How U.S. Payers View “Value” — And Why “Cost-Saving” and “Costs More” Don’t Always Mix

In the medtech world, it’s common to hear a new product described as both innovative and cost saving. On paper, this makes perfect sense: better outcomes can reduce downstream healthcare costs, and an effective technology should, over time, pay for itself.

But in the U.S. payer environment, “cost-saving” technologies that “cost more” rarely get far. Understanding why requires looking closely at how U.S. payers actually define “value,” and how their perspective differs from that of manufacturers, clinicians, or even patients.

How Payers Think About Value

For most U.S. payers, value boils down to a fairly simple equation:

Value = Change in outcome ÷ Change in cost

It’s not just whether outcomes improve; it’s whether the degree of improvement is worth the incremental cost of providing the technology to the covered population. This is often expressed in terms of cost per improved outcome (e.g., cost per hospitalization avoided, cost per additional year of life gained).

Here’s the wrinkle: “cost” isn’t the total lifetime cost of care in a health economics paper. For many payers, it’s the claims cost they’ll see in the next budget cycle. If your technology requires a higher up-front payment, those costs hit immediately, while the benefits may accrue months or years later… and possibly to some other payer’s balance sheet entirely.

Why “Cost Saving” Doesn’t Always Land

A device that reduces hospital readmissions or prevents complications may indeed lower total healthcare spending across the system. But if it increases per-patient claims for the payer in the short run, the financial argument gets harder.

For example:

• A payer may acknowledge that your device prevents a $50,000 complication—but if that complication is rare in their covered population, the average cost avoided per member is small.

• If your product requires additional procedures, monitoring, or specialist visits, those line-items add cost now, even if they avoid bigger costs later.

• Member churn means some of the long-term savings may go to another insurer after a patient changes plans.

In short, any given U.S. payer’s definition of “savings” is tied to their own financial risk horizon, not the healthcare system’s as a whole.

Reconciling the Two Perspectives

For medtech developers, bridging the gap between “system savings” and a payer’s financial reality starts with meeting payers where they are. That means presenting a value story that speaks directly to their cost horizon and decision criteria. It’s not enough to highlight that your product lowers long-term healthcare costs; you also need to show how it delivers meaningful financial impact in the near term.

This often involves quantifying both immediate and downstream benefits, starting with the offsets a payer will see right away—fewer emergency room visits in the current quarter, reduced follow-up procedures in the first year—before expanding to the longer-term picture. It also means segmenting your evidence to spotlight the populations where your product’s impact is most pronounced, especially high-risk subgroups where the potential for near-term savings is greatest.

Equally important is acknowledging the higher up-front cost. Being transparent about that investment, and then clearly connecting it to improved quality metrics, competitive positioning, or regulatory incentives, builds credibility. When framed this way, “higher cost but higher value” becomes a defensible and persuasive position, rather than a contradiction.

A More Nuanced View of Value

The U.S. payer environment rewards clarity and specificity over sweeping claims. Framing your technology as “higher cost but higher value” is often more credible than insisting it’s both cost saving and more expensive. By showing exactly how and when payers see a return on that investment, you give them a reason to cover your product, not just for the promise it holds, but for the financial sense it makes in their world.

In the end, value is in the eye of the payer, but it’s within your control to make sure they see it clearly.

Have a question about how payers evaluate value or cost-effectiveness? Ask Me Anything — Nicole Coustier will respond directly.

Need tailored advice on your reimbursement or coding strategy? Schedule a 30-minute Consult to make sure your value story is aligned with real-world payer priorities.

Just exploring? Learn more about Coustier Advisory and how we help early-stage MedTech startups get the payment strategy right — before it’s too late.