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CareDx Nabs Medicare Coverage for Lung Transplant Rejection Monitoring Test

NEW YORK – CareDx announced on Tuesday that its AlloSure Lung test for lung transplant rejection monitoring has received coverage from the US Centers for Medicare and Medicaid Services' MolDx program. 

The test will be covered for use in the surveillance setting in lung transplant patients under the local coverage determination for molecular testing for solid organ allograft rejection, which took effect on May 9. 

The noninvasive test has been validated to identify a composite endpoint of acute cellular rejection, antibody-mediated rejection, and infection in asymptomatic lung transplant patients during surveillance screening, the Brisbane, California-based company said in a statement. The test was launched in 2021.

In a note to investors, Craig-Hallum analyst Alex Nowak said that the new coverage was a "complete surprise" and that it could equate to an estimated $9 million yearly uplift in revenue and earnings before interest, taxes, depreciation, and amortization.

CareDx previously received Medicare coverage for its AlloSure donor-derived cell-free DNA tests for kidney and heart transplant patients. 

Earlier this year, Medicare Administrative Contractor Palmetto GBA released a billing article limiting reimbursement to one test per patient encounter and stipulating coverage of surveillance testing only for patients enrolled in centers that use surveillance protocols and would otherwise receive such testing. The article also said Medicare would no longer reimburse for-cause tests unless they were used in place of a biopsy or to confirm biopsy results.

The decision caused CareDx to withdraw its full-year 2023 financial guidance and reorganize resources, including reducing headcount by about 12 percent through the rest of the year.