Thursday, October 06, 2011

5 insights on pricing & reimbursement of diagnostics

The reimbursement of diagnostics is a key consideration for both diagnostic providers and payers.  This is true because while 5% - 7% of the hospital cost is incurred through the use of diagnostics, they are used in about 70% of healthcare decisions.

It has been very challenging to develop an optimum price, especially for emerging diagnostic technologies such as molecular diagnostics – because evidence-based pricing does not suffice for such technologies.  This complicates the scenario for early movers in diagnostics.

Moreover, there has been an on-going issue with respect to existing technologies, as companies have an immense need to re-consider their pricing strategies to deal with cost and demand versus reimbursement issues.

Hence, it is crucial to identify the best pricing strategies to maintain reimbursement for innovative diagnostics.

In a recent report from BusinessInsights, the analysts conclude:

  1. A procedure has a higher chance of getting insurance coverage, if it reduces the overall treatment costs.
  2. The recent reduction made by the CMS in the reimbursement amount for non-facility units is expected to impact the diagnostic devices market especially in the form of a lack of innovation.
  3. Reimbursement structures are restraining the growth of innovative technologies such as molecular diagnostics.
  4. An OEM’s pricing is fundamentally based on its desired Return-on-Investment and the overall cost of manufacturing its equipment.
  5. Fair Value Pricing and Risk Sharing Pricing are the new methods of pricing within healthcare diagnostics.

Read more in the full report.

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