Digital Therapeutics Company Begins Reimbursement Planning Too Late, Leaving Few Options

The Client’s Business Need

This case study shows how we identified multiple monetization pathways for a smartphone and tablet-based test. This study is also intended to demonstrate the company’s reimbursement planning should had begun three years, not one year, prior to product launch.

A German medical software company began preparation for the U.S. launch one year prior to the forecasted FDA 510K class II smartphone/table-based tests. The company’s software can transform the medical professional’s smart phone or tablet into a full suite of clinically accepted, gold-standard orthopedic rehabilitation assessment and monitoring tests which are performed following knee and hip replacement and ACL reconstruction. The initial focus is the U.S. orthopedic surgeon office market. The providers of interest are the surgeon and the physical therapist.

The company’s mobile digital test platform offers benefits to the surgeon and physical therapist relative to the (current) subjective and the office-based rehab equipment testing methods, they are;

1. Real time comparative and systematic normative data analysis.

2. A mobile platform which facilitates conducting the tests in different sites of care.

3. Electronic integration of the test results with the patient’s electronic medical record.

4. Faster test times without compromising specificity and sensitivity.

5. Lower test price.

The client’s business need was for us to define and implement the U.S. monetization plan for their smart phone/ tablet based orthopedic rehab assessment and monitoring tests. In addition, the company wanted us to integrate the tests’ monetization plan into the ongoing product launch planning efforts. The company contacted us one year from U.S. launch date.

Our Approach

While the mobile test incorporated the gold standard rehab tests accepted by providers and payers, we were more concerned about coding and reimbursement amounts than coverage at this point.We decided to conduct a comprehensive payer prioritization based on reimbursement amounts and the availability of alternative monetization pathways outside of traditional reimbursement.

We believed alternative pathways were going to be important since launch was less than one year away. Alternative monetization pathways would had been less of a concern for us if the company reached out at least three years prior to launch.

The Results

The screening criteria and stratification noted above determined Medicare was a payer of interest. Medicare had in place traditional reimbursement mechanisms and an alternative monetization pathway. While the Medicare reimbursement amount was lower relative to other payers, the value of Medicare’s alternative payment pathway was paramount.

Reimbursement for the surgeon and physical therapist (the providers) using the mobile-based test could be possible under the Medicare’s current reimbursement mechanisms and policies. However, we believed Medicare would soon eventually deny the providers’ claims for a variety of reasons such as costs.

This was not to be the case for the alternative monetization pathway we identified because its mechanisms are different from traditional reimbursement.

As a result, the alternative monetization pathway became more important than traditional reimbursement in supporting the company’s mid-term U.S. commercialization efforts. It would be the company’s primary provider payment mechanism used while concurrent efforts to secure new coding and revised reimbursement amounts were underway by the company and us.

The key takeaway from this case study is the work described above should have started at least three-four years prior to launch. Doing so gives a company the time to establish relationships with the payers, to apply for codes and to collect the evidence needed to help justify to the payers the basis for the mobile test’s reimbursement amount.