Germany : the new Digital Healthcare Act (DVG)
Yesterday evening the German Parliament / Bundestag decided to pave the way for a broad usage and reimbursement of digital health applications and to improve the digitization of the German healthcare market.
Until now, apps or other medical software offerings for patients could only be reimbursed by an insurance company on a case-by-case basis or under special selective agreements. The first-mentioned was a very complex process for the patient and did not open up a sustainable business model for the provider of the app or software. A selective agreement was and is a way of having the product reimbursed by statutory health insurers, but these agreements were limited in time and did not allow for comprehensive market coverage in Germany. Once the contract expired, there was no direct route to transition into the regulated reimbursement by all statutory health insurers in Germany. The new Digital Healthcare Act (DVG) now opens up a structured path to have digital health applications reimbursed by statutory health insurance funds, thus make them accessible to patients on a broad basis.
But what does the Digital Healthcare Act actually mean for stakeholders in the healthcare market?
What are the key implications for patients and providers?
All such health apps, which can help patients to manage a diagnosed medical condition, can from January 2020 onwards be prescribed by their doctors. The costs are borne by the statutory health insurances, hence those insurances 73 million people in Germany are members of. To receive market clearance, apps have to undergo an assessment on data security and functionality by the Federal Institute for Drugs and Medical Devices (BfArM). It is important to know, however, that statutory health insurances will reimburse the costs provisionally for one year only. In order to qualify for cost reimbursement, providers of health apps have to generate proof for positive effects on care for their respective apps within these first twelve months. This process is referred to as the “Fast Track” into standard care in Germany. Such positive effects could be related directly to medical outcomes for patients or to process and structural improvements. Providers of health apps which already generated proof for these positive effects can now apply at the BfArM to become component of German reimbursed standard care directly.
What does the act mean for telemedicine and digitization?
In 2018 the before then highly restrictive regulation on distant treatments had been opened towards remote/video consultations. Now, doctors are allowed to better inform patients about their video offerings, and video consultations will be reimbursable. In addition, there will be stronger incentives and regulations in place to further improve digitization of traditionally paper-bound documents, e.g. certificates for sick leaves, medical reports, and prescriptions. To allow for a more efficient exchange of data amongst all stakeholders in the healthcare sector, doctors, hospitals, and pharmacies are now obliged to connect to the German telematics infrastructure. Midwives, physiotherapists as well as rehabilitation and nursing facilities can voluntarily join the telematics infrastructure and will be reimbursed for that voluntary connection. As a consequence, the relevant preconditions for an electronic patient file will highly improve as well.
Does it have an effect on funding options for start-ups?
Yes, it does! Statutory health insurances are now allowed to support start-ups not only know how- and market-related, but also financially – by investing directly into VC funds with focus on digital solutions in the healthcare space. Up to approximately 400 million EUR out of the financial reserves of the German statutory health insurances could be potentially invested.
The euphoria and excitement in Berlin’s digital health ecosystem is enormous. And the speed at which the Federal Ministry of Health has designed the new law is worthy of a start-up: in 18 months from the idea to the passing of the law. „As a former co-founder of a digital-health startup, I am relieved and impressed. Relieved, as the #DVG is a key milestone in Germany’s strategy to leapfrog its health system into the 21st century. And impressed, as the very robust but also rigid German system is now taking a pioneering role to open up for digital health innovations.”, says Dr. Henrik Matthies, managing director of Berlin based health innovation hub (health innovation hub) – think tank and digital transformation partner of the German Ministry of Health. Digital health start-ups can now prepare their market entry in a clearly defined regulatory environment. Patients can look forward to easy and fast access to their physician, pharmacy and digital healthcare applications, as well as improved medical care. And we healthcare investors can better assess the opportunities for our portfolio companies to enter the market.