Memorandum

Medtronic officially launches MiniMed 670G Performance Guarantee for payers and employers – June 28, 2018

Following the first mention on Monday at its one-hour ADA Analyst Briefing, Medtronic officially announced today that it is launching the MiniMed 670G outcomes-based guarantee for payers: if there is a diabetes-related hospitalization or ER visit for a patient on the 670G, Medtronic will reimburse it up to a cap of $25,000 over a four-year period. Wow!

This is arguably the biggest value- and outcomes-based move we’ve ever seen in pumps and CGM contracting to date, and it certainly signals Medtronic’s confidence in the real-world outcomes on the hybrid closed loop system.

Assuming payers go for this attractive deal (what do they have to lose?), Medtronic will also be highly incentivized to keep patients out of the hospital, possibly putting more emphasis on strong upfront training, remote monitoring (not yet available in 670G), and potentially coaching and other outreach.

The press release notes that Medtronic will “work with payer and employer partners to identify patients who would benefit from the MiniMed 670G system, including those who may be most at-risk for diabetes-related adverse events.” In other words, this isn’t only an outcomes guarantee for those that happen to be on the device now, but a funnel to add more patients to it. This is very smart in a rising competitive AID environment, especially with Tandem, Bigfoot, Lilly, Insulet, and Beta Bionics aiming to launch competitive systems of their own in the next ~1-2 years.

This is a very bold and important move for the field, and Medtronic’s Susanne Winters said in Q&A on Monday that payers are “very interested in this,” especially to have predictability around costs. Will we see more preferred arrangements like the UHC/Medtronic deal? Could this form a competitive moat that other companies will have to match?

  • On Monday, President Hooman Hakami was very impassioned in presenting the slide below: “Based on the outcomes with the  670G…and the compelling data we see from the millions of patient-days, we’re ready to stand behind the system through a business model…There is no other diabetes company that can say this or do this. No other company has the benefit of a system that actually keeps a patient in the right glycemic control. There is no other company that has the data we do that demonstrates the value of that control. This is something we think the community is going to embrace. It’s a further indication of our commitment to value-based-healthcare, and not just driving fee-for-service – but actually selling outcomes.” He later added that “Medtronic is trying to change the conversation. Today’s paradigm, where companies offer a product, they are compensated for the product immediately, but the healthcare system lives with a promise that things will get better because of utilization. ‘Pay me for this, trust me, it’s going to drive better outcomes and lower costs.’ That’s a broken dynamic. We want to change that. Instead, we say, ‘I’m going to prove it to you; if you buy this, we feel so strongly that this was designed for outcomes, we’re going to stand by it.”

 

--by Adam Brown and Kelly Close