The Client’s Business Need

This case study demonstrates two points. First in the absence of traditional reimbursement other monetization pathways maybe available. The other point is to show how reimbursement can be used to assist companies with defining Indications for Use (IFU), and the claims and labeling language prior to formal discussions with the US Federal Food and Drug Administration (FDA).

A company, under the guidance of a Minnesota-based incubator, was developing a Point of Care (POC) diagnostic test to detect the presence or absence of Urinary Tract Infection (UTI). The test’s USA market was the acute stay hospital market. The company’s third-party market intelligence concluded the incidence and prevalence of UTI is higher than normal in older patients and particularly those who are admitted to the hospital.

Based on the company’s market intelligence, the company believed the test’s FDA regulatory/ clinical trial efforts should focus on the test’s use during the admission period. The admission period is defined as the time from patient hospital admission to discharge. The proposed regulatory strategy which included the test’s claims, Indications for Use (IFU), labeling and FDA clinical trial design were all geared to secure 510K clearance for test use during the admission period.

The client’s business need was for us to determine if and how the POC-UTI test based on the regulatory strategy described above would affect hospital reimbursement.

Our Approach

Our first step in our work was to re-confirm, unequivocally, the company’s conclusion that UTI incidence and prevalence rates are higher in older patients who are admitted to the hospital. We also had to identify the Beachhead Payer for the test to help focus our efforts in identifying hospital reimbursement for a test used during a patient’s hospital admission.

The Results

Because we have access to current and actual (not forecasted) USA health insurance payer data for UTI incidence and prevalence rates before, during and after the hospital admission period we were able to unequivocally re-confirm our client’s conclusion; UTI incidence/prevalence rates are high for older patients, especially those patients who are admitted to the hospital. Based on the age confirmation we did identify the test’s Beachhead Payer, it is Medicare

Based on these two key conclusions we determined the following,

1) Hospital reimbursement from Medicare for the POC-UTI test is not possible due to structural reasons.

2) An alternative monetization pathway from Medicare for the hospital is possible for the POC-UTI test.

The Medicare alternative monetization pathway to traditional hospital reimbursement we identified does financially penalize any hospital in the event a patient acquires UTI during the hospital admission period. However, if UTI is detected at the point of hospital admission, that is before the hospital admission period, Medicare will not financially penalize the hospital. Another words there is a financial incentive for the hospital to purchase the POC-UTI test in the absence of Medicare reimbursement for the hospital.

Based on our identification of an alternative monetization pathway we identified the POC-UTI test the company changed the test’s FDA regulatory and clinical strategy. The revised regulatory and clinical strategy was re-positioned to test’s use at the point of hospital admission vs. the original positioning of during the admission period. The change was done to ensure there is a hospital monetization pathway after the test’s FDA clearance and market launch.