Medical Devices Reimbursement Market

Market Overview

The global medical devices reimbursement market size was valued at USD 460.11 billion in 2022. It is estimated to reach USD 1,140.07 billion by 2031, growing at a CAGR of 10.6% over the forecast period (2023–2031). Medical Devices Reimbursement Market growth is anticipated to be driven by major stakeholders' growing interest in reimbursement due to the continuous rise in healthcare costs during the forecast period.

Highlights

• Public dominates the payers segment.
• Hospitals dominate the healthcare setting segment.
• North America is the highest shareholder in the global market.

Private insurance will reimburse a healthcare provider for costs associated with employing medical devices by sending them money. Private and public health insurance typically covers a patient's hospital bills as well as the cost of medical equipment. Most of a person's medical expenses are either fully or partially reimbursed by the government or a health insurance provider.

Medical device reimbursement has become an essential foundation to ensure patients have access to state-of-the-art diagnostic and other medical technology. The amount of compensation is determined by paying for specific medical devices that are used or for the surgical procedure itself, which includes the use of surgical instruments or devices.

Market Dynamics

Global Medical Devices Reimbursement Market Drivers:

Increasing Prevalence of Various Chronic Diseases

According to WHO, in 2020, major chronic conditions such as cancer, diabetes, respiratory disorders, cardiovascular diseases, and other life-threatening diseases are projected to account for nearly 73% of all deaths and around 60% of the global disease burden. Approximately 79% of the deaths due to these diseases are estimated to occur in developing countries. Moreover, according to WHO, cardiovascular diseases are the main death cause and disability globally, resulting in 17.9 million deaths yearly, of which more than three-quarters were in low-income and middle-income countries. The high prevalence of these diseases is anticipated to increase the need for affordable and quality healthcare.

Furthermore, respiratory diseases are a major concern across the globe. For instance, according to WHO, in 2019, nearly 4 billion people globally were suffering from respiratory problems. Moreover, according to WHO, as of February 24, 2021, there were nearly 11,176 million confirmed cases of COVID-19, including nearly 2.48 million deaths worldwide. As the prevalence of respiratory diseases elevates, the demand for medical devices, such as ventilators, is also increasing. These are the reasons behind the anticipated medical device reimbursement market growth during the forecast period.

Increasing Cost of Healthcare

Major stakeholders are becoming increasingly interested in reimbursement due to the continuous rise in healthcare costs. As per the CMS data, national healthcare expenditure in the U.S. accounted for 17.7% of the country's GDP and grew by nearly 4.6% in 2019. Chronic illnesses, such as heart disease, diabetes, and cancer, have increased and can be attributed to 85% of the health care costs. Almost half of the population in America has at least one of these diseases, and treatment is expensive. As a result, the sickest 5% of the population consumes 50% of the total healthcare costs.

The four leading causes of death are chronic obstructive pulmonary disorder, heart disease, stroke, and cancer. These diseases can be prevented or would be cheaper to treat if diagnosed in the early stages. These diseases cost approximately USD 7,900 extra per person. As per an article published by ScienceDaily, the cost of cardiovascular diseases will exceed USD 1 trillion by 2035 for the U.S., and the number of Americans with these diseases will rise to 131.2 million (45%), indicating that the economic burden of cardiovascular conditions will worsen in the coming years, fueling the market growth.

Global Medical Devices Reimbursement Market Restraint:

Complex Framework

The primary drawback of the highly complicated healthcare reimbursement system is that its regulations are subject to frequent changes, sometimes even daily, for government payers. Health insurance payers have a range of healthcare reimbursement plans and contracts with health systems and individual practices. This means there can be a single price for services in a health care system contracted with a payer and another price for services outside that system. For instance, The CMS mainly uses G-codes under the Medicare Physician Fee Schedule (MPFS) for Image-guided Radiation Therapy (IGRT) and Intensity-modulated Radiation Therapy (IMRT). Meanwhile, some non-Medicare payers may report using CPT codes in freestanding centers as per their own assigned value for CPT code 77387 or fee schedules or can use either IGRT G-codes.

Furthermore, the path to claim payment is too complex. Hence, some providers have dedicated resources to fight claims denied for many reasons, not just registration. This process includes understanding payer rejections and amending and submitting the claim again within a stated time frame. The company can deny paying to claim, declaring that "timely filing limitations" have been surpassed. The service is then written as the patient is not liable. Moreover, the price charged by a provider for a specific service is not the retail price. Payers have a maximum payment allowed for each Common Procedural Technology (CPT) code, which is the initial point of determining what the payers will pay. The payer then regulates the maximum payment allowed with "claim edits," which disqualifies payment for some services, and "payment rules," which usually minimize payments for some services.

Reimbursement rules also vary across countries. In most countries, reimbursement rates applicable for a device or procedure type are cost-based, while in some countries, they are value-based. Furthermore, the increased burden on market players to provide substantial evidence for clinical performance and cost-effectiveness of a device, which is part of the reimbursement coverage decision, is anticipated to increase reimbursement issues in the market.

Global Medical Devices Reimbursement Market Opportunities:

Supportive Government Programs

The federal government has a primary role in shaping all aspects of the healthcare sector. Government initiatives play a vital role in boosting medical reimbursement market growth. For instance, the U.S. Affordable Care Act (ACA) aims to provide access to health insurance for low-income people. The act intends to lower healthcare costs and raise the standard of care. The number of reimbursements and denials is anticipated to increase as insurance coverage spreads. The expansion of Medicaid is one of the obligations of the ACA. Medicaid is available to almost all Americans and legal residents between 19 and 64 with a household income below 133% of the federal poverty level.

Initially, all states were required to expand Medicaid under this law. The federal government would penalize the states that did not obey. As of 2020, around 36 states and DC had accepted federal funding to expand Medicaid under the ACA. Missouri and Oklahoma are anticipated to join the program by mid-2021, while Georgia plans to partially expand Medicaid in mid-2021. Therefore, the managed Medicaid market will likely create high growth potential for insurance companies as more states move Medicaid beneficiaries into managed care plans.

Other government programs, such as Medicaid, Medicare, the Children's Health Insurance Program (CHIP), the Indian Health Service (IHS) program, the Veterans Health Administration (VHA) program, and Department of Defense TRICARE, and TRICARE for Life programs (DOD TRICARE) provide health care services to about one-third of Americans. These six major government healthcare programs serve the elderly, disabled, low-income mothers and children, veterans, active-duty military personnel and their dependents, and Native Americans. Moreover, in December 2019, Germany introduced the Digital Healthcare Act, which enables physicians to prescribe digital health applications to patients and to seek reimbursement from healthcare insurers for these apps that meet certain criteria issued by the government. Such supportive initiatives are anticipated to fuel medical devices reimbursement market growth.

Regional Analysis

Region-wise, the global medical devices reimbursement market is segmented into North America, Europe, Asia-Pacific, and LAMEA.

North America Dominates the Global Market

North America is the most significant global medical devices reimbursement market shareholder and is estimated to exhibit a CAGR of 10.81% during the forecast period. Market expansion in this region is expected to be boosted by the rising prevalence of chronic illnesses and the demand for medical devices over the forecast period. The growing geriatric population in the region can also be attributed to the growth of the North American medical device reimbursement market. Provisions for medical device reimbursement are well-established in the region. The U.S. market for medical devices reimbursement comprises both public and private third-party coverage.

At the federal level, Medicare mostly provides reimbursement, while at the state level, Medicaid covers the expenses. The U.S. Affordable Care Act effectively controls and minimizes healthcare costs by spreading the cost of certain services across a large patient population. The law made healthcare affordable for a large population by supporting innovative methods to deliver medical care at reduced costs. Moreover, the Centre for Medicare & Medicaid Services is endorsing efficient strategies in the healthcare system by supporting the delivery of reliable, high-quality care and ensuring health insurance coverage in the country. Such favorable policies can be attributed to the large share of the medical devices reimbursement industry.

Europe is expected to grow at a CAGR of 10.1% during the forecast period. An independent organization—the National Institute for Health and Clinical Excellence (NICE)—produces national guidance on medical devices in the U.K. Supervision helps the NHS in adopting effective and cost-efficient technologies. Favorable government initiatives in the country are predicted to propel the medical device reimbursement market. For instance, in 2016, a new nationwide system was introduced by NHS England for purchasing expensive implants and medical devices. This system helped reduce price variations, thereby saving the overall annual cost of medical devices.

Furthermore, the new system also made new technologies accessible to patients by making medical device adoption faster and more economical. Such a streamlined reimbursement environment can be attributed to the significant share of the U.K. in the European market for medical devices reimbursement . Moreover, the rise in the prominence of chronic diseases in the country, coupled with the large senior population, is also anticipated to drive the U.K. market for medical devices reimbursement over the foreseeable future.

Asia-Pacific is the third largest region. The changing business dynamics and the rising cost of medical devices are among the prime factors expected to boost demand for medical device reimbursement services in countries like India and China. Established companies in Western Europe and the U.S. outsource analytical services, site research development, and clinical activities in Asia-Pacific. Establishing several regional medical device reimbursement services has also strengthened the market. Moreover, an increase in the need for cost-effective operations by pharmaceutical companies will likely boost this region's medical device reimbursement market. The medical device reimbursement market is expected to grow in countries like China and India. Government support and the availability of skilled practitioners are expected to further contribute to the market growth.

Segmental Analysis

The global medical devices reimbursement market is segmented by payers and healthcare settings.

Based on payers, the global medical devices reimbursement market is segmented into public and private. 

The public segment dominates the global market and is estimated to exhibit a CAGR of 9.7% during the forecast period. Public payers offer businesses in the healthcare and pharmaceutical sectors end-to-end solutions. As a result, there is a growing need for public payers as a result of the prevalence of chronic diseases worldwide and the need for cost-effective operations. The two categories of public payers are Medicaid and Medicare. Medicare is the largest payer in the United States; it covers patients with end-stage renal disease, permanent disabilities, and those over 60. Medicaid payers offer insurance services to individuals with low and moderate incomes. It covers the cost of hospital visits, prescription drugs, and emergency room visits.

Furthermore, the National Health Service across England provides free public healthcare, including hospitals, physicians, and mental healthcare. In 2017, the NHS treated over 8.5 million nonurgent patients, and around 135,000 people received long-term treatment under the NHS. Hence, with an increase in the aging population and the rise in the prominence of chronic diseases, the market is expected to grow over the forecast period.

Based on the healthcare setting, the global medical devices reimbursement market is segmented into hospitals, outpatient facilities, and others.

The hospital segment owns the highest market share and is estimated to grow at a CAGR of 10.5% during the forecast period. An increase in the incidence of diseases, high demand for advanced medicines and medical devices, and cost-efficient production are expected to drive the segment over the forecast period. The hospital's market exhibits a high growth rate, accounting for more than 25% of the total market for medical devices reimbursement.

Private patients (patients with private health insurance) can also be treated in public hospitals, and, therefore, public hospitals witness high patient influx as they can treat private and public patients compared to private hospitals, which are generally not preferred by public insurance patients. Therefore, a high influx of hospital patients is anticipated to increase the adoption of new treatment and diagnosis solutions and the number of treatment and diagnosis procedures, thereby positively impacting the market growth.

Recent Developments

• July 2023- France implemented an expedited reimbursement procedure for digital medical devices. France's Ministry of Health, represented by Louisa Stuwe, implemented a streamlined process for granting expedited access and reimbursement to digital devices used for remote patient monitoring and digital therapeutics. The process is analogous to Germany's DiGA.