Designing Medical Devices with Reimbursement in Mind

For many FDA-cleared devices, the nearly five-year wait for CMS reimbursement is a death sentence, often dooming startups before they can scale and ultimately hindering new treatment innovations. This article addresses frequently asked questions about the road to reimbursement for medical devices and how to consider reimbursement strategies from the inception of your product.

Understanding the Reimbursement Landscape

Q: How does the CMS reimbursement process differ from FDA clearance or approval?

A: Mainly, these entities are evaluating different aspects of the device. The FDA is charged with ensuring the device is safe and effective to bring to the public, while CMS determines if it’s medically reasonable and necessary to warrant reimbursement, each with its own criteria. In my experience, from a process perspective, the FDA provides more guidelines for developers and is more transparent about its process. CMS is less explicit about its process and how it define what is “medically reasonable and necessary.”

Another key difference is the FDA makes decisions for the entire nation, while CMS can make national decisions or local decisions by Medicare Administrative Contractors (MACs), which can vary by region, potentially leading to reimbursement decisions that vary by location.

Q: What are the biggest challenges startups face in securing a billing code, CMS coverage, payment, and ultimately reimbursement?

A: The biggest hurdles are the long timelines and lack of transparency in the process. For startups, this makes it especially difficult to provide investors with clear guidance on requirements. It’s unlike the FDA, which you can meet with to ensure your actions are aligned with what they’re looking to evaluate. CMS is more difficult to schedule meetings with and rarely provides anything in writing. Their lack of available guidelines can make their review process more challenging to navigate.

Q: How do private payers approach reimbursement differently from CMS?

A: Private payers often follow the lead of CMS; if CMS makes a decision, they will likely follow, but it’s not a hard-and-fast rule. Private payers place a larger emphasis on the impact on overall healthcare costs, which is not a factor CMS considers.

Strategic Device Development for Reimbursement

Q: What are the key reimbursement considerations that device developers should address early in the design process?

A: Device developers should identify the data needed to support reimbursement early on, as this will shape the clinical research and validation strategy. FDA, CMS, and private payers each evaluate technologies through different lenses. For CMS in particular, the data should demonstrate that the device is medically reasonable and necessary, not just a helpful addition to clinical workflow.

Whenever possible, designing a product that aligns with existing codes—with established payment and coverage—can simplify the reimbursement process. However, this may limit how novel the product is, as it builds on pathways already established by similar technologies.

Q: What role does real-world evidence play in securing reimbursement?

A: Real-world evidence (RWE) is becoming increasingly important in reimbursement discussions, though its role is still evolving. There’s growing support from both payers and device developers to use RWE, particularly to demonstrate clinical utility and adoption in practice.

For example, when seeking a Category I CPT code through the AMA, one requirement is demonstrating widespread use—an area where RWE can be especially valuable. However, the main criticism of RWE is its lack of controlled variables, making it less rigorous than randomized controlled trials. Still, as data collection and analysis methods improve, RWE is playing a larger role in supporting both coding and coverage decisions.

Q: How do FDA regulatory requirements and CMS reimbursement expectations overlap or conflict?

A: For startups, navigating FDA and CMS expectations can be a major challenge—and a costly one. While the FDA focuses on safety and effectiveness under controlled conditions, CMS is asking a different question: Is your device reasonable and necessary for routine use in the Medicare population? That means the clinical data you generate for FDA approval may not be enough to secure reimbursement.

Programs like Parallel Review and the Breakthrough Devices Program were created to help align these pathways, allowing earlier engagement with CMS during the FDA process. But in practice, these programs have had mixed results. Many startups find that the promised efficiency gains are limited, and CMS may still require additional studies after FDA clearance, often focused on real-world outcomes, comparative effectiveness, or cost impact.

The consequence? Startups may need to design and fund separate evidence-generation efforts just to meet CMS’s bar, adding millions in cost and delaying market access by years. For early-stage companies with limited resources, understanding and planning for both FDA and CMS expectations from the start is critical to avoiding these costly delays.

Navigating the Reimbursement Pathway

Q: What factors influence CMS’s decision to cover a new device?

A: CMS’s coverage decisions can be difficult to predict. Even when a company provides all the requested data, coverage isn’t guaranteed, and the criteria CMS uses to determine what is “reasonable and necessary” are often not fully transparent.

Compounding this challenge is the fact that CMS has limited resources, which restricts how many new technologies they can evaluate in a given timeframe.

Coverage decisions also vary geographically. In addition to national coverage determinations (NCDs), CMS relies heavily on local MACs to make local coverage determinations (LCDs). As a result, the same device with the same supporting data may be covered in one region but denied in another—adding another layer of complexity for device developers trying to scale nationwide.

Q: How can companies accelerate the reimbursement timeline?

A: One of the most effective ways to speed up reimbursement is to design products that leverage existing codes and coverage pathways. This can reduce friction and shorten timelines, but it often means building on what already exists, rather than introducing something truly novel. Unfortunately, the current reimbursement system tends to favor these “me-too” products, which can discourage breakthrough innovation.

To accelerate reimbursement without compromising innovation, companies should engage with both CMS and private payers as early and frequently as possible. Early dialogue helps uncover specific concerns and data expectations, enabling you to design clinical trials that align with reimbursement requirements from the outset. Proactively building these insights into your development strategy is key to avoiding costly delays down the line, but this is often easier said than done.

Brittany Berry-Pusey is the co-founder and COO of AI cancer-mapping startup Avenda Health.