Navigating the Neurotechnology Insurance Reimbursement Maze: Challenges and Solutions in the United States
The field of neurotechnology stands at the cusp of a revolutionary era, with promising new therapeutics and other ways of improving quality of life. From neuromodulation to brain-computer interfaces, these innovations offer hope for restored functionality, improved mental health, cognitive enhancement, and more. Despite this immense potential and excitement, there lies a formidable barrier: the complex landscape of insurance reimbursement. In this article, we explore the challenges faced by neurotech companies in securing reimbursement for their products in the United States and the intricacies of insurance coverage. We then discuss pragmatic steps companies can employ to achieve and sustain reimbursement for their neurotechnologies.
The Growing Neurotech Market
The global neurotechnology market is booming, with a projected value of $38.17 billion by 2032, up from $12.82 billion in 2022. In 2023, neurotechnology companies raised $1.4 billion in venture capital backed funds for a variety of devices, from spinal implants to brain interface chips. This rapid growth reflects both the demand for innovative neurological treatments and the incredible potential of neurotech to revolutionize healthcare. Despite the market’s exponential expansion, the path to reimbursement in the United States for these technologies remains fraught with obstacles.
Challenges Faced by Neurotech Companies
Neurotechnology startups face a variety of challenges, most notably data rigor and reproducibility, market adoption, stringent regulation hurdles, and of course, lengthy and arduous reimbursements processes and models. For clinical neurotechnology in the United States, securing U.S. Food and Drug Administration (FDA) approval is often the first hurdle, a resource and time intensive task which requires extensive clinical research and financial investment. However, even with regulatory clearance, gaining the insurance coverage needed to generate revenue and sustain business operations is far from guaranteed.
While the FDA evaluates technologies in the context of benefits and risks to patients, payers are also focused on the economics of the technology — insurance examines how the technology compares to others already on the market and what the economic benefit will be of reimbursing this specific technology. This requires new supporting data, such as cost effectiveness studies, that companies do not need for FDA approval, yet must direct resources, finances, and time to for a shot at reimbursement.
This sequential process can slow consumer adoption, as FDA-approved products can face protracted gestation times when entering the market before obtaining insurance reimbursement. Insurance reimbursement is a long and arduous process similar to FDA approval, and the resources to guide companies successfully through it are few and far between. Given the challenges of finding information on actionable strategies for maximizing success, especially pertaining to neurotechnologies, companies often navigate this terrain with limited insight. Here, we address this knowledge gap by presenting an overview of the reimbursement process along with practical measures that neurotech startups can implement to optimize their chances of reimbursement.
Insurance Reimbursement Process Basics
For anyone unfamiliar with the process of reimbursement for novel neurotechnologies, we will quickly go over the basics. First, the technologies typically undergo evaluation and approval by the FDA to ensure safety and effectiveness. Once FDA approval or clearance has been obtained, manufacturers can put the device on the market for healthcare providers to use in clinical practice for patient treatment. Not all FDA approved devices are the same. Medical devices can be broken up into Class I, Class II, and Class III, in which the regulatory control and guidelines increase with class. These different levels of FDA clearance affect later stages of reimbursement, where we see products that are more highly regulated (Class III) more easily approved by payers for reimbursement than devices with less regulatory control.
After FDA approval, the next step in reimbursement is securing a Current Procedural Terminology (CPT) code. CPT codes are considered “the language of medicine”; they are utilized throughout the US by physicians and payers for reimbursement submissions. These codes are overseen and established by the American Medical Association CPT Editorial Panel. Whether leveraging an existing code or seeking creation of a new one specific to the neurotechnology, a key pivotal step towards reimbursement is application to, and subsequent clearance by, the CPT Editorial Panel. CPT codes fall into three distinct categories:
- Category I includes commonly used codes for established devices and procedures,
- Category II comprises supplementary codes for performance measurement,
- Category III encompasses temporary codes for emerging technologies. Category III codes undergo evaluation and may eventually transition to Category I status if they become widely adopted and proven effective.
Although Category III has a less stringent standard than Category I and does not require prior FDA approval, Category III technologies are not eligible to be reimbursed by Medicare — the United States’ federal health insurance for people 65 or older — but can sometimes be reimbursed by private payers. When a code and category is established, the Specialty Society Relative Value Scale Update Committee (RUC) undertakes a secondary evaluation process to assess a product’s value relative to the resources required for treatment provision. The RUC then determines a Resource Based Relative Value Scale (RBRVS) for technologies in conjunction with the CPT, which is then used by Medicare and other payers to set payment rates. Medicare’s coverage and reimbursement policies often influence private insurance coverage decisions, so obtaining Medicare coverage for a new neurotechnology medical device is crucial if a company is looking towards broader insurance reimbursement. This entire approval process from applying for a CPT code to clearing and receiving a RUC designation can take months, if not years.
Pragmatic Steps to Take
Given the previously discussed challenges and arduous nature of the approval process, what are pragmatic steps entrepreneurs and startups can take so they are able to flourish instead of fail? Experts say that building relationships with key groups — such as professional societies, clinicians, patient advocacy groups, etc — is the best foundation for future insurance approval. Carlene MacMillan, MD, CMO of Osmind, Co-Chair of the Clinical TMS Society Insurance Committee, and licensed child, adolescent, and adult psychiatrist, emphasizes the need to solidify these relationships early — long before the product is brought to market. It is vital that manufacturers have professional organizations and groups lobbying for their product and technology in the lead up to and during the CPT Editorial Panel and RUC. It is also important to start this process as early as possible, even before FDA clearance has been officially given. It is a long process. Medical device developers should ensure they have all the support and data necessary before going in front of the panel to ensure success. Dr. MacMillan recommends hiring experienced individuals into scientific advisory boards early, bringing on board people who know the process, strategizing which groups to gain support of, and knowing who to lobby — this is just as important as the validity of a technology’s clinical data.
Dr. MacMillan also emphasizes the need to find a professional organization working in the niche specialty that a technology falls into. These niche societies are generally smaller than more generalised organisations, but will have a vested interest in and knowledge of the technology, and will be able to help build a larger coalition with the bigger, related societies to support the technology in the CPT process. For example, a TMS neuromodulation startup looking for CPT approval could approach the Clinical TMS Society, which then could coalesce support with the American Psychiatric Association in order to grow their impact and reach. Larger societies often reserve assistance until smaller, specialized societies unite and collectively approach them, asking for support and advocacy.
The professional organizations that will be the most helpful depends on the type of neurotechnology, but a few societies include: North American Neuromodulation Society (NANS), Neurocritical Care Society (NCS), American Neurological Association (ANA), American Academy of Neurology (AAN), and more (shown below). Other important groups to leverage are patient advocacy groups and clinician groups, as these groups can also provide invaluable lobbying and support for technologies to be covered by insurance and be reimbursed. There are also a variety of consortia and law firms supporting companies as they face this process, such as Medical Alley, Latham and Watkins LLP, Maynard Nexsen, and more.
These relationships are important to leverage while trying to obtain CPT approval. After approval, the relations must be maintained to receive reimbursement from payers. Receiving a CPT code for a technology does not guarantee that the payers will reimburse it. Insurance companies need to expect a return on investment; it is not enough for the technology to be effective clinically. Medical technologies need to be cost effective, serve a high unmet need, and save more money in the long term than they cost. It is vital to leverage connections with professional societies and advocacy groups to demonstrate the necessity of the technology to payers. Having a reputable champion of a technology in these organizations can help manufacturers immensely in breaking through the reimbursement barrier.
Kip Ludwig, PhD, Co-Director of the Wisconsin Institute for Translational Neuroengineering, emphasises the importance of highlighting the uniqueness, efficacy, and cost savings of a technology when submitting a CPT code proposal, as well as during public meetings related to the Healthcare Common Procedural Coding System (HCPCS; an additional medical billing language covering additional services and supplies beyond typical CPT procedures). According to Dr. Ludwig, manufacturers should be clear why their technology is the best choice for reimbursement. What do they offer that other companies do not? Do they have clear data showing that no other technology can provide the same clinical outcomes as their technology? Will their technology save payers the most money? These are questions that payers, the CPT Editorial Panel, and HCPCS public meetings will ask. Ludwig also suggests that leadership in neurotech companies should ensure the publishers of the critical data are not employed or compensated by the company seeking reimbursement, as this can be seen as a conflict of interest. For some neurotechnologies, the insurance approval process might even require a higher standard of evidence for approval than the FDA — something companies should start preparing for in the early days of their startup by working with professional consultants in the field.
From day one of starting a company, understanding how to navigate reimbursement should be a priority. To bring a device to market, manufacturers need a viable business model, a team that understands how the insurance sector and reimbursement processes work, a strong network of connections with professional societies, and data to gain both FDA approval and the continuous support of payers. While it takes a village to raise a medical neurotech device, avenues are emerging to solve for unmet needs.
Exploring Alternatives and Solutions
In the face of the sisyphean task of approvals, neurotech companies are exploring alternative pathways to traditional reimbursement. Incentive-based reimbursements have emerged as a new avenue. One example of this is New Technology Add-on Payment (NTAP), a reimbursement mechanism used by the Centers for Medicare and Medicaid Services (CMS). NTAP is designed to provide additional payment to hospitals for utilizing certain eligible new and innovative medical technologies. These technologies must be FDA authorized, be truly novel and innovative, demonstrate significantly improved clinical outcomes compared to the current treatment methods, and cost in excess of the pre-determined payment healthcare organisations receive for the diagnosis or treatment for which the technology is used (read more about diagnosis-related group (DRG) payments here). This model allows hospitals to take a chance on novel technologies and lays a foundation for the technologies to eventually receive a CPT code.
Self-funded insurance companies may also offer non-traditional reimbursements. Dr. MacMillan advises that these companies and programs tend to favor technologies that offer specific benefits to target populations (fertility, mental health, etc), and can offer point-solution benefits including innovative and specialized care that might not be covered under standard insurance.
Some manufacturers have forgone reimbursement all together. Steve Gullans, PhD, Co-Founder and CEO of Thynk, highlights that some start-ups have started to opt for innovative company financing models, leveraging venture capital and strategic partnerships to keep costs low and accessibility high. Others may pivot towards marketing their products as wellness devices, circumventing the reimbursement conundrum, but raising equity concerns. Every approach has its own set of trade-offs, uncertainties, and benefits.
Conclusion
Navigating the reimbursement landscape presents formidable challenges as well as significant opportunities for innovation in neurotechnology and patient care. The complexities of securing insurance coverage and reimbursement underscore the importance of strategic planning and proactive engagement with key stakeholders. By building strong relationships with professional societies, clinicians, and advocacy groups early in the process and by understanding the standard of evidence required to obtain approvals, neurotech companies can lay a solid foundation for successful reimbursement outcomes. Moreover, exploring alternative pathways such as incentive-based reimbursements and partnerships with self-funded insurance companies can offer viable options to overcome traditional reimbursement barriers. Ultimately, prioritizing reimbursement strategies from the inception of a neurotech venture, as well as fostering strategic connections within the healthcare ecosystem, are essential for navigating the reimbursement maze effectively. Both are needed to pave the path for widespread adoption and accessibility of transformative neurotechnologies.
Are there any considerations or strategies we missed? If so, please let us know in the comments.
Written by Anna Riggs with guidance and editing by Sharena Rice.
Anna Riggs is the Project and Event Manager at BrainMind, a 501(c)(3) public charity that is seeding and accelerating company creation in neuroscience to further human potential. She graduated magna cum laude with a B.S. in Neuroscience from Santa Clara University.
Sharena Rice works in medical technology as Research Scientist at Sanmai Technologies PBC, which is in clinical trials with their focused ultrasound neuromodulation device. She is Contributing Editor for Neurotech Reports and earned a PhD in neuroscience from the University of Michigan.
