Insurance payers have ultimate control over whether a procedure will be covered – or paid. Although a specific service may be listed as a benefit by a payer, it usually is not covered unless it is determined to be medically necessary. Each payer has an internal process used to determine “medical necessity,” and professional society guidelines play an important role in this process.

In general, for a procedure to be used clinically and achieve success in the marketplace, it needs to be:

  • FDA-authorized
  • Associated with a code
  • Have payment assigned to that code
  • Have coverage for the code from insurance carriers

While codes and relative payment rates are issued and set by the Centers for Medicare and Medicaid Services (CMS) and the American Medical Association (AMA), coverage is at the discretion of each payer. Payers include:

  • CMS (Medicare)
  • Commercial insurers [Blue Cross Blue Shield (BCBS), Aetna, Cigna, United HealthCare]
  • Managed Care Health Plan Providers (Kaiser, Highmark, Mayo Clinic, Cleveland Clinic)

Variations in coverage policies exist among payers and even among different regional players within a given payer. For instance, there are 12 regional Medicare Administrative Contractors (MACs), each of which is responsible for coverage determinations within its designated region. Likewise, there are 36 independent and locally operated Blue Cross Blue Shield companies, each of which defines its own coverage policies.

Regardless, each payer asks the same basic question when determining whether a given procedure or technology will be covered at the payment level assigned to the procedure or technology: Is it reasonable and necessary? Unfortunately, there is no uniform definition of medical necessity. Post World War II, “reasonable and necessary” was interpreted to be medical care that most doctors believed to be appropriate. Since then, this has been supplanted by a consensus that only interventions with demonstrated effectiveness can be considered necessary, leading to the development and advancement of “evidence-based medicine.”

The central task of evidence-based medicine is the adoption of medical practices wherein effectiveness has been demonstrated by adequate evidence generated through a convincing body of well-designed studies. Few payers have attempted to set down detailed rules about how much evidence constitutes “adequate evidence” for a given coverage decision. Most coverage policies are based on an in-house or consultant-generated review of credible scientific evidence published in peer-reviewed medical literature, relying primarily on randomized clinical trials. If no credible scientific evidence is available, or as part of the standard review process even if it is, physician specialty society recommendations or professional standards of care may be, and usually are, considered. A review of the websites of major commercial insurance carriers, as well as that of CMS, shows that all take into account physician society recommendations and/or guidelines when determining whether a procedure or technology is reasonable and necessary.

Suffice it to say that securing favorable professional society guideline recommendations should be considered a critical piece of the strategy aimed at securing coverage for a new procedure or technology. Since guidelines are data driven, realizing as many supportive peer-reviewed high-quality publications as possible, preferably including reports from randomized clinical trials, becomes the first order of business – both to obtain a code and to realize coverage of that code. There is also a tendency to preferentially view studies performed on a US population of patients treated in the US.

It is important to understand that the literature requirements for obtaining a code are different from those required for obtaining coverage. For instance, the AMA requirements for considering a new code are:

  • Five published peer-reviewed articles with a minimum of two of these papers involving no overlapping patients
  • At least one paper with no lower than level IIA evidence (systematic review of cohort studies) 

Abstracts, book chapters, white papers, and non-peer reviewed publications not allowed.

However, for a favorable guideline recommendation, most societies require level IA evidence (obtained from systematic review of randomized controlled trials) or level IB evidence (obtained from an individual randomized clinical trial). This evidence requirement is much more labor intensive, takes longer, and carries a higher cost to meet, emphasizing the need to plan for early in the commercialization discussion.

Inclusion in a guideline does not ensure coverage by any given payer; there are no hard and fast rules, and the payer can make any coverage decision regardless of level of evidence. However, lack of inclusion in a published guideline can provide the payer with a reason to deny coverage when it is unable to make a definitive statement of reasonable and necessary based on its review of the literature.

Many of these topics and more will be explored in greater detail at the Focused Ultrasound Foundation Symposium’s day-long program on “Commercialization” on Friday, November 13, 2020. Consisting of invited talks, panel sessions, and roundtable opportunities, this program is designed to help existing and new companies in the field become better acquainted with the issues facing them along the road to commercial success. Click HERE for more information and to register.

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