Marketing Mix>
Adopting to DRGs, Part 3: A Medical Device Company's Perspective
This series from Amir Inbar of Mediclever has examined DRG
codes and discussed the way in which their payment levels are set. In this
final article of the series, Amir shows the implications of DRGs on
the way a medical device company should approach its reimbursement project.
Since a DRG code covers a hospital's full cost of administrating treatment
for a certain disease group, including the cost associated with the utilized
medical device, a new medical device should lead to one of the following outcomes:
1. A reduction in the hospital's cost of providing treatment within the
framework of the relevant DRG. Thus, the hospital will continue to
receive the same amount of reimbursement due to the DRG, but lower its
expenses and therefore increase its profit.
2. The new medical device does
not reduce the hospital's cost of providing treatment within the framework
of the relevant DRG, but it does lower the overall costs of the healthcare
system.
A Closer Look: Reducing the Hospital's Cost
In the case of option #1 above, a careful
analysis of the hospital's current DRG-related cost drivers should be performed and
compared with the costs of providing the same service when the new device
is utilized.
This analysis should consider the following:
--payment for
the medical team's work
--cost of utilized medical devices
--medication and
anesthetics
--use of hospital facilities (e.g., OR)
--cost of hospitalization
If
the new medical device fits into an existing DRG and the hospital's
overall costs associated with this DRG decrease, there is a good
chance of making the sale.
No further reimbursement effort is required.
A Closer Look: Lowering the Overall Cost
In the case of option #2 above, the company will have to seek
approval from entities that look at the bigger healthcare picture or are
concerned about the budget of the overall healthcare system. Such entities
include insurance companies, sickness funds, or the government.
The medical device company will then need to
convince such an entity that an increase in the reimbursement level of a
certain DRG would eventually lead to an overall reduction in healthcare costs
due to fewer complications, fewer repeat procedures, and other advantages.
This
process is indeed long and expensive. It should not be undertaken
unless it is impossible to implement option #1. However, even if option #2
is required, there are still a few intermediate reimbursement mechanisms
that could be utilized, until a formal new reimbursement mechanism has been
established.
About Mediclever Mediclever
manages end-to-end reimbursement projects for Israeli companies selling medical
technology products in the United States and Europe.
Mediclever identifies the availability of existing reimbursement codes (relevant
to the product), and in case such existing mechanisms
do not exist, Mediclever outlines processes and criteria for obtaining coverage,
including the development of new or modified codes and the establishment of favorable
coverage guidelines for such codes.
Mediclever appoints an outsourced reimbursement project
manager for each Israeli client. The manager works at the client's site and leads
the leading the reimbursement project, which saves the company from
hiring and training a full-time reimbursement manager.
