DXCM vs ABT in Updated ADA Guidelines
We view ABT as likely better positioned than DXCM following updated guidelines from the American Diabetes Association (ADA) that clinicians “consider” the use of continuous glucose monitors (CGM) in “adults with type 2 diabetes treated with glucose-lowering medications other than insulin.” However, any near-term Medicare coverage gains for the companies’ over-the-counter (OTC) products will more likely come from the 74% of Medicare Advantage (MA) plans offering these supplemental benefits rather than Fee-for-Service (FFS), which continues to require a physician order / prescription. That said, ~54% of beneficiaries are now enrolled in MA rather than FFS.
Current Coverage Policy
Recall that the existing Medicare FFS coverage policy for CGM under the Part B Durable Medical Equipment (DME) benefit requires that beneficiaries meet all of the below criteria [1-5], with our own emphasis added. We also note that this does not currently extend to OTC products acquired without a prescription.
This policy was most recently updated in April 2023 to remove what had previously been a requirement that beneficiaries be taking “multiple (three or more) daily administrations of insulin,” replacing it with the criteria that they merely be “insulin treated” or have “a history of problematic hypoglycemia.”
The policy maintains its condition that CGMs be “prescribed in accordance with its FDA indications for use,” which is relevant when we consider the 510(k) clearance documents for DXCM’s Stelo and ABT’s Rio / Lingo:
As shown above, DXCM’s Stelo includes a specific prohibition on use by those with “problematic hypoglycemia,” whereas ABT’s Rio is intended to “aid in the detection of euglycemia, hyperglycemia, and hypoglycemia.”
In other words, Rio could theoretically meet the existing standards for coverage, so long as the patient has (A) either type 1 or type 2 diabetes, and (B) a documented history of problematic hypoglycemia. Coverage in Medicare FFS would nevertheless still require a valid prescription following consultation with a physician to ensure these criteria are met, which would seem to preclude OTC utilization.
FFS Versus MA
While ADA’s updated guidance is certainly a positive step and could lay the groundwork for a Medicare FFS coverage expansion into non-insulin-treated individuals, we would be surprised to see this in the near-term.
- Not only is the April 2023 update of the current FFS coverage policy fairly recent as far as Medicare coverage goes, but even the ADA guidelines themselves stop short of an outright recommendation for use in non-insulin patients, instead suggesting only that clinicians “consider” CGM use in this population.
- Moreover, the recommendation still presupposes the involvement of a clinician, which is little reason for CMS to lift its long-standing practice of requiring a prescription for DME equipment and supplies. Indeed, even during the COVID-19 pandemic, CMS had to create a special demonstration project to allow FFS coverage of OTC test kits, which was ended along with the Public Health Emergency (PHE) declaration in May 2023.
The Medicare Advantage (MA) population is a somewhat different story. While the baseline for coverage must be no less generous than whatever is provided for in FFS, MA plans are free to go beyond such standards to better attract customers. An analysis of 2025 plan offerings shows that nearly three-quarters will provide supplemental OTC coverage benefits, and with CBO projecting that the share of MA beneficiaries will only grow over time from today’s 54%, this is a potentially meaningful patient group.
