Moving Health Ahead

Another challenge: Reimbursement rates, or the amount of money a patient’s insurance company will pay for a particular medical device or procedure, are a determining factor in whether or not a device will become widely available. The U.S. Department of Health and Human Services’ Center for Medical and Medicaid Services (HHS/CMS) sets reimbursement rates for the Medicare and Medicaid programs, and private insurers usually take their cues from HHS/CMS on reimbursement; the fate of many medical devices hangs on HHS/CMS decisions. They set the menu of options and the price, says Liz Rammer, vice president for marketing communications at LifeScience

For example, some private insurers are reimbursing patients for Micromedics’ EarPopper, but there’s no Medicare or Medicaid reimbursement for the $300 device. “Physicians are reimbursed for providing [in-office] EarPopper treatments. Also, patients with chronic conditions are purchasing their own EarPoppers for repeated use as needed. Some large private insurers already reimburse patients who purchase an EarPopper for personal use.

“We expect private insurance reimbursement will become more widespread as the clinical and financial benefits of the EarPopper become more widely recognized. We believe that having Medicare and Medicaid reimbursement would dramatically accelerate that trend,” Curt Miller says. In 2006, Micromedics applied for a Healthcare Common Procedure Coding System number to get EarPopper recognized as a reimbursable device in Medicaid’s system. Miller says he expects to receive a number in 2007 and be in the system in early 2008. However, he adds, that does not guarantee reimbursement.

Medicare and Medicaid reimbursement is important for small and midsize medical device companies, but they can stay profitable by offering a range of products. “We manufacture several lines of proprietary medical devices and market them worldwide,” Curt Miller says. “Since we have made a substantial investment in EarPopper, we would naturally be disappointed if we didn’t get Medicare and Medicaid reimbursement. However, in the last year, EarPopper provided only 6 percent of Micromedics’ total revenue. Even without Medicare and Medicaid reimbursement, EarPopper sales would continue to grow, although more slowly, and our profitability would not be adversely affected,” Miller says.

Corbett expects to see “a changing regulatory and reimbursement landscape, which I think will require more and more clinical proof to reimburse for those new innovations.” To provide more proof, medical device companies will be burdened with the costs of clinical trials, and it will take longer for some devices to arrive in doctors’ offices.

But Kevin Mensink, vice president of marketing at GN ReSound North America, notes a universal challenge for the medical-device industry: “Finding the next technological breakthrough without breaking the bank on R&D.”

Many medical device companies are concentrating their efforts on treating chronic diseases and underserved populations. Nickels says that his company will continue to create new therapies for chronic wound patients—a traditionally underserved population.