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Healthcare Reimbursement Scenario in China and Japan: A Nightmare for Medical Device Manufacturers

There are two fundamental working models for health insurance, the first being the out-of-pocket expenses paid by the insured, which is then reimbursed by the insurer and the second being the direct payment model, where the insurer pays the amount directly to the healtha2 care provider. Even though health insurance may seem like a relatively simple process, changes in country, governance, policies, laws, insurance agents, and healthcare acts make it a complicated affair. In the case of China and Japan, the majority of its population is covered under its universal healthcare system or insurance program. The government spends a lot of money in healthcare reforms in an attempt to bring the healthcare cost down and reduce insurance frauds with better healthcare reimbursement plans. A large chunk of this healthcare cost is spent in the sourcing and procurement of medical devices. The government tries to reduce the cost burden to the healthcare facilities by reimbursing a part of the cost of medical devices. But procurement processes for these medical devices is complicated as the reimbursement rates cannot be easily calculated.

The complexity of reimbursement plan poses a critical challenge for suppliers as well as the buyers for these medical devices. Here’s how Infiniti Research approaches this problem and offers a definitive solution to concerned stakeholders:

Understanding the Complexity of Medical Insurance in China and Japan

Japan

In order to reduce their overall government spending in the medical sector, the Japanese government has been lowering the reimbursement rates for medical devices over the past three years. They have also made attempts to promote domestically procured medical devices and doesn’t recognize CE markings or FDA certificate. Since there is a lack of private insurers in the Japanese market, suppliers are obliged to clear their products for medical reimbursement. Despite the difficulties and confusing classification of devices, if a manufacturer wants to list his device, they have to benchmark their prices with approved prices based on device classes.

China

China also assumes a similar stance to promote domestically procured medical devices. But, there exists an added complexity in the procurement of the medical devices as they employ tendering and bidding process, which is conducted at national, provincial, and hospital levels. Apart from the rigorous tender and bidding process and lengthy regulatory and reimbursement approval procedure, the system also lacks a standardization procedure as the reimbursement is based on a multitude of factors such as age, place of residence, class of medical device, type of hospital, average employee wages, and local level income. The larger portion of medical device expenses is paid by the patients, as a result of which the Chinese government is making efforts to increase coverage of their health insurance plans.

So Why Should Manufacturers be Concerned about the Reimbursement Scenario?

Gaining an understanding of the reimbursement scenario simplifies and speeds up the regulatory approval process. The manufacturera2 should have a thorough knowledge of medical device classification to benchmark imported medical products with domestic products. In some cases, it is essential to modify products to suit the local requirements and to comply with reimbursement standards. Since the government has made the procurement of imported devices unfavourable, foreign players can look for mergers and acquisitions to increase their survival chances and enjoy reimbursement benefits.

Challenges Faced by Foreign Medical Devices Suppliers in Tackling the Reimbursement Scenario

Japan

  • Presence of multiple regulatory bodies
  • Complicated medical device reimbursement application and review procedure
  • Preference towards domestically manufactured devices
  • Lack of knowledge on the dynamic Japanese medical devices market
  • Regular price revisions and lowered reimbursement rates
  • Lack of proper categorization of imported medical devices
  • Unclear grouping of medical devices for reimbursement
  • Requirement of local influence for survival

China

  • Complex reimbursement calculation methods
  • Low reimbursement for complex medical devices
  • Exclusion of multiple components by government insurance
  • Variation in deductibles and hospital tier level affects the reimbursement percentage
  • Locally manufactured devices having higher proportion of reimbursement
  • A host of factors such as age, income, city of residence, occupation, hospital locality, and family structure for consideration of reimbursement to patients

How Infiniti Research Equips Foreign Medical Equipment Suppliers to Tackle the Issue:

A lot of information is available regarding the medical reimbursement scenario in China and Japan, but it is either outdated, irrelevant, or impractical. The existing reports usually focus on a general overview of medical reimbursement scenario excluding the intricacies and don’t offer scope for new adjustment in regulatory changes. Infiniti Research addresses all these problems and provides a systematic solution for medical device manufacturers to provide product-wise reimbursement information.

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Information pertaining to medical devices is extracted from public registries, government, private databases, traditional media, internet scan, local language resources, and insurance aggregators to create a sound basis for reimbursement models. Research experts at Infiniti Research also assess the reimbursement scenario for each device and start by building models from scratch, making realistic assumptions on inputs from physicians and industry insiders. The models are then validated from KOLs, other doctors, insurance agencies, hospital departments, and regulatory bodies.

Related Articles:

Understanding the Health Economics Behind Medical Devices

Traditionally, health economics studies the manner in which limited resources are allocated to provide better health care services. It also takes into consideration how medical services can be better distributed among individuals and groups. Currently, the healthcare industry is becoming more cost-conscious, which is why medical devices manufacturers are looking for the best solutions that would bring down the cost of production without compromising on quality.

The two key focus areas for every medical device company, regardless of their size, are:

  1. Better access to the market
  2. Increase in reimbursement

Often small-sized organizations, adopt health economics to boost the sale of their tools and gain higher acceptability for their diagnostics. The major players, on the other hand, adopt health economics initiatives to reach the best value – for both medical devices as well as patient outcomes. Our health plan market intelligence studies show that manufacturers are sure to benefit if health economics is put into play right at the initial stages of product development. This strategy helps companies to commercialize their products in a better manner and thereby disrupt the market to their advantage.

Benefits of health economic analysis in the medical devices market

Health economics analysis (HEA) enables the manufacturers to gain a clear understanding of the direct as well as indirect costs of medical intervention. Different models are adopted to understand how a particular medical device would get a better access to the market as well as meet the manufacturer’s reimbursement goals. HEA provides a clear picture on the sustainability of the business strategy of any medical device company. It does this by examining:

  1. Cost-functionality: By taking technology costs and utility outcomes of the medical devices into consideration, HEA indicates how functional is the product for the patient. Cost-functionality also brings into perspective if the patient is keen to pay for high-cost devices without guaranteed high clinical benefits.
  2. Cost-minimization: Health economics is all about finding the best viable alternative medical solution at the least possible cost. For instance, if a low cost technology can provide the same benefit as an existing high-cost one – it is beneficial for both the patient and the manufacturer.
  3. Cost-effectiveness: Here the clinical outcome of the alternate technologies is examined in a detailed manner. While the cost of technology is measured in monetary terms, an increase in life expectancy determines the overall health benefits of the product.

The focus of healthcare systems across the globe is on reducing the cost of health services per person. Advances in medical technology and higher dependency on medical devices has made it imperative for those in the medical devices industry to take health economics into serious consideration.

Infiniti Research are leading providers of life sciences and health economics solutions

 

market segmentation

Bringing Market Access into Your Pharma Business Plan

Gone are the days when all a pharma company had to think about is the safety of its product to gain market access. Competition from companies who work in the same therapeutic area, focus on keeping the cost low, and the emergence of health technology assessment (HTA) has made it rather difficult for businesses to gain market access. Therefore, it has become critical for every pharma company to embed market access into its business model.

The ‘Awe-Factor’ in Market Access

Market access is one of those phrases which is used in everyday business, yet is quite tough to define. Perhaps this is one of the reasons why many are in awe of this concept. Simply put, market access is about:

  • Taking the value of your product to customers who influence its sales
  • Building a congenial healthcare environment to position your product
  • Understanding the impact of your product on wider healthcare market

Thus, what market access does is bring the right data together and communicate it to the focused customer group. It is also about taking the needs of your stakeholders into consideration and developing messages which will boost the chances of your product’s success. Once all these factors are taken care of, it becomes rather easy to obtain market access promptly.

Through higher segmentation of market types, adoption of engaging models to connect with consumers, and sophisticated go-to-market models at the local level, market access has synchronized public health, sales, and customer needs in a seamless manner. Often there is a gap between the knowledge of market access and pharma business plan, which is why organizations fail to leverage their products in the right fashion. Thus, there is a need to bridge the gap between market access information and your pharma business plan.

Infiniti’s Take on Inculcating Market Access into a typical Pharma Business Plan

One major issue with the majority of the pharma business plans is that it fails to integrate market access professionals with its various work functions. Often regarded as the bearers of bad news, market access leaders are not kept in the loop with business strategies. Thus, to power your pharma business plan with market access, the following steps needs to be taken:

  • Regular involvement of market access experts to improve the commercial value of the products
  • Align business strategies with hands-on information gained from the end consumers of the products
  • Regular interaction between senior executives of the pharma companies with their peers in HTA, insurance sector, and policy makers.

It is high time that organizations realize the importance of inputs from market access teams to build successful product launch and product renewal strategies.

IPTV Service

Health Economics for Medical Device Developers

The medical device industry is driven by optimistic device companies in the U.S., Europe, and Asia that seek innovation. With new innovations, the key stakeholders in the medical device market will keep funding research and new ideologies to bring about product differentiation. From the demand for self-medication to in-home healthcare services, the medical device industry is witnessing a change in preferences. Currently, the industry is going through a huge strategic change with respect to the development and launch of new products. And our health economists are here to help decode the trends for all the medical device developers.

Health economics plays a vital role in demonstrating the value of new products launched by medical device manufacturers. In general, there are two main areas to focus – Medical Device Reimbursement and Market Access. Involving health economics early in the process will help businesses assess product development opportunities. At Infiniti Research, our experts will leave you with compelling reasons to choose health economics for the medical device industry.

Let Data Do the Talking

Create a comprehensive reimbursement plan for medical devices with the help of health economics analysis from a payers’ perspective. A detailed health economics analysis will give you insights on providing quality care for more people by reducing costs. This will help decision makers to conclude how effective the proposed medical device is over the existing ones and its value for money. This will also prevent the development of technologies and devices that have doubtful value in the future.

Make Well-informed Decisions

Expenditure in the medical device industry is substantially growing. There is an extensive government intervention when it comes to norms and regulations to promote the efficient use of medical devices. This is where an economic evaluation of medical devices will keep every medical device manufacturer informed about the pricing and reimbursement plans. Not just that, it will demonstrate the cost-effectiveness of new and emerging medical devices to make sound decisions.

Rethink Reimbursement

Cost-effectiveness of medical devices plays a huge role when it comes to reimbursement. If there exists therapy A and a new therapy B and they both seem to have similar clinical outcomes, preference will be given to the therapy that is more cost efficient. However, this choice of treatment can be debated if therapy B is much more effective than A. As a medical device manufacturer, you can save time and money when you rethink reimbursement.

As a medical device manufacturer, it is a wise choice to analyze the health economics for the newly developed medical device. Right from assessing the commercial viability of the device to avoiding frugal innovations, the device will have its reimbursement strategies explored. Other than that, a developer can make a better, informed product design ruling out unpromising technologies.

Whether you’re a strategy expert or a decision maker, here is our case study.

Medical Reimbursement, Health Economics, and Market Access Mapping for Wound Care Dressings.
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Pain-Free Reimbursement Pathways for Wound Care Dressings

With path-breaking growth in innovative technologies, the medical device industry is here to stay. In terms of key products, this industry consists of medical devices like orthopedic instruments, surgical instruments, diagnostic apparatuses, stents and catheters, syringes and hypodermic needles and intravenous equipment. Hospitals and physicians use a wide array of medical devices, but it must be noted that it’s the public and private payers who reimburse and set the rules. Having the right medical device reimbursement strategy in place will help your business stay ahead of competitors by understanding the profitability of products. Not just that, it will also ensure that companies have a great revenue stream and profitability for new technologies.

In the wound care industry, getting insights into the right medical device reimbursement pathway is important for ameliorating sales growth in the future. Whether you’re venturing into the medical device industry or a medical device company, you can count on us to help you make the right decision. At Infiniti, we give you insights into the 5 top ways on how to work on your medical device’s reimbursement.

  1. Plan right from the design phase – Your medical device reimbursement assessment starts right when you design the type of wound care dressing. This is where our medical device reimbursement consultants will thoroughly analyze the impact on product design and its sales.
  1. Be prepared for the shortfalls – Fee-for-Service (FFS) medical reimbursement model and value-based purchasing (VBP) medical reimbursement are some of the limitations faced by the professionals in the industry.
  1. Think from a medical director’s perspective – If you’re having a tough time getting the right coverage for your wound care dressings, it’s time to feel their pain. Market your product to a payer. Anticipate their objections.
  1. Analyze country-specific reimbursement pathways – Though the reimbursement pathways are easier to navigate because they are often single-payer, government-based systems, coverage decisions are made by the local Medicare Administrative Contractors (MACs). Get your personalized analysis of location-specific reimbursement pathways here.
  1. Broaden your spectrum – When you develop a new wound care dressing product, try not to focus on the clearance only from the U.S. Food and Drug Administration (FDA). But, also try and meet requirements from Current Procedural Terminology (CPT, a registered trademark of the American Medical Association) and/or Healthcare Procedure Coding System (HCPCS) codes.

 

If you’re a medical equipment company, we understand how crucial it is to obtain coverage and funding for your healthcare products. At Infiniti, our medical device reimbursement consultants are here to assist you effectively. With the help of our market assessment plan, innovation tracking and stakeholder intelligence, you’re sure to get your medical device reimbursement plan in place and gain strategic insights into the wound care dressings industry.

Want to know how we helped a global medical device manufacturer improve ROIs for their products?

Read more here

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