Medicare and Reimbursement for Your Product/Service Developed Under SBIR/STTR: Medicare and Reimbursement for Your Product/Service Developed Under SBIR/STTR Presented by: Ronald Podraza CEO, Reimbursement Principles Inc. July 13, 2006


The Medicare Factor: The Medicare Factor 39.7 million Americans aged 65 and older (Medicare) account for 69% of total US healthcare spending 38% of Hospital Admissions 48% of Inpatient Days Medicare policy sets the standard that the rest of the industry follows Sources: Kaiser Family Foundation; Medicare At A Glance, September 2005; kff.org/medicare/loader.cfm?url=/.../ security/getfile.cfm&PageID=52974 AND Medicare/CMS website; www.cms.hhs.gov


United States Payer Mix : United States Payer Mix Private Payers - 60% (198.3 million) Uninsured - 14% (45.8 million) Medicare - 12% (39.7 million) Medicaid - 11% (37.5 million) Other Payers - 3% (10.7 million) Source: U.S. Census Bureau, Current Population Survey, 2005 Annual Social and Economic Supplement


Medicare Reimbursement: Medicare Reimbursement Medicare reimbursement defined Coding Coverage Payment Influencers of Medicare reimbursement Site of Service Benefit Category


Influencer: Site of Service: Influencer: Site of Service Site of service (inpatient, outpatient, ASC, physician’s office, home, etc) drives Medicare coding, coverage and payment What are the expected sites of service? Is coding in place for all sites of service? Does Medicare cover procedure/ technology in all sites of service? Does Medicare payment support pricing in all sites of service?


Influencer: Benefit Category: Influencer: Benefit Category Medicare is a defined benefit program A service must fall into one of over 50 statutorily-defined “benefit categories” as a first step toward coverage Is there a defined Medicare Benefit Category available to provide reimbursement for your procedure/ technology?


Coding: Coding Used by Medicare and providers to identify diagnoses and procedures Track utilization and establish Medicare reimbursements rates for facility and professional services Codes evolve – Medicare updates at least annually, sometimes more frequently


Coding: Coding “We need a Medicare code” or “find us a code” Finding a code and “making it fit” may have unintended consequences Be mindful of short and long term market viability


Coverage: Coverage Terms and Conditions used by Medicare to determine whether a product, service or procedure is eligible for reimbursement and under what conditions it will be covered Fundamental: Is it medically necessary to diagnose or treat the patient’s condition?


CMS - Coverage Authority : CMS - Coverage Authority Section 1862(a)(1)(A) “. . .no payment may be made . . . For expenses incurred for items or services . . [which] are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” Provides the Secretary (acting through CMS) the authority to determine appropriate coverage of services under Medicare


Medicare Focus: Evidence Based Medicine: Medicare Focus: Evidence Based Medicine Randomized clinical trials Cohort studies Controlled case-control Controlled case-series Registries Clinical consensus/specialty society positions


Medicare Coverage Policies: Medicare Coverage Policies Local Coverage Determination (LCD) versus National Coverage Determination (NCD) Local Coverage Determination (LCD) Usually established prior to National coverage determinations (NCD) Non controversial technology Most coverage determinations are local


Medicare Coverage Policies: Medicare Coverage Policies National Coverage Determinations (NCD) Usually issued when Local contractors develop differing policies Expensive or controversial technology Program integrity concerns External request Manufacturer, advocacy groups, contractors Takes precedence over LCDs


Medicare Payment: Medicare Payment The amount of reimbursement provided to the hospital, physician, etc. Payment for facility is separate from payment for physician services All private payers benchmark or follow Medicare fee schedules


Medicare Payment Methodologies: Medicare Payment Methodologies Hospital Inpatient > 24 hrs. Hospital Outpatient < 24 hrs. Ambulatory Surgery Center (ASC) One DRG payment rate All inclusive payment methodology driven by ICD-9-CM diagnosis and procedure coding Professional Services Paid under multiple APCs Payment methodology driven by CPT procedure coding One ASC Payment Group All inclusive payment driven by CPT procedure coding Medicare Physician Fee Schedule Payment driven by CPT procedure coding


Payment Questions: Payment Questions What level of Medicare payment currently exists for facility and professional services? Is service bundled into Medicare payment for the procedure? Or, is it payable as a line item? Is it enough to support pricing? What if it isn’t? How long will it take to align payment and pricing?


Reimbursement in Tandem: Reimbursement in Tandem Reimbursement should be a coordinated effort working in tandem with clinical and regulatory issues during clinical trial and implementation Clinical Reimbursement Regulatory


Medicare Reimbursement During Clinical Trials: 1995 FDA/CMS Interagency Agreement IDE devices used in conjunction with manufacturer-sponsored, FDA-approved clinical trials are eligible for Medicare reimbursement consideration during clinical trials 94% of FDA IDE products eligible for reimbursement Medicare Reimbursement During Clinical Trials


Why Bill During Clinical Trials?: Why Bill During Clinical Trials? Reimbursement during clinical trials can: Provide early and much needed revenue Reduce time required to establish reimbursement elements Build claims history (coding and charges) Collect cost effectiveness data Provide opportunity to educate payers Shorten time to market Clinical, regulatory & reimbursement pathways run in tandem instead of separate tracks


FDA Review vs Medicare Coverage: FDA Review vs Medicare Coverage FDA regulates products and devices Ensures product safety and efficacy Validates manufacturer claims Does not determine product pricing, coding, coverage, etc. Medicare is a purchaser of technology/services Is the procedure reasonable and necessary? Evidence of improved outcomes? What is the benefit to the Medicare program? Has safety and efficacy been proven? Medicare wants clinical outcomes compared to “gold standard” Costs compared to alternatives


Regulatory Process & Reimbursement : Beware of “substantial equivalence” Substantially equivalent product = substantially equivalent coding, coverage and payment Consider alternate regulatory pathways permitting product differentiation Patient registries Regulatory Process & Reimbursement


Regulatory Process & Reimbursement : Regulatory Process & Reimbursement Reimbursement NOT automatic following FDA clearance/approval FDA clearance is a “threshold” but not enough to satisfy payer requirements Medicare requires evidence of improved outcomes Does the technology reduce or eliminate a procedure OR does it add another step without improved outcomes in the continuum of care? Does it have widespread clinical usage? Slide 22


Points to Remember: Points to Remember Medicare reimbursement must be factored into early product design and development Start early and never take your eye off of it Don’t put off reimbursement Reimbursement is a PROCESS It is not automatic and will not “fall into place” despite the best science and life saving potential Most reimbursement development can and should be done in tandem with regulatory and market development


Points to Remember: Points to Remember Understand the elements of Medicare reimbursement and how it may apply to your product Is coding in place or is a new code(s) required? Is coverage in place or will it need to be developed? Is payment adequate to support your pricing? Slide 24


Points to Remember: Points to Remember Keep lines of communication open with Medicare Articulate why your product benefits the Medicare program Making an investment and commitment in reimbursement will help secure successful long term viability of your product/ technology Respect the power of reimbursement Lack of reimbursement has been the demise of MANY excellent technologies


Medicare and Reimbursement for Your Product/Service Developed Under SBIR/STTR: Medicare and Reimbursement for Your Product/Service Developed Under SBIR/STTR Presented by: Ronald Podraza CEO, Reimbursement Principles Inc. 800.471.9387 www.reimbursementprinciples.com