Avoiding the experimental and investigational label

Authored by David Gregory and Kelly Seeger

Securing positive coverage (i.e., reimbursement) from CMS and commercial payers is a significant challenge facing medical technology firms and often takes longer than the time it takes to get FDA clearance. Moreover, FDA clearance is simply not enough to gain coverage.  CMS classifies medical technologies into one of three categories: medically necessary, not medically necessary or experimental and investigational (E&I), with only technologies deemed to have “clinical utility” and/or are “reasonable and necessary for the diagnosis or treatment of an injury or illness” being granted a positive coverage decision.i This article will demonstrate the importance in planning your reimbursement strategy early in the product development phase in order to avoid the E&I label and for reimbursement to be optimally realized.

One example of a commercial payer’s approach to categorizing medical technology is that of the Blue Cross Blue Shield Association (BCBSA).ii They consider technology to fall in the E&I category when they “are in the developmental stage and are in the process of human or animal testing.”iii BCBSA has an explicit list of five evidence-based criteria used to determine whether a technology is deemed E&I, including:

  1. The technology must have final approval from the appropriate government regulatory bodies
  2. Scientific evidence must permit conclusions concerning the effect of the technology on health outcomes
  3. The technology must improve the net health outcome
  4. The technology must be as beneficial as any established alternatives
  5. The improvement must be attainable outside the investigational settings

Another commercial payer, Cigna, provides a definition of medical necessity for their physician network that incorporates cost-effectiveness into the criteria:iv

  1. In accordance with the generally accepted standards of medical practice;
  2. Clinically appropriate, in terms of type, frequency, extent, site and duration, and considered effective for the patient’s illness, injury or disease; and
  3. Not primarily for the convenience of the patient or physician, or other physician, and not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient’s illness , injury or disease.

These criteria reinforce that multiple forms of evidence must be developed early in the product development process in order to achieve optimal payer coverage. Therefore, establishing a reimbursement team to create a strategy at the research and development stage is essential. Doing this allows the company to integrate their reimbursement strategy into all phases of the product life cycle, alongside their regulatory approval strategy and supporting clinical trials. Executing these two strategies in tandem is necessary, as both payers and the FDA define the intended use and indications for the technology and it is crucial these processes are coordinated and as similar as possible. Moreover, the reimbursement strategy should be integrated into a company’s business plan, since this will be important to investors and stakeholders as they evaluate the projected profitability of the company. The strategy should be grounded on the basis of how the medical benefit (clinical utility) and added value will be demonstrated through clinical research. Allocating enough time and resources for sufficient evidence to be accumulated is key, as approaching payers for coverage/reimbursement too early will be inefficient at best. Further, approaching payers who are silent on the technology before necessary evidence is generated could force an undesirable non-coverage policy.

The aforementioned criteria in place by the BCBSA, which is similar to the criteria in place at other commercial plans, emphasizes the necessity for a medical technology to have a breadth of clinical evidence supporting the technology. The presence of published, valid scientific evidence from well-designed clinical trials is directly related to payers’ decisions whether to cover a new technology. In fact, the first step many payers take when drafting clinical policies is to conduct a comprehensive search of medical literature in PubMed.v Payers want to see this evidence published in peer-reviewed journals and collected not only over the short-term, but also over the long-term—making it essential to start collecting data as early as possible.

Study designs at the top of the hierarchy of evidence and most preferred by payers include RCTs and meta-analyses of large multicenter RCTs. Ideally, the studies will focus on a specific target population who benefit most from the technology, isolating the effect of the technology in the sub-population for which the manufacturer will be seeking coverage. For example, you should highlight limiting criteria such as gender, age, anatomical location and condition severity that would determine if a patient would benefit from the medical technology. Studies should include 200-300 patients, which provides a large enough sample size to eliminate the effect of confounding variables between the study groups, making it feasible to attribute outcome differences to the tested intervention. If RCTs are not feasible due to time and/or financial constraints, prospective and retrospective comparative cohort studies or meta-analyses of cohort studies (level two evidence) can be utilized to demonstrate clinical utility. (Read more about alternative studies designs capable of measuring clinical utility.) Lastly, case control study designs can be provided as evidence of clinical effectiveness but generally only as a supplement to stronger RCT and/or cohort studies.

Alongside the requirement to collect and present clinical evidence, payers also will review data demonstrating a technology’s economic value. Given the healthcare industry’s shift towards value-based care, it is becoming more of a necessity to demonstrate the episode-of-care value of a new technology through health economics studies. A group of 80 medical device firms surveyed on their reimbursement experience highlighted “the need for economic data to prove the value of their products” as one of the main challenges faced during reimbursement efforts.vi Many payers will review both clinical and economic evidence when considering a technology’s value proposition compared to the standard of care; therefore, having both categories of evidence creates a more compelling value proposition.

Internal and external advocacy are other essential components to a successful reimbursement strategy. Externally, developing strategic partnerships with key stakeholders and users of your technology will create allies to support your technology’s journey to gaining market access. This could include advocacy networks comprised of providers, patients, government agencies and perhaps technology assessment organizations. Partnerships created for the purposes of assisting with product development or testing can also be extended to reimbursement activities. For example, a physician involved with the clinical trial for FDA approval may also be effective in discussing access to the medical technology directly with payers. Further, an advisory board and/or target health plans should be consulted to gather information relevant to developing the reimbursement strategy. However, the company should be realistic in these conversations about the type and amount of evidence that is feasible for them to produce. In addition to developing relationships with external stakeholders, processes and programs inside the company must be in place to ensure all staff, from senior management to product developers, are aware of the reimbursement strategy and their role in the effort.    

Payer reimbursement greatly contributes to a technology’s ability to gain and expand market access, therefore it is essential to generate the necessary evidence to achieve payer coverage. The trend towards value-based care is projected to bring lower reimbursement rates and reduced procedure volume in the coming years, essentially limiting reimbursement for medical technologies.vii Consequently, medical technology companies will be increasingly pressured to compete for reimbursement and new revenue streams from payers and providers. Planning a reimbursement strategy early in the product development phase will facilitate the process of gaining reimbursement and avoiding the E&I label.

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.


i Centers for Medicare and Medicaid Services. Medicare Coverage Determination Process. 
ii Nearly one in three Americans are Blue Cross Blue Shield beneficiaries. Policy review committees at BCBS franchises reviews the policy position of the BCBS National Association’s Medical Policy Program to inform their own decisions.
iii BCBS Association. Medical Policy Reference Manual. 
iv Cigna. Medical Necessity Definitions. 
v Cross, James. (2008). Clinical Policy Process. Presentation at the Third Annual Medical Device Regulatory, Reimbursement and Compliance Congress. Cambridge, MA.
vi Mensh, Stephanie. (2007). How Medical Device Companies Deploy Reimbursement Resources Report on the Compliance-Alliance Reimbursement Benchmarking Survey. 
vii Mercer Capital. (2016 June). 5 Trends to Watch in the Medical Device Industry in 2016.