About minutes 20-32.
AI SUMMARY
The discussion centered on how reimbursement remains one of the biggest obstacles to medical technology innovation. Speaker 1 opened by expressing frustration that while Medicare has become more engaged and progress is visible, commercial payers still seem distrustful of industry motives. He emphasized that even when companies clearly aim to deliver technologies that both improve outcomes and reduce costs, payers remain skeptical. He called for a more integrated ecosystem where stakeholders—industry, CMS, and private insurers—work collaboratively rather than working at cross purposes.
Speaker 2 agreed that reimbursement is the single greatest hurdle facing new medical technologies, noting that the cost, complexity, and duration of development have all increased. Beyond inflation and clinical trial expansion, he argued that the largest time burden now lies in convincing payers to cover innovations, even when strong clinical evidence exists. He contrasted Medicare’s openness to new technologies with commercial insurers’ resistance, describing the latter’s business model as inherently focused on avoiding payment for new interventions. Medicare, he observed, can play a constructive leadership role because of its scale and influence on other payers. However, the combined regulatory and reimbursement timelines—often extending 10 to 14 years—make it difficult for venture investors to justify early-stage funding, since returns fall outside a fund’s typical 10-year window. Compressing these timelines, he argued, is essential for restoring the economic logic of medtech innovation.
Speaker 1 agreed that FDA pathways, while imperfect, are at least transparent and predictable, whereas payer coverage decisions are opaque and inconsistent. This lack of clarity discourages investors from backing transformative technologies. He also pointed out that commercial payers’ short member turnover—most beneficiaries remain with an insurer for only a few years—discourages long-term investment in innovations that improve health over time. He asked whether there might be creative ways to engage private payers more meaningfully in supporting innovation.
In response, Speaker 2 suggested leveraging competition and public awareness to pressure commercial insurers. Patients and employers could be encouraged to select plans that provide access to leading technologies, effectively rewarding payers who adopt progressive coverage policies. He cited the diabetes field as an example where attempts to restrict access to continuous glucose monitors and pumps backfired, as patient backlash and employer preferences forced insurers to reverse course. He also proposed that companies publicly celebrate insurers who issue positive coverage policies, especially during open enrollment seasons, to build consumer loyalty. In addition, he raised the idea of positioning some payer denials as potential liability risks, particularly when the technology in question has already become a standard of care or is covered by Medicare.
Both speakers agreed that improving access and coverage should be central goals for payers, not afterthoughts. They concluded by acknowledging that the cost of bringing a medtech product from concept to market has escalated dramatically, widening the funding gap for early-stage startups. Many investors now avoid early-stage medtech altogether, leaving only a handful of institutional backers willing to support companies before reimbursement is secured. Speaker 1 closed by asking how entrepreneurs can realistically raise small seed rounds in this climate, underscoring the need for structural solutions to restore early innovation funding.
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## AUTO TRANSCRIPT
Speaker 1 0:00
And I think, you know, as I, as I think about that one of the things that still frustrates me, and just how do we get all the stakeholders to the table, is still on the reimbursement side of things. And I think Medicare is, is is engaged. And I think, you know, even this week, we're seeing some progress, it seems, but, but commercial payers, it still seems like there's that distrust of industry. And I just wonder, like, how do we break through that barrier, you know, continue to break through with it, with Medicare and and even get the commercial payers to the table, you know, can we make this truly an ecosystem? Because I agree with you. I think, I think we got the message long ago that it's not just enough to, you know, create a better widget that is, you know, nice and innovative, but adds cost to the system, and we have to really be tackling both improved outcomes and reduced cost, which should play to everybody but, but I think that's still a difficult message, or at least it's one that is viewed with skepticism by by payers. So I'm curious what your thoughts are on how we how we start to bridge that
Speaker 2 1:17
gap. Well, first of all, I agree with you. I think, I think reimbursement is the most significant hurdle that innovations face, truly, truly new innovations face. I think the fundamental issue is the timelines and the capital requirements to get innovations to market have extended for a bunch of reasons. I think you can point to, you know, pre clinical product development requirements, clinical trial sizes, fundamental input costs along the way, right? You know, inflation, but when you when you really kind of break down where there's a significant burden on time, and in my opinion, a fair amount of, I'll call it redundancy. It's convincing payers that these innovations are worth paying for, even after, in many cases, you've run high quality level one clinical trials that demonstrate clinical outcomes benefits. And most of the time, I think the medical device industry is funding innovations that can be inherently cost saving on their face, right, whether it's enabling transitions to less invasive procedures with faster recovery times or sites of care delivery that are lower cost, less risk, etc, a lot of what we're funding is just sort of fundamentally cost saving. It may take a little time in terms of kind of learning curve and procedural refinements, but when you look at how these technologies come to market, they are almost invariably cost saving over the medium to long term. But you know, the reimbursement side, I think in a lot of ways, we're fundamentally facing a stakeholder that doesn't want to pay for new things as part of their business model, sort of inherently, and I would distinguish in a lot of ways, Medicare and CMS from commercial payers in this regard, and one of the reasons that I focus a lot of our policy efforts on CMS is, number one, They're the largest quote, unquote single payer, you know, covering more lives, you know, particularly for patients that are consuming medical technologies. And so they're an important stakeholder in that regard. But actually, I also don't think they're fundamentally opposed to covering new things that are beneficial. The question is, at what point do they really believe that they're beneficial, and what are the requirements to demonstrate that to them. I also believe, because they're the largest payer, they can be influential and the policies they set and the things they're willing to cover, and when you know, do have an impact on how commercial payers have to then follow suit. And so I think, as a partner in the ecosystem, they're an important focal point, because they can be more influential than if we just say, went for United Healthcare, whatever. But it's this path of post approval, validation and extension of the timelines to get products into the US market in particular, that's really killing the math associated with making investments in truly novel, you know, venture backed companies, especially at an early stage, you know, you know, as well as anyone, Jeff, we've got sort of 10 year fund lifetimes, and you really can't justify investing in the series a of a sort of new startup company when it's going to take seven to 10 years to get Through the, you know, clinical validation and FDA approval process, and then it could take another, you know, four to seven years after that to get coding coverage and reimbursement in place, to have a US market opportunity that you can access and commercialize it to. And it just, it vastly exceeds the timelines of our funds, and no LP is going to. To buy into that model. So got to figure out how to compress these timelines. And I think reimbursement and the requirements there the things that probably deserve the most attention and can move the needle the most.
Speaker 1 5:11
I totally agree. And it's, you know, it's, it's the we can have our qualms with FDA, but at least there's sort of a well understood, you know, pathway there and there's and the incentives are more or less aligned. I mean, I think FDA really wants to see new treatments come to market, but there the lack of transparency and predictability on the payer side creates uncertainty, which really, you know, has a negative effect on on on innovation, the willingness to invest in things that are really a whole new, transformative type of treatment. So it's, it has sort of implications. And I, you know, all the work you've done to on some of the things that would allow for more of a bridge to coverage, I think with Medicare is going to be, I think, hopefully, very helpful the commercial side, you know, I still don't know, like what you know. I think we face another issue with commercial payers, and that many of their members are only members of that carrier for a handful of years. And so when they do the math on investing in these patients or their members, essentially, I think they struggle to justify whether you know, you know whether it's worth making that investment. And I don't know if you have creative ideas on how we how we get them to the table, to think about basically investing in their membership.
Speaker 2 6:34
Well, I think, I think you're right, first of all, that that those economics are real for them. I I have wondered if there aren't more opportunities to almost force them to cover new technologies that that have a significant patient impact, because either you know patients as a purchaser insurance or their employers can make decisions between different commercial insurance providers, and could we do a better job of helping employers or patients distinguish between payers that are more restrictive in their policies, not covering technologies that patients want access to or employers believe are best for their their teams, and almost force a more competitive dynamic where, you know, supporting innovation through coverage policies is actually how they effectively compete. You know, for their customers, I think it's interesting in theory, not the easiest thing to do, but I think there are some good examples. You know, diabetes is a particularly noteworthy one, some companies have pursued pretty aggressive policies to limit access to technology, and whether it's brands or types of products like CGMS or pumps, and it really came back to bite them, because that patient community has significant expectations around freedom of choice and personal preference means a lot in managing a chronic condition like that. And I think we've seen, you know, efforts to limit patient access really backfire. Yeah, it makes me just think there may be other opportunities in our categories, you know, where we could provide some of that education or market differentiation at relieva, we were, we've been receiving an increasing number of commercial payer coverage policies, you know, this year for the intercept procedure for chronic axial low back pain. And I it almost, you almost want to sponsor, you know, marketing campaigns that celebrate, you know, when a payer announces that positive insurance policy, and they're doing it ahead of the open enrollment period. We ought to be putting out press releases on their behalf, signaling who's out there and ahead of the curve relative to their competitors.
Speaker 1 8:55
Yeah, that's really interesting. Hadn't quite appreciated just the importance of the ability to inform the consumer via these, you know, direct patient campaigns that have really become, you know, very prevalent. I mean, the Inspire, I think, does a great job with their commercials. But really, you know, beginning to arm the consumer with much more information, and it probably drives doctors crazy to a certain extent, when they walk in with a whole host of you know, things that they've come up with, but but empowering the patient is, I think, probably the best, one of the best ways we have to influence the carrier.
Speaker 2 9:38
Yeah, I think that's right. I mean, I think the other is, you know, to what extent can we better establish new technologies as bonafide standards of care? And you know, when payers are denying patients access to technologies that can be life saving, or, you know, life preserving, you know, particularly, let's, let's imagine, you know. Medicare starts covering a technology you know, ahead of private commercial pairs, which frequently happens. Can you make a case that you know, denial of that care is is almost something that there could be liability for, and it gets it. It's challenged to pick the right technologies in the right circumstances. But I've seen some pretty egregious examples of patients being denied access to devices, diagnostics or drugs that you know, we know are better, and they're proven to be better, and there's no excuse for foot dragging by private payers.
Speaker 1 10:36
Yeah, yeah. And that language you're using certainly seem to come out in some of the hearings or proceedings on the Hill this week with respect to Medicare and covering new technologies, and it is about access, and providing Medicare eligible patients with access to things that could really dramatically alter their lives. So that that would be great if that became part of the ethos for commercial carriers as well. You know, maybe one thing would be good to get into, and we're touching on it a little bit, because we've talked about, you know, just the cost of getting some of these companies through to approval. And then, you know, not even talking about commercialization, because that's probably the most costly part, part of their journey. But the you know, there's no question that the amount that it takes to get these companies from concept through commercialization has gone up. And I think it's a reality in our business that a lot of folks have sort of steered away from the early stages of investing in order to shorten that timeline for their investment, and it's created this funding gap for early stage companies. I mean, I all the time I'm trying to answer for entrepreneurs. You know, if you're not going to go this early, then who else should I talk to? And there's probably just a handful of sort of institutional investors I can point them to. And I guess one question I have for you is, what, how do you answer that question? How, when an entrepreneur is just looking for that, you know, first million or 3 million, how do you advise them as far as how to get it off the ground? That's agreed? I.
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