MEDTECH ROUNDTABLEDEVELOPMENTS IN MEDICAL

DEVICE REIMBURSEMENT

FEBRUARY 24, 2010

PanelistsPanelists

• Colleen Faddick• Colleen FaddickPartner, Faegre & Benson LLP

• Gina Kastel• Gina KastelPartner, Faegre & Benson LLP

• Carla Monacelli• Carla MonacelliManaging Partner, Argenta Advisors

• Bob PaulsonBob PaulsonPresident, CEO and Director, NxThera

AgendaAgenda

• Device reimbursement background• Device reimbursement background• Device coding basics• Manufacturer’s perspective• Discussion

PanelistsPanelists

• Colleen Faddick• Colleen FaddickPartner, Faegre & Benson LLP

• Gina Kastel• Gina KastelPartner, Faegre & Benson LLP

• Carla Monacelli• Carla MonacelliManaging Partner, Argenta Advisors

• Bob PaulsonBob PaulsonPresident, CEO and Director, NxThera

Device Reimbursement– HospitalDevice Reimbursement Hospital• Inpatient–Medicare

– Most devices are “operating costs” paid within the p g pprospective payment system

• MS-DRGs based on patient diagnosis upon admission with severity adjustment

• Outpatient Medicare• Outpatient–Medicare– Devices generally included within a procedure group

(ambulatory payment classification, “APC”); multiple procedures yield multiple APCsprocedures yield multiple APCs

• Commercial– Payments may be similar to Medicare, per diem, case

rate othersrate, others– Contract with hospital will determine whether device is

separately paid

Device Reimbursement– Add-OnDevice Reimbursement Add On• Medicare

I ti t d i b li ibl f N– Inpatient devices may be eligible for New Technology Add-On payment

• Technology must be new and pose substantial i t i ti th i timprovement over existing therapies, payment inadequate

• Lasts for 2 – 3 yearsMay be specific to manufacturer or technology• May be specific to manufacturer or technology

– Outpatient devices may be eligible for pass-through payments

• Similar to inpatient criteria, but cost of device must not be insignificant relative to APC payment

Device Reimbursement–ASCDevice Reimbursement ASC

• Medicare• Medicare– Pays ASC 65% of APC rate– Most but not all procedures performed in– Most, but not all, procedures performed in

outpatient hospital department permitted in ASC

• Commercial– May be similar to Medicare (current or

historic nine payment groups) or any other method

Device Reimbursement–Physician

• Medicare

Device Reimbursement Physician

• Medicare– If not inpatient only, may be paid in physician

office setting (consider state law)office setting (consider state law)– Paid CPT code for professional service,

HCPCS code for device (coverage category ( g g ymay require separate enrollment)

• Commercial– May be similar to Medicare, but Medicare

setting and enrollment limitations do not exist

PanelistsPanelists

• Colleen Faddick• Colleen FaddickPartner, Faegre & Benson LLP

• Gina Kastel• Gina KastelPartner, Faegre & Benson LLP

• Carla Monacelli• Carla MonacelliManaging Partner, Argenta Advisors

• Bob PaulsonBob PaulsonPresident, CEO and Director, NxThera

CPT ProcessCPT Process

• Governed by the American MedicalGoverned by the American Medical Association

• Process to create, revise and delete CPT-4 coding nomenclature– Category I CPT Codes - five-digit numeric codes used as the

standard to report procedures performed in a physician office, outpatient hospital setting and ambulatory surgery centeroutpatient hospital setting, and ambulatory surgery center

– Category II CPT Codes - four-digits followed by an alpha character that are used primarily for performance measurement and data collection (i.e. PQRI)C t III CPT C d l k “T” T ki C d– Category III CPT Codes - also known as “T” or Tracking Codes, consist of a four numeric digits followed by an alpha identifier, and used primarily to facilitate data collection and assessment of new and emerging technology

CPT Editorial Panel ProcessCPT Editorial Panel ProcessAnyone Can Submit a CPT y

Change Proposal

AMA Staff

CPT/HCPAC Advisory Committee

CPT Editorial Panel

Appeals Process

CPT Executive CommitteeAMA/Specialty Society RVS Update Committee (RUC)

CPT ProcessCPT Process

1) Anyone can submit a CPT Code Change1) Anyone can submit a CPT Code Change ProposalApplication and instructions are available

li / tonline: www.ama-assn.org/cpt2) AMA staff reviews all proposals to

determine if the Panel has alreadydetermine if the Panel has already addressed the question and to assist in the refinement of coding conventions and issuesissues(proposals are not “weeded out,” all go through);through);

CPT ProcessCPT Process3) Request is referred to appropriate members of 3) q pp p

the CPT/HCPAC Advisory Committee- If Advisors agree that no new code or

revision is needed, AMA staff providesrevision is needed, AMA staff provides information to the requester on the use of existing codes to report the procedure

- If at least one advisor believes a new orIf at least one advisor believes a new or revised code is needed, the code proposal will go to the Editorial Panel

- Advisors are given the opportunity toAdvisors are given the opportunity to suggest alternative language to present to the Panel

Application RequirementsApplication RequirementsCategory I CPT Code Category III CPT Code

APPLICATION REQUIREMENTS

• FDA clearance/approval• National utilization by a large

• FDA clearance/approval is documented or is imminentNational utilization by a large

number of physicians• Established clinical efficacy

published in 3-5 U S peer-

documented or is imminent within a given CPT cycle

• Proven clinical efficacy (undefined by the Panel)published in 3 5 U.S. peer

reviewed journals(undefined by the Panel)

• Performed by many physicians across the

countrycountry- 3 application deadlines per

yearE t bli h d ll

- 3 application deadlines peryearE t bli h d t i- Established annually on

January 1st- Established twice per year;

January 1st and July 1st

CPT ProcessCPT Process

4) Review by CPT Editorial Panel4) Review by CPT Editorial Panel– Requestor is given opportunity to present

proposed coding changes– Panel has 3 options:

• ACCEPT – With or without revisions– Category I or recommend Category III

• REJECT • TABLE

CPT Appeals ProcessCPT Appeals Process

• Agenda item is prepared for the Executive• Agenda item is prepared for the Executive Committee

• Interested in new or additional informationInterested in new or additional information than that reviewed by the Panel

• 2 options; approve reconsideration or reject p pp jreconsideration

Who should submit a change ?request?

Anyone can submit a change requestAnyone can submit a change request…• Manufacturers? Physicians? Consultants?• Society sponsorship is critical• Society sponsorship is critical• Most applications not submitted by societies

failfail– Lab and pathology are exceptions

• Plan ahead to allow time for society reviewPlan ahead to allow time for society review within their own committee process

CT Process ChallengesCT Process Challenges

• Gives increased visibility to technology• Gives increased visibility to technology, procedure and data

• CPT Editorial Panel trending towardCPT Editorial Panel trending toward issuance of Category III CPT codes – Many commercial payers have non-coverage

policies for Category III CPT codes • Payer voting members of the Panel have

difficulty removing their payer hatdifficulty removing their payer hat– The lines between coding, coverage and

payment become blurredp y

CPT and RUC Process–ExampleCPT and RUC Process Example

Specialty society to present proposal at AMA’s CPT

The CPT Process The RUC Process

RUC advisor contacts relevant specialty societies to coordinate survey to obtain data to develop RVU recommendation RUC forwards RVU Specialty 2010 CPT Codes

Deadline for

Editorial Panel meeting; panel decides whether to approve, reject, or modify proposals

data to develop RVU recommendation for new or revised code recommendations to

CMS society drafts

initial CPT proposal

CPT Agenda

Become Active

Proposed values presented at RUC meeting; Coding changes forwarded to Deadline for submission of

CPT proposal to AMA

CMS publishes annual update to

PFS

CPT Agenda Books Mailed

Proposed values presented at RUC meeting; RUC deliberates on whether to approve,

reject or modify specialty society’s recommendation

Coding changes forwarded to advisory committee for valuation*

Feb-March, 2010

Jan, 2011

Nov, 2009

Feb-March, 2010

,Feb, 2010

April, 2010

Nov, 2010

Summer 2009

Jan, 2010Manufacturer to garner support for CPT coding strategy from specialty societies

May, 2010

*The RUC Advisory Committee is comprised of representatives from specialty societies. The RUC advisors represent their specialty society at RUC meetings and make RVU recommendations for new and revised CPT codes that affect members of their specialty.

coding strategy from specialty societies

PanelistsPanelists

• Colleen Faddick• Colleen FaddickPartner, Faegre & Benson LLP

• Gina Kastel• Gina KastelPartner, Faegre & Benson LLP

• Carla Monacelli• Carla MonacelliManaging Partner, Argenta Advisors

• Bob PaulsonBob PaulsonPresident, CEO and Director, NxThera

Reimbursement ConsiderationsVenture-Backed, Early-Stage Companies

• Guiding Principle #1• Guiding Principle #1

How awesome your product or technology is How awesome your product or technology is will not matter if physicians / hospitals can’t get paidg p

……….they won’t use it

……….the days of “build it and they will come” are forever goneg

Reimbursement ConsiderationsVenture-Backed, Early-Stage Companies

1. Integral to every business plang y pa. Critical to investment & “risk assessment” in every roundb. Time = cash requirements = cash burn

2 Current code vs new code2. Current code vs. new codea. Code + Coverage = Payment

• A code alone is not enough - positive coverage policesb Category I vs Category IIIb. Category I vs. Category III

• Time & resource requirements = money = revenuec. Specialty society awareness & support

• Understanding society politics & “key influencers”g y p y• Market dynamics (e.g., CMS; competitive/other products,

technologies & procedures)• There is only one CMS “payment pie”

Reimbursement ConsiderationsVenture-Backed, Early-Stage Companies

3. Cross-functional impactpa. Timelines / milestones (time = cash)

i. R&D / product developmentii. Regulatory (U.S., Europe, Asia Pacific)iii Clinical iii. Clinical

– Study design– Number of studies & patients – follow-up– Study locations & sites

Publication requirements & timelines– Publication requirements & timelinesiv. Commercialization (sales & marketing - pricing, adoption/revenue)

4. Organizational alignment - expectations & assumptionsa. Investors & board of directorsb. Clinical & other advisors & within company

Reimbursement ConsiderationsVenture-Backed, Early-Stage Companies

• Guiding Principle #2Guiding Principle #2The only constant in reimbursement right now is change

……….CMSGovernmental healthcare policies……….Governmental healthcare policies

……….PayersY i b t d i ( ) t ………Your reimbursement advisor(s) must be “at the table” and a key part of your team

MEDTECH ROUNDTABLEDEVELOPMENTS IN MEDICAL

DEVICE REIMBURSEMENT

FEBRUARY 24, 2010