1. Stephanie Mensh, M.P.A. Vice President, Reimbursement Policy Lessons Learned From the Mistakes of Others: Reimbursement Issues Harvard Medical Device Congress General Session Day 3 - March 30, 2007

2. Issue Ace decides that it needs its own CPT code and directs one of the marketing managers to take charge of submitting an application to the AMA’s CPT panel for the continuous ventilator. The CPT panel determines that the technology is considered to be too new and experimental for a regular (“category one”) code and instead assigns it a temporary (“category three”) code. Now the insurers won’t pay the doctors or the hospitals for using the device when they bill the new code, and even their best customers have stopped using it. What should Ace do? 2

3. What does this mean? Reimbursement = How hospitals, physicians, other providers are paid by Medicare or commercial insurers (Blue Cross, Aetna) for services and items used to diagnose or treat patients 3 Coding Payment Coverage

4. What does this mean? Coverage = is this service/device eligible to be paid? Coding = how is this described/listed on the bill? Payment = what $ rate will this be paid? 4 Coding Payment Coverage

5. What happened to Ace? 5 No reimbursement strategy No understanding of implications Sales tells marketing customers won’t buy because the new ventilator doesn’t have a code Marketing tells sales to get a code

6. What happened to Ace? 6

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9. 9 Multiple systems for each Different decision makers Competing calendars No clear path Unaware of Medicare’s role in setting policy for all age groups AMA CPT on-line application appears simple Coding Payment Coverage

10. What happened to Ace? 10 AMA CPT process: Physician-controlled Seeking accepted practice Long time horizon Codes don’t guarantee coverage & payment Technology short-cut for tracking; no MD $ value Ace got a code, and a problem

11. Steps to Solve Ace’s Problem 11 Establish a reimbursement team: – Designate a capable team leader – Convey authority – Provide sufficient resources: people & $$

12. Steps to Solve Ace’s Problem 12 Conduct a reimbursement assessment: – Does the ventilator device qualify for coverage? – What indications/patients will be covered? – How are similar devices covered, coded and paid? – What prior coverage, coding, and payment decisions for similar devices will have implications – positive or negative – for Ace? – Can the ventilator qualify for hospital inpatient or outpatient payment? For new tech payments? – What data is available to make the case for the ventilator’s economic value over current practice?

13. Steps to Solve Ace’s Problem 13 Meet with policy makers to: – Educate them on the new ventilator’s function & value – Demonstrate support for the ventilator by leaders in the field – Determine data needed for interim coverage & payment – Determine data needed to move to a permanent code covered for appropriate indications paid at a reasonable rate – Discuss process & realistic time line for moving to a permanent code/coverage/payment

14. Steps to Solve Ace’s Problem 14 Develop and implement: – Strategies to continue to educate policy makers on the new ventilator’s function & value – Growing support for the ventilator by leaders and practitioners in the field – Steps to achieve interim coverage & payment – Data collection & analysis & procedures for attaining a permanent code, covered for appropriate indications, paid at a reasonable rate.

15. Conclusion 15 Reimbursement success requires: – Value from the payer’s perspective – Attention to mind-numbing detail – Policy collaboration with physicians & competitors – Stubborn determination

16. The Neocure Group, LLC Randel Richner, BSN, MPH, President Stephanie Mensh, MPA, Vice President, Reimbursement Policy Adi Renbaum, MBA, Vice President, Health Policy & Finance Kristin Fahy, MPH, Senior Research Associate Chatham Center 29 Crafts Street, Suite 270 Newton MA 02458-1274  Washington DC Office 1655 N. Fort Myer Drive, Suite 1225 Arlington VA 22209-3121 617 527-9100 www.neocuregroup.com www.neocuregroup.com Stephanie Mensh: 703-472-5784  mensh@neocuregroup.com 16