Virtual reality reimbursement may be coming from CMS

Virtual reality reimbursement may be coming from CMS unknown

Reimbursement from payers will increase usage of virtual reality headsets in healthcare but experts say the process will take time.

Healthcare organizations are increasingly turning to virtual reality technology to complement care. Virtual reality companies in this area have three options as the market becomes more defined: They can appeal to providers on the clinical impact and cost savings of their solutions, market products directly to consumers or seek regulatory and payer approvals. Getting regulatory approval will be a time-consuming process, experts say.

"[The regulatory and development] process is going to require that there are healthcare experienced and trained individuals that are deeply [involved] with developing that [technology]," said Brad Reimer chief information officer at Sioux Falls, South Dakota-based Sanford Health.

Reimer said vendors could benefit from directly partnering with clinicians and healthcare professionals as they're building virtual reality technology.

A recent CMS ruling could provide a tailwind, representing the first signal that clinicians will get reimbursed for usage of these technologies by Medicare. On April 1, CMS designated a new durable medical equipment designation for virtual reality company AppliedVR's RelieVRx therapy, which treats chronic lower back pain. It was the first time the designation had been made for a virtual reality-based therapy.

“We're putting everything, all the pieces in place, so that you can get that broad scalability and adoption in the market,” said Matthew Stoudt, CEO and co-founder of AppliedVR. “In our case, as a therapeutic, it comes down to reimbursement.”

In its decision, CMS justified the designation because the software and device were “so integral” and other non-medical software could not be added to the virtual reality headset. The virtual reality headset could not be replaced with another consumer model or personal computer, CMS said in its report.

While the therapy was approved by CMS, a specific reimbursement structure for what the company will be paid for has not yet been set. According to CMS, this will take place at subsequent meeting. Stoudt said establishing a reimbursement pathway through CMS was “critical” to the company’s long-term success.

For AppliedVR's therapy, patients put on the virtual reality headset and complete a series of at-home modules to treat lower back pain. The therapy is administered to patients for up to 16 minutes daily for 56 days, according the company's filing with CMS.

It remains to be seen whether other virtual reality companies will be able to follow in the AppliedVR's steps. AgeWell, a managed care organization for Medicare and Medicaid recipients based in Lake Success, New York announced in January that it would begin covering virtual reality-based mental health therapies from MyndVR for members on its institutional special needs plan. But the number of patients in the initiative is only around 200.

Other companies are taking alternate approaches in driving up adoption of virtual reality.

Penumbra, a medical device company, has developed a virtual reality system focused on patients who are undergoing physical therapy treatments. The company is initially trying to appeal to clinicians on its value rather than focusing on payer reimbursement.

“Fundamentally, the way that healthcare has always moved is actually through clinicians,” said Gita Barry, president of immersive healthcare at Penumbra. “If [clinicians] are not comfortable using it with their patients in person, how in the world would they be comfortable sending it into the home?”

Penumbra has designed a series of virtual exercises ranging from making simulated sandwiches to virtual pinball that it says accomplishes the same tasks as traditional physical therapy. The company said it can offer real-time data to physical therapists, which allows them to work more efficiently with patients. Still, Barry said much of the work it's doing is about generating awareness.

“First, we have to [get clinicians to] know that this kind of technology is out there and that it's out there as a medical device," Barry said.

Providers are just beginning to understand how virtual reality can be deployed in their systems. But a lack of understanding on its potential still very much exists among clinicians and patients, says Daniel O’Brien general manager for the Americas region at Taiwanese electronics company HTC. He said this is a big reason why virtual reality in healthcare is in its early stages.

"In terms of early mass adoption, we're still a few years off of that," O'Brien said.

HTC manufactures virtual reality headsets both consumer and medical markets. While many of the headsets used in medical settings share similar hardware to consumer devices, there are subtle differences, O'Brien said. For instance, medical-based virtual reality has an ability to incorporate additional sensors and observe other parts of the body such as movement in limbs. Headsets may also be more easily taken apart and cleaned.

Beyond reimbursement and lack of awareness, providers say ergonomics are limiting the technology’s adoption. Reimer said this is true of virtual reality and augmented reality, which enhances what a user is seeing rather than blocking it out completely like virtual reality does.

“One of the challenges that comes along with [augmented reality] and [virtuality reality] today is the bulkiness of those headsets,” Reimer said.

According to Reimer, Sanford has taken initial steps to experiment with virtual reality but not in a significant way. Still, he said it's hard to deny the potential.

“I think it holds a ton of promise,” Reimer said, “I think there are limited use cases that are what I would put in the ‘ready now’ category for broad use.”

This story first appeared in Digital Health Business & Technology.