Devices International Health Care Systems

Device Pricing Policies in the U.S. and Europe

How do public payers set device reimbursement in the U.S. and Europe?  A Health Affairs article by Sorenson, Drummond and Burns answers this question.

Compared to the United States, Europe more formally and consistently considers value to determine which technologies to cover and at what price, especially for complex, costly devices. Both the United States and Europe have introduced policies to provide temporary coverage and reimbursement for promising technologies while additional evidence of value is generated.


Europe previously focused mostly on the cost of devices, but now looks at value as part of its pricing determinations.

In Europe, the Conformité Européenne means that if a device is deemed safe functions according to the intended purpose by one country, it can be sold in any EU country. “In practice, however, institutional arrangements for financing differ among countries,which can result in divergent coverage, reimbursement, and pricing decisions for a particular device.” Most European countries use a health technology assessment to determine if their health plans will cover a device and if so at what price.

The European and U.S. health care systems only update prices occasionally and thus when new products hit the market, special procedures are used. Typically, policymakers create a new diagnosis-related group (DRG) or an increase in the reimbursement price or create a separate CPT code to temporarily price the device.

U.S. Public Payers

In the U.S., CMS will only cover new devices is they are approved by the FDA. Because most devices are used to treat existing conditions covered by the inpatient prosepective payment system’s (IPPS) DRG payments or the outpatient prospective payment system’s (OPPS) ambulatory payment classifications (APCs).

For some new devices that do not fall into existing DRGs or APCs, CMS conducts a national coverage determination (NCD) using research form CMS, MedCAC, AHRQ, physicians, the manufacturer and other sources. CMS can also use local coverage determinations (LCD) where fiscial intermediaries and carriers in certain regions can approve a device. If coverage is approved, CMS will often grant separate “add-on payments” (or “pass through payments” in the outpatient setting) to account for the high cost of new technology relative to the base diagnosis-related group payment and to encourage providers to adopt the technology. “Fewer
than ten technologies have been approved for add-on payments, while pass-through payments have been made for more than a hundred different device categories.”

U.S. Private Payers

Private payers in the U.S. often use Medicare NCDs as part of their own coverage decisions but not always.

WellPoint draws on comparative effectiveness evidence and on input from panels of medical experts to assign existing and new treatments to one of four value tiers. Both the Blue Cross Blue Shield Association and Kaiser Permanente have established institutional policies and dedicated funding for in-house or external programs that generate evidence to support coverage determinations and clinical practice guidelines.

Private insurers, however, rarely pay for devices directly, rather they are bundled into payments to hospitals and physicians for specific services.

Post Market Surveillance Trends

Some European countries—including Germany, Italy, Sweden, and the United Kingdom—have introduced registries, particularly in orthopedics and cardiology, to collect postmarket data.




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