Getting Insurance Coverage for Your Digital Health Product
Cameron Jacox is the founder of Rocket Digital Health, the foremost digital health scale consultancy. Go-to-market is hard in healthcare, and we believe that you don’t need to reinvent the wheel to bring your brilliant invention to market. Having helped scale 13 digital health startups, including for 4 years as Chief Growth Officer at Lark Health from Series A to Unicorn status, Cameron & his team work with select startups to bring growth strategy to bear to beat their growth goals and catch their stride.
Reimbursement is an important and often overlooked subject in digital health. You might have spent a lot of time designing, building and marketing your product, but how will you actually get paid? And how do insurers pay for your product? The answer lies in reimbursement.
What is reimbursement?
Reimbursement is a significant challenge for digital health because it involves a third party paying for products and services. The product or service must be approved by a government body and meet specific criteria, usually based on its efficacy.
For example, if you're in the business of manufacturing breathalyzers that can detect alcohol consumption in drivers before they get behind the wheel of their cars, your product must go through rigorous testing with the Federal Drug Administration (FDA) to make sure it's accurate enough to be used as evidence in DUI cases.
Once approved by the FDA, manufacturers are able to offer this technology directly to consumers through their own websites or elsewhere online—and insurance companies may cover the cost of these devices or services if they're deemed necessary for treating an addiction issue or other condition that requires immediate attention (e.g., diabetes).
What can you get reimbursed for?
If your company wants to offer a digital health product through a health insurance reimbursement, you’ll need to know which products are covered and what kind of reimbursements you can expect. When it comes to getting reimbursed for your digital health product, there are two main types: pharmaceuticals and medical devices. Pharmaceuticals include things like prescription medications, but they also include over-the-counter medications like bandages or vitamins. Medical devices are anything that is not a prescription medication but still helps patients manage their symptoms—such as blood glucose monitors or pacemakers.
In general, if your app involves providing treatment for any condition with a diagnosis code from the International Classification of Diseases (ICD), then it qualifies as a medical device and may be eligible for reimbursement through private insurance companies or government programs such as Medicare/Medicaid/VA Health Care Program (VHA).
How do digital health products get reimbursed?
The reimbursement process for digital health products is similar to that of traditional medical devices. The key difference is the reliance on clinical data, which can be difficult or impossible to obtain with some products.
In order for your product to be reimbursed by insurers, it must provide significant clinical value in comparison with existing treatments. This means that you must prove:
Your product has a superior track record when compared with other similar products;
Your product provides a more affordable option than existing treatments; and/or
It's important enough to warrant coverage on top of other treatments that are already covered by insurance companies (i.e., if an insurer covers chemotherapy drugs but not anti-nausea medications, they might cover your anti-nausea medication).
Which digital health products have gotten reimbursements?
There is a growing list of digital health products, apps and devices that have received reimbursement or are currently seeking it. The following are some examples:
A product called mHealth Coach was developed to help patients with diabetes manage their disease and reduce the need for hospitalization. It is being used by over 100,000 patients in North America, Europe and Australia.
The insurer BlueCross BlueShield of Tennessee has already reimbursed these costs for its members who use mHealth Coach if they have type 2 diabetes. Additionally, Humana Health has reimbursed $5 million worth of provider fees relating to this product since 2015 (source).
The company's goal is to grow its market share while maintaining profitability over time (source). As such it will likely look toward other insurers as well as Medicare/Medicaid programs when seeking reimbursement for its products going forward since these payers tend not only reimbursing more than commercial plans but also reimburse at higher rates than most private payers do (source).
I'm sure there are many other digital health companies out there looking into similar opportunities so don't feel like yours is alone!
Key takeaways
Reimbursement is an important and often overlooked subject in digital health.
Do your homework, talk to insurers and start small.
There are many different types of payment models and which do we recommend?
Reimbursement is an important and often overlooked subject in digital health.
Although most people are aware that digital health products are reimbursable, the reimbursement process is complex and can be time consuming. In addition, the reimbursement process for digital health products differs from other medical equipment. The reimbursement rate depends on the type of product and its intended purpose. For example, if you have a smartphone app that tracks heart rate data or a wearable device that measures blood pressure, it will probably be covered under Medicare Part B (which covers services such as outpatient care). On the other hand, if you're selling an app that helps patients manage their diabetes or manage symptoms of depression and anxiety through cognitive behavioral therapy (CBT), then these products might not qualify for reimbursement due to insufficient evidence regarding their efficacy in treating chronic conditions like diabetes or depression/anxiety disorders.
What is reimbursement?
Reimbursement is the process of getting paid for a product or service that you provide to your customer. It’s a way to get paid by insurance companies and government programs like Medicare, Medicaid, or Tricare.
Reimbursement is also a type of payment that customers can get from their employers if they have health benefits through their workplace. In this case, the employer pays out some amount towards an employee's health expenses each year, which becomes part of the overall cost of running the business.
Who pays for digital health products?
Insurance companies, employers and government programs are the most common sources of reimbursement for digital health products.
Medicare, Medicaid, self-pay and other private insurance companies will also reimburse you for your digital health product if it's prescribed by a doctor or therapist.
What factors affect reimbursement of a digital health product?
When determining whether your digital health product is eligible for reimbursement, you should consider the following factors:
What problem are you trying to solve?
Who is your target audience?
What is the solution? How does it work?
What is the cost benefit ratio of using this product over others on the market (if any)?
Are there risks or benefits associated with using this product that warrant further investigation by doctors and patients alike (for example, could this condition leave me open to future health problems such as cancer)?
It's also important to remember that no one knows what tomorrow brings—so if something goes wrong with my new treatment plan today because of some unforeseen circumstances like an allergic reaction, how will I feel about putting my faith into technology again when there’s so much risk involved with initial adoption.
How do I get reimbursed?
You can also get reimbursement for digital health products by talking to your insurance provider. If you have a copay, you will be responsible for a percentage of the cost.
If your insurance provider does not offer coverage for the product, contact the company that created it and request a quote from them. The quote is important because it will tell you how much money they'll reimburse upfront if you choose to buy their product with their services.
Once again, compare both quotes with each other and decide which one works best for you based on your needs as well as financial situation (keeping in mind that there are usually limits on how much money an insurance company will pay per year towards health-related expenses). If you do choose this option, call back into your insurer's customer service line to let them know of your decision so they can remove any restrictions they may have placed on previous claims made during this calendar year; otherwise those limits may still apply even after switching providers!
What are the different types of payment models and which do we recommend?
Pay-per-use: This is the most basic model, where you charge clients for each use of your product. While it can be good to have some pay-per-use models in place (especially if you need to make a profit), we recommend that this is not the primary model for reimbursement and should only be used in conjunction with another model.
Pay-for-performance: In this model, you charge clients based on their success or improvement with your digital health product. For example, if your client has an increase in their cholesterol levels after using your product then they will be charged more than someone who saw no change at all. We recommend using this as a secondary source of income as well because it requires a lot more work from both parties than other models do but does provide extra incentive for both parties involved since there is more risk involved for you as well as them!
Pay-for-success: This is similar to pay-for performance except that instead of charging based off how much improvement there was between before and after using the product; instead it charges based off how close together those numbers were at any given point during treatment which could mean charging less if there isn’t much change over time or even none at all while still providing good value points back every time something gets done right!
Takeaway: Do your homework, talk to insurers and start small.
The first step in the reimbursement process is doing your homework. That means researching what insurers will or won’t pay for, and talking to the company that insures you.
Next, start small. The market will be more receptive if you can demonstrate that patients benefit from your product before moving on to larger reimbursements.
Conclusion
We hope this post has given you some insight into how reimbursement works, what factors affect it and how to get started. We would love to hear from you if there are any areas where we could be more specific or helpful.