Decision Makers and Decision-Making Processes Diagram
Figure 1: Overall Reimbursement System in Germany
Model description and Symbols:
The ultimate decision maker is listed at the top of the model
Boxes: Decision-making bodies
Solid Arrows: Required step in decision-making process
Broken Arrows: May or may not impact decision
The Federal Republic of Germany currently has approximately 82.5 million inhabitants and is organised in 16 states (Laender). Germany utilises a “Bismarck” Insurance Fund-based system of healthcare provision which covers the vast majority of the population. Statutory Health Insurance Funds (SHIs) are responsible for the costs of healthcare provision to their insured population. Being insured is legally mandatory and 92% of the population are members of a SHI. Private insurance coverage can only be used in addition for improved services or if the yearly income exceeds a defined level (49.950 EUR in 2010). Medical Devices and Diagnostics are used both in the inpatient and the ambulatory sectors with markedly different reimbursement and funding mechanisms in each one.
The partition of inpatient and ambulatory care in Germany is large. Traditionally, hospitals are public institutions providing only inpatient care, while ambulatory care is supplied by private practices which are paid by SHIs and private insurances. Increasingly, hospitals are also providing ambulatory care which is regulated by a Committee for Ambulatory Care in the Hospital. There is a trend towards foundation of policlinics (outpatient clinics or healthcare centers) or so called Medical Supply Centers (Medizinisches Versorgungszentrum), both, on a private business level or in a public hospital setting. Also, hospitals are increasingly privatized. The process for successful market access of different medical device or diagnostic products will be highly dependent on the setting in the product should be used.
This document will address both, the reimbursement processes relating to the inpatient hospital sector and those in the ambulatory sector. The German healthcare environment is very dynamic and prone to change; high-level structures are unlikely to be altered; specifics, however, most certainly.
(Note: For more information on Germany Healthcare systems, please refer to the Pharmaceuticals Road Map)
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DECISION-MAKERS AND INFLUENCERS
DIMDI - (German Institute of Medical Documentation and Information): Maintains diagnostic (ICD-10-GM) and procedural (OPS) coding.
InEK - (Institute for the Hospital Remuneration System): Maintenance of G-DRG codes and associated reimbursement rates. Handling of applications for NUB (see below) and monitoring of NUB utilization.
G-BA - (Joint Federal Committee): Ratification of new procedures for coverage by the SHI.
Ambulatory Care Committee (Part of G-BA): Maintains the EBM catalogue (see below), which is the basis for the fee for service remuneration of providers.
IQWiG - (Institute for Quality and Efficiency in Healthcare): May conduct health technology assessments if requested by G-BA. There is no standardized health technology assessment procedure by IQWi) for (companion) diagnostics existing, yet.
SHI - (Statutory Health Insurance): pays for services provided based on G-DRG or EBM
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REGUALTORY PATHWAY/ MARKET APPROVAL PROCESS
The CE mark is required for a new technology before it can be marketed and reimbursed.
Specific diagnostic and procedure codes are used for prospective (hospital) or retrospective (ambulant) reimbursement. However, coding does not directly and automatically lead to reimbursement.
There is a time lag between the availability of a new procedure and the correct coding. The update of the G-DRG by InEK is done yearly based on the data from the previous 2 years.
Hospitals can apply individually for using a new procedure under the NUB process (see below). The adequate uptake and correct coding of a new technology by the hospitals that participate in InEK’s calculation system is surveyed by InEK. The reimbursement for NUBs is negotiated with the SHI.
In addition to the CE mark, ambulatory care procedures need a listing in the EBM and to be reimbursed by the SHI. Private physicians can only charge for services listed in the EBM, which is edited and administrated by DIMDI.
Funding of hospitals:
The State covers large investment costs and the procurement of assets with a long economic life (> 3 years) – investments are negotiated between the State and each hospital.
The statutory health insurance (SHI) or private insurer covers inpatient hospital activities – according to G-DRG.
Diagnostics and medical devices for hospital use are usually part of the procedure (flat rate per case) and therefore do not necessarily lead to a new coding. The flat rate and the time lag to rate adaptation may hamper the adoption of new procedures (e.g., additional diagnostic test).
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REIMBURSEMENT AND COVERAGE/ PAYMENT FLOW MAP AND PROCUREMENT PROCESS
All medical devices and diagnostics are subject to contracts (Hospitals, Medical Doctors, and Health Insurers). These contracts differ between hospitals and ambulant services.
All applications for reimbursement of CE-certified medical devices and care products must be submitted to the SHI umbrella organization. Applicants must provide information supporting product functional suitability, safety, quality, and – subject to requirement – medical or nursing care benefits. The SHI informs applicants of the application decision in writing.
Hospital (Inpatient) Sector
Figure 2: Reimbursement of Inpatient Hospital Products
Broad Mechanisms of Hospital Funding
Hospital Funding in Germany is regulated by the “Hospital Financing Act” which establishes a dual funding mechanism for German hospitals. Under the Act, each state is responsible for covering large investment costs and the procurement of assets with a long economic life (more than three years). These types of investments need to be negotiated and agreed between the state and the hospital in question. Inpatient hospital activity is the responsibility of each patient’s SHI (or private insurer) and this covers facility maintenance costs (unless the facility is going to be completely replaced in which case the state would be liable for that), labour costs and disposable costs. The principle mechanism of inpatient activity reimbursement to hospitals by the SHIs (or private insurers) is a highly evolved Prospective Payment System (PPS) called the German DRG or G-DRG.
Foundations and Goals of the G-DRG System
The G-DRG builds on the September 2004 Version 5.1 of the Australian “Australian Refined Diagnosis Related Group” AR-DRG system, but has since evolved far from its originator and is now a completely separate hospital financing mechanism. Different to other healthcare systems around the world, the G-DRG does not aim to incentivise, or disincentivise hospital activity; instead it aspires to accurately reimburse all activity types in a budget-neutral way for the hospital.
The G-DRG system is maintained by the “Institute for the Hospital Remuneration System” (Institut für das Entgeltsystem im Krankenhaus, Siegburg) also known as InEK. InEK is responsible for the collection and processing of hospital costing data, the updating of the funding units associated with each funding code and the updating of the funding codes themselves. The institute is also responsible for certifying the logic system of various grouper software available to German hospitals. However, InEK does maintain neither the diagnostic, nor the procedural codes employed by G-DRG, which are responsibilities of the “German Institute of Medical Documentation and Information” (Deutsche Institut für Medizinische Dokumentation und Information) or DIMDI.
German Diagnostic Code System
The diagnostic codes system employed by G-DRG is the ICD-10-GM “German Modification”). DIMDI maintains and updates the ICD-10-GM on an annual basis. As the name implies, the system is based upon and closely resembles the ICD-10 maintained by the World Health Organisation (or WHO).
German Procedure Code System
Procedure codes (arguably one of the most important pillars of successful market access in Germany) in the G-DRG come from the OPS (Operationen- und ProzedurenSchlüssel) system which is also maintained by the DIMDI and also updated on an annual basis. In contrast with ICD-10-GM, OPS is unique to Germany.
Process of Accurate Reimbursement of Newly Introduced Technologies
As with every PPS system, the reimbursement of newly introduced technologies depends on the availability of specific diagnostic and procedure codes, as well as the adequate uptake and correct coding of this new technology by the hospitals that participate in InEK’s calculation system. InEK is updating G-DRG on an annual basis, using however data from the previous two years. This may contribute to a time lag for successfully funding a new technology or creating new funding codes for it. Furthermore, as explained, correct coding of a new technology will not necessarily lead to sufficient reimbursement immediately. Therefore, German hospitals (who are constantly under pressure to contain expenditure and improve efficiency) may have a counter-incentive against potentially useful and cost-effective or cost-efficient technologies because of the certainly negative initial budget impact. In addition, diagnostics and medical devices for hospital use often are part of the procedure (flat rate per case) and therefore do not necessarily lead to a new coding. This creates even more disincentive to introduce a new additional procedure (e.g. diagnostic) since it most probably decreases the margin.
Quick Pathway to Access for Innovative Products – The NUB Application
Recognising the need for a mechanism allowing innovation within the G-DRG system, the InEK has created an “on-top” funding process for innovative products. This process, known as NUB (Neue Untersuchungs- und Behandlungsmethoden) Application can be filed by hospitals only for technologies that have just been introduced in Germany. Every hospital will need to apply separately (electronic application at InEK) and the “on-top” payment (if the application is approved) will be available only to the hospitals that applied for it and not to every hospital in Germany. Approved applications are subsequently monitored by InEK and should the new technology be adequately used; correctly coded; and, exhibit a cost profile of sufficient difference, the InEK may integrate it permanently to the G-DRG. It should be noted that InEK makes no decision on the actual amount of the “on-top” payment. That will need to be directly negotiated between the successful hospital applicants and the SHIs. The NUB pathway has the potential to accelerate market access for new technologies but requires significant effort from its users.
Despite the introduction of the G-DRG system, hospitals in Germany are not free to increase activity beyond pre-defined limits. Through G-DRG based calculations, German hospitals are still under a system of “global budget”. Therefore, all new technologies are essentially attempting to capture a share of a budget that remains largely stable throughout the years. Successful market access will be based either on increases of this activity caps or on more efficient inpatient activity that will allow space for new procedures within current limits.
Broad Payment Mechanism – The Uniform Value Scale
The majority of ambulatory services are provided by private practitioners in the community. These physicians are paid by their regional association who is in turn paid by the SHIs. Payments by the SHIs to physician associations are usually based on a “per physician member” or a “per insured person” basis and while private insurers predominantly pay on a fee for service basis. The physician associations are responsible for distributing these payments to their members in accordance with the “Uniform Value Scale” catalogue, also known as EBM (Einheitlicher Bemessungsmassstab). The EBM system constitutes a mix of services delivered, number of patients served, and fixed budget distribution system. Physicians are only able to invoice services that appear on the EBM. The EBM is maintained by the Ambulatory Care Committee which is a part of the Federal Joint Committee.
New Diagnostic and Therapeutic Procedures and Health Technology Assessment
In general, new diagnostic and therapeutic procedures can only be reimbursed by the SHI if they are ‘necessary, appropriate, and economic’. The decision on acceptance of new procedures for coverage by the SHI has to be ratified by the Federal Joint Commission (Gemeinsamer Bundesausschuss, G-BA). New technologies aspiring to be used in the ambulatory sector will need to be listed on the EBM, a process which requires physician support and may involve a Health Technology Assessment (HTA) by the Institute for Quality and Efficiency in Healthcare (Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen) or IQWiG. It should be noted that the actual payment amount of an EBM-listed procedure is the responsibility of the Valuation Committee which is separate from the Ambulatory Care Committee.
Ambulatory care procedures will need to be approved by the Ambulatory Care Committee and the Federal Joint Committee if they are to become listed on the EBM and offered to German patients through private physicians. This may involve an HTA by IQWiG which closely resembles the process used for the evaluation of pharmaceutical products. The IQWiG methodology has been recently updated. To date, no medical devices or diagnostics have been subjected to such an HTA.
Other Market Access Issues
As with the inpatient procedure sector, ambulatory care in Germany is also capitated and subject to a “global budget” like structure. The actual amount is only determined after the fact. Once all physicians in that region have invoiced the association, the usually too limited budget is distributed according to the EBM points unless a physician has too many. Then she/he may receive relatively less. Also, physicians can only invoice for 1 procedure per patient quarter. If the patient comes back a second time, there is no additional payment. Therefore, the introduction of new technologies will also need to overcome the inherent barriers associated with budgetary capitations.
In addition to the procedures listed in the EBM and reimbursed by the SHIs, there are so called IGeL (Individuelle Gesundheitsleistungen; Individual Healthcare Services) which are fully paid by the patients. Preventive care or diagnostic procedures frequently have to be paid out of the pocket.
DATA REQUIREMENTS (HTA, PAYMENT DECISIONS)
Although IQWiG can be charged by the G-BA to evaluate diagnostic products or medical devices, there is no specific standard guidance existing for these assessments. It can be assumed that the assessment will follow the directives for pharmaceutical products.
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CE: Conformité Européeenne
DIMDI: Deutsche Institut für Medizinische Dokumentation und Information (German Institute of Medical Documentation and Information)
EBM: Einheitlicher Bemessungsmassstab (Uniform Valuation Scale)
G-BA: Gemeinsamer Bundesausschuss (Federal Joint Committee)
G-DRG: Diagnosis Related Group; ICD-10-GM “German Modification”
GKV: = SHI
HTA: Health Technology Assessment
IGeL: Individuelle Gesundheitsleistungen (Individual Healthcare Services)
InEK: Institut für das Entgeltsystem im Krankenhaus (Institute for the Hospital Remuneration System)
IQWiG: Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen (Institute for Quality and Efficiency in Healthcare)
NUB: Neue Untersuchungs- und Behandlungsmethoden (New diagnostic and therapeutic methods)
OPS: Operationen- und ProzedurenSchlüssel (Surgery and Procedure Code)
SHI: Statutory Health Insurance = GKV (Gesetzliche Krankenversicherung)
- EU Commission medical device classification explanations and examples guidelines. Available at: http://ec.europa.eu/enterprise/medical_devices/ :
- German Medical Device Law (in German Language) available at: http://bundesrecht.juris.de/mpg/index.html :
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Busse R, Riesberg A. Health care systems in transition: Germany. Copenhagen, WHO Regional Office for Europe on behalf of the European Observatory on Health Systems and Policies, 2004.
AUTHORS & CONTRIBUTORS
Stelios Tsintzos, MD, MSc, SQDM Health Economics and Reimbursement Analyst, Medtronic International Trading, Tolochenaz, Switzerland
Anke-Peggy Holtorf, PhD, MBA, Business Director Europe, BioBridge Strategies, Basel, Switzerland
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