Despite the tremendous contributions medical devices have made to medicine, historically physicians viewed devices with suspicion and were wary of machine-produced information. Today, the U.S. medical device industry is the largest in the world with a market size of approximately $110 billion and is expected to reach $133 billion by 2016.1 Despite the industry expansion, many of the challenges medical devices faced in the past continue to affect modern-day markets. While new technologies are developed at a rapid pace, providers and payers may remain slow to adopt them.
Sufficient data demonstrating effectiveness, safety and value from multiple perspectives is key to the adoption of new devices. For health care providers, devices should be practical and meet recognized clinical needs. For payers, a device’s combined clinical and economic value must be clear before coverage is provided. Addressing the needs and concerns of payers and end users can be challenging.
Seeing Value Through the Payer’s Eyes
In the U.S., when we refer to “payers,” we traditionally mean government payers, such as the Centers for Medicare & Medicaid Services (CMS) or private payers such as the Blue Cross Blue Shield Association. More and more, health care facilities (e.g., hospitals) directly purchase medical devices without receiving reimbursement from traditional payers. In these cases, facilities act as payers, too.
The expanding role of health care facilities as payers is spurred by health care reform, the creation of Accountable Care Organizations (ACOs) and a shift in emphasis from volume-based to value-based reimbursement. For innovative medical device adoption and success, identifying appropriate payers and market strategies revolving around those payers’ perceptions is crucial.
It is critical for medical device manufacturers to remember that traditional health care payers are not impressed with the safety and efficacy data collected in clinical trials for regulatory approval; payers seek evidence of real-world effectiveness as compared to currently available treatments. Furthermore, while often not explicitly stated, cost considerations are implicit in payer decisions to cover innovative technologies.
Payers and providers are also moving together toward value-based reimbursement where payers offer financial incentives to providers for improvements in population health. However, because value-based reimbursement is not yet the norm, manufacturers must design studies to collect sufficient short- and long-term data to demonstrate device safety, real-world effectiveness and economic impact from the traditional volume-based payer perspective as well as from the myriad value-based reimbursement perspectives still evolving.
Finally, when conducting research it is important to remember the role of hospitals and other health care facilities as direct purchasers of some technologies. Hospitals also want information on how an innovative technology will affect their patients’ health as well as their bottom line.
Paving the Road Ahead
Demonstration of long-term clinical and economic value from the payers’ perspective is necessary to gain coverage and adoption. It is crucial for every step of the development process to take place with the technology’s value story in mind. The right research and a well-formulated market access strategy will save substantial time and money and lead to earlier market adoption and widespread usage of medical devices and other technologies.
About Decision Driver Analytics
Founded in 2006, Decision Driver Analytics provides a suite of services that covers the full range of health economics and outcomes research (HEOR) as well as the outreach materials needed to reach investors, health care providers, payers and the public. Utilizing veteran health economists, epidemiologists, biostatisticians, medical writers and reimbursement experts, DDA’s services include complete product life cycle value analysis, strategy and planning, clinical economic study services, predictive modeling analytics, definitive analysis studies, communication and sales training.
SelectUSA. The Medical Device Industry in the United States. Accessed November 25, 2014.