Below are overviews of the approval and reimbursement processes of medical devices in the U.S. A graphical representation of the processes involved is included in the attached Google Presentation document. The Google Slide features additional notes highlighting the process flow and what is required or expected.
FDA Approval for Medical Devices
- The FDA approval process for medical devices classifies them into three categories, Class I — low-risk devices like bandages & handheld surgical instruments; Class II — intermediate-risk devices; and Class III — high-risk devices that matter to health or sustaining life.
- The majority of Class I devices are “exempt from Premarket Notification 510(k).” Class II devices “require Premarket Notification 510(k),” while most Class III devices require Premarket Approval.
- The basic regulatory requirements that U.S. medical devices manufacturers must comply with are
- Both domestic and foreign medical device manufacturers must register their establishments with the FDA.
- Medical device manufacturers then list their devices with the FDA.
- Devices requiring the submission of a Premarket Notification 510(k), must receive a letter of substantial equivalence from the FDA authorizing such manufacturers to commercially distribute the devices.
- Most Class I and some Class II devices are exempted from the Premarket Notification 510(k) submission process. Class III devices are subject to Premarket Approval (PMA). The PMA process involves the submission of clinical trials results to support claims made for the device.
- Next is the investigational device exemption (IDE) phase, whereby the device is tested to uncover safety and effectiveness data to support a Premarket Approval (PMA) application or a Premarket Notification 510(k) submission to FDA.
- Quality system (QS) regulation focuses on the methods used in “designing, purchasing, manufacturing, packaging, labeling, storing, installing and servicing of medical devices.”
- Labeling requirements, including labels on the device and detailed information that accompanies the device.
- The Medical Device Reporting (MDR) requirement mandates manufacturers to report to the FDA any deaths or serious injuries resulting from using the device.
FDA Reimbursement Process for Medical Devices
- Medical device reimbursement approval in the U.S. focuses on three core areas, namely coding, coverage, and payment. The three elements must be addresses in the reimbursement strategy to avoid compromising the overall strength of the plan.
- Coding — clarify the right coding system (CPT, HCPCS or ICD-10-PCS), identify applicable coverage policies, appropriate type of payment mechanisms, “(MS-DRG, APC and different fee-for-service fee schedules),” and payment rates for the device.
- Coverage — provide evidence demonstrating that the new device/technologies are effective and have the potential to advance medical practice.
- Payment — shows what is covered whether it is the full cost of the service or treatment, or partial because payers can ask providers for pricing specific to their overall plan by optimizing payment to maximize returns.
New Technology Add-on Payment (NTAP) Program Reimbursement Process
- A medical service or technology is considered a new add-on payment if, “based on the estimated costs incurred with respect to discharges involving such service or technology, the diagnosis-related group (DRG) prospective payment rate otherwise applicable to such discharges under this subsection is inadequate.”
- The regulations at 42 CFR 412.87 specifies three criteria for a new medical service or technology to receive the additional payment —
- “The medical service or technology must be new”
- “The medical service or technology must be costly such that the DRG rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate.”
- “The service or technology must demonstrate a substantial clinical improvement over existing services or technologies.”
- Some transformative new devices, including “Qualified Infectious Disease Products (QIDP) and Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) can qualify under an alternative inpatient new technology add-on payment pathway, as per the regulations at CFR 412.87(c) and (d). “