Many new medical technologies, particularly the low- or mid-tech ones, fit more or less neatly into an existing reimbursement code. For the companies developing such devices, de-risking involves demonstrating 1) it works and won’t kill anyone, 2) the path through FDA is efficient, 3) the company can manufacture it at attractive margins, and 4) enough people will want to buy to imagine profitability.

For most “disruptive” medical technologies, however, it is the market adoption risk that often generates the most worry starting around Series B and escalating to a fever pitch in the quarters leading up to launch. Providers generally want to get paid more for using expensive new technology, and additional reimbursement typically lags years behind product approval if it ever happens at all. Compared to the payers of the world, the medical device regulatory bodies are virtual pussycats. You did one study for FDA? We need three. You studied patients out 6 months? We want two years. And we still might not pay extra for your devices, no guarantees.

The high hurdle to new reimbursement will, and is meant to, discourage all but the most confident in the value of their novel therapy or diagnostic. Those brave companies that do forge ahead to slay the reimbursement beast need to be armed appropriately. To learn more about how emerging medtech companies can pave the way toward reimbursement for disruptive new devices, I spoke with Kelly Shriner, Director of Health Economics and Reimbursement for Boston Scientific (by way of Asthmatx). In 2010, BSC acquired Athmatx, with its novel Alair Bronchial Thermoplasty treatment for severe asthma, for $193.5M up front and up to $250M more on the back end. Bronchial Thermoplasty was awarded a rare new Category 1 CPT reimbursement code in 2012, a major milestone long in the making.

For the edification of our emerging medtech clientele, I asked Kelly what she was glad she did early on at Asthmatx to position the technology for reimbursement down the road. “I can’t overemphasize the importance of a strong clinical strategy,” said Kelly. “We followed a scientifically sound path that helped us gain ground along the way, which was crucial for a technology as novel as ours.” What made Asthmatx’s clinical program so rigorous? Three randomized, controlled trials, including a robust sham control arm and tracking of healthcare utilization data in both arms to facilitate economic comparisons. “If we didn’t have that data, we’d be dead in the water with payers,” said Kelly.

Building relationships with the relevant clinical societies, and building them early, is also important groundwork for future reimbursement. “Payers seek the input of these societies on all their decisions,” said Kelly. Asthmatx started reaching out to societies in 2005, a full seven years before receiving their Category 1 code. “The societies are the ones that push for appropriate coding with the American Medical Association (AMA), and as a company you can’t own that process,” said Kelly. “The persistence of the societies helped us go from a temporary Category III code to a Category 1 code in one year.” Trust me, this is lightening speed.

Once on the market with a new CPT code, the reimbursement effort is far from over. Individual payers still have to agree to actually cover the assigned code (a.k.a. send money) when the procedure is performed. Payers can do this on a case-by-case basis, necessitating much paperwork and fortitude on the part of providers, or they can issue a coverage policy so the reimbursement flows with appropriate use. “The Catch 22 is that payers’ coverage policies don’t flip until payers see demand from market, but demand is driven by reimbursement,” says Kelly. In the meantime, companies need to be prepared to offer users “an intense level of support” through the one-off reimbursement appeals.

Companies also need to intensively educate the payers, for example about the rigors of the PMA regulatory process. “I found myself having to explain the difference between a 510(k) and a PMA, and the level of evidence required for a PMA device like Alair,” said Kelly. Feeding into this misperception is the fact that the FDA has access to all of the company’s data, whereas payers tend to only look at published, peer reviewed articles – a naturally self-limited dataset. Given the opportunity to explain how similar a PMA is to an NDA, though, payers got it. “As an industry, we need to do a better job of bringing payers up to speed on the FDAprocess, particularly for PMA-approved medical devices”, suggested Kelly.

Kelly continues to negotiate with payers around the world as part of the BSC team. Reflecting on the acquisition, Kelly proudly recalls, “Our early payer strategy helped BSC get comfortable with Asthmatx; the reimbursement strategy, as well as the strong clinical strategy and compelling data, helped get BSC over the hurdle of taking on an earlier stage technology.”