Skip to main content
Premium Trial:

Request an Annual Quote

CMS' Preliminary Pricing Plan Would Reduce Payments for Several Molecular Tests

NEW YORK (GenomeWeb) – The Centers for Medicare & Medicaid Services last week released preliminary gapfill rates for 2017 from its Medicare Administrative Contractors (MAC) for a number of molecular diagnostic tests.

CMS' proposed median payment would reduce pricing for CareDx's AlloMap by 74 percent to $732; Veracyte's Afirma GEC by 30 percent to $2,240; and Genomic Health's Oncotype DX Colon by 72 percent to $849. CMS has proposed to essentially maintain pricing for Myriad Genetics' Vectra DA at $587.

In a note to investors, Leerink Partners analyst Dan Leonard estimated based on the percentage each product contributes to company revenues and the extent to which the tests depend on CMS reimbursement, that CareDx could see a 25 percent and Veracyte could see a 5 percent negative impact on revenues if these proposed prices are maintained.

"This is similar to the initial position taken by CMS in Q4 of 2016," CareDx CEO Peter Maag said in a statement. "Through communicating the potential impact on patient care, as well as the costs associated with testing, CareDx remains optimistic that this proposal will be reversed during the open comment period."

Leonard also noted that diagnostics companies will likely work with MACs to revise their initial low payment rates. The public has 30 days to comment on the recently issued proposed pricing.

The price for hereditary breast cancer panel testing is consistent with MAC-proposed pricing of $623, but is below the $950 Invitae has said it would aim for in negotiations. 

Meanwhile, Leonard wrote that $133 for DNA analysis of fetal aneuploidies "challenges the business model for Illumina's customers in non-invasive prenatal testing." Even though most patients getting this type of testing aren't Medicare patients, Leonard wrote that there is a risk that "commercial payers could anchor to the Medicare price."

Analysts guessed that CMS will likely finalize these proposed pricing rates by the end of the summer or early fall. However, it is still unclear when the market-based pricing slated for implementation at the start of 2017 under the Protecting Access to Medicare Act will come into play.

Like others in industry, Piper Jaffray analyst William Quirk is expecting PAMA will be implemented closer to 2018. "If these rates become final, we would expect [CareDx's] and [Veracyte's] Medicare reimbursement to increase in 2018 based on their current private payer rates," he wrote in a note to investors.