Reimbursement Strategy for Diagnostics and Devices
Regulatory clearance allows a product to be marketed. Reimbursement determines whether someone can afford to adopt it at scale. For diagnostics and many medical devices, those are separate problems that should be developed in parallel.
The Four Reimbursement Questions
A practical reimbursement assessment begins with four connected questions.
- Who pays?
- What code or payment mechanism is used?
- Under what conditions will the payer cover the product or associated procedure?
- Is the payment sufficient to support adoption and the business model?
Coding Is Not Coverage
Having a billing code does not guarantee that a payer will cover the product, and coverage does not guarantee attractive payment. Founders should avoid using the word 'reimbursement' as if it were a single milestone.
Understand Site of Service
Economics can change depending on whether care occurs in a physician office, hospital outpatient department, inpatient setting, laboratory, ambulatory surgery center, or home. The same product can create different incentives in each environment.
Build the Value Proposition for the Payer and Provider
Clinical benefit matters, but economic evidence often matters too. A diagnostic may avoid an unnecessary procedure, shorten time to treatment, or improve therapy selection. A device may reduce operating time, complications, length of stay, readmissions, or resource use.
Reimbursement Can Change Product Strategy
If payment depends on a particular setting, code, test category, or clinical pathway, those constraints can influence intended use, trial design, price, launch sequence, and the customer you prioritize.
Plan Evidence before the Pivotal Study
Whenever possible, identify the clinical and economic data that payers and provider systems will eventually expect before the expensive validation program is locked.
BYB Takeaway
Do not treat reimbursement as a launch activity. Treat it as a product-development input that can affect evidence, pricing, workflow, adoption, and even the initial indication.
A cleared product without a payment pathway can still be commercially stranded.
