Clinical Trial Reimbursement in the U.S.: FAQs for MedTech Companies
For companies that strategically plan for it, clinical trial reimbursement can be a powerful tool to reduce costs, accelerate site engagement, and improve the long-term commercial outlook of their device.
1. What is clinical trial reimbursement, and why is it important?
Clinical trial reimbursement refers to the ability of certain healthcare payers—primarily Medicare—to cover specific costs associated with investigational medical device trials. This reimbursement helps offset expenses for both trial sponsors and participating sites, making studies more financially feasible. For medtech companies, securing reimbursement can lower trial costs, encourage hospital participation, and align early payer expectations with post-market coverage.
2. How does Medicare decide which clinical trials to reimburse?
Medicare follows guidelines set by an interagency agreement between the FDA and CMS, which determines whether an investigational device qualifies for reimbursement. The key factor is how the FDA classifies the device:
Category A (Experimental) – Medicare covers only routine patient care costs, such as hospital stays and physician visits, but not the investigational device itself.
Category B (Non-Experimental/Incremental Innovation) – Medicare may cover both routine care costs and the investigational device if it meets certain criteria.
3. What is the process for getting a trial reimbursed?
To obtain Medicare reimbursement, manufacturers must:
Secure FDA category status for their Investigational Device Exemption (IDE) trial.
Request a CMS coverage determination for Category B devices, providing clinical and economic justification.
Ensure trial sites comply with Medicare’s billing rules, including correct use of billing modifiers and documentation requirements.
CMS approval is not automatic and requires proactive engagement. Without proper oversight, billing errors can lead to denied claims, audits, or delays in reimbursement.
4. How should a company price its device during the trial, and what are the implications?
Pricing an investigational device during a clinical trial has both strategic and regulatory implications. Medicare typically reimburses at cost, meaning manufacturers must submit documentation justifying the device price based on production expenses rather than commercial value. Setting the price too low may undermine future pricing negotiations, while setting it too high may discourage reimbursement approval or raise scrutiny about cost-effectiveness post-market.
Additionally, commercial payers may use the trial price as an anchor when assessing post-market coverage, which can make it difficult to secure higher reimbursement rates later. Companies should carefully balance short-term cost recovery with long-term market positioning, ensuring trial pricing aligns with their overall commercialization strategy.
5. What are the advantages of clinical trial reimbursement?
The primary advantage is cost reduction. By shifting some trial expenses to Medicare, manufacturers can stretch limited budgets further, making large-scale trials more financially viable. Reimbursement can also increase hospital and investigator participation, as sites may be more willing to enroll patients when their standard-of-care costs are covered. Additionally, securing Medicare reimbursement can help establish a precedent for post-market payer coverage, smoothing the path to commercial adoption.
6. What are the trade-offs and challenges of pursuing reimbursement?
While clinical trial reimbursement can offset costs, it introduces regulatory complexity that can slow down trial enrollment. CMS approval requires additional paperwork, compliance oversight, and site training, which can create administrative burdens for trial sites unfamiliar with Medicare’s billing rules. Enrollment delays are common, as sites must navigate reimbursement logistics before they can begin enrolling patients. Additionally, Medicare’s payment rates may not fully cover device costs, meaning manufacturers may still need to subsidize part of the trial.
7. Do private insurers reimburse clinical trial costs?
Unlike Medicare, private insurers are not required to reimburse clinical trial costs. Some commercial payers may cover routine care costs if the trial is deemed medically necessary, but reimbursement for investigational devices depends upon individual health plans, patient benefits, and authorization requirement. Private payers tend to be more selective, often requiring case-by-case approvals, and their reimbursement criteria vary widely. If private insurance coverage is a critical factor for your trial, setting up adequate infrastructure for the reimbursement initiative to support your trial sites will be critical in order to reap the benefits.
8. Should my company pursue clinical trial reimbursement?
It depends on your priorities. If reducing costs and obtaining payer validation early is critical and you can manage the added complexity, clinical trial reimbursement may be a smart strategy. However, if speed to market is your priority and you want to avoid administrative delays, self-funding the trial may be the better option. The key is to assess your company’s financial position, regulatory expertise, and timeline constraints before deciding whether to incorporate clinical trial reimbursement into your goals and planning.
