What is the basic reimbursement proposition?

Every new product warrants a bespoke business case that plays to its unique strengths in its niche. However, successful cases usually fall into one of four categories, summarised in Figure 1.

Figure 1

Core proposition	Costs	Clinical results	Other benefits
‘Efficiency’
‘Better care, lower cost’
‘Me-too’
‘Invest for better care’

How the proposition fits with the architecture of the reimbursement system

Time profile

The time profile of costs, savings, and benefits is important. ‘Pay now to save later’ may make less sense to a decision-maker with a cash-limited annual budget than a health economist. The worthwhile is not always affordable, particularly if you cannot borrow. Very long time horizons may be acceptable in some well-worked areas of healthcare, such as diabetes, osteoarthritis, coronary disease, or hypertension. However, our experience of payer behaviour suggests that there are typically four categories Figure 2).

Figure 2

	Immediate (i.e. within the same budget years)	Soon (2-3 years)	Medium-term (4-5 years)	Long-term (≥ 5 years)
Improved health
Savings
Costs

Key to Figure 2, Figure 3, and Figure 4 showing implications for reimbursement

Very favourable

Favourable

Slightly unfavourable

Very unfavourable

Where the effects fall

Another three dimensions influencing adoption decisions are where the effects of adopting your product fall in terms of:

• costs and savings
• the organisational benefit and management effort of adopting the change
• where staff work

Figure 3

Costs and savings	Organisational benefit and effort	Location
Same department	Same department	Same department
Same organisation (e.g. hospital)	Same organisation (e.g. hospital)	Same organisation (e.g. hospital)
Different healthcare organisations	Different healthcare organisations	Different healthcare organisations
Different sector	Different sector	Different sector

Size of the proposed change

Further considerations are the size of the changes involved.

Figure 4

	Nil	Small	Medium	Big
Effect on organisational constraint (capacity issues, targets, policy goals)
Budget impact negative (net saving)
Budget impact positive (net cost)
Management effort to implement
Change to ways of working

Your target audience

If costs rise significantly in a hospital stay or other situation in which there is fixed reimbursement, the payer will need to be involved. If not, the hospital or other provider is likely to be your main focus. Read more about targeting here.

Adjusting the reimbursement architecture

If reimbursement is obtainable only with a code (such as procedure or device code), or tariffs attached to current codes are insufficient to meet the costs of your product, you will need to engage with application processes. This takes time, introduces uncertainty as to the outcome, and visibility which may trigger pushback from the payers or other reviewers. Running with the grain of the reimbursement system is easiest: if your product can fit comfortably into the existing codes and tariffs, you will be rowing downstream.

The evidence you will need to support your case

The bigger the budget impact the more robust the evidence expected: methodology, consistency, number of trials. The further away the time horizon, the more robust the evidence.

Rowing downstream: reduced net cost to same provider within same episode, easy to implement, and involving no significant change to ways of working. For example, a joint replacement prosthesis which is cheaper and has a lower failure rate than the existing prostheses used by a hospital.

Rowing upstream, even with a theoretically good case: fairly big net cost in one part of the system, savings spread out over time and accruing to other parts of the system, benefits delayed, involving significant changes to how staff care for patients. For example, an expensive device which allows 24-hour monitoring of patients with a chronic illness, permitting early corrective action to be taken in the patient’s home, instead of prolonged and repeated admissions to hospital.

Conclusion

Using a checklist of this type, it is useful to explore how the reimbursement environment in markets of interest will respond to your proposed proposition. This will allow you to ensure that the right data are generated by your evidence development programme. Choices are usually available—different target populations, different test strategies, different clinical situations: working through these using a checklist can identify the proposition that ‘fits’ best, the optimum combination of speed of adoption, size of market, and price.