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Myriad Shares Recover after Medicare Contractors Confirm Error on BRCA1/2 CPT Code Price

NEW YORK (GenomeWeb News) – Myriad Genetics' stock rebounded today after two Medicare contractors acknowledged an error in the reimbursement rate for Myriad's BRACAnalysis test.

By afternoon, shares of the Salt Lake City molecular diagnostic firm's stock were up as much as 13 percent on the Nasdaq, after the Medicare contractors, Noridian Healthcare Solutions and Palmetto GBA, confirmed to Myriad that they had erroneously priced CPT code 81211 (BRCA1 and BRCA1 full sequence) at $1,449 for the remainder of 2013, which would have represented a 48 percent cut from the prior rate of $2,795.

Noridian and Palmetto's pricing error set off alarms among investors that the 48 percent cut would stand into 2014, and by the end of the day on Monday, Myriad's shares fell by as much as 13 percent.

Late on Monday, Myriad said in a document filed with the US Securities and Exchange Commission that Noridian and Palmetto confirmed their error to the company, and on a call Noridian told Myriad that it will contact the Centers for Medicare and Medicaid Services "and immediately correct the pricing for CPT code 81211 to $2,795.09. We believe that it may take a week or two for this correction to be reflected by CMS."

Jefferies analyst Brandon Couillard wrote in a research note that Myriad has said that the correct Noridian reimbursement rate and National Limit Amount for the BRACAnalysis test is $3,382 "comprised of BRCA1/2 and BART at $2,795 and $587, respectively."

Such proposed reimbursement rates are consistent with new rates that Palmetto set last week and current levels that Noridian set in March, he said.

However, CMS did cut the reimbursement rate for Myriad's Colaris test by 46 percent to $2,612.

"We are surprised by this degree of price cut given that the test has enjoyed relatively strong pricing in the past," Credit Suisse's Vamil Divan said in a research note, adding that 15 percent of Colaris revenues are Medicare-based. Colaris makes up about 9 percent of Myriad's sales, and the price cut could negatively impact the company's sales by approximately $20 million starting in 2014, "should it be permanently implemented," he said.

Couillard said that since Medicare accounts for around 15 percent of Colaris sales, the overall headwind to Myriad revenues is approximately 1 percent.

In afternoon trading Myriad shares were up 9 percent at $25.61.