When developing new medical device and drug products, it is important to understand how the product will be adopted and paid for in the marketplace.
The development of new drugs and devices involves countless hours researching, testing, modifying, iterating, and testing some more… In larger companies, whole teams of people also dedicate the same effort into developing a market access plan—meaning careful planning for manufacturing, distribution, and insurance contracting. This strategic planning can be overlooked in start-up biotech companies operating on limited resources and which are squarely focused on innovating new technologies.
This strategic planning can be overlooked in start-up biotech companies operating on limited resources and which are squarely focused on innovating new technologies.
However, skipping this planning step can mean slow uptake and payment pathways for the providers that ultimately prescribe and use these products. Solidifying a reimbursement pathway for a new drug or device can make the difference .
Manufacturers must invest time and resources into communicating to payers and providers about new products so they can turn these new products into revenue. This process usually begins a year prior to an anticipated approval, and is aimed at avoiding insurance coverage gaps and increasing utilization of the products once they received appropriate approvals. Outpatient drugs and devices, and other items and services, are identified on claim forms and paid for through HCPCS codes. These codes are issued by the Centers for Medicare and Medicaid Services (CMS), and are used throughout the private insurance marketplace. Once there is an appropriate code identified, the manufacturer will need to make sure billing suppliers and providers know the code and the drug or device exists. If manufacturers fail to take necessary steps to ensure access, providers will likely be slow to adopt the new product because of fears that they will not be reimbursed.
Temporary and Permanent Codes
Traditionally, new drugs and devices apply to CMS for temporary generic reimbursement codes. When these codes are used by provider, payors typically require them to provide additional information related to the product. Payers also tend to require extensive prior authorization and utilization reviews to determine how the drug or device is covered under the applicable plan. Temporary codes are used until manufacturers apply for, and receive, a permanent code, which identifies the drug and its therapeutic class. Permanent codes, which are traditionally issued by CMS only once annually, can greatly speed up the utilization review and payment process for healthcare providers and decrease payment denials – meaning that providers more accurately rely on payment from using products with permanent billing codes. In a recent announcement, CMS has adopted a new process to help speed up the time it takes to realize steady reimbursement for new drugs and devices.
In a recent announcement, CMS has adopted a new process to help speed up the time it takes to realize steady reimbursement for new drugs and devices.
For permanent billing code applications that were received in July, codes will be issued on October 1, 2019. Thereafter, drug manufacturers will receive permanent codes for new products on a rolling quarterly basis. For medical devices, codes will now be issued twice a year. CMS Administrator Seema Verma stated earlier this summer that, “the agency is moving to a process with quarterly opportunities to apply for drugs, and semi-annual opportunities to apply for devices. CMS anticipates this will greatly improve the ability for technologies to move through the adoption curve.”
CMS’ new process for issuing permanent billing codes will undoubtedly improve the reimbursement process and, therefore, provider utilization, of new drug and device products. Also, manufacturers can adjust their development-to-market strategic plans to take advantage of the new billing code application process and give more certainty to payers and providers.
Please contact us if you have questions or need assistance with your drug or device reimbursement and market access strategies.