Eyes on the Prize: It’s Not the Approval, It’s the Reimbursement

Dear Friends: I apologize for falling behind in sharing any new blogposts in some time. I suppose everyone needs a 2015 Resolution, and mine is to commit to a more regular schedule.

Many of you have confronted, hundreds of times, the policy issue that slapped me in the face at the end of the year. A flurry of year-end projects brought me a project symbolizing everything I love about healthcare regulation… and everything I hate about it.

First, the part I loved. The project looked at how certain medical devices get bottlenecked at FDA and at CMS at the same time. Oh, wait, wasn’t that the part I hated? No, I had it right – it’s the part I loved.

Bottlenecks mean government is doing something. Devices deserve a day with an FDA reviewer – the bottleneck saves us from bogus hip replacements, full-body CAT-scan physicals and all the way back to x-ray measurements of your shoe size and thalidomide. I’m happy, even proud.

New healthcare products also deserve their day knock-knock-knocking at Medicare’s door. Remember than whenever a new procedure code gets onto the books, we’ll have it around forever. There’s probably an ancient HCPCS Code somewhere covering leech applications on the gluteus maximus or something. (Yes, I know, leeches are making a comeback. Don’t remind me.)

Yes, the new order for Medicare as value-based purchaser means that both the coverage and reimbursement reviews could take time.

Well, if delays are the part I loved, then what’s the part I hated? That would be the failure of some product sponsors to plan ahead for smooth sailing through both the FDA and CMS reviews. Not the government’s failure, mind you, but the product developer’s. And I hated seeing it because it’s like watching a train wreck and it happens shockingly often.

Perhaps it’s not fair to say shockingly. After all, it’s a huge amount of work to get a product through FDA, even if a “mere” 510(k) device notification and clearance. That kind of regulatory work is not for the faint of heart. But why is the work so hypnotic that it keeps otherwise-bright product managers from looking ahead to the next big thing – coverage and reimbursement.

Market approval from FDA is nice, but getting that product covered under health insurance plans and reimbursed at a fair level – that’s what MasterCard calls “priceless.” And all too often, even the best companies can forget to pursue CMS until FDA’s approval is in the bag.

That segregation of approval vs. coverage is what I hate – now do you understand why?

The pattern is pretty familiar to me. The phone rings. Someone wants to talk about a new product. It’s already at FDA Advisory Committee, or perhaps already approved. They want to talk about Medicare coverage. And invariably it turns out they are… about 9 months too late.

What would have helped? Well, if one goal is Medicare coverage (and remember, many private health plans still look to CMS reimbursement decisions as the gold standard), then the business plan needs to address a favorable CMS review. Add some pharmacoeconomics to your Phase III drug trials. Oversample the elderly in clinical (and nonclinical) trials. Find diversity (racial, ethnic, etc) in all your testing. And file with CMS before you even know when FDA might act.

Failure to plan ahead is not always fatal. Depending on the time of year, it’s not always too late to catch up a bit.

The cycle for seeking a new CPT code that sets Medicare coverage is an annual one, so catch up by January and you might have all you need to get by. Or, if there’s a Next Big Thing product involved, the quarterly cycle of the MedCAC panel might offer some good news without a lot of delay. The MACs might save you, or the (little-known) guaranteed coverage provisions under Part B for outpatient chemotherapy, or a dozen little details. Let’s hope a catch-up is possible.

Unless the calendar falls out just right, though, the options are limited and a favorable reimbursement decision seems delayed at best. Hope, perhaps, that doctors would still use your product with a “paper submission” billing, using some kind of J-Code that would let the bravest of providers go around the electronic record’s meaningful use and go back to pencil and paper. Which would require a pretty brave provider and a very understanding billing office.

So, year-end for me was a love-it-and-hate-it moment. I love playing at the intersection of FDA and CMS Streets – there’s not a lot of traffic and I honestly enjoy playing there. On the other hand, having so many folks dropping by that intersection for a visit and forgetting there’s a job to do at that corner… is kind of a lonely experience.

Since real clients and real products were part of this year-end push, I can’t get into the specifics of product, sponsor and the like. I can only say that some larger players ought to know better than to run out of steam after FDA’s approval, without a final strategy for Medicare coverage.

So that was my year-end treat – getting to say to anyone who’d listen… the time to think about coverage and reimbursement is before product approval, before FDA submission, and usually even before conducting clinical trials. Repeat after me: coverage first.

Show me a company with a good strategy up-front for its coverage issues, and I should start pulling out my checkbook to invest in that company’s stock.

Yep, the intersection of CMS and FDA, which is a bypass right above the intersection of Stupid and Arrogant. Here’s my full glass in a New Years toast to all those sophisticated Washington policy experts who’ve made the move to an integrated regulatory plan. A good year to you.