“Investigational” Is Payer Code for “Coverage Denied”
By: Gil Bashe
Tags: Medical Devices, Health Insurance, Healthcare Technology, Insurance Claim Denial, Digital Health

“Investigational” Is Payer Code for “Coverage Denied”

Photo Credit: Christian Horz iStock — Getty Images

Right now, state and federal governments are throwing everything at COVID-19 with an urgency so great that the U.S. Food and Drug Administration (FDA) has issued Emergency Use Authorizations (EUAs) that tear down long-standing obstacles to telehealth, digital health, diagnostics and innovative medications that may prove effective against the virus. Payers have been quick to follow, making these innovations — sometimes labeled “investigational” — available on their plans.

With the eyes of the world upon them, payers know that when beneficiaries’ health and corporate reputations are at risk, innovation is welcomed, and the “investigational” label is not a barrier to urgently needed care. But, if you suffer from less-visible ailments, unrelated to COVID-19, you may be in trouble.

Outside the pandemic, “investigational” remains payer code for denying reimbursement. In the case of treatment for chronic conditions, even FDA-approved digital-health and connected devices languish on waitlists for formulary inclusion.

Considering the health-giving and money-saving benefits of digital-health innovations — whether connected devices, smartphone-controlled apps or virtual-reality tools — the idea that coverage is routinely denied by payers using the excuse that these products are “investigational” is outrageous. It’s time for change. When entropy and status quo become the banners to which the system rallies, we need new, bold approaches. We need national standards, rather than the hidden patchwork established by arbitrary payer committees. It’s time that sector leaders such as Apple, Google and Microsoft, trade groups such as HIMSS, private-equity sector leaders like Rock Health and others take up the cause for digital medical products and devices to gain clear paths to payer-formulary inclusion. That does not mean lowering the bar for safety and efficacy — it means making coverage standards clear.

Rock Health, the first venture fund dedicated to digital health, is bullish about the category and reported that U.S. digital health companies raised $5.4B in venture funding during the first six months of 2020 alone:

The strength of 2020 investment to date matches this moment of unparalleled demand and opportunity for digital health. Our optimism for tech-driven transformation is reinforced by the legitimization of business models, demonstration of strong clinical and economic outcomes, increasing FDA clearances and approvals, and industry efforts to develop scalable payment mechanisms for digital health products. However, we are just on the cusp of this momentum.

Yet without payers embracing the possibilities that digital health and connected devices bring to improving patient well-being, these innovations will not reach patients — nor provide return on investment for sponsors. We see innovators and private equity leaders engage regularly on the digital- health speakers’ circuit, but where are the leading-edge payers, talking about how digital therapeutics and devices are integrated into their patient-care vision and available for physicians to use as indicated? An “investigational” medical device requires clinical studies designed to evaluate its effectiveness and safety. In many cases, de novo (unique) devices approved by FDA for patient use require multiple clinical studies to pass muster. These devices are vetted scientifically by the intended Agency gatekeeper — so why do the doors to access remain locked by outside actors?

Eye-to-Eye with Payers

Payers may feel they have sufficient short-term, financial justification to deny medical device coverage. It might be that they have criteria in place that must first be met before these devices are added to formularies. If so, what are those guidelines? Of course, decision-making must take into account efficacy data, physician expertise and common sense; why can’t these standards be shared transparently? Payer decisions must become more transparent and more standardized so that patients and physicians know where they stand. Payers must be held accountable for their processes when it comes to formulary and reimbursement decisions and their impact on patients — both their wellbeing, and their doctors’ ability to diagnose and treat them.

For example: a child, diagnosed with Ehlers Danlos Syndrome with small-fiber neuropathy and hypermobility who presented with terrible, debilitating stomach pains and was barely able to eat. An academic medical center gastroenterologist in New York City requested use of an FDA-approved “pill camera” to track the child’s digestive function. This so-called capsule endoscopy has been in use for more than a decade and uses a micro wireless camera to take pictures as it journeys through the digestive system. Despite the child’s need, FDA approval and history of safe and successful use, the payer denied the request.

The GI specialist appealed, sending peer-reviewed, published, clinical studies to the payer case officer. Health insurance again refused coverage, calling the smart pill “investigational,” suggesting the formulary pathway of colonoscopy, endoscopy and imaging. With their child in pain, the weary parents paid “out-of-pocket” for the smart pill, which produced an immediate, clear diagnosis. Why was this necessary? And what would have happened to the child, had the family been unable to “go around the system” to access the needed technology? The payer review process is completely opaque — and riddled with inequity.

Overcoming (and Overhauling) the System

Reimbursement for de novo medical devices is an uphill struggle. In the payers’ war of attrition, denying reimbursement by calling something “investigational” works only for payers. It doesn’t work for physician experts seeking options for their patients. The solution to overcome payer obstacles is that physician groups, trade associations, venture capital funds and patient advocates must join forces to support digital- and connected-device access. The Centers for Medicare and Medicaid Services (CMS), Veteran Administration (VA) and FDA must also update direction to better define the payer landscape.

Recently, FDA expanded approval for one remote, electrical neuromodulation device that treats episodic and chronic migraine in children, 12 and older. “Having this drug-free migraine therapy available for the adolescent migraine community could positively impact patient compliance,” said Jennifer McVige, MD, a board-certified physician in pediatric neurology, adult and pediatric headache and neuroimaging at the DENT Neurologic Institute in New York. “Teens do not always want to take pills, and some may be unable to do so due to various drug-to-drug contraindications.”

Dr. McVige adds that as adolescents typically adapt easily to new technology: “[This is] an efficacious smartphone-controlled tech solution that can be worn inconspicuously and is the perfect design for teens who may unfortunately begin to experience migraine attacks.”

However, online parent chat boards cite overwhelming challenges in engaging the payer system to support this approach. “It’s investigational,” is the familiar retort to reimbursement requests. Like the smart pill mentioned above, migraine neuromodulation device options have undergone clinical studies. While some are approved for reimbursement by the VA, for a parent dealing with a child screaming with migraine pain, it’s more than a headache to get a payer to put the product on formulary — even after navigating the hoops of prior authorization through which physicians are willing to jump.

Physicians and Patients Need Greater Clarity

When German officials passed the “Act to Improve Healthcare Provision through Digitalization and Innovation” in 2019, regulators determined doctors should prescribe health apps and these should be reimbursed. As a result of the reimbursement policies, the relationship between digital and device manufacturers and the healthcare system ceased being adversarial. No longer pitted against each other, the payer system and device innovators serve mutually patient needs.

But unlike one-payer system countries, such as Germany, the U.S. insurance network is fragmented, which adds complexity for medical device innovators seeking coverage. In the U.S., each payer sets individual standards for coverage. There is no central group setting policy for device reimbursement and each mysterious payer meeting has unpredictable outcomes. Health insurance companies can therefore seem deaf to consumer needs when it comes to evaluating new devices and technologies that can address persistent medical concerns. Until the opaque walls thrown up by payers can be torn down, patients and their physicians are forced to expend huge amounts of time and energy to get answers.

“Commercial insurance coverage decisions lack transparency and processes for stakeholder engagement and are not appropriate for inclusion in Medicare’s reasonable and necessary definition.” That’s the response of the Advanced Medical Technology Association (AdvaMed), the leading device trade association, to the insurance lobbying industry’s objection to a proposed CMS rule accelerating access to FDA-approved medical devices for seniors. “CMS (proposed rule) is sending a signal to the entire innovation ecosystem that taking the risk to develop new breakthroughs will be rewarded if those devices receive FDA marketing authorization and improve patient care,” AdvaMed continued.

This adversarial relationship isn’t necessary. “Patients form the basis of the clinical need and, along with patient advocacy groups, can be important drivers of the adoption of new medical treatments,” writes Denise P. Clarke, senior consultant, Boston MedTech Advisors, in “From Approved To Covered — What Medical Device Companies Need to Know.” But even when patients help in clinical-trial design with physician experts, and FDA grants approval to market, payers have too many hidden ways to “just say no.” That shouldn’t be the case.

Innovation is only meaningful when patients have access to it. Checks and balances are essential, but, they must be transparent. Technology that can improve people’s health and lives — reduce their pain and suffering — cannot be kept out of reach forever. We consumers — the payer system’s customers — are becoming smarter and are more informed every day, and seeking ways to take action, together.

It is time for payers to recognize that physicians and patients should not have to scale walls of undetermined height to access medical innovation that can make them healthier — and which may well save payers more money in the long run.

[My appreciation to Finn Partners colleagues Arielle Bernstein Pinsof and John Bianchi for their comments and to Shira Friedman for her review.]