Is “Having a Code” Enough for Reimbursement Success in the US?
In our previous newsletter, “What Does it Mean to “Have a Code”?”, we highlighted the importance of having a coordinated and effectively executed coverage, coding, and payment strategy to optimize reimbursement success for a medical technology. Additionally, the reimbursement strategy must be integrated into a broader commercial strategy that considers the competitive landscape, clinical positioning, value proposition, and clinical and economic evidence requirements.
As a follow-up to that article, we wanted to address a misconception that continues to surface in conversations with MedTech innovators, investors, and industry stakeholders. While coding is an important part of any reimbursement strategy, having a code is not a strategy in and of itself.
Why is “having a code” not the same as having a reimbursement strategy?
Coding is one of the three pillars of reimbursement, alongside coverage and payment. Having a code means there is a mechanism to report a product or service to payers. It does not mean 1) the code has payment assigned to it, 2) the product or service is consistently covered by US payers, or 3) there is interest in the product or service from healthcare providers.
The decision whether to pursue a new code or codes must also consider the strategic implications of doing so, which include how payment will be assigned by the AMA’s RUC, CMS, or commercial payers, the potential for the development of non-coverage policies now that a new code is on the payer’s radar, and the potential need to establish a prior authorization and / or appeals program to support customers through the claims submission, adjudication and appeals process. Additionally, in some cases, receiving a new code could result in no change in the reimbursement amount.
We supported a leading multinational company in due diligence of an O-US company developing a software-based diagnostic. The Target company had built their reimbursement strategy around using an existing Category III CPT code that was developed by a competitor, which the target forecasted would lead to significant provider adoption and accelerated US market entry. In addition to questions about the suitability of the existing Category III code, our research showed that the Target’s technology did not reflect current US clinical practice and studies to date had only been performed O-US. This raised significant doubts around adoption rates and Category III to I code conversion timing assumptions used in the Target’s revenue model.
In another example, we supported an O-US-based neurology start-up company that initially asked BeaconOne to perform a coding assessment to validate their assumption that existing CPT codes were appropriate for their technology. While our findings confirmed that the codes are appropriate, more importantly, we also discovered that these codes have no national physician payment assigned to them by CMS and are not covered by most commercial payers and some MACs. This client is now considering product updates to address a greater market need in the US and assessing European markets for reimbursement potential.
Successful medical device companies consider the strategic implications of various coding scenarios, as part of broader integrated reimbursement and market access strategy.