Some of the most challenging yet most important processes for digital health startups to navigate are those related to reimbursement and coding.
“People think, ‘Oh, I’ve got a code. I’m great. I can just go to the market and I’m going to get all the money.’ But it doesn’t work that way. You have to make sure that the insurer will cover you with that code and that the payment is commensurate with what you’d like the price to be,” said Renée Arnold, entrepreneur-in-residence at BioHealth Innovation and the National Institutes of Health, during a recent conference.
She made these remarks last week during a session at the Heart Rhythm Society’s HRX conference in Atlanta.
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Another panelist — Venk Varadan, CEO and co-founder of medical technology startup Nanowear — pointed out that digital startups usually segment their milestones into different phases. Often, a startup will focus on creating a viable product, then validate it with the clinical community and then start preparing for FDA approval — all before it begins to seriously consider the processes required to obtain coverage and codes — Varadan noted.
“If I could have done it all over again, I really would have been thinking in parallel at the very beginning about reimbursement strategies,” he declared.
Once a startup receives FDA approval for its product, the leadership team might discover that the existing reimbursement codes that they thought would work for their product actually don’t, Varadan said.
For example, a startup selling a cardiac monitoring wearable device may think there is an existing code out there that would work for its product, but after reading the fine print, they might discover that their device wouldn’t qualify for reimbursement using existing codes. Codes tend to be specific about requirements — sometimes a device needs to collect a certain amount of data points or be used within a certain patient population, Varadan pointed out.
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He and the rest of Nanowear’s leadership team learned about this by talking to potential users of their product, which is a remote diagnostics platform built on wearable cloth nanotechnology.
Many potential customers said that they loved the idea of the product but probably wouldn’t be using it because they can’t be reimbursed for it, Varadan remarked.
“So almost by accident, we kind of fell into our contract research organization model, where sponsors and CROs pay us to evaluate their own products. And the beauty there is, we’re collecting that real-world evidence in certain disease states, so one day we can go to CMS and say we’ve got data on these 2,000 patients with, for example, labile uncontrolled hypertension. We need a specific Novitas code — here’s the data,” he explained.
Collecting this data early on and getting a head start on preparing for the creation of a new code is something more startups may want to consider, Varadan said.
Photo: LeoWolfert, Getty Images
Editor’s note: This story is based on discussions at HRX, a conference in Atlanta that was hosted by the Heart Rhythm Society. MedCity News Senior Reporter Katie Adams was invited to attend and speak at the conference, and all her travel and related expenses were covered by Heart Rhythm Society. However, company officials had no input in editorial coverage.