this NUB mechanism that could shorten their time-to-market and even increase their chances of obtaining a relevant G-DRG code in the future.

In the next part I will provide a short description of the German G-DRG system, and then discuss the NUB mechanism in detail.

2. German G-DRG System

The German DRG system, or G-DRG system, groups several parameters, such as: the patient’s main and sub diagnosis (using ICD-10 diagnostic codes), performed procedures (using OPS procedure codes) as well as additional characteristics including the patient’s age, complications and co-morbidities into a single G-DRG code and assigns each code with a price tag (with different adaptations that are outside the scope of this article).

The G-DRG system is a ‘leaning system’, relying on quantitative data supplied to the Agency for the Hospital Payment System (InEK) by the ~250 reporting hospitals throughout the year.  The data gathered during 2010 is applied in the 2012 catalog.

3. NUB Reimbursement

Article 6.2 of the Hospital Remuneration Law (KHEntgG) allows hospitals to submit requests for reimbursement of “new and innovative diagnosis and treatment methods” that did not obtain a G-DRG code yet.

It should be emphasized that the device manufacturer is not the one applying for NUB reimbursement.  Mediclever typically assists the manufacturer in preparing the application and then each relevant hospital receives a copy and submits it on its own.

3.1 Required Criteria

The NUB reimbursement request must fulfill the following criteria:

*  The new and innovative method affects several existing G-DRGs.

*  The new and innovative method can be clearly defined.

*  The cost of using this new and innovative method affects the cost structure of the relevant procedure and the overall cost structure of the hospital.

*  The requesting hospital’s financial situation would be worse if the request is rejected.

3.2 The Application Process

Any hospital, interested in submitting a request for NUB reimbursement, should fill out a request form, which could be downloaded from the InEK site (www.g-drg.de).  The application must be submitted by October 31st and provide information regarding the substituted (old) method, date of first applying the new method, number of patients treated and expected number of patients that will be treated according to this new and innovative method.  Furthermore, a cost analysis comparing between the old and new methods should be added.

InEK checks all submitted applications and replies with a value of 1 to 4 for each application by January 31st

Value 1:

-  The innovative method corresponds with the requirements and will be reimbursed.

-  Usually, InEK will not have a national database that enables a uniform reimbursement rate, therefore each hospital and local GKV negotiation committee will negotiate the reimbursement rate.

-  InEK will also check if the innovative method can be adapted into the G-DRG framework

Value 2:

-  The innovative method does not correspond with the requirements.

-  The hospital is not allowed to negotiate reimbursement with any Sickness Fund.

Value 3:

-  InEK is overloaded and cannot reply to the submitted application until the deadline of Jan 31st.

-  The hospital may negotiate NUB reimbursement with interested Sickness Funds

Value 4:

-  The application was not clear or did not explain clearly why NUB reimbursement is needed.

-  The hospital may negotiate NUB reimbursement with interested Sickness Funds.

3.3 Benefits and Disadvantages

Benefits:

-  Obtaining NUB reimbursement takes a relatively short time.  This could lead to immediate increase in procedure and sales volume.

-  There are no risks in receiving a rejection and a negative reply will not affect chances of obtaining another reimbursement mechanism in the future.

Disadvantages:

-  NUB reimbursement only applies to submitting hospitals and requires bilateral negotiations between each hospital and the local Sickness Funds.

-  Each agreement is only valid for one year, but may be renewed, relatively easy, unless it has become a part of the G-DRG system.

In a recent research conducted by the Institute of Health Economics (IFG), it was suggested that hospital submissions will be available throughout the year and innovative methods that received a value 1 reply will automatically be reimbursed until included in G-DRG and apply to all relevant hospitals.

3.4 Statistics

For 2010, out of 13,865 requests for 546 new methods, 7,480 (representing 87 new methods) were assigned with Value 1, 6,005 (representing 444 new methods) were assigned with Value 2, none with Value 3 and 245 (representing 11 new methods) were assigned with Value 4. (Source: InEK).

4. Summary

The German healthcare system is trying to cope with the built-in delays of integrating innovative diagnostic and therapeutic treatments into the system.  Similar to the German NUBs, comparable reimbursement mechanisms exist in the UK and in some regions of Italy.  Utilizing these mechanisms can help US companies obtain reimbursement in Europe faster, bring their products to market sooner and increase their chances of obtaining a specific DRG code at a later stage.

Posted in Medical Devices, Reimbursement in Europe | Leave a comment

Reimbursement by Distributors

1. Overview

In many cases, when we ask the CEO of a medical device company how they are planning to obtain reimbursement for their product in Europe, they answer: “we have an excellent distributor who will take care of it”.

The purpose of this post is to show:

  • When may a company obtain reimbursement through a distributor and when it should not.
  • In cases where the company may rely on its distributor to obtain reimbursement:
    • Which steps of the process may be relegated to the distributor and which steps must be kept under the company’s lead.
    • How should the company preserve its interests and avoid being driven into a controlled position by its distributor.

 

2. When may a company obtain reimbursement through a distributor

a. Using existing reimbursement mechanisms

The first question to be asked is whether the relevant device can be reimbursed through existing reimbursement mechanisms (codes, coverage and payment levels). 

  • If new reimbursement mechanisms have to be developed for the device, the reimbursement task should not be relegated to the distributor.

Distributors are experts at distributing, not at reimbursement.  In some cases, according to the local law, the company only has one opportunity to apply for reimbursement.  If it fails in this first trial, it is banned from applying again – forever!

  • If existing reimbursement mechanisms could be utilized without any modifications, transferring the responsibility for reimbursement to an experienced distributor may be considered. 

 

b. Steps that should always remain the company’s responsibility

Even when the distributor assumes responsibility for reimbursement, if a Billing Guide should be issued, it is the company that should be responsible for it, not the distributor.  A Billing Guide has two purposes:

1)     Serve as the only source from the company that instructs the local healthcare providers on reimbursement issues.  When to bill, who to bill and how much.

2)     Reduce the company’s exposure to fraud and abuse claims if a healthcare provider or a distributor fails to appropriately use (mistakenly or deliberately) the correct reimbursement mechanism.     

c. Preserving the company’s interests

In some cases, even when existing reimbursement mechanisms may be utilized, an appropriate confirmation should be received from the relevant authority.  If the distributor applies for this confirmation, he could phrase it in a manner that would grant the authority to himself (rather than the company), which will provide him with control over the company’s products and make it difficult for the company to replace him with another distributor.

In some cases, we applied on behalf of our clients to correct the application and replace the distributor’s name with the company’s.  This resulted with unnecessary delays for the company in replacing the distributor and launching the product in Europe.

3. Summary

The issue of reimbursement should only be transferred to an experienced distributor in case existing reimbursement mechanisms can be utilized.  In such case, the company should still be responsible for the issue of its Billing Guide and make sure that any applications made by the distributor do not conflict with the company’s interests.

Posted in Medical Devices, Reimbursement in Europe, Reimbursement in the US | Leave a comment