Medical Devices Reimbursement Market Size, Share & Trends Analysis Report By Payer (Public, Private), By Healthcare Setting (Hospitals, Outpatient Facilities), By Region, And Segment Forecasts, 2021 - 2028

Report Overview

The global medical devices reimbursement market size was valued at USD 374.4 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 10.8% from 2021 to 2028. Medical devices reimbursement is defined as payment a private insurer pays to healthcare providers for costs the provider incurred while using medical devices. Usually, the health insurer or government payers cover the patients’ healthcare expenses inclusive of medical device use. Technological advancements in Electronic Medical Records (EMR), rising cases of chronic diseases, and the growing need for reimbursement are certain factors driving the market. The reimbursement amount is decided by two methods; complete reimbursement of specific medical devices, and payment by the result of the entire medical procedure where a medical device is used.

The U.S. Affordable Care Act focuses on decreasing costs of healthcare for patients. The main purpose of this act is to reduce the medical device cost and make affordable healthcare insurance available to every person in the country. In addition, the Center for Medicaid and Medicare is working towards providing high-quality medical devices and making health insurance available for billions of people. Hence, Medicaid spending in the U.S. increased by 4.5% in 2019. Also, according to a report published by the Center for American Progress (CAP), around USD 1.3 trillion is estimated to have been spent for healthcare reimbursement in 2019 within the US. Due to this reason, the market is expected to show lucrative growth over the forecast period.

Furthermore, with an increasingly aging population, healthcare expenditures will continue to increase, leading to high demand for medical devices. This is another factor that will highly impact the reimbursement industry in the long run. Other factors responsible for the growth of the market are the increasing cost of healthcare, the growing patient population, and rising awareness among people regarding health insurance policies.

COVID-19 has had a significant effect on medical devices and its supply chain market. Movement restriction between countries interrupted transportation services between regional warehouses. Many medical device companies rely on healthcare facilities for clinical trial data collection, as most medical devices undergo trials before manufacturers can obtain certificates for market approval. As there is a restriction on ambulatory visits, under which these research studies typically fall, the launch of new medical devices by manufacturers is likely to be hindered.

However, COVID-19 has also led to an increase in demand for home care services and products, which is estimated to positively impact the reimbursement coverage of remote monitoring devices, wearable devices, home infusion devices, durable medical devices, and others. For instance, ALS Association, National Association for Home Care and Hospice, Massachusetts General Hospital, and Partners Healthcare System have requested CMS to issue an 1135 blanket waiver, allowing coverage for all home infusion therapies during the COVID-19 public emergency.

Medical Devices Reimbursement Market Trends

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. Moreover, approximately 79% of the deaths due to these diseases are estimated to occur in the developing countries.

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 early stages. These diseases cost approximately USD 7,900 extra per person. According to an article published by ScienceDaily, 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 market growth.

Government initiatives play a vital role in boosting medical reimbursement market growth. For instance, the Affordable Care Act (ACA), implemented in the U.S., focuses on expanding health insurance coverage to individuals with low income. The act aims to improve the quality of healthcare services and reduce the cost of care. The expanding insurance coverage is expected to raise the number of reimbursements as well as denials. One of the requirements of ACA is the expansion of Medicaid.

The healthcare reimbursement system is highly complex, and the main limitation is that the rules governing it change very often, with government payers occasionally changing on a day-to-day basis. The payers of health insurance have a range of healthcare reimbursement plans and have contracts with health systems and individual practices. This means that there can be a single price for services that exist in a health care system, which are contracted with a payer, and another price for services outside that system.

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, increased burden on market players to provide substantial evidence for clinical performance as well as cost-effectiveness of a device, which is part of the reimbursement coverage decision, is anticipated to increase reimbursement issues in the market.

Payer Insights

The private medical devices reimbursement segment accounted for the largest revenue share of 65.1% in 2020. The growth of the segment is attributed to the presence of a large number of private players in the market. The segment is expected to continue its dominance over the forecast period. Additionally, the rising prevalence of cancer and diabetes and increasing demand for better treatment are also responsible for segment growth over the forecast period. Also, the current assessment criteria for reimbursement reflect the cost of using a device or performing a procedure, but not the value of the technology used. Thus, owing to a lower average reimbursement value, various public healthcare settings do not have advanced technology medical devices at their disposal.

The growing adoption of public payers in emerging and developed markets and rising innovation for the development of new medical devices are among the major factors contributing to the growth of the public medical device reimbursement segment. In 2017, NHS treated over 8.5 million non-urgent patients and around 135,000 people received long-term treatment under NHS. Hence, with an increase in the aging population and a rise in the prevalence of chronic diseases, the market is expected to grow over the forecast period.

Healthcare Setting Insights

The hospital segment dominated the market and accounted for the largest revenue share of 53.4% in 2020. The segment is anticipated to maintain its dominance over the forecast period. Moreover, the growing aging population and increasing prevalence of chronic diseases are further driving the segment. The growing prevalence of chronic diseases is driving the demand for medical device reimbursement in large-scale settings such as hospitals. Many research-based innovative medical devices are initially used in public hospitals before they are sold to private hospitals. The private healthcare settings maintain a purchasing budget which includes surplus revenue being extracted from patients directly. Hence, they are more equipped with state-of-the-art medical devices. 

The outpatient facilities segment is anticipated to witness the highest CAGR of 11.4% over the forecast period due to increasing investments in R&D and the growing incidence of chronic diseases. Moreover, the growing need for medicines and their cost-efficient production is anticipated to further drive the segment.

Regional Insights

North America dominated the medical devices reimbursement market and accounted for the largest revenue share of 50.0% in 2020 and is expected to lead throughout the forecast period. Increasing cases of various deadly diseases are predicted to stimulate the market over the forecast period. Furthermore, the reimbursement framework is the most advanced within the region compared to other regions. A biannual revision of the list of devices is performed by committees to incorporate the latest products within the reimbursement system.

Changes in the regulatory scenarios and increasing pressure on the healthcare industry to decrease service costs are likely to increase the demand for medical device reimbursement. Hence, the market is expected to show growth over the forecast period. An increasing number of healthcare centers and rising demand for medical devices are expected to drive the market in Europe.

Germany has around 100 statutory health insurers with the National Association of Statutory Health Insurance Funds (GKV) being the largest payer institution. However, on the basis of number of persons insured, Techniker Krankenkasse (TK) is the largest single health insurance funding entity in Germany; it provided insurance to around 10 million individuals in 2020. In addition, private health insurance companies also play a vital role in reimbursing the cost for medical devices. Approximately 9 million Germans are covered under various private health insurers.

Asia Pacific is likely to witness significant growth over the forecast period due to rising healthcare expenditure, increasing chronic disease prevalence, and rising demand for resources in developing countries like China, Japan, South Korea, and India. These countries are adopting the policies being followed by the U.S. and European countries in order to streamline and develop a highly efficient healthcare management system.

South Korea is rapidly becoming a world leader in medical devices reimbursement services. High demand for high value pharma & biologic, medical device, and temperature sensitive shipments is expected to boost medical devices reimbursement market growth. High-end medical devices are imported from the U.S., Japan, and EU countries, which supply 60.0% of total market demand, with the U.S. holding the largest share among the three. Companies exporting medical technology equipment to South Korea require appointment of representative or importer to ensure regulatory compliance and gain medical device approval.

Key Companies & Market Share Insights

Key companies are focusing on research and development to introduce technologically advanced products and gain a competitive edge. Growth in medical device reimbursement will, in turn, propel technological advancements by the medical device manufacturers. This will allow for better healthcare outcomes and higher cost efficiency in the long run. Furthermore, the medical device players are investing in consulting towards the preparation of apt reimbursement proposals for regulatory authorities to increase their profit margins. This trend is expected to rise, owing to reimbursement being the biggest challenge for the medical device manufacturers to secure coverage and attract risk-averse investors. In North America, the most prominent region for this market, since the implementation of the Affordable Care Act, the healthcare industry has transformed from a volume-based to value-based care model, thus driving the need for reimbursement consulting.

Key companies are also engaging in partnerships, mergers, and acquisitions to strengthen their product portfolio, manufacturing capacities, and provide competitive differentiation. Some of the prominent players in the medical devices reimbursement market include:

• Aviva

• Nippon Life Insurance

• CVS Health

• WellCare Health Plans

• BNP Paribas

• Aetna

• Allianz

• Humana

• Cigna

• UnitedHealth Group

Medical Devices Reimbursement Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2028. For the purpose of this study, Grand View Research has segmented the global medical devices reimbursement market report on the basis of the payer, healthcare setting, and region:

• Payer Outlook (Revenue, USD Billion, 2016 - 2028)

  • Public

  • Private

• Healthcare Setting Outlook (Revenue, USD Billion, 2016 - 2028)

  • Hospitals

  • Outpatient Facilities

  • Others

• Regional Outlook (Revenue, USD Billion, 2016 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Italy

    • Spain

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Mexico

    • Argentina

    • Colombia

  • Middle East & Africa

    • South Africa

    • Kuwait

    • UAE