Reimbursement Reminders for Executives

Josh Heuchan, Founder and CEO of FloodGate Medical, recently had a chance to interview one of the most knowledgeable reimbursement experts in our industry. As you will find by reading her article below, Kathleen Schaum has some wonderful advice for the commercial leaders who are impacted by this aspect of their company’s commercialization strategy. We hope you enjoy this terrific summary of questions that need to be asked/answered and other strategic steps you can take to be better equipped for better outcomes

Kathleen D. Schaum, MS

Multiple times throughout each month this reimbursement strategy consultant receives telephone calls from executives of manufacturers or distributors of wound management products. The executives are often frustrated because their sales numbers are lagging due to one or more reimbursement issues. Following are just a few of the common scenarios that the executives present:

• “We just received FDA clearance/approval for our innovative new wound management product, but our sales representatives are reporting they cannot sell the product because it is not separately reimbursed? How quickly can we gain reimbursement for the device?”
• “Our product has FDA clearance for most wound types, but our sales representatives are reporting that payers are denying coverage for the product. How can we convince the payer to cover our product for the covered wound types in all sites of care?”
• “Our sales representatives have been successfully selling our product in hospital owned outpatient provider-based departments, but they are failing in ambulatory surgery centers and skilled nursing facilities. Can you educate them how to succeed in those sites of care?”
• “Our sales representatives have been successfully selling our product in the operating room, but they cannot sell it in the hospital owned outpatient provider-based departments and in physician offices. Can you educate them how to sell in those sites of care?”
• “We have a HCPCS code for our product, but the payment rate is too low. How quickly can you help us obtain a new HCPCS code for our product, so suppliers and providers can receive a higher payment rate?”

When I receive these calls, I always do my best to calm the executive and to determine exactly where, on the reimbursement timeline, we need to begin. Most of the time, I learn that the executives and the research and development staff focused on obtaining sales and marketing clearance/approval from the FDA and did not simultaneously consider developing a reimbursement strategy and funding a reimbursement team composed of both internal staff and external wound care reimbursement specialists. In addition, the executives and the sales and marketing teams often do not understand that reimbursement strategy work must begin early and must be continued and funded throughout the product’s life cycle. These stakeholders are often surprised to learn that

1. Reimbursement is not a single entity
2. It is an ongoing process composed of 3 parts (coding, coverage, and payment)
3. Each component of the process requires separate work with the various governmental and private payers.
4. Finally, the manufacturers/distributors typically do not realize that various sites of care, which could use their device, are reimbursed differently by the various payers.

Therefore, my work often begins with an executive reimbursement workshop which educates all the invited stakeholders about the reimbursement landscape that pertains to their product.

By the end of each custom-designed workshop, the executives have answered or understand why they must answer the following reimbursement strategy questions. As you read through each reimbursement strategy question below, take the time to answer it for each of your wound management products. Congratulations if you have established a complete reimbursement process and if you can thoroughly explain the details of your reimbursement strategy for each current product and for each product in the pipeline! If you find some “holes in your reimbursement strategy bucket”, you should consider if you have appropriately funded and empowered a reimbursement team composed of both internal and external reimbursement specialists.

• What sites of care could improve their wound management by using the product?
• Which sites of care do not require separate reimbursement for the product? What is the Medicare payment system for each of those sites of care?
• Which sites of care require separate reimbursement for the product? What is the Medicare payment system for each of those sites of care?
• For the sites of care that require separate reimbursement, does the product fit into an existing code or does it need a new Healthcare Procedure Coding System (HCPCS) code, a Current Procedural Terminology (CPT®) code, and/or an International Classification of Diseases, 10th Edition, Clinical Modification (ICD-10-CM) code?
• If the product has appropriate existing HCPCS, CPT®, and/or ICD-10-CM code(s), is it covered by the major payers of the patients who will receive it?
  • Who will verify that appropriate coverage language for the product exists in pertinent Medicare National Coverage Determinations (NCDs) and/or Local Coverage Determinations (LCDs), as well as in medical policies of pertinent private payers, Medicaid plans, TriCare, Workman’s Compensations, etc.?
  • If the product is not covered by one or more payers, who will educate those payers about the product? Has your organization incorporated the time it takes to gain coverage into its sales and marketing plans and quotas?
  • How will your organization inform your sales and marketing teams about the product’s positive and negative coverage on an ongoing basis?
• If the product has appropriate  existing HCPCS, CPT®, and/or ICD-10-CM code(s), and is covered by the major payers for the patients, who will receive it, is the payment rate of each payer adequate for the wound management professional/provider/supplier to purchase and supply the product in each site of care that receives separate payment for the product and/or its application?
  • Who will verify the payment rates of the major payers?
  • Who will work with the payers if the payment rate is not adequate? Has your organization incorporated the time it takes to change payers’ payment rates into its sales and marketing plans and quotas?
  • How will your organization inform your sales and marketing teams about the product’s payment rates from various payers on an ongoing basis?
• If one or more new codes are required:
  • What materials, published clinical evidence, etc., must be submitted with the code application(s)?
  • What is the timeline for submission of the code application(s), for any public meetings pertaining to the code application(s), and for the final notification of the receipt/denial of the code(s)?
  • Has your organization incorporated the time it takes to obtain the various codes into its sales and marketing plans and quotas?
• Who will educate your executives and sales and marketing team about future proposed positive or negative coverage and/or payment changes for your product in each site of care?
  • What process is established to quickly respond to these proposed changes?
  • What published data is available to share with the payers?
• Who will create your reimbursement materials, including your website, for internal and external stakeholder education?
• Who will provide ongoing reimbursement education to your new and existing sales and marketing personnel? How often? Using what media?
• Who will answer your customers’ reimbursement questions? Keep in mind, it should not be your sales representatives: they should only provide written reimbursement material to the customers and then refer the customers to your internal or external reimbursement hotline.

After answering these very important questions, you should begin to understand that developing and implementing a reimbursement strategy early in each product’s life cycle, is paramount to the success of your business.  Obtaining FDA clearance/approval does not guarantee reimbursement.

In fact, many payers have told manufacturers/distributors, “So the product is safe and effective, why should we pay for it rather than other products that we already cover and that cost less?”

Therefore, if you were unable to describe the reimbursement strategy details for every question above, you should do everything possible to

1. Educate your organization from the top down
2. Fund, assemble, and empower an internal and external reimbursement strategy team to support each product.

Reminder: It takes a reimbursement team composed of both internal and external reimbursement specialists with different reimbursement expertise.

If someone tells you they know everything about wound care reimbursement, run the other way! It is impossible for one person to be skilled in all the reimbursement topics above and to do all the work necessary to accomplish all the tasks needed to gain positive reimbursement now and to maintain positive reimbursement in the future. Unlike your FDA work, your reimbursement process and team must be in place throughout each product’s life cycle.

If you have questions about the reimbursement strategy concepts discussed in this article, feel free to contact Kathleen at her office 561-964-2470, on her mobile phone 561-670-7176, or via her e-mail kathleendschaum@bellsouth.net.

About the Author:

Kathleen D. Schaum is the President and founder of Kathleen D. Schaum & Associates, Inc. where she has served as a wound management reimbursement strategy consultant and educator for more than 20 years. She has more than 50 years of reimbursement experience and success across the health care, biotech, and medical industries, where she held leadership positions at health care companies e.g., Smith & Nephew, Inc. (Director of Medical Products Reimbursement), Healthpoint, Ltd. (Director of Reimbursement), Johnson & Johnson Medical (Director of Reimbursement), and Bimeco (Manager of Alternate Care Sales Division).

Kathleen has consulted with hundreds of hospital owned outpatient provider-based departments, and physicians and other qualified healthcare professionals to start new wound management programs or to transform existing programs that were previously in disarray.  She has been an asset for wound management manufacturers, distributors, and suppliers – especially those seeking assistance with executive and sales force reimbursement education, reimbursement strategy development, and with the reimbursement component of the merger and acquisition due diligence process.

In addition to educating many wound management executives and sales representatives, Kathleen founded and co-presents the Wound Clinic Business seminars which recently celebrated their 10th anniversary and which are offered in 10 cities every year. Kathleen also provides reimbursement education at many regional and national wound care symposiums. As a writer and authority in her field, Kathleen has a running monthly column in two medical journals: Payment Strategies in Advances in Skin & Wound Care and Business Briefs in Today’s Wound Clinic. She has been the guest editor for several special reimbursement issues of Advances in Wound Care and Today’s Wound Clinic. Kathleen also serves on the editorial boards of Today’s Wound Clinic and Wound Source.