Creating a comprehensive reimbursement landscape assessment is essential for medtech innovators who need to navigate the complex U.S. reimbursement environment. This process evaluates the coding, coverage, and payment pathways that influence market access and financial viability. Many medtech entrepreneurs try to figure out this complicated process themselves. Instead, we recommend our clients monitor our progress using the 10 key steps below that guide the development of an effective reimbursement landscape assessment. 

Why This Is Important

Reimbursement varies, often by location of service. Your reimbursement landscape assessment consultant should look at all the locations that can impact your reimbursement when doing your reimbursement landscape assessment.

The following represents the process we use.

1. Define the Assessment Scope—Define the product or service under evaluation, including indications, target patient population, and intended use. This basic step ensures the assessment remains focused and relevant.

2. Analyze the Current Coding Landscape—Examine existing procedural and diagnostic codes (e.g., CPT, HCPCS relevant to the product). Determine if applicable codes exist or if a new code application is necessary. This can significantly affect reimbursement timelines.

3. Evaluate Coverage Policies—Review coverage determinations from major payers, including Medicare,
Medicaid, and private insurers. National and regional policies can be quite different, so assess both to understand the variability and find possible obstacles to coverage.

Including COVID-19 vaccines, there were 405 editorial changes in the 2022 CPT code set. The CPT code set continues to see growth in new and innovative areas of medicine, with 43% of editorial changes linked to new technology.¹

Modifications to the E/M (evaluation and management) codes are included in the 393 editorial changes in the 2023 CPT code set (Table 1). In response to the rapid velocity of innovation, a new appendix has been generated for the 2023 CPT code set with a directory for artificial intelligence, virtual reality, and augmented intelligence applications.²

4. Assess Payment Mechanisms—Examine payment rates and methodologies associated with relevant codes. Understand how different settings and payer types influence reimbursement levels. Reimbursement varies considerably based on the care setting (Table 2) and the type of payer involved. Following is an in-depth look at how these factors influence reimbursement levels.

Inpatient Settings

• Diagnosis-Related Groups (DRG): In inpatient hospital settings, Medicare and many private insurers utilize DRGs to determine reimbursement. Each DRG represents a category of hospitalization with similar clinical conditions and resource usage. Hospitals receive a fixed payment for each case, regardless of the actual services provided, incentivizing cost-effective care delivery. 
• Prospective Payment System (PPS): This system determines predetermined payment amounts for specific services or diagnoses before care is delivered. PPS is designed to control costs by providing fixed payments, encouraging providers to manage resources efficiently. 

Outpatient and Physician Office Settings

• Ambulatory Payment Classifications (APCs): For outpatient hospital services, Medicare uses APCs to group procedures that are clinically similar and require comparable resources. Each APC has an assigned payment rate, facilitating standardized reimbursement for outpatient care.
• Resource-Based Relative Value Scale (RBRVS): In physician office settings, reimbursement is often determined using RBRVS. This system assigns relative value units (RVUs) to services based on physician work, practice expenses, and malpractice costs. Payments are calculated by multiplying the RVUs by a conversion factor and adjusting for geographic cost variations using the Geographic Practice Cost Index (GPCI).⁴

Payer Types and Their Influence

• Medicare: As a federal program, Medicare sets standardized reimbursement rates using systems like DRGs for inpatient care and RBRVS for physician services. Rates are publicly available and may be annually updated.
• Medicaid: State-administered Medicaid programs may adopt Medicare’s methodologies but may also have separate payment rates and policies, leading to variability across states.
• Private Insurers: Private payers negotiate reimbursement rates with providers, which can vary widely. Fee-for-service models, capitation, or bundled payments influence how services are billed and reimbursed.

Recognizing how different settings and payer types affect reimbursement is vital for healthcare providers and medtech organizations. It enables accurate financial forecasting, strategic planning, and ensures compliance with billing regulations. Understanding these differences helps identify opportunities for optimizing revenue cycles and improving overall financial performance.

5. Conduct Stakeholder Interviews—Engage with key stakeholders such as payers, providers, and coding experts to gather insights into real-world reimbursement experiences and challenges. These qualitative inputs are difficult for novice interviewers to conduct because they require an extensive background in reimbursement interviewing to uncover critical findings that are not evident in policy documents.

6. Benchmark Against Competitors—Analyze how similar products are reimbursed, including their coding, coverage, and payment structures. This critical and often complex process of benchmarking highlights best practices and identifies potential pitfalls to avoid, saving time and money.

7. Identify Evidence Gaps—Determine what clinical and economic evidence is required to boost favorable reimbursement decisions. Is planning for additional studies or health economic analyses required to demonstrate value to payers?

8. Develop a Reimbursement Strategy—Based on the findings from the process outlined previously, create a strategic plan that defines the next steps needed to optimize reimbursement. Include knowledgeable timelines for code applications, evidence generation, and payer engagement activities. 

9. Implement the Strategy—This is the most difficult part. Implement the reimbursement plan, directing internal teams and external partners to perform the necessary actions, such as submitting code applications or conducting additional research.

10. Monitor and Update the Assessment—Continuously track changes in the reimbursement landscape, including policy updates and shifts in payer behavior. Regularly revisiting and updating the assessment ensures ongoing alignment with the evolving environment.

The Medi-Vantage Perspective

By systematically following these steps and with the assistance of experienced reimbursement partners, organizations can develop a robust reimbursement landscape assessment that informs strategic decisions and enhances the likelihood of successful codes and market access.

References

1. tinyurl.com/mpo250651
2. tinyurl.com/mpo250652
3. tinyurl.com/mpo250653
4. tinyurl.com/mpo250654

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Maria Shepherd has more than 20 years of experience in marketing in small startups and top-tier companies. She founded Medi-Vantage, which provides marketing and business strategy for the medtech industry. She can be reached at mshepherd@medi-vantage.com. Visit her website at www.medi-vantage.com.