Medical Device Reimbursement: The Complete Guide to Coding, Coverage, and Payment

Why Reimbursement Matters for Medical Device Commercialization

Regulatory clearance or approval is a necessary condition for commercializing a medical device. It is not a sufficient one. A device that the FDA has cleared or that carries a CE mark but lacks a reimbursement pathway is a device that hospitals cannot afford to buy, physicians have no financial incentive to use, and patients cannot access. Reimbursement is the bridge between regulatory authorization and real-world adoption.

This is the single most underappreciated reality in the medical device industry, especially among startups. A first-time founder will spend two years and several million dollars pursuing 510(k) clearance, celebrate on the day the clearance letter arrives, and then discover that no hospital will purchase the device because there is no billing code, no coverage policy, and no mechanism for the hospital to get paid for using it.

The numbers make the case. In the United States, CMS (the Centers for Medicare & Medicaid Services) and private health insurers together control the flow of over $4 trillion in healthcare spending annually. Hospitals operate on thin margins — typically 2% to 5% — and every purchasing decision is filtered through the question: Will we get reimbursed for this? A device without a clear reimbursement pathway is, from the hospital's perspective, a cost center with no offsetting revenue.

This guide covers the complete reimbursement landscape: US coding systems, CMS and private payer coverage pathways, hospital purchasing economics, European health technology assessment, health economics and outcomes research, and the strategic timeline for building a reimbursement case. Whether you are a startup founder, a regulatory affairs professional expanding into market access, or a commercial leader preparing for launch, this is what you need to know.

The US Reimbursement Landscape

How Money Flows in US Healthcare

Before diving into coding and coverage, it helps to understand the basic mechanics of how healthcare is paid for in the United States.

A patient receives a procedure using a medical device. The healthcare provider — typically a hospital or ambulatory surgery center (ASC) — submits a claim to the patient's insurer. That insurer is either a government program (Medicare, Medicaid, TRICARE, VA) or a private payer (UnitedHealthcare, Anthem, Aetna, Cigna, Humana, and hundreds of regional plans). The insurer adjudicates the claim and pays the provider according to a predetermined rate or a negotiated fee schedule.

For the claim to be processed, three things must be in place:

1. Coding — A standardized code that identifies the procedure performed and/or the device used
2. Coverage — A policy from the payer stating that the procedure or device is covered (i.e., the payer will pay for it)
3. Payment — A defined payment amount or methodology

If any of these three elements is missing, the provider does not get paid. And if the provider does not get paid, the provider does not buy your device.

The Payer Mix

Understanding who pays is critical to prioritizing your reimbursement strategy.

Payer	Approximate % of US Health Spending	Key Characteristics
Medicare (CMS)	~21%	Covers 65+ and disabled; sets the benchmark that private payers often follow
Medicaid (CMS + states)	~17%	Covers low-income populations; administered by states with federal oversight
Employer-sponsored private insurance	~32%	Largest single segment; negotiated rates between payers and providers
Individual/marketplace plans	~6%	ACA marketplace plans; vary by state
Other government (VA, TRICARE, CHIP)	~5%	Military, veterans, children's health
Out-of-pocket	~10%	Patient copays, deductibles, and self-pay
Other private (workers' comp, etc.)	~9%	Specialty coverage

Medicare is disproportionately important for medical devices — not because it is the largest payer by dollar volume (employer-sponsored insurance is), but because it sets the standard. Private payers routinely look to CMS coverage decisions as a reference point for their own policies. A favorable CMS National Coverage Determination (NCD) creates a downstream cascade of favorable private payer decisions. Conversely, a CMS non-coverage decision makes private payer coverage an uphill battle.

Medical Device Coding Systems

Coding is the language of reimbursement. Every claim submitted to a payer must include standardized codes that describe the diagnosis, the procedure, and — in some cases — the specific device. The US healthcare system uses multiple overlapping coding systems, each serving a different purpose.

CPT Codes (Current Procedural Terminology)

CPT codes are maintained by the American Medical Association (AMA) and describe medical procedures and services. When a surgeon performs a procedure using your device, the surgeon's office or the hospital bills for that procedure using a CPT code.

• Format: 5-digit numeric codes (e.g., 33285 for insertion of a subcutaneous cardiac rhythm monitor)
• Maintained by: AMA CPT Editorial Panel
• Updated: Annually, with new codes effective January 1. For 2026, the AMA introduced 288 new CPT codes, 46 revised codes, and 84 deleted codes — reflecting rapid advances in digital health, remote monitoring, AI-enabled diagnostics, and minimally invasive surgery.
• Used by: Physicians, hospitals (outpatient), ambulatory surgery centers

CPT codes are organized into three categories:

CPT Category	Description	Example
Category I	Established procedures widely performed by physicians	33285 — Insertion of subcutaneous cardiac rhythm monitor
Category II	Tracking/performance measurement codes (optional, informational)	0001F — Heart failure composite measure
Category III	Temporary codes for emerging technology/procedures	See examples below

For medical device companies, Category III CPT codes are often the first step. These are temporary codes assigned to new and emerging procedures that do not yet meet the criteria for a Category I code (which requires evidence of widespread clinical use). A Category III code typically has a five-year lifespan, after which it must either be converted to a Category I code or it sunsets.

Recent Category III CPT Code Examples for Medical Devices

To make the Category III pathway concrete, here are real examples of Category III codes assigned to emerging medical device technologies in 2025–2026:

Code(s)	Description	Device/Technology Area
0951T–0955T	Totally implantable active middle ear hearing implant procedures	Implantable hearing devices
0970T–0971T	Ablation of breast tumors	Tumor ablation devices
1004T–1009T	Implantable sub-scalp continuous bilateral electroencephalography monitoring	Neuromonitoring implants
1042T	Implantation of absorbable urologic scaffold during bladder neck/urethral reconstruction	Regenerative/absorbable scaffolds
1044T–1049T	Skin substitute application codes for wound management	Regenerative tissue technologies
0704T–0706T	Prescription digital behavioral therapy (FDA-cleared) — setup, monthly management, and extended management	Prescription digital therapeutics (PDTx)
0689T–0690T	AI-enabled ultrasound tissue characterization	AI-enabled diagnostic devices
0787T	AI-based cardiac function analysis	AI-enabled cardiac imaging

The September 2025 CPT Editorial Panel meeting alone added 28 new Category III codes (1026T–1053T). Device companies should monitor AMA Panel meetings (held three times per year — February, June, and October) for codes relevant to their technology area.

Key insight for device companies: Category III codes often lack established payment rates — many MACs assign no fee or a nominal fee. This means that even with a Category III code, your device may not be adequately reimbursed until the code is converted to Category I with RVU-based payment. Plan your commercial strategy around this reality, and pursue Category I conversion as soon as your clinical evidence supports widespread use. Note also that some Category III codes — particularly for AI-enabled services — have recently been upgraded to Category I (e.g., AI-assisted lung nodule detection on chest CT and AI-flagged stroke detection on brain imaging were upgraded for the 2026 CPT code set), establishing RVUs and creating more predictable reimbursement.

Key point: A CPT code describes a procedure, not a device. Your device is used during a procedure that is billed with a CPT code. In some cases, an existing CPT code adequately describes the procedure your device enables. In other cases, no existing code captures what your device does, and you need to apply for a new one.

HCPCS Codes (Healthcare Common Procedure Coding System)

HCPCS (pronounced "hick-picks") is a two-level coding system maintained by CMS.

• Level I: Identical to CPT codes
• Level II: Alphanumeric codes (one letter followed by four digits, e.g., L8614) that identify products, supplies, and services not covered by CPT codes — including specific medical devices, durable medical equipment (DME), prosthetics, orthotics, and supplies

HCPCS Level II codes are critical for devices that are billed separately from a procedure — for example, implantable devices, prosthetic limbs, or durable medical equipment used at home.

HCPCS Level II Code Range	Category
A0000–A0999	Ambulance and transport
C1000–C9999	Outpatient PPS (hospital outpatient devices and services)
E0100–E9999	Durable medical equipment (DME)
K0000–K0999	DME (temporary codes)
L0100–L9999	Orthotics and prosthetics
Q0035–Q9999	Temporary codes (miscellaneous)

The C-codes (C1000–C9999) are particularly important for new medical devices used in the hospital outpatient setting. CMS assigns C-codes to devices and procedures that need separate payment under the Outpatient Prospective Payment System (OPPS). These codes are used for pass-through payment — a mechanism that provides additional payment for new, high-cost devices beyond the standard APC (Ambulatory Payment Classification) rate.

ICD-10 Codes (International Classification of Diseases, 10th Revision)

ICD-10 codes describe diagnoses and medical conditions — the why behind the procedure. Every claim must include an ICD-10 diagnosis code that justifies the medical necessity of the service provided.

• ICD-10-CM: Clinical Modification, used for diagnosis coding in the US
• ICD-10-PCS: Procedure Coding System, used for inpatient procedure coding

ICD-10 codes matter for your device because coverage policies are often tied to specific ICD-10 diagnoses. A payer may cover your device for diagnosis A but not diagnosis B. Understanding which ICD-10 codes are linked to your device's covered indications is essential for ensuring claims are paid.

DRG (Diagnosis-Related Groups) — Inpatient Hospital Payment

For patients admitted to a hospital, Medicare pays the hospital a fixed amount per admission based on the DRG — a classification system that groups similar clinical conditions and procedures into payment categories.

• Maintained by: CMS
• Used for: Medicare inpatient hospital payment under the Inpatient Prospective Payment System (IPPS)
• Key mechanism: The hospital receives a single bundled payment for the entire admission, regardless of how many days the patient stays or how many resources are consumed

This has a direct implication for medical devices used in the inpatient setting: the cost of the device is included in the DRG payment. If your device costs $30,000 and the DRG payment for the procedure is $25,000, the hospital loses $5,000 on every case. No amount of clinical superiority will overcome that math in a hospital CFO's office.

For new, high-cost technologies, CMS offers New Technology Add-on Payment (NTAP), which provides additional payment on top of the standard DRG for cases that use qualifying new devices. NTAP is a critical pathway for expensive novel devices and is discussed in detail below.

APC (Ambulatory Payment Classifications) — Outpatient Hospital Payment

For procedures performed in the hospital outpatient department, Medicare pays based on APCs under the Outpatient Prospective Payment System (OPPS).

• APCs group procedures with similar clinical characteristics and similar costs
• Each APC has a fixed payment rate
• Unlike DRGs, a single outpatient visit can generate multiple APC payments if multiple procedures are performed

Pass-through payment for new devices is available under the OPPS. A new device can receive transitional pass-through status, which provides additional payment beyond the APC rate for two to three years, giving hospitals financial support while the technology is new and its costs are being established.

ASP (Average Sales Price) — Physician-Administered Drugs and Biologics

While ASP is primarily relevant to drugs and biologics rather than devices, some combination products (device + drug or device + biologic) may involve ASP-based payment. The ASP methodology pays providers based on the manufacturer's average sales price plus a percentage markup (typically ASP + 6% under Medicare Part B).

How ASP Payment Works in Practice

Manufacturers are required to report quarterly sales data — including all discounts, rebates, and price concessions — to CMS through the ASP Data Collection System. CMS then calculates the ASP and publishes ASP Pricing Files that determine Medicare Part B payment for each applicable product.

Key mechanics for device companies to understand:

• Combination products: If your device is combined with a drug or biologic (e.g., drug-eluting implants, drug-coated balloons, biologic-device composites), the drug/biologic component may be reimbursed under ASP + 6%, while the device component is reimbursed through the applicable facility payment system (DRG for inpatient, APC for outpatient). Understanding which component drives the economics — and which reimbursement methodology governs — is essential for pricing strategy.
• Bona fide service fee (BFSF) requirements: Effective January 1, 2026, CMS finalized new requirements for manufacturers to document fair market value for service fees paid to distributors and group purchasing organizations. Fees that do not qualify as bona fide service fees must be treated as price concessions — reducing the reported ASP and, therefore, the Medicare payment rate. Device-pharma combination product manufacturers must track these requirements carefully.
• Skin substitute reclassification: As a notable example of shifting payment methodologies, CMS in the CY 2026 final rule reclassified most skin substitute products (many of which are device-biologic combinations) from ASP-based payment to payment as incident-to supplies under the Physician Fee Schedule or OPPS. This reclassification significantly changed the economics for these products and illustrates how CMS can restructure payment methodologies for product categories that blur the device-drug-biologic boundary.

IPPS and OPPS Payment Rate Mechanics — What Device Companies Need to Know

Understanding how CMS sets and updates IPPS and OPPS payment rates is important for modeling your device's financial impact on hospitals.

IPPS (Inpatient Prospective Payment System) Rate Setting

CMS updates IPPS rates annually through the IPPS Final Rule, effective October 1 (the start of the federal fiscal year).

• Market basket update: CMS applies a hospital market basket update reflecting inflation in the costs hospitals face, reduced by a productivity adjustment mandated by the Affordable Care Act. For FY 2026, the net market basket update is 2.6% (3.3% gross, minus a 0.7% productivity adjustment).
• DRG relative weights: CMS recalibrates the relative weights assigned to each MS-DRG annually based on hospital cost report data and claims data. If the cost profile of cases in your device's DRG changes — for example, because a new, expensive technology is increasingly used — the DRG weight and payment will eventually adjust, but with a significant lag (typically 2 to 3 years of cost data are needed).
• NTAP budget impact: For FY 2026, CMS estimates that additional payments for inpatient cases involving new medical technologies (NTAP) will increase by approximately $192 million — driven by the continuation and expansion of NTAP for several technologies. Total IPPS operating and capital payment rate changes are expected to increase hospital payments by approximately $5.0 billion for FY 2026.

OPPS (Outpatient Prospective Payment System) Rate Setting

CMS updates OPPS rates annually through the OPPS Final Rule, effective January 1 (the calendar year).

• Conversion factor: The OPPS uses a single conversion factor multiplied by the relative weight of each APC to determine payment. For CY 2026, the OPPS conversion factor is $91.415.
• Market basket update: The CY 2026 OPPS net market basket update is also 2.6%, the same as IPPS.
• Total OPPS spending: CMS estimates total payments to OPPS providers for CY 2026 at approximately $101.0 billion — an increase of approximately $8.0 billion compared to CY 2025.
• Physician Fee Schedule conversion factor: For physician services billed under the Medicare Physician Fee Schedule (MPFS), the CY 2026 conversion factor is $33.4009. This conversion factor, multiplied by the total RVUs for a given CPT code, determines physician payment — and is directly relevant to device companies whose products are used in physician-billed procedures.

Why this matters for device companies: When you model hospital economics for your device, you need to use the current DRG payment amount (for inpatient) or APC payment amount (for outpatient) — and understand that these amounts change annually. A financial model built on last year's payment rates may overstate or understate the hospital's margin. Update your models annually when CMS publishes the IPPS and OPPS final rules.

Summary of Key Coding Systems

Coding System	What It Describes	Who Maintains It	Where It's Used
CPT	Procedures and services	AMA	Physician billing, outpatient
HCPCS Level II	Devices, supplies, DME	CMS	Device-specific billing
ICD-10-CM	Diagnoses	WHO / CMS (US adaptation)	All claims — justifies medical necessity
ICD-10-PCS	Inpatient procedures	CMS	Inpatient hospital claims
MS-DRG	Inpatient payment groups	CMS	Medicare inpatient payment (IPPS)
APC	Outpatient payment groups	CMS	Medicare outpatient payment (OPPS)

How to Get a New Code for Your Medical Device

If your device enables a procedure that is not adequately described by existing codes, you will need to apply for a new code. This process is separate from the FDA regulatory pathway and has its own timeline, stakeholders, and requirements.

When You Need a New Code

You need a new code when:

• Your device enables a fundamentally new procedure that no existing CPT or HCPCS code captures
• Existing codes lump your device's procedure together with dissimilar procedures, resulting in inadequate payment
• Payers cannot distinguish claims involving your device from claims involving inferior or lower-cost alternatives

You may not need a new code when:

• An existing CPT code adequately describes the procedure
• Your device is a new or improved version of an existing technology used in the same procedure
• A miscellaneous or unlisted code can serve as a temporary solution while you build a coding case

CPT Code Application Process

Applying for a new CPT code involves the AMA's CPT Editorial Panel, which meets three times per year (February, June, and October).

Step 1: Develop the coding proposal. Work with physician specialty societies (the societies whose members will perform the procedure) to draft a code change proposal. The AMA requires that applications come from or be endorsed by relevant medical specialty societies — the AMA will not accept applications directly from device manufacturers.

Step 2: Submit the application. Applications are typically due 60 to 90 days before the Panel meeting. The proposal must include a clear description of the procedure, evidence that the procedure is distinct from existing coded procedures, clinical literature supporting the procedure, and information about how widely the procedure is performed.

Step 3: AMA CPT Editorial Panel review. The Panel reviews the proposal, may request additional information, and may convene an expert advisory committee. The Panel can approve the code, reject it, or defer for additional information.

Step 4: RVU valuation. If a new Category I CPT code is approved, the AMA's Relative Value Scale Update Committee (RUC) assigns relative value units (RVUs) that determine physician payment. This process can take an additional 6 to 12 months.

Step 5: CMS review and implementation. CMS reviews the RUC's RVU recommendation and publishes the final RVU in the Medicare Physician Fee Schedule (MPFS) final rule, effective January 1 of the following year.

Timeline: From initial application to a billable Category I CPT code with a finalized RVU, the process typically takes 2 to 4 years. A Category III code (temporary/emerging technology) can be obtained faster — typically 6 to 18 months — but Category III codes often have lower or no established payment rates.

HCPCS Level II Code Application Process

For device-specific HCPCS Level II codes, the application process goes through CMS rather than the AMA.

• Applications are submitted to the CMS HCPCS Workgroup
• CMS accepts applications during a defined annual window (typically Q1)
• Decisions are published typically in the fall, with codes effective January 1 of the following year
• The manufacturer can apply directly — no specialty society endorsement is required, though supporting letters from clinicians strengthen the application

New Technology Add-on Payment (NTAP) for Inpatient Devices

NTAP provides additional Medicare payment on top of the standard DRG for cases involving new, high-cost medical technologies.

Eligibility criteria:

• The technology must be new — it cannot have been on the US market for more than 2 to 3 years
• The technology must be inadequately paid under the existing DRG (the cost of using the technology must exceed the DRG payment threshold)
• The technology must represent a substantial clinical improvement over existing treatments

Application timeline: NTAP applications are submitted annually as part of the IPPS proposed rule comment period (typically due in the fall for the proposed rule published in April and the final rule published in August, effective October 1).

Payment: NTAP pays an additional amount equal to 65% of the costs that exceed the standard DRG payment (or 75% for devices designated as Breakthrough Devices by the FDA). The maximum NTAP add-on equals 65% (or 75%) of the cost of the new technology.

NTAP Real-World Examples and Case Studies

The NTAP program has grown significantly. During FY 2012–2020, CMS approved an average of 4 technologies per year for NTAP. During FY 2021–2024, that number increased to an average of 15 per year. For FY 2026, CMS approved a total of 54 NTAP-eligible technologies — 27 continuing from FY 2025, 5 newly approved under the traditional pathway, and 22 newly approved under the alternative pathway (20 with Breakthrough Device designation, 2 with Qualified Infectious Disease Product designation).

The following real-world examples illustrate the range of NTAP payments and the types of technologies that have successfully obtained NTAP:

Technology	Therapeutic Area	Max NTAP Payment	Notes
Shockwave Coronary IVL Catheter	Interventional cardiology (calcified coronary lesions)	Up to $3,666 per case (FY 2023)	Intravascular lithotripsy for severely calcified arteries; NTAP payment supported hospital adoption during initial commercialization
ContaCT (AI-based large vessel occlusion detection)	Stroke / neurovascular	Up to $1,040 per case	One of the first AI-enabled devices to receive NTAP; demonstrated that software/AI technologies can qualify
Abbott TriClip Transcatheter Tricuspid Valve Repair	Structural heart	NTAP approved (FY 2025)	Breakthrough Device; received 75% add-on payment rate
Lungpacer AeroPace System	Pulmonary / critical care	NTAP approved (FY 2026)	Diaphragm pacing system; approved under FY 2026 IPPS Final Rule effective October 1, 2025
Casgevy (exagamglogene autotemcel)	Gene therapy (sickle cell disease)	Up to $1,650,000 per case	Gene therapy with 75% Breakthrough Device rate; illustrates that NTAP can support extremely high-cost technologies
Lyfgenia (lovotibeglogene autotemcel)	Gene therapy (sickle cell disease)	Up to $2,325,000 per case	Highest NTAP payment amount as of FY 2026
Breyanzi (lisocabtagene maraleucel)	Oncology (CAR-T)	Up to $316,860 per case (FY 2026)	Approved under traditional pathway

Key takeaway: Research published in Health Affairs Scholar indicates that the NTAP program fulfills its objective of increasing adoption of new technologies at current add-on payment rates — and that increases in utilization are sustained even after the NTAP period ends. This suggests that NTAP serves its intended purpose as a bridge, giving hospitals the financial support they need to adopt a new technology during its initial years, after which the technology's costs are absorbed into the recalibrated DRG weight.

Transitional Pass-Through Payment for Outpatient Devices

For devices used in the hospital outpatient setting, CMS offers transitional pass-through payment under the OPPS.

Eligibility criteria:

• The device must not have been paid for as an outpatient service as of December 31, 1996 (or is a substantially new or improved version)
• The device cost must be "not insignificant" relative to the APC payment
• The device must meet CMS criteria for newness and cost significance

Duration: Pass-through status lasts for a minimum of 2 years and a maximum of 3 years.

Payment: During the pass-through period, the hospital receives the standard APC payment plus additional pass-through payment for the device.

CMS Coverage Pathways

Having a code is necessary but not sufficient. You also need coverage — a determination by the payer that it will pay for the procedure or device for a specific clinical indication. CMS has several coverage pathways.

National Coverage Determination (NCD)

An NCD is a national-level coverage decision made by CMS that applies to all Medicare beneficiaries across all Medicare Administrative Contractors (MACs).

• Scope: Nationwide — applies to all ~67 million Medicare beneficiaries
• Who can request it: Anyone (physicians, manufacturers, beneficiaries, CMS itself)
• Process: CMS opens a National Coverage Analysis (NCA), accepts public comments, reviews the clinical evidence, and issues a decision
• Timeline: CMS is required to complete an NCD within 6 to 9 months of formally accepting a request, but in practice, the process can take 12 to 18 months or longer
• Outcome: CMS can issue a positive NCD (covered nationally), a negative NCD (not covered nationally), or coverage with specific conditions

NCDs are relatively rare — CMS issues only a handful each year. Most coverage decisions are made at the local level. However, an NCD carries enormous weight because it settles the coverage question for the entire Medicare population.

Local Coverage Determination (LCD)

An LCD is a coverage decision made by a Medicare Administrative Contractor (MAC) — the regional entities that process Medicare claims on CMS's behalf.

• Scope: Regional — applies only to the jurisdiction of the MAC that issues the LCD
• Number of MACs: There are currently 7 MAC jurisdictions for Part A/B claims
• Process: The MAC opens an LCD, accepts public comments, and issues a coverage decision
• Timeline: Typically 6 to 12 months
• Outcome: Covered, not covered, or covered with conditions — but only within that MAC's jurisdiction

LCDs are more common and more accessible than NCDs. Many device companies pursue favorable LCDs in key MACs as an alternative or precursor to seeking a national coverage determination. The challenge is geographic fragmentation: your device might be covered in one MAC jurisdiction but not in another.

Coverage with Evidence Development (CED)

CED is a unique CMS mechanism that provides coverage for a new technology contingent on the beneficiary's participation in a clinical study or registry. It is CMS's way of saying: "We see promising evidence but not enough to justify broad coverage. We will cover the technology, but only if the patient is enrolled in an approved study that will generate the evidence we need."

CED is typically attached to an NCD. The NCD specifies the conditions under which coverage applies, including the approved clinical study or registry.

Why CED matters for device companies: CED can provide a pathway to coverage for technologies that have promising but incomplete evidence. It keeps your device accessible to Medicare beneficiaries while you continue to build the evidence base. However, it also imposes significant operational burdens — you must ensure that approved study sites are available and that patients are enrolled.

Medicare Coverage of Innovative Technology (MCIT) — Historical Context

CMS proposed the MCIT pathway in 2021 to provide automatic Medicare coverage for FDA Breakthrough Devices for up to 4 years. The rule was finalized but subsequently delayed and then withdrawn by CMS. As of 2026, MCIT is not in effect, but the concept remains relevant to policy discussions about accelerating coverage for innovative devices. Device companies should monitor CMS rulemaking for any future revival or replacement of this concept.

Transitional Coverage for Emerging Technologies (TCET)

CMS finalized the Transitional Coverage for Emerging Technologies (TCET) pathway in August 2024, establishing it as the operational successor to the withdrawn MCIT rule. TCET is now an active, functioning pathway — not a proposal — and represents the most significant expansion of CMS coverage pathways for medical devices in over a decade.

TCET Eligibility

Eligibility for the TCET pathway is limited to devices that meet all four criteria:

1. FDA Breakthrough Device designation — the device must have been granted Breakthrough Device designation by the FDA
2. Within a Medicare benefit category — the device must fall within an existing Medicare benefit category (this is a meaningful constraint: many digital health technologies currently lack a clear Medicare benefit category, which limits their TCET eligibility)
3. No existing NCD — the device must not already be the subject of a Medicare National Coverage Determination
4. Not otherwise excluded — the device must not be excluded from coverage by law or regulation

In vitro diagnostic products (IVDs) are not formally excluded but are generally handled by Medicare Administrative Contractors rather than through TCET.

TCET Nomination Process

The TCET nomination process is voluntary and manufacturer-initiated:

• Letter of intent: Manufacturers submit a non-binding letter of intent to CMS 18 to 24 months before anticipated FDA market authorization
• Formal nomination: Submitted approximately 12 months before the expected FDA decision, through the CMS Coverage Center website
• CMS response: CMS responds within 20 business days and offers an initial meeting, which may be coordinated with the FDA
• Quarterly review cycles: CMS reviews nominations on a quarterly basis. The established quarterly deadlines are January 31, April 30, July 31, and October 31
• Annual cap: CMS accepts up to five TCET candidates per year
• Timing constraint: CMS will not accept nominations for devices anticipated to receive FDA authorization within six months, because there would be insufficient time for CMS to complete its review processes
• Automatic reconsideration: Nominations not accepted in one quarterly cycle are automatically reconsidered in subsequent quarters without requiring resubmission

Evidence Preview and Evidence Development Plan (EDP)

After a device is accepted into TCET, CMS conducts an Evidence Preview — a systematic literature review that provides early feedback on the strengths and weaknesses of publicly available evidence for the technology.

Based on the Evidence Preview, the manufacturer develops an Evidence Development Plan (EDP) that specifies how remaining evidence gaps will be addressed. Key features of the EDP:

• EDPs may include traditional clinical study designs or "fit-for-purpose study designs" — including those that rely on secondary use of real-world data
• CMS collaborates with AHRQ (Agency for Healthcare Research and Quality) to evaluate the scientific integrity of proposed EDPs
• Non-proprietary elements of the EDP are published publicly
• EDPs must include interim reporting provisions showing protocol changes
• CMS aims to approve the EDP within 90 business days of FDA market authorization

TCET Coverage Timeline and Duration

• NCD goal: CMS's stated goal is to finalize a TCET NCD within six months after FDA market authorization — dramatically faster than the traditional NCD timeline of 12 to 18+ months
• Coverage duration: Transitional coverage under TCET generally lasts five or more years, tied to the timeline of the approved Evidence Development Plan
• Post-study period: An additional year is provided after study completion for data analysis and publication
• Evidence review updates: CMS initiates updated evidence reviews within six calendar months of the review date specified in the EDP

Post-TCET Transition

After the evidence review is complete, CMS issues one of four determinations:

1. NCD without evidence requirements — full national coverage without conditions (the best outcome)
2. NCD with continued evidence development — coverage continues but additional evidence generation is required
3. Non-coverage determination — CMS determines the evidence does not support coverage
4. NCD rescission — the NCD is rescinded, reverting coverage decisions to the individual MACs

Strategic Implications for Device Companies

TCET represents a meaningful opportunity for companies with FDA Breakthrough Device designation. However, the pathway requires significant advance planning:

• The 18- to 24-month pre-nomination timeline means companies must engage with CMS well before FDA authorization
• The Evidence Preview process exposes gaps in the evidence base — companies should ensure their clinical programs are generating the comparative effectiveness and real-world data that CMS will evaluate
• The annual cap of five devices creates competitive dynamics — early nomination and a strong evidence package improve the chances of acceptance
• The EDP requirement means companies must be prepared to commit to ongoing evidence generation, potentially including post-market studies with Medicare-population patients

Summary of CMS Coverage Pathways

Pathway	Scope	Timeline	Best For
NCD	National (all Medicare)	6–18+ months	Devices with strong evidence seeking definitive national coverage
LCD	Regional (single MAC jurisdiction)	6–12 months	Devices building evidence regionally; faster than NCD
CED	National (with conditions)	Variable	Devices with promising but incomplete evidence
TCET	National (if finalized)	Potentially faster than NCD	FDA Breakthrough Devices
NTAP	National (inpatient add-on payment)	Annual cycle	High-cost new inpatient technologies
Pass-through	National (outpatient add-on payment)	Annual cycle	New devices in hospital outpatient setting

Recent CMS Coverage Decisions: Lessons for Device Companies

Recent NCD activity illustrates how CMS coverage decisions work in practice and the timelines involved.

Renal Denervation (October 2025): CMS issued a National Coverage Determination for renal denervation therapy — including the Recor Medical Paradise Ultrasound Renal Denervation (uRDN) system — for the treatment of uncontrolled hypertension. This NCD is notable because it covers a device-based therapy for a condition (hypertension) that has traditionally been managed pharmacologically. The NCD process for renal denervation took approximately 12 months from the opening of the National Coverage Analysis to the final determination. This case illustrates the importance of generating robust comparative effectiveness evidence: earlier renal denervation technologies (such as the Medtronic Symplicity system) faced coverage setbacks after a pivotal sham-controlled trial (SYMPLICITY HTN-3) failed to meet its primary endpoint in 2014. The successful NCD for the Recor system came only after a new generation of devices demonstrated efficacy in well-designed sham-controlled trials (RADIANCE-HTN TRIO and RADIANCE II).

AI-Enabled Diagnostic Technologies: CMS has begun addressing AI-enabled medical devices through local coverage determinations (LCDs). Multiple MACs have established LCDs for AI technologies used in diagnostic imaging, establishing coverage criteria including clinical indications, provider qualifications, and documentation requirements. CMS is also evaluating AI technologies through its Coverage with Evidence Development pathway. Notably, the CY 2026 Hospital OPPS Final Rule established national reimbursement under OPPS for AI-assisted cardiac analysis — marking a shift from regional LCD-based coverage to national payment recognition.

NCD Timeline Performance: A 2025 GAO review found that CMS met its specified timeframes of 9 or 12 months for 83% (44 of 53) of coverage analyses completed between October 2012 and February 2025. The remaining 9 analyses took an additional 6 to 351 days beyond the specified timeframe. This data gives device companies a realistic basis for planning coverage timelines.

Private Payer Strategy

While Medicare sets the benchmark, approximately 50% of the insured US population has private (commercial) insurance. Private payer coverage is essential for broad market access — and it requires its own strategy.

How Private Payers Make Coverage Decisions

Private payers — UnitedHealthcare, Anthem (Elevance Health), Aetna (CVS Health), Cigna (The Cigna Group), Humana, and hundreds of regional and smaller plans — each maintain their own coverage policies, often called medical policies or clinical coverage guidelines.

The typical private payer coverage decision process involves:

1. Technology assessment: The payer's clinical team (or a contracted health technology assessment organization) reviews the clinical evidence
2. Medical policy development: The payer drafts a coverage policy based on the evidence review
3. Internal review: A coverage committee (often called a medical policy committee or pharmacy and therapeutics committee) reviews and votes on the policy
4. Publication: The policy is published, often with an effective date 60 to 90 days after publication
5. Periodic review: Policies are reviewed and updated on a regular cycle (typically every 1 to 3 years)

Key Differences from CMS

Factor	CMS (Medicare)	Private Payers
Transparency	High — NCDs and LCDs are publicly posted with evidence reviews	Lower — policies are posted but the decision-making process is less visible
Appeal rights	Formal appeals process codified in law	Varies by plan; internal and external appeal processes exist
Speed	Slower (NCD can take 12–18 months)	Potentially faster but highly variable
Evidence standard	Published evidence review, public comment	Varies; some payers follow CMS, others have independent criteria
Physician influence	Less direct	Significant — physicians on the medical policy committee have real influence
Employer influence	None	Significant — large self-insured employers can override coverage decisions for their own plans

Building a Private Payer Strategy

Start with the Big Five. UnitedHealthcare, Anthem, Aetna, Cigna, and Humana collectively cover a large share of the commercially insured population. A positive coverage decision from even one or two of these payers can meaningfully accelerate adoption.

Engage early. Do not wait until after FDA clearance to introduce your device to payers. Many large payers have formal early engagement programs for emerging technologies. Use these to understand what evidence the payer will require for a positive coverage decision.

Leverage CMS decisions. A favorable CMS NCD or LCD makes the conversation with private payers significantly easier. Many private payers explicitly reference CMS coverage decisions in their own policies.

Identify physician champions. Private payer medical policy committees often include practicing physicians. Identifying and engaging physicians who serve on these committees — and who have clinical experience with your device — can be highly influential.

Focus on total cost of care. Private payers are increasingly focused on total cost of care, not just procedure cost. If your device reduces readmissions, shortens length of stay, avoids downstream surgeries, or enables a shift from inpatient to outpatient settings, build and present that economic case.

Understand self-insured vs. fully insured. Most large employers in the US are self-insured — they pay claims directly and use the insurance company only for network access and claims administration. Self-insured employers can make their own coverage decisions independent of the insurer's standard medical policy. This creates an alternative pathway: if UnitedHealthcare's standard policy does not cover your device, a large self-insured employer using UnitedHealthcare's network can still choose to cover it.

Medicare Advantage: A Growing and Distinct Challenge

Medicare Advantage (MA) plans — private health plans that contract with CMS to provide Medicare benefits — now cover more than half of all Medicare beneficiaries. For device companies, MA plans represent a distinct reimbursement challenge that is separate from both traditional (fee-for-service) Medicare and commercial insurance.

Why Medicare Advantage matters for device companies:

• Different coverage decisions: MA plans are required to cover all services covered by traditional Medicare, but they can impose additional requirements — most notably, prior authorization. A device that is covered under a CMS NCD or LCD may still face barriers in the MA setting if the MA plan requires prior authorization and applies restrictive criteria.
• Prior authorization burden: A 2022 HHS Inspector General report found that 13% of prior authorization requests denied by MA plans would have been approved under traditional Medicare. For device companies, this means that even with a favorable CMS coverage decision, patient access may be constrained in the MA population.
• Volume impact: With MA enrollment exceeding 50% of Medicare beneficiaries in many markets, the prior authorization policies of the largest MA plans (UnitedHealthcare Medicare Advantage, Humana, CVS Health/Aetna, and others) can materially affect procedure volumes and, therefore, device sales.

Regulatory reform in progress: CMS has implemented new rules requiring MA plans to issue prior authorization decisions within 72 hours for expedited requests and 7 calendar days for standard requests, effective January 2026. Additionally, 48 major health insurers — including UnitedHealthcare, Humana, Cigna, and CVS Health/Aetna — have pledged to "streamline, simplify, and reduce" prior authorizations. Congress has also introduced the Improving Seniors' Timely Access to Care Act (H.R. 3514/S. 1816), supported by more than half the House and a supermajority of Senators, which would further reform prior authorization in Medicare Advantage.

Strategy for device companies: Do not assume that a favorable CMS NCD or LCD automatically translates to smooth access in the MA channel. Engage directly with the medical policy teams at major MA plans, understand their prior authorization criteria for your device's procedure codes, and develop prior authorization support tools (clinical documentation templates, medical necessity letters) that your physician customers can use to navigate the process.

Hospital Economics and Purchasing Decisions

Even with coding and coverage in place, a hospital must still decide to purchase your device. Hospital purchasing decisions are economic decisions, and understanding the hospital's financial perspective is critical.

How Hospitals Think About Device Purchases

Hospitals evaluate new devices through the lens of their specific payment environment:

Inpatient (DRG-based payment): The hospital receives a fixed DRG payment regardless of costs incurred. Every dollar spent on your device is a dollar that comes out of the hospital's margin on that DRG. A new device must either (a) cost less than the device it replaces, (b) reduce other costs within the episode of care (shorter OR time, fewer ICU days, shorter length of stay, fewer complications), or (c) qualify for NTAP to supplement the DRG payment.

Outpatient (APC-based payment): Similar logic applies — the APC payment is fixed, and device costs affect the hospital's margin. Pass-through payment can supplement the APC during the device's initial years on market.

ASC (Ambulatory Surgery Center): ASCs have their own payment rates under the ASC fee schedule. ASCs are typically more cost-sensitive than hospitals because their payment rates are generally lower.

Value Analysis Committees

Most hospitals use a Value Analysis Committee (VAC) to evaluate new products and technologies before they are approved for purchase. The VAC is the gatekeeper between your sales team and the hospital formulary.

A typical VAC includes:

• Supply chain / materials management — focused on cost, contracts, and standardization
• Clinical representatives — nurses, physicians, and other clinicians who will use the device
• Quality / patient safety — focused on outcomes and risk
• Finance — focused on the business case and budget impact
• Administration — final decision authority

To get through a VAC successfully, you need to present:

1. Clinical evidence demonstrating safety and efficacy compared to the current standard of care
2. Economic analysis showing the total cost impact (device cost, procedure time, length of stay, complication rates, readmission rates)
3. Reimbursement analysis showing that the hospital will be adequately reimbursed for procedures using your device
4. Workflow analysis showing how the device fits into existing clinical workflows (training requirements, OR time impact, staff requirements)
5. Competitive positioning showing how your device compares to alternatives the hospital is already using or considering

Practical tip: The most common mistake device companies make with VACs is leading with clinical data while ignoring the economic case. VAC members who are not clinicians do not evaluate clinical trial results — they evaluate budget impact. If you cannot show a positive or neutral financial impact, your clinical data will not matter.

The Total Cost of Ownership Framework

Hospitals increasingly evaluate devices using a total cost of ownership (TCO) framework that extends beyond the device purchase price:

Cost Category	Examples
Device acquisition cost	Purchase price, leasing cost, capital equipment cost
Procedure costs	OR time, anesthesia time, staff requirements, disposable supplies
Post-procedure costs	Length of stay, ICU time, complication management
Training costs	Physician and staff training, learning curve (including reduced efficiency during ramp-up)
Long-term costs	Maintenance, service contracts, replacement parts, software updates
Avoided costs	Reduced readmissions, fewer revision surgeries, shift from inpatient to outpatient, shorter recovery

Digital Health, Software, and AI Device Reimbursement

The reimbursement landscape for digital health technologies — including software as a medical device (SaMD), digital therapeutics (DTx), remote patient monitoring (RPM), remote therapeutic monitoring (RTM), and AI-enabled diagnostic devices — has evolved rapidly. Between 2020 and 2026, CMS and the AMA overhauled portions of the CPT and HCPCS coding systems to enable billing for evidence-based digital therapeutics, remote monitoring, and AI-enabled decision support alongside traditional clinical services. Device companies building software-based or digitally-enabled products must understand this evolving landscape.

Remote Patient Monitoring (RPM) Codes

Remote physiologic monitoring allows clinicians to monitor patients' physiological data (blood pressure, weight, pulse oximetry, respiratory flow rate, blood glucose) remotely using connected devices. RPM is one of the most established reimbursement pathways for digital health and is directly relevant to medical device companies that manufacture connected monitoring devices.

Core RPM CPT Codes (Established)

Code	Description	CY 2026 Approximate Reimbursement
99453	Initial setup and patient education on remote monitoring equipment	~$22
99454	Device supply with daily recordings or programmed alerts, 16–30 days in a 30-day period	~$47
99457	Remote physiologic monitoring treatment management — first 20 minutes of clinical staff/provider time per calendar month, including interactive communication with the patient	~$52
99458	Each additional 20 minutes of RPM treatment management	~$41

New RPM CPT Codes for 2026

The CY 2026 Medicare Physician Fee Schedule introduced two significant new RPM codes that expand flexibility:

Code	Description	CY 2026 Approximate Reimbursement	Why It Matters
99445	Device supply with daily recordings or programmed alerts, 2–15 days in a 30-day period	~$47	Addresses a major gap: the previous 16-day minimum threshold meant that patients who transmitted data for fewer than 16 days could not be billed. This code allows billing for patients with lower engagement — critical for device companies whose products serve populations with variable adherence.
99470	RPM treatment management — first 10 minutes per calendar month, including interactive communication	~$26	Lowers the management time threshold from 20 minutes to 10 minutes, making RPM economically viable for a broader range of patients and reducing the clinical burden required to trigger billing.

Key implications for device companies building RPM products: The expansion of RPM codes to shorter monitoring durations (2–15 days) and shorter management time (10 minutes) significantly broadens the addressable patient population for RPM devices. If your device captures physiological data and transmits it to a clinician, your commercial team should model the revenue opportunity using both the established codes (99453/99454/99457/99458) and the new 2026 codes (99445/99470). The existing codes remain available and are not replaced by the new codes.

Remote Therapeutic Monitoring (RTM) Codes

RTM extends the remote monitoring concept beyond physiological data to therapeutic data — including musculoskeletal system status, respiratory system status, and therapy adherence. RTM is particularly relevant for digital therapeutics and connected treatment devices.

Core RTM CPT Codes (Established)

Code	Description	Clinical Application
98975	Initial setup and patient education for RTM device	Digital physiotherapy, pulmonary rehabilitation onboarding
98976	RTM device supply — respiratory system data, per 30 days	Asthma, COPD, sleep apnea monitoring
98977	RTM device supply — musculoskeletal system data, per 30 days	Post-surgical recovery, chronic pain management
98978	RTM device supply — cognitive behavioral therapy adherence, per 30 days	Digital CBT engagement tracking
98980	RTM treatment management — first 20 minutes per calendar month	Interactive patient communication and data review
98981	Each additional 20 minutes of RTM treatment management	Extended therapeutic management

New RTM CPT Codes for 2026

Code	Description	Significance
98984	RTM device supply — musculoskeletal system data, 2–15 days in a 30-day period	Mirrors the RPM expansion; allows billing for shorter monitoring durations
98985	RTM device supply — respiratory system data, 2–15 days in a 30-day period	Same shorter-duration expansion for respiratory monitoring
98979	RTM device supply — cognitive behavioral therapy, 2–15 days in a 30-day period	Extends the shorter-duration option to digital CBT devices

Important note on RTM provider eligibility: Unlike RPM, which is generally limited to physicians and qualified healthcare professionals, RTM codes can be billed by a broader range of providers, including physical therapists, occupational therapists, and clinical psychologists. This broader provider eligibility is relevant for device companies whose products are used in rehabilitation, mental health, or therapy settings.

Digital Mental Health Treatment (DMHT) Codes

CMS established a new category of HCPCS codes in the CY 2025 Medicare Physician Fee Schedule specifically for prescription digital therapeutics used in mental and behavioral health — the Digital Mental Health Treatment (DMHT) codes. These codes were expanded in the CY 2026 rule to include ADHD.

Code	Description	CY 2025 Approximate Reimbursement
G0552	Supply of a DMHT device and initial patient education/onboarding	Set-up code; billed once
G0553	DMHT treatment management — first 20 minutes per calendar month	~$20
G0554	DMHT treatment management — each additional 20 minutes	~$20

The DMHT codes represent CMS's first formal recognition that prescription digital therapeutics — FDA-cleared software applications that deliver evidence-based therapeutic interventions — are billable Medicare services. For CY 2026, CMS expanded the eligible conditions for DMHT to include ADHD, in addition to the substance use disorders and insomnia conditions covered in 2025.

What this means for digital therapeutics companies: The DMHT codes provide a Medicare payment pathway for FDA-cleared digital therapeutics. However, several limitations remain. Reimbursement rates are relatively low (~$20 per 20-minute management increment), and adoption depends on physician willingness to prescribe and monitor digital therapeutics. Companies should track legislative developments, including the Access to Prescription Digital Therapeutics Act (H.R. 1458), which, if enacted, would create a formal Medicare benefit category for prescription digital therapeutics with dedicated HCPCS codes — potentially enabling higher and more predictable reimbursement.

Prescription Digital Therapeutics (PDTx) — Category III Codes

For prescription digital therapeutics that do not yet fall under the DMHT framework, Category III CPT codes provide a temporary billing mechanism:

Code	Description
0704T	Initial setup and onboarding for prescription digital behavioral therapy (FDA-cleared)
0705T	Monthly digital behavioral therapy management service
0706T	Extended digital behavioral therapy management (additional time)

As with other Category III codes, these typically lack established national fee rates — reimbursement depends on individual MAC policies and private payer coverage decisions.

AI-Enabled Medical Device Reimbursement

The 2026 CPT code set marks a historic milestone: it is the first time artificial intelligence has been explicitly recognized in CPT medical coding. This is directly relevant to the growing number of FDA-cleared AI/ML-enabled medical devices (over 950 as of early 2026, per the FDA's AI/ML device database).

AI Coding Developments

Category III to Category I upgrades: Several AI-enabled diagnostic codes have been upgraded from Category III (temporary/emerging) to Category I (established) for the 2026 code set, with assigned RVUs and predictable reimbursement:

• AI-assisted lung nodule detection on chest CT — upgraded to Category I, establishing RVUs for AI-flagged findings
• AI-flagged stroke detection on brain imaging — upgraded to Category I
• AI-based coronary atherosclerotic plaque assessment — new Category I code for quantifying and characterizing coronary plaque to assess disease severity

AI-augmented service categories in CPT 2026:

Category	Description
Radiology and Imaging	AI-assisted interpretation and detection (lung nodules, stroke signs, mammography comparison)
Diagnostics	AI-enhanced evaluation of lab results, EKGs, and physiological signals
Predictive Analytics	AI models used to predict clinical risks and outcomes
Cardiac Analysis	AI-assisted cardiac function analysis (national reimbursement established under CY 2026 OPPS)

Key reimbursement reality for AI device companies: Despite over 950 FDA clearances for AI/ML devices, reimbursement pathways remain fragmented. Most AI devices are covered through a patchwork of local coverage determinations (LCDs), miscellaneous codes, or bundled into existing procedure codes without separate payment. The 2026 Category I code upgrades for radiology AI represent a significant step forward, but the majority of AI device categories still lack dedicated national payment codes. Companies building AI-enabled medical devices should:

1. Determine whether their AI tool will be billed as a standalone service, as an add-on to an existing procedure, or bundled into the procedure code without separate payment
2. Pursue Category III CPT codes early if no existing code captures the AI-enabled service
3. Generate the clinical evidence needed to support Category I conversion — particularly evidence of clinical utility (i.e., that the AI tool changes clinical decisions and improves outcomes, not just that it has high sensitivity/specificity)
4. Engage with MACs to establish LCDs while pursuing national coding pathways

Software as a Medical Device (SaMD) — Reimbursement Considerations

FDA regulatory classification as SaMD is a necessary but not sufficient condition for reimbursement. A device may have FDA clearance or De Novo authorization as SaMD, but reimbursement requires separate alignment with payer coding, coverage, and benefit category rules.

Key challenges specific to SaMD reimbursement:

• Benefit category fit: Medicare covers items and services that fall within specific statutory benefit categories (e.g., durable medical equipment, physician services, hospital services). Software-only products may not clearly fit within an existing benefit category, which limits CMS's ability to cover them — regardless of clinical merit. This is one reason many digital health technologies are currently ineligible for the TCET pathway.
• No physical device to bill separately: Unlike implantable or durable medical equipment, software does not have a physical component that hospitals purchase and bill for separately. Reimbursement for SaMD typically flows through the procedure code (the physician or hospital bills for the clinical service that the software supports) rather than through a device-specific HCPCS code.
• Subscription vs. one-time payment: Many SaMD products use a subscription pricing model, but Medicare's fee-for-service payment systems are designed for one-time services or monthly supply codes. Aligning a subscription SaaS model with Medicare's code-based payment structure requires careful structuring — often using the RPM/RTM monthly codes, the DMHT codes, or negotiating with payers for per-patient-per-month arrangements outside fee-for-service.

Overall digital health reimbursement landscape: As of early 2026, more than 300 billing codes support the use of digital health solutions and digital care in the US — including approximately 117 codes specific to software-based technologies (SaMD, software in a medical device, and AI-SaMD). However, reimbursement opportunities vary substantially by solution type, payer, therapy area, and care setting. Device companies in the digital health space should conduct a code-by-code analysis specific to their technology rather than assuming a single pathway.

International Digital Health Reimbursement Frameworks

Several countries have developed dedicated reimbursement pathways for digital health technologies that differ from their traditional device reimbursement systems:

Country	Program	Key Features
Germany	DiGA (Digitale Gesundheitsanwendungen)	Dedicated "app on prescription" pathway; manufacturers can obtain provisional listing in the DiGA directory with limited evidence, then generate RWE during a 24-month provisional period; prices are negotiated with the GKV-SV (statutory health insurance association) after the provisional period; patients access DiGA through a prescription, and the statutory health insurance system reimburses the manufacturer directly
Germany	DiPA (Digitale Pflegeanwendungen)	Extension of DiGA to digital nursing care applications
France	PECAN (Prise en Charge Anticipee du Numerique)	Early coverage framework administered by HAS for digital therapeutics; provides reimbursement during an evidence-generation period
United Kingdom	NICE EVA (Early Value Assessment)	Fast-track NICE evaluation pathway for digital health technologies; uses Digital Technology Assessment Criteria (DTAC) as a baseline quality standard

Strategic note: For device companies building digital health products with global ambitions, Germany's DiGA program is currently the most established and commercially relevant digital health reimbursement pathway in Europe. DiGA listing is increasingly viewed as a proof-of-concept milestone that supports reimbursement discussions in other markets.

Health Technology Assessment in the EU

While the US reimbursement system is primarily payer-driven, many European countries use formal Health Technology Assessment (HTA) processes to determine whether a new technology provides sufficient value to justify coverage and reimbursement by national health systems.

What is HTA?

Health Technology Assessment is a systematic evaluation of a medical technology's clinical effectiveness, cost-effectiveness, and broader impact (ethical, social, organizational) to inform coverage and pricing decisions. HTA bodies do not clear or approve devices for safety — that is the role of the CE marking process under the MDR/IVDR. Instead, HTA bodies answer a different question: Given that this device is safe and performs as intended, does it provide enough clinical and economic value to justify public reimbursement at the proposed price?

Major EU HTA Bodies

HTA Body	Country	Key Characteristics
NICE (National Institute for Health and Care Excellence)	UK	Evaluates clinical and cost-effectiveness; uses QALY-based thresholds (typically GBP 20,000–30,000 per QALY); Medical Technologies Evaluation Programme (MTEP) for devices
G-BA (Gemeinsamer Bundesausschuss / Federal Joint Committee)	Germany	Evaluates benefit relative to comparators; works with IQWiG for evidence assessment; added benefit assessment determines pricing
HAS (Haute Autorite de Sante)	France	Evaluates clinical benefit (SMR) and improvement over existing treatments (ASMR); ASMR rating directly influences pricing negotiation
AIFA (Agenzia Italiana del Farmaco) + regional HTAs	Italy	National and regional HTA processes; significant regional variation
ZIN (Zorginstituut Nederland)	Netherlands	Evaluates effectiveness, cost-effectiveness, necessity, and feasibility

How HTA Differs from FDA/CE Marking Assessment

Dimension	Regulatory (FDA / CE Marking)	HTA
Core question	Is it safe and does it perform as intended?	Does it provide clinical and economic value?
Comparator	Predicate device (510(k)) or state of the art	Current standard of care (active comparator)
Evidence type	Clinical trials vs. predicate or essential requirements	Comparative effectiveness, cost-effectiveness, real-world evidence
Outcome	Market authorization	Coverage, pricing, and reimbursement recommendation
Decision-maker	FDA / Notified Body	HTA body / payer / government

NICE Medical Technologies Evaluation Programme (MTEP)

NICE's MTEP is specifically designed for medical devices and diagnostics, recognizing that devices have different evidence profiles than pharmaceuticals. MTEP produces:

• Medical Technologies Guidance (MTG): For technologies that are cost-saving or cost-neutral
• Diagnostics Guidance (DG): For diagnostic technologies
• Interventional Procedures Guidance (IPG): For new procedures

NICE generally uses a cost-effectiveness threshold of GBP 20,000 to GBP 30,000 per quality-adjusted life year (QALY) gained. Technologies exceeding this threshold face a high bar for positive recommendation.

Germany's Benefit Assessment Process

Germany uses a unique system where all medical devices can generally be used and billed through the DRG system once they have CE marking. However, for new examination and treatment methods (Neue Untersuchungs- und Behandlungsmethoden, or NUB) in the inpatient setting, hospitals must apply for NUB status to receive additional payment. For ambulatory care, the G-BA determines which methods are covered through an evaluation of their benefit — this is where manufacturers face the most significant HTA hurdle in Germany.

The G-BA commissions IQWiG (Institut fur Qualitat und Wirtschaftlichkeit im Gesundheitswesen) to conduct evidence assessments. IQWiG evaluates the added benefit of a new technology compared to the appropriate comparator therapy.

France's ASMR/SMR System

In France, the HAS evaluates devices through two dimensions:

• SMR (Service Medical Rendu) — the actual clinical benefit of the device. An insufficient SMR rating means the device will not be reimbursed.
• ASMR (Amelioration du Service Medical Rendu) — the improvement in clinical benefit compared to existing treatments, rated on a scale from I (major improvement) to V (no improvement). The ASMR rating directly determines pricing: a higher ASMR allows a higher price.

EU HTA Regulation (EU) 2021/2282

The EU adopted Regulation (EU) 2021/2282 on Health Technology Assessment in December 2021, creating a framework for joint clinical assessments at the EU level. This regulation represents a fundamental shift in how HTA is conducted in Europe.

Key provisions:

• Joint Clinical Assessments (JCA): Centralized EU-level clinical assessments will be conducted for certain medical devices and in vitro diagnostics. Initially (from January 2025), the regulation applied to medicinal products. For medical devices, the regulation phases in from January 2030 for Class III and Class IIb implantable devices that require clinical evidence at the CE marking stage.
• Scope for devices: When fully implemented, joint clinical assessments will cover high-risk medical devices (Class III and Class IIb implantables).
• Member state use: EU member states will be required to take the joint clinical assessment into account in their national HTA processes. However, member states retain sovereignty over pricing and reimbursement decisions — the JCA covers the clinical assessment, not the economic evaluation or the coverage decision.
• No duplication: Member states cannot duplicate the clinical assessment work done at the EU level for technologies that have undergone a JCA.
• Manufacturer obligations: Manufacturers of devices subject to JCA will need to submit an HTA dossier in addition to their CE marking technical documentation.

What this means for device companies: Starting in 2030, manufacturers of high-risk medical devices will need to prepare for EU-level joint clinical assessments. This means generating comparative effectiveness evidence — not just against a predicate device (as in a 510(k)), but against the current clinical standard of care. Companies developing high-risk devices should begin building HTA-ready evidence packages now, even if the JCA requirement is several years away.

EU HTA Regulation Timeline	Milestone
December 2021	Regulation (EU) 2021/2282 adopted
January 2025	Joint clinical assessments begin for oncology and ATMP medicinal products
January 2028	Joint clinical assessments expand to all new medicinal products
January 2030	Joint clinical assessments begin for Class III and Class IIb implantable medical devices
Ongoing	Member states retain pricing and reimbursement authority

Health Economics and Outcomes Research (HEOR)

HEOR is the discipline that generates the evidence payers and HTA bodies need to make coverage and reimbursement decisions. For medical devices, HEOR is no longer optional — it is a core component of the market access strategy.

Cost-Effectiveness Analysis (CEA)

Cost-effectiveness analysis compares the costs and health outcomes of a new technology against a comparator (usually the current standard of care). The result is expressed as an incremental cost-effectiveness ratio (ICER):

ICER = (Cost of new technology - Cost of comparator) / (Health outcomes of new technology - Health outcomes of comparator)

When health outcomes are measured in QALYs (quality-adjusted life years), the analysis is specifically called a cost-utility analysis. This is the preferred method for most HTA bodies, particularly NICE.

Key considerations for medical devices:

• Comparator selection: The comparator must be the current standard of care, not a straw man. HTA bodies will reject analyses that use an inappropriate or inferior comparator.
• Time horizon: The analysis must capture all relevant costs and benefits over an appropriate time horizon. For implantable devices, this may mean modeling outcomes over 10 to 20 years.
• Discount rate: Future costs and health outcomes are typically discounted (3% to 5% per year in most jurisdictions). This is important for devices with upfront costs but long-term benefits.
• Uncertainty: HTA bodies expect sensitivity analyses — deterministic (varying individual parameters) and probabilistic (varying all parameters simultaneously) — to characterize the uncertainty in the ICER estimate.

Budget Impact Analysis (BIA)

While CEA addresses the question "Is this technology cost-effective?", budget impact analysis addresses the question "Can we afford it?" BIA estimates the financial impact of adopting a new technology on the payer's total budget over a defined time horizon (typically 1 to 5 years).

A BIA typically models:

BIA Component	Description
Eligible population	How many patients are eligible for the new technology
Market uptake	Expected adoption rate over time
Cost per patient	Device cost, procedure cost, follow-up costs
Displacement	Which existing technologies/procedures will be displaced
Net budget impact	Total cost of new technology minus avoided costs of displaced treatments

Budget impact modeling is particularly important for devices that have a high per-unit cost, even if they are cost-effective over the long term. A device that saves money over 10 years but requires a large upfront investment may still face resistance from payers managing annual budgets.

Real-World Evidence (RWE) for Reimbursement

Real-world evidence — data from clinical practice, registries, electronic health records, claims databases, and patient-reported outcomes — is increasingly important for reimbursement decisions. While randomized controlled trials (RCTs) remain the gold standard for efficacy evidence, payers and HTA bodies recognize that RCTs have limitations:

• RCT populations may not reflect the patients seen in routine clinical practice
• RCTs are expensive and time-consuming, particularly for surgical devices where blinding is often impractical
• RCTs may not capture long-term outcomes or rare adverse events

RWE fills these gaps. Specific applications include:

• Post-market registries that track outcomes across large, real-world patient populations
• Claims data analysis demonstrating real-world utilization patterns, costs, and outcomes
• Comparative effectiveness studies using real-world data to compare your device against alternatives
• Patient-reported outcomes capturing functional status, quality of life, and patient satisfaction

CMS has explicitly acknowledged the role of RWE in coverage decisions, including through the CED mechanism. The FDA has also published a framework for evaluating RWE, and its increasing acceptance in the regulatory space reinforces its role in the reimbursement space.

Practical tip: Plan your real-world evidence strategy from day one. Design your clinical trials with HEOR endpoints built in — not just primary efficacy endpoints, but cost-related outcomes (length of stay, readmissions, return to work) and patient-reported outcomes (PROs). Post-market, invest in registries and real-world data collection. The evidence you generate today is the evidence your market access team will use to negotiate coverage and payment tomorrow.

Reimbursement Strategy Timeline

One of the most consequential decisions in medical device commercialization is when to start working on reimbursement. The answer is: much earlier than most companies think.

The Integrated Timeline

Phase	Timeframe Relative to Launch	Reimbursement Activities
Concept / Early Feasibility	5–7 years before launch	Landscape assessment: identify existing codes, coverage policies, and payment rates for the clinical area your device addresses. Determine whether existing codes and coverage are adequate or whether new codes and coverage will be required.
Design Input / Pre-clinical	4–5 years before launch	Begin HEOR planning: identify the economic value proposition, define the key endpoints you will need for payer evidence, incorporate HEOR endpoints into clinical trial design. Engage health economists.
Clinical Trials	2–4 years before launch	Collect HEOR data within trials (cost endpoints, PROs, resource utilization). Begin payer advisory boards — informal meetings with payers to understand their evidence requirements. For devices in the EU, begin HTA dossier preparation.
Regulatory Submission	1–2 years before launch	Submit coding applications (CPT Category III, HCPCS Level II). Prepare CMS coverage dossier. Submit NTAP or pass-through payment applications if applicable. Engage with private payers for pre-submission meetings. Begin LCD outreach to key MACs.
FDA Clearance / CE Marking	0 (launch)	Finalize coding applications. Submit for NCD or LCD if not already done. Launch payer engagement campaign. Begin VAC engagement at target hospitals.
Post-Launch (Year 1–2)	0–2 years after launch	Pursue remaining coverage decisions. Collect real-world evidence. Apply for CPT Category I code conversion (if you started with Category III). Submit NTAP or pass-through renewal if applicable.
Post-Launch (Year 2–5)	2–5 years after launch	Finalize Category I CPT code. Pursue national coverage if starting with regional. Build the real-world evidence base for long-term coverage defense. Expand international pricing and reimbursement filings.

Key principle: Reimbursement strategy should begin in parallel with product development — not after regulatory clearance. The clinical data you generate in your pivotal trial must serve both the regulatory submission and the reimbursement case. If you design your trial only for regulatory purposes and ignore payer evidence needs, you will face a 2- to 3-year gap after clearance while you generate the data payers require.

International Pricing and Reimbursement Considerations

Medical device reimbursement is not a US-only problem. Every market where you intend to sell your device has its own coding, coverage, and payment systems. A few critical considerations for the international landscape:

Reference Pricing

Many countries use international reference pricing (IRP) — they set their reimbursement rate by referencing the price of the device in other countries. This creates a strategic sequencing challenge: the price you set in your first market affects the price you can achieve in subsequent markets.

Common reference pricing dynamics:

Country/Region	Pricing Approach
United States	No government price controls for most devices; prices are negotiated between manufacturers and purchasers (hospitals, GPOs)
Germany	Relatively free pricing for inpatient devices (DRG-based); NUB process for new technologies; ambulatory pricing subject to G-BA and reimbursement schedules
France	Price regulated by CEPS (Comite Economique des Produits de Sante); ASMR rating determines pricing ceiling
UK	NICE cost-effectiveness assessment; NHS procurement and tendering
Japan	Reimbursement price set by MHLW; function-based categories; foreign average pricing (FAP) using reference countries
China	Volume-based procurement (VBP) for many device categories; price compression through centralized bidding
Brazil	ANVISA regulatory approval + CMED pricing for some categories; CONITEC HTA for SUS (public system) coverage

Launch Sequencing

Because of reference pricing, the order in which you launch matters:

1. Launch first in markets with free pricing (US, Germany) to establish the highest possible reference price
2. Follow with markets that reference early-launch countries to lock in favorable reference points
3. Defer or manage carefully markets with aggressive price controls to avoid depressing reference prices globally

This is the same logic used in pharmaceutical launch sequencing, and it applies with increasing force to medical devices as more countries implement reference pricing for high-cost technologies.

Japan: A Special Case

Japan deserves specific mention because it has one of the largest medical device markets in the world and a unique reimbursement system. Devices are reimbursed under the Japanese DPC/PDPS (Diagnosis Procedure Combination / Per-Diem Payment System) for inpatient care, with device-specific reimbursement prices set by the Ministry of Health, Labour and Welfare (MHLW). Japan uses a functional category-based pricing system: new devices are assigned to a functional category, and if no appropriate category exists, a new one can be created. Japan also conducts periodic price revisions (typically every 2 years) and uses foreign average pricing as a reference.

Common Mistakes in Medical Device Reimbursement

Having worked with device companies across the spectrum — from pre-revenue startups to large multinationals — these are the mistakes I see most frequently.

Mistake 1: Treating Reimbursement as a Post-Clearance Problem

This is the most damaging mistake. Companies complete their clinical program, receive FDA clearance, and then ask: "How do we get reimbursed?" By that point, the clinical trial is done and the data is locked. If the trial did not collect the endpoints payers need — cost data, resource utilization, patient-reported outcomes, comparison to the appropriate clinical comparator — you are years behind.

Fix: Begin reimbursement strategy in the concept phase. Integrate HEOR endpoints into clinical trial design from the start.

Mistake 2: Assuming Existing Codes are Adequate

A common assumption is: "There is already a CPT code for this type of procedure, so we are fine." But an existing code may lump your innovative device together with older, cheaper alternatives — resulting in a payment rate that does not support your device's cost. Or the code may not accurately describe the procedure your device enables, leading to claim denials.

Fix: Conduct a thorough coding analysis early. Determine whether existing codes capture your procedure accurately and whether the associated payment rates support your device's economics. If not, start the new code application process immediately — it takes years.

Mistake 3: Ignoring the Hospital's Financial Perspective

A device that is clinically superior but financially toxic to the hospital will not be adopted. If your device costs $50,000 and the DRG payment is $35,000, the hospital loses money on every case. Showing the hospital a pivotal trial with impressive clinical outcomes does not solve this problem.

Fix: Build the economic case alongside the clinical case. Model the total cost impact, including reductions in complications, readmissions, length of stay, and downstream care. Apply for NTAP if your device qualifies.

Mistake 4: Neglecting Private Payers

Many companies focus exclusively on CMS and neglect private payer strategy. But for devices used in populations younger than 65, private payers are the dominant source of payment. A favorable CMS decision helps, but it does not guarantee private payer coverage.

Fix: Develop a parallel private payer strategy. Engage with the major commercial payers early, understand their evidence requirements, and build relationships with their clinical teams.

Mistake 5: Underinvesting in Health Economics Expertise

Many device startups do not have anyone on the team who understands reimbursement, health economics, or market access. They hire an RA/QA team, a clinical team, and an engineering team — but no one who can build the economic case for the device.

Fix: Bring in health economics and market access expertise early — either by hiring or through specialized consultants. This is not an area where general business skills substitute for domain expertise.

Mistake 6: Using the Wrong Comparator in Economic Analyses

Economic analyses that compare your device against a straw man comparator — an outdated technology that no one uses anymore — will be rejected by HTA bodies and sophisticated payers. The comparator must be the current clinical standard of care.

Fix: Define the appropriate comparator in consultation with clinical experts and payer advisory boards. Use the same comparator in your clinical trial and your health economic model.

Mistake 7: Ignoring the EU HTA Landscape Until CE Marking

With the EU HTA Regulation requiring joint clinical assessments for high-risk devices starting in 2030, companies that generate evidence only for CE marking purposes will be caught unprepared when they need to submit HTA dossiers with comparative effectiveness data.

Fix: Build HTA-ready evidence from the start. Design clinical programs that generate comparative effectiveness data, not just safety and performance data relative to a predicate.

Mistake 8: Pricing Without a Reimbursement Analysis

Setting your device price based on manufacturing cost plus a margin — without understanding what payers will pay and what hospitals can afford — leads to pricing that is either too high (no adoption) or too low (leaving money on the table and undermining your long-term reimbursement case).

Fix: Set pricing based on the value your device delivers, anchored to the reimbursement landscape. Understand the DRG/APC payment rates for your target procedures, model the hospital's margin at various price points, and align pricing with the economic evidence you have generated.

Tips for Startups

Startups face a unique set of challenges in reimbursement. Resources are limited, the team is small, and the instinct is to defer everything that is not directly on the path to FDA clearance. Here is what startups should prioritize.

1. Hire or Retain Reimbursement Expertise by the Clinical Trial Design Stage

You do not need a full-time VP of Market Access in the seed stage. But by the time you are designing your pivotal trial, you need someone — an advisor, a consultant, or a part-time hire — who understands payer evidence requirements and can ensure your trial design serves both regulatory and reimbursement objectives.

2. Conduct a Reimbursement Landscape Assessment Before Your Series A

Investors increasingly ask about reimbursement during diligence. Having a clear picture of the coding, coverage, and payment landscape — and a realistic plan for addressing gaps — strengthens your fundraising story and demonstrates commercial maturity.

3. Incorporate HEOR Endpoints into Every Clinical Study

Every clinical data point you collect is an opportunity to build your reimbursement case. At minimum, collect:

• Resource utilization (procedure time, length of stay, ICU days, readmissions)
• Cost data (device cost, ancillary supply costs, facility costs)
• Patient-reported outcomes (validated PRO instruments relevant to your clinical area)
• Comparison to the current standard of care (not just a sham or no-treatment control)

4. Build Payer Relationships Before You Need Them

Engage payer advisory boards 12 to 24 months before you expect to seek coverage decisions. These are structured sessions where you present your evidence plan to payer decision-makers and gather feedback on what they need to see. The insights are invaluable, and the relationship building pays dividends when you submit for coverage.

5. Budget for Reimbursement

Coding applications, NTAP applications, payer engagement, health economic modeling, real-world evidence generation — none of this is free. Budget for reimbursement activities explicitly in your financial plan. A reasonable rule of thumb for a novel device requiring new codes and coverage: $500,000 to $2 million in total reimbursement strategy costs from planning through initial coverage decisions.

6. Do Not Assume the US Market is the Only One That Matters

If you plan to sell in Europe, Japan, or other international markets, your reimbursement strategy must be global from the beginning. Clinical trial design, comparator selection, endpoint selection, and pricing strategy all have international implications. Decisions made for the US market can constrain or enable your options in other markets.

7. Use Breakthrough Device Designation Strategically

If your device qualifies for FDA Breakthrough Device designation, pursue it — not only for the regulatory benefits (priority review, interactive communication with FDA) but also because Breakthrough Device designation confers advantages in the reimbursement space. NTAP provides a higher payment percentage (75% vs. 65%) for Breakthrough Devices, and future coverage pathways like TCET may preferentially benefit Breakthrough-designated devices.

8. Plan for the Evidence Continuum

Reimbursement is not a one-time event. It is a continuum. The evidence that gets you initial coverage (a pivotal RCT) is not the same evidence that sustains and expands coverage over time (real-world evidence, long-term follow-up data, health economic analyses). Plan for evidence generation across the full product lifecycle.

Key Takeaways

Medical device reimbursement is a complex, multi-stakeholder process that requires planning, investment, and expertise. The companies that succeed are those that treat reimbursement as a strategic discipline on par with regulatory affairs and clinical development — not an afterthought.

The essential principles:

• Start early. Reimbursement strategy begins at the concept stage, not after FDA clearance.
• Design clinical trials for dual purpose. Your pivotal trial must generate evidence that satisfies both regulators and payers.
• Understand the coding landscape. Determine whether existing codes work for your device or whether you need new ones — and start the application process years before launch.
• Build the economic case. Clinical superiority without a compelling economic argument will not drive hospital adoption.
• Engage payers before you need them. Payer advisory boards and early engagement programs are essential for understanding evidence requirements.
• Think globally. Pricing decisions, comparator selection, and evidence generation all have international implications.
• Invest in HEOR. Health economics and outcomes research is not optional — it is the language payers speak.
• Plan for the long term. Initial coverage is just the beginning. Real-world evidence, long-term data, and ongoing payer engagement sustain and expand market access over time.

Reimbursement is where clinical innovation meets commercial reality. The device that changes patient outcomes but cannot navigate the reimbursement landscape is a device that never reaches the patients who need it. Getting reimbursement right is not just a business imperative — it is how medical technology actually makes it from the bench to the bedside.