Advice for Companies: What I Know Now That I Wish I Knew Then

Written by Mark Carol, MD

Mark CarolWith paradigm shifting, disruptive technology, achieving code, payment, and coverage are the true keys to commercial success. No matter how great, a new technology will languish if not covered with a “living payment” by insurance payers. Just realizing a code from the Centers for Medicare and Medicaid Services (CMS/Medicare) or the American Medical Association (AMA) is not enough; there is no guarantee the code will carry a payment that encourages facilities to purchase the product, and having adequate payment does not guarantee the coverage by payers required for patients to utilize the treatment. Wide ranging decisions, made or not made during product development and the company’s commercial strategy, will impact payment levels and coverage decisions in ways not readily apparent and often counterintuitive. As an example, charging less for a disposable may suggest increased case numbers but may actually lead to lower payment by CMS, discouraging hospitals from performing procedures.

Having a payment code assigned requires clinical validation of the technology. This process can take five or more years; it can take even longer to get the code covered. All parties must understand the true requirements and timeline for commercial success, as well as the funds and comprehensive plan needed to get the company to that point. Again, as an example, it may seem cost-effective to avoid an expensive controlled, randomized trial, but the lack of such evidence may significantly prolong the time required to get favorable coverage decisions, an effective time-related expense that may cost more than the trial.

Payment is set by a complex and not widely understood CMS/AMA methodology used to determine cost. Creating a corporate price structure that allows companies and hospitals to make a profit, then working with hospitals to make sure their bills reflect the true cost of acquiring and using the technology, requires thought and strategy from day one. Otherwise, a payment may be set that even if covered will not be enough to encourage the use of the technology.

FALLACY #2 – Everyone will think highly of the technology.
To paraphrase the movie Field of Dreams, we all assume that “If we build it, they will come.” Unfortunately, it is likely that their arrival will be delayed. A technology may be better and/or cheaper, but it will take years for others to come to that conclusion. Patients, users, providers, and payers have vested interests in the status quo that will hinder speed of adoption of new medical technologies no matter how great. Physicians must learn a new technique that may also impact their bank account; providers must be able to justify an incremental capital cost; payers will try to avoid upsetting a status quo already quantified and mapped onto cost-benefit analyses; and patients must get comfortable with a treatment lacking the long-term follow-up they need to accept a new approach for treating their disease.

Save angst down the road. Assume it will take a good five years from general clinical introduction for a technology to realize the market penetration required to demonstrate success.

FALLACY #3 – We can make it so much better now.
Living with new technology development provides insight into how great the technology is but also how much better it could be, fueling the desire to develop the next generation before the first has become established.

Do not go down this path. It will take time for patients, physicians, payers, and professional societies to adopt the level of enthusiasm required to justify the next generation product. It will take time to penetrate the market and create an installed base that appreciates how great an advance the technology represents. In addition, you will learn much from customer feedback. Funds should be used to achieve market penetration and product adoption and to protect against factors that cannot be controlled, such as delays in coverage or the next pandemic. There will be time enough for advances after the technology becomes a must-have.

Mark Carol, MD, trained as a neurosurgeon, has spent the last 35 years in the medical technology industry and now works at the Focused Ultrasound Foundation. He has founded a handful of companies in the neurosurgery and radiation oncology arenas and is considered by many to be the father of intensity-modulated and image-guided radiation therapy, the current standards in the domain of external beam radiation oncology. He has been the CEO of a company in the focused ultrasound space as well as Chief Technology Officer at companies in the fields of medical imaging. Among the many hats he has worn, Dr. Carol has gained FDA authorization for more than a dozen products; overseen a PMA submission; and has lobbied successfully with CMS and the AMA for C-Codes and CPT codes, respectively.