Changes to Medicare Reimbursement and the Affect on U.S. Commerical Insurance

The Centers for Medicare and Medicaid Services (CMS) announced this year material changes to Medicare reimbursement for clinicians. The changes are a direct result of the Medicare Access and CHIP Reauthorization Act of 2015 and codified under Medicare’s Quality Payment Programs.

We believe with a better understanding of the Quality Programs there could be an opportunity to create economic value for your medical device and digital health technology in the absence of fee for service reimbursement. Furthermore, while Medicare has set the standard for the reimbursement based on the Quality Programs, it is reasonable to conclude the U.S. private payers will soon emulate them.

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Starting in 2017 and for the foreseeable future, clinicians may choose from two tracks under the Quality Payment Program.

The first track provides a performance-based payment adjustment to the clinician’s 2019 Medicare reimbursement based on 2017-performance data submission. The intention of the data submitted by clinicians to Medicare is to report the quality and efficiency of clinical care they provided to Medicare beneficiaries. Based on the data submitted in 2017, the payment adjustment made to the clinicians’ Medicare reimbursement in 2019 can be additive, punitive or have no impact.

The second track allows clinicians to earn more from Medicare by sharing in the financial risk related to patients’ outcomes. Clinicians may earn a 5% lump sum bonus to their 2019 Medicare reimbursement based their 2017 performance data submission. Clinicians who qualify for this track participate in Medicare population models such as the Comprehensive End Stage Renal Disease Care Model, the Oncology Care Bundled Payment Model and other similar models. Most clinicians who care for Medicare beneficiaries take part in at least one of Medicare’s population models.

Both tracks have a two-year lag time between data submission and the reimbursement adjustment. Performance data sent to Medicare in 2018 will be evident in the 2020 reimbursement rates and so on.

It is important to understand Medicare is encouraging commercial and employer payers to incorporate similar payment programs based on quality and process improvement into their health plans, and in doing so help to create a national patient quality care standard.

Why this News Brief:
We believe Medicare’s Quality Payment Programs may offer unique opportunities to monetize your medical device and digital technology outside of traditional reimbursement pathways. Why not consider incorporating the Medicare Quality Program into your product development, clinical trial and sales plans? To discuss such a possible planning strategy, click on the CONTACT US button found in the lower left-hand corner of this page.

About Us:
Rowinski Group LLC serves medical technology innovators who are financing, developing or selling medical devices, digital health technologies and diagnostics for the U.S. health-care market. The innovators we work for include companies (private and publicly traded), investment firms and governments located in the U.S., the EuroZone and Asia.

We help innovators to secure reimbursement and other monetization pathways for their medical technology and to build professional relationships with U.S. health insurance payers. Our main office is based in the San Francisco-Silicon Valley area, 10 miles (16km) south of the San Francisco airport and 30 miles (48 km) north of the San Jose airport.

Winter 2018, Volume 10.2

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