It is no surprise that our team of reimbursement consultants has been inundated with entrepreneurs developing digital health therapeutics that are attempting to build reimbursement strategies and implement market access plans. The digital health therapeutic sector has been growing at an average of 40 percent per year over the last several years. In the first half of 2021, digital health companies brought in $14.7 billion, already more than they raised in all of 2020, according to Rock Health. This investment growth, combined with needs created by the COVID-19 pandemic, have led to a boom in the development of digital health technologies. However, despite the flow of attention into digital health, relatively few digital health technologies have garnered payer interest or consistent and reliable reimbursement.
While working with the deluge of innovators, our reimbursement consulting team has noticed some common challenges with the reimbursement strategies and market access plans that have been proposed by these digital health technology companies. These potential obstacles are being created by the clash of cultures between the fast-paced technology innovation community that is developing these products and attempting to launch them into the more traditional healthcare innovation ecosystem. While many of these missteps and philosophical issues are common to all innovators, they are particularly pronounced in the digital health therapeutic space because so many of the leaders of this revolutionary new sector were formerly leaders in the consumer technology sector. To be successful in launching a digital health therapeutic, innovators will need to be aware of the following six critical mistakes they are making:
1. Approaching entry to market with a digital healthcare technology in the same way as with an ordinary digital consumer technology.
The regulation of both healthcare and of healthcare sales and marketing creates a level of complexity that is not paralleled in consumer products. Further, the relationship between patient, provider, and insurer causes the healthcare marketplace to work differently from ordinary consumer or business-to-business markets. It is not coincidental that reimbursement strategy is colloquially referred to as a “reimbursement pathway.” The first to market a healthcare technology gets to be the first to work through all the issues related to coding, coverage, and payment. Think of a hiker or cross-country skier after a three-foot snow. The first person down the trail has quite a bit of work to move forward, but each successive person that follows gets to enjoy a better-packed pathway until finally there is a well-groomed trail. Unlike in consumer goods, where first to market is usually an advantage, fastest to market does not mean first to be reimbursed. Additionally, the need to navigate regulatory pathways in healthcare often requires a level of commitment that stifles the ability to fail fast and pivot quickly.
2. Attempting to influence medical policy by asserting that health economics data is a substitute for health outcomes data.
Value is one of the most misunderstood concepts in healthcare technology. While the ability to show savings in healthcare (cost effectiveness/cost avoidance) is an important factor driving market access, health economics data cannot stand on its own. We frequently see innovators from consumer technology espousing the naive belief that saving money is always better and should be good enough for Medicare or a commercial insurer to establish coverage. It is not. Value in healthcare means demonstrating an improvement in net health outcomes for patients without adding to overall cost. Published peer-reviewed clinical data demonstrating that a technology directly results in improved patient outcomes as compared to the current standard of care is a NECESSITY before costing information is considered by payers.
3. Designing a product at the bench or programming terminal instead of designing it from the clinic.
While novel technology that fills an unmet medical need often faces a challenging pathway, novel technology that is not a response to an unmet medical need faces a nearly impossible climb up a cliff. Really interesting and innovative technology can draw investment dollars based upon vision and potential, but this potential does not translate into coding, coverage, and payment. The ability to fill a clinical need and demonstrate that ability with published data does. It is vital for a digital health technology innovator to understand which physician specialty will be drawn to utilize the device(s) for their patients, along with how it will impact medical decision-making and result in higher-quality outcomes for their patients.
4. Failing to recognize that healthcare purchasing is still dominated by physicians.
Working with and involving clinical physician stakeholders and champions early on is one of the keys to success for any new healthcare technology. In addition to helping make sure that the new technology fills a clinical need and is practical to use clinically, support from the medical community is a necessity for successful commercialization. Technologies that reduce physicians’ workload or usurp their judgment without good reason are not always welcome. Additionally, CPT codes are maintained by the American Medical Association’s CPT Editorial Panel, and additions and changes to these are voted on by physicians. Most applications without the support of a medical specialty society are dead-on-arrival. However, by working with physician stakeholders early on, innovators can find out reasons the medical community may have to object and then develop an appropriate value statement and positioning to deal with their objections before they become an issue. Physicians are ultimately the only determinants of whether a treatment or technology is medically appropriate for a particular patient/diagnosis.
5. Making assumptions about CPT payment codes without understanding that clinical data, utilization, and societal support are all necessary to obtain a CPT code along with coverage.
Not every innovation requires a new CPT code. However, the decision to recommend or use an existing code should be researched and reviewed by a certified coder before it becomes part of a commercialization strategy. Should a new CPT code be necessary because no currently available code is appropriate, the AMA’s CPT Editorial Panel will require the submitter to provide support for it by demonstrating the demand for the product in addition to published peer-reviewed clinical outcomes data. Not unlike a payer, AMA’s CPT is not interested in establishing new CPT codes for physician services related to technology that is not able to demonstrate a broad utilization demand in addition to favorable clinical outcomes. Codes for new technology are created when it becomes apparent to the medical community that currently available codes are inadequate to report a new procedure, service, or treatment. They are not created for the purpose of aiding the marketing of a new technology.
6. Assuming that the creation of payer policy will lead to sales and not vice versa.
The purpose of medical policy is to provide a basis for utilization management decisions—it is not to create a marketing channel for your digital health technology. Payers do not typically take the time to develop medical policy for technologies that have not demonstrated sufficient utilization. While the development of clinical data is necessary for creating a basis for medical policy, utilization creates the impetus for its creation. Payer medical policy and technology evaluation teams have bandwidth limitations—unless there is a need, a demonstrated demand made by providers and patients, to address and manage a technology or treatment, it will likely not be addressed. A review that is requested by a manufacturer without a contracted or network physician submitting claims or expressing a desire to submit claims soon is not likely to succeed. Over our years of practice, we have heard consistently from medical directors that they become resentful when a medical device, diagnostic, or therapeutic manufacturer consistently attempts to use medical policy to get the payer to create a market to sell their product. It is one of the seven common ways to disenfranchise payer medical directors. For the others, read “The 7 Market Access and Payer Outreach Mistakes That Will Haunt Your Medical Device or Therapeutic.”
With improving technology, the availability of investment money, and the opportunities created as a result of the pandemic, the push to create and commercialize digital health therapeutics will continue. While there are areas of care, such as behavioral health, that face challenges calling for digital therapeutic solutions, not every area has a problem that needs solving. The digital health innovators that are successful in commercializing their technologies and receiving coding, coverage, and payment will be the ones that respect and acknowledge the requirements of the parties already existing in the healthcare ecosystem. While digital healthcare will likely change the healthcare system over time, it will need to modify its philosophy to gain acceptance by payers to achieve favorable medical policies, and to create access to new technologies for providers and patients.
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