Long-term growth and profitability in the medical device market, along with the aging population and managed care initiatives to reduce acute care costs, are driving the growth of home care and the continual development of home health care medical devices. Disease man-agement and new initiatives such as CMS-CCIP (Centers for Medicare and Medi-caid Services–Chronic Care Improvement Program) are also contributing factors.

The Food and Drug Administration’s Center for Devices and Radiological Health (FDA’s CDRH) regulates medical devices to provide reasonable assurance of their safety and effectiveness. By FDA definition, a home health care medical device (HHMD) is any product or equipment used in the home environment by persons who are ill or have disabilities. Examples of HHMDs are ventilators and nebulizers, wheelchairs, infusion pumps, blood glucose meters, oxygen delivery devices, continuous positive airway pressure (CPAP) devices, apnea monitors, and other home monitoring devices. During the next decade, the industry will continue to grow at double-digit rates thanks to new designs and novel products that reduce hospitalization stays and decrease cost burdens on patients and insurers.

Growth Trends
The ratio of dollars spent on hospital care to home care was 279:1 in 1970, and by 1991 the margin had drastically been reduced to 29:1. In 1987 approximately $4 billion was spent on all US home care. That number increased to approximately $22 billion by 1994 and continues to rise. The resultant acute care shift (lower length of stay or LOS) and quicker discharge to lower levels of care (and home care) facilitate patients’ transition to home sooner with more complex medical equipment.
Substantial new product development in 5 to 10 years will focus on integrated patient medical information systems, prevention-oriented devices, consumer health (self-care) models, noninvasive sensors, smart devices, computer-aided medical decision-making devices, and data analysis tools for medical decisions with wireless connectivity. In addition, the home health care products market is expanding rapidly due to the aging population, a corresponding increase in chronic illnesses and diseases, the expense and reduced length of acute care hospital stays, advances in new home medical technologies, and patient demand for home-based products and services.

According to Medtech Insight, the overall market for these services in the United States is expected to increase from $56 billion in 2003 to $112 billion in 2012. One of the fastest-growing segments will be an obstructive sleep apnea therapy product. Sales are projected to increase from $365 million in 2003 to more than $636 million in 2007, a compound annual growth rate of nearly 15%.

Product Development and Reimbursement
Is new always better? The answer may be different depending on whom you are talking to and “better” is of course relative depending on where the interests are. To obtain the right reimbursement for a new HHMD, close collaboration among stakeholders (manufacturers, providers, physicians, payors, and consumers) must occur. The FDA has implemented a similar process of collaboration within their organization to promote and protect the public health. The process is called the Total Product Life Cycle Model (TPLC). The TPLC attempts to educate and partner with staff and stakeholders and use scorecards to organize the data. The FDA uses multiple pilot projects to accelerate implementation, realign center incentives, and harmonize with CDRH and international regulations.

It is incumbent upon us as an industry to collaborate with policy makers and educate them on our essential value in the continuum of care. Product development and evaluation is an excellent opportunity to support collaboration across the health care continuum.

Customer Feedback
Providers and their customers (consumers, payors, physicians) are the best source of feedback to evaluate the benefits and risks of new devices. Collaboration between stakeholders can differentiate a product and demonstrate cost savings over other options, providing stronger reimbursement data. We can collaboratively establish a strategic reimbursement plan and conduct cost modeling early in the product development process to increase a product's chances for success in the marketplace and defend for new HCPCS (Healthcare Common Procedure Coding Systems) codes when appropriate. So, how early should a manufacturer consider reimbursement?

• The manufacturer should consider reimbursement as early as possible. If the product is to be successful in the market, it is essential that a manufacturer work with home health care providers (HHCPs) who are familiar with reimbursement and have close relationships with physicians, payors, and patients—prior to bench testing and clinical trials. For example, if a company is developing a new technology, team members must be sure that they are focusing on a clinical situation where reimbursement will be favorable. Engineers and sales and marketing personnel may not be thinking about clinical and economic advantages, costs, and payor issues, and the HME provider can help guide the team at this early stage.

• What are the steps to developing a reimbursement strategic plan? One of the success factors is ensuring that design controls are implemented correctly. HME providers can provide feedback early to assure the success and acceptance of the product. The issues that the design controls address include manufacturing, quality control, and design requirements that meet the needs of the end user.

• What makes an effective reimbursement assessment? It is important for all stakeholders—patients, physicians, clinicians, HHCPs, and payors—to understand the issue. They all have their own distinct motivations. While some technologies may be valuable because they save the clinician time (and possibly reduce costs), others improve health and economic outcomes. Technologies may decrease hospital LOS and these advantages must be well documented. A product that has negatives for any of the key stakeholders will face reimbursement and/or market resistance.

• How would a manufacturer ensure that the economic data it is collecting is appropriate and valuable? As with clinical safety and efficacy studies, patient populations and health outcomes are important. However, economic outcomes are additional considerations. Defining costs is a problem, so any study needs to identify a credible source for the economic data. And again, collaboration is all important.

• The manufacturer and product development team must be familiar with CMS policies that impact the product. A complete competitive analysis should be conducted to determine both the clinical and economic advantages of the new device versus existing predicate devices. Additional questions to consider: Will there be additional benefit to the patient? Does the device meet a clinical need that no other device meets? Will there be an added cost to providers? Who/what will reduce cost if the technology is adopted? What is the physician or end user’s attitude toward the technology? The goal of the planning process at this stage is what would be expected for product performance in a peer-reviewed publication, industry journal, or white paper. This process is essential to begin in our efforts to develop data that quantifies our essential value in the continuum of care.

• How is the data and assessment used to influence payor policy? It is used in applications for new HCPCS codes, applications for pass-through payments under the inpatient or outpatient prospective payment systems (PPS), and presentations to local or regional carriers to support coverage decisions.

As technology improves, we must collaborate as an industry to develop quality products that meet the needs of our patients while positioning ourselves to produce cost-efficient medical devices that we can defend to get new HCPCS codes with appropriate reimbursement. While doing this, we must assure patient safety and quality of care while seeking to reduce product recalls.

Vernon R. Pertelle, MBA, RRT, CCM, is director of respiratory services for Apria Healthcare Inc, Lake Forest, Calif.