Conference Policy Prep Pack: Devices, Diagnostics, & Tools

Boston Scientific (BSX)

Context: In the CY25 rulemaking, CMS declined requests for hospital outpatient transitional pass-through (TPT) payments for pulsed field ablation (PFA) while granting BSX’s TPT application for the Agent drug coated balloon (DCB) catheter. Our estimates suggest that this would imply facility margins of -25% and -10%, respectively. For PFA, this estimate includes the elimination of a standalone mapping catheter due to the recent FDA approval of Farapulse + Farawave. For Agent DCB, we should note that our procedure cost estimates are actually lower than those provided by BSX, but we suspect will still be sufficient for eventual reassignment into a higher-paying Ambulatory Payment Classification (APC) group, with margins becoming effectively flat.

• On PFA, does BSX expect to apply for a TPT payment based on the recent Farapulse + Farawave approval, or is the cost threshold cited by CMS – requiring a ~$14K price point – too significant?
• PFA adoption has clearly been strong, but with facilities potentially losing money on each case, does BSX expect the adoption curve to slow at all in the year ahead?

• With PFA catheter costs of ~$10K, compared to $4K-$6K for traditional ablation and mapping catheters, what are the service-related costs for facilities, and how much can those be reduced over time as centers gain greater experience?
• On Agent DCB, CMS’s allowance of a TPT payment should help cover the additional $5.5K in catheter costs but, based on your presentations to CMS this summer, that plus the $5.7K baseline payment (total: $11.2K) would still seem to fall well short of facility costs, so how is that likely to impact adoption?

• Each of the above cost estimates would nevertheless seem to exceed CMS’s 2x Rule for APC assignments, so how likely is the agency to reassign Agent procedures (0913T) to a higher paying group next year, increasing the base rate from $5.7K to $11.3K (+50%), as recommended by CMS advisors?

Medtronic (MDT)

Context: With 2025-2027 TPT payments established for renal denervation (RDN) products from both MDT and ReCor / Otsuka, investor focus is now on the timing of Medicare coverage. While some investors expect an imminent National Coverage Determination (NDC), we continue to believe that that the start of that process is unlikely before ~mid-year, pushing finalization out into 2026, in light of an existing wait list of eight NCD requests, where RDN does not appear. The longer the wait, however, the less time there will be for the TPT to help drive adoption.

• The average time from NCD request to an analysis being opened has gone up significantly in recent years, and was more than 1.5 years in 2024, so do you have a formal NCD request that has been accepted by the agency?

• Considering the current backlog of NCD requests that have been accepted by the agency (last updated Nov. 15), would you eventually expect RDN to be added to this list, and which might its review be prioritized over, given that CMS typically conducts 4-5 NCDs at a time, with each taking 9-10 months to complete?

• Given that it typically takes ~6 months for CMS to issue a draft NCD once an analysis has been opened, and another ~3 months after that to issue a final policy, when would you expect that process to begin?
• In other words, even the opening of a review today would likely mean a draft version being released by mid-year that would not be finalized until 4Q25, so are you envisioning a more expedited process?
• Some have suggested this could be through the Transitional Coverage of Emerging Technologies (TCET) pathway devised by CMS in August 2024, but would RDN be eligible in light of agency guidance stating that “nominations for devices that are already FDA market authorized or those anticipated to receive an FDA decision within six months of nomination will not be accepted”?
• The typical ~9 month NCD timeline even seems to apply to the two “pilot” TCET NCDs already underway (i.e., tricuspid valve replacement and repair), both of which stem from the joint CMS / FDA Parallel Review program, so has MDT’s RDN been a participant in that as well, and are you expecting a quicker review than even that?
• In the absence of an NCD, coverage remains at the discretion of each individual MAC, which are often reticent to cover novel technologies, so what proportion of claims are you seeing denied, approved, or subject to documentation requests?

Edwards Lifesciences (EW)

Context: Following the company’s July selloff, investor focus remains on the outlook for both the aortic and tricuspid valve procedure markets. Since that time, CMS has: (A) rejected EW’s request for transcatheter aortic valve replacement (TAVR) reassignment to higher-paying diagnosis related groups (DRGs); and (B) issued a draft NCD for transcatheter tricuspid valve replacement (TTVR), with comments accepted until Jan. 18. We also await a separate draft NCD for transcatheter tricuspid edge-to-edge repair (T-TEER) on or before Apr. 3.

Aortic Valve Economics

• In your request for DRG reassignment you argue that “TAVR procedures are not profitable to hospitals,” and that the payment rate’s negative contribution margin has discouraged the creation / expansion of TAVR programs, so how relevant is an improvement in reimbursement to future growth?

• Considering that CMS denied your request, with both the Society of Thoracic Surgeons (STS) and American College of Cardiology (ACC) also voicing their opposition, will you again pursue DRG reassignment in the FY26 rulemaking?
• While academic literature [here, here, here] supports the view that hospital economics play a role in utilization, particularly for lower-volume / rural centers, what other factors will help grow adoption if you fail to secure higher payments?

Tricuspid Valve Coverage

• How would you expect the sales trajectory of Evoque to develop post-draft NCD in terms of its looking more like TAVR (~40% CAGR) or mitral valve transcatheter edge-to-edge repair (M-TEER) (~25% CAGR)?
• On the one hand, the draft appears relatively benign with its absence of any operator / facility volume requirements, but it also requires an active comparator for its Coverage with Evidence Development (CED) study, so do you view this as potentially limiting use to larger academic medical centers?
• Would this study be layered on top of the post-approval study already required by FDA, which appears to have 62 centers enrolled, or do you see it expanding out beyond that?
• With CMS apparently focused on the need for demonstrated efficacy through “hard” clinical endpoints (e.g., mortality, hospitalizations), how confident are you that this will be achieved as part of the CED study given the gains in TRISCEND II largely stem from symptomatic / quality of life improvements?
• From a competitive standpoint, what coverage differences are you expecting in the T-TEER draft NCD due out by Apr. 3, and how might that impact the adoption trajectory between it and TTVR?
• The TTVR procedure (60-90 minutes) appears much briefer, with less need for complex imaging, than T-TEER (~130 minutes), meaning that despite nominally higher physician payments for T-TEER, the per minute rate for TTVR would be superior, so do you think this may drive greater use of one over the other?

Dexcom (DXCM)

Context: Following the post-2Q24 print sell-off, policy-related risk overhangs likely include: (A) ~2Q25 release of findings from an Office of Inspector General (OIG) investigation into continuous glucose monitor (CGM) costs; and (B) the risk of CGM inclusion in an ~August proposal on the next round of the Medicare Competitive Bidding Program (CBP) that has historically driven reimbursement down ~50%, likely to start 2027-2028. The anticipated OIG findings likely bring headline risk given what we suspect is a sizable delta between Medicare CGM rates and supplier acquisition costs, though we give just 40% odds to CBP inclusion due to the controversy that would ensue and a politically active patient population. If we are wrong, margin risks are more directly relevant for suppliers (e.g., AHCO, OMI), but may also further pressure DXCM to cut pricing to retain market share versus ABT’s Libre.

• With the OIG contacting durable medical equipment (DME) suppliers to compare Medicare reimbursement to their “acquisition costs and prices otherwise available to consumers,” what is the delta between your selling price to CMS suppliers and the current payment rate (~$290 per month, ~$3.4K per year)?
• What information has OIG sought in terms of the selling price into the Medicare DME channel, and is there any indication they may be considering acquisition costs in other networks (e.g., pharmacy, cash, commercial DME)?
• How would you view both the Medicare DME and aggregate channel spread in comparison to other items for which OIG has previously recommended inclusion in the CBP, even if those recommendations have yet to materialize (e.g., urinary catheters, non-invasive ventilators)?

• Have you been in discussions with diabetes, medical equipment, or patient advocacy groups to push back on any efforts at CBP inclusion, particularly with DME stakeholders’ ongoing disagreement with CMS that the program has reduced the total number of suppliers / patient access (here, here)?
• If CGM is included in the CBP, what ability would you have to shift / split any reimbursement pressures with DME suppliers to avoid margin erosion, given that distributor profits appear to represent ~50% of Medicare payment rates?
• What is the risk of Medicare DME market share loss if CMS were to pressure supplier rates, given that ABT appears to have a somewhat larger cushion, and how do you balance that against the need to protect channel margins?

Glaukos (GKOS)

Context: We would focus investors on several key policy areas following establishment of a unique product code for iDose (J7355), facility reimbursement of its associated procedure code (0660T), and updated local coverage determinations (LCDs) for iStent Infinite (0671T). This includes: (A) any erosion in realized iDose revenues per patient as Medicare transitions from payments based on Wholesale Acquisition Cost (WAC) to Average Sales Price (ASP); (B) expectations for iDose physician reimbursement of the procedure itself; (C) any payer pushback to combination procedures (e.g., iDose + cataract / iStent Infinite); and (D) potential share shift following the LCD updates.

iDose Product Payments

• You previously indicated that your “realized ASP” for iDose would likely settle at ~$13K, relative to the $13,950 list price, once mandatory Medicaid discounts are reflected in CMS data, but the implied ASP for 1Q25 seems to have remained constant based on this quarter’s updates, so does this suggest that Medicaid volumes have not materialized to any meaningful extent?

• Does this also imply that your current realized ASP per service remains closer to the $13,950 list price for the time being, and would you continue to expect that to erode over time as rebates / discounts from other channels are reflected?

iDose Procedure Payments

• We have seen just one MAC (Noridian) – responsible for ~25% of volumes – publish a physician payment rate for the iDose procedure (0660T), at $876, so would you expect others to establish similar reimbursement levels, or can anything be gleaned from the distribution of rates we’ve now seen from all seven MACs for iStent Infinite?

Updated LCDs: Combinations & Competition

• Following LCD language instructing that combination micro-invasive glaucoma surgery (MIGS) would be non-covered, there have been fears that this might preclude concurrent use of iDose + iStent Infinite or cataract removal, so have you seen any evidence of this in terms of claim denials?
• Given that the MACs had originally finalized non-coverage of competitor MIGS devices (e.g., SGHT’s Omni) before rescinding that policy and leaving the issue unaddressed in the updated LCDs, have you seen anything to suggest the MACs may be denying more of these services (e.g., share gains)?

Inspire Medical (INSP)

Context: With the next leg of growth tied to the Inspire V device and its potential value accretion for physicians through reduced procedure times, a key component for this thesis remains procedure billing / reimbursement. We continue to believe that INSP will be able to bill Inspire V under existing hypoglossal code (CPT 64582), paying $816 in CY25 and improving per minute compensation by ~30%, but this also risks future adjustments (~2027). Alternative billing options involve: (A) the more general cranial / vagus nerve code (CPT 64568, $594), implying a nominal rate decline but leaving per minute payments roughly constant, while also bringing coverage uncertainty; or (B) in a less likely / tail risk scenario, Unlisted Nervous System Procedure code CPT 64999, which historically has a ~50% denial rate and variable payments, averaging just $82 last year.

• Given that the current code used for hypoglossal nerve obstructive sleep apnea (OSA) implants (CPT 64582) was specifically created in 2022 to differentiate such procedures from cranial / vagus nerve cases (CPT 64568), is it your sense that this remains the most appropriate coding option?
• With Inspire V payments being a key question for investors, can you speak to the delay in providing additional clarity, and whether this implies you have received pushback from payers / specialty societies to that approach?
• There have also been suggestions that payers may allow use of the current code in conjunction with a “modifier” (e.g., modifier -52) that would reduce payments as much as 50% for “partially reduced or eliminated (services) at the provider’s discretion,” but isn’t that also only for “unusual circumstances,” rather than a standard matter of practice, as would be the case with all Inspire V cases?
• In terms of the procedural work associated with each product iteration, the Inspire IV transition from three incisions to two would also seem to have been a significant departure from the original code value / description, so can you discuss any billing challenges you may have faced at that time and what similarities / differences Inspire V now brings?
• If providers do end up billing Inspire V cases under CPT 64582, would you expect the AMA’s Relative Value Unit (RVU) Update Committee (RUC) to resurvey that code to reflect the ongoing decline in physician work time, and what sort of rate pressures would you expect that to bring?
• If payers do not accept CPT 64582, do you view the cranial / vagus nerve code (CPT 64568) as an appropriate alternative, and how do you reconcile that with AMA guidance: “Do not select a CPT code that merely approximates the procedure or service provided. If no such specific code exists, then report the procedure or service using the appropriate unlisted procedure or service code”?
• If providers must use either the cranial / vagus or unlisted procedure code, is that likely to push out Inspire V coverage and utilization, considering that current MAC policies only cover hypoglossal code CPT 64582, and must therefore be changed?

• By the same token, do you expect competitors (e.g., LIVN, NYXH) to secure coverage under either the cranial / vagus implant (CPT 64568) or cranial nerve insertion / replacement (CPT 61886) codes without a similar change in policy?
• Given that you had seen a significant inflection point in covered services following the inclusion of your own hypoglossal implant code into local MAC coverage policies in 2H20, would you expect a similar dynamic for both competitors and Inspire V if updated billing articles are again required?

Exact Sciences (EXAS)

Context: Despite CMS granting the new Cologuard Plus (0464U) a CY25 payment rate of $592 – representing a 16% premium to the $509 for legacy Cologuard (81528) – the newer test does not appear to be covered under Medicare’s current colorectal cancer (CRC) screening policy. Accordingly, the revenue benefits for EXAS may be delayed until CMS can conduct a full reconsideration of its National Coverage Determination (NCD), which is unlikely to be completed before YE25-1Q26. Alternatively, CMS would need to deem the two tests as identical, likely through instructions to Medicare Administrative Contractors (MACs) or its CRC Screening Guide, which was last updated Jan. 1, 2025 but still does not include the Cologuard Plus billing code [see full note].

• Do you view Cologuard Plus as being covered under Medicare without any revisions to the current National Coverage Determination (NCD) for colorectal cancer, despite its explicit reference to only “Cologuard™” and its dedicated billing code (81528)?
• If so, is it your contention that CMS views the two tests as effectively identical, despite the fact that they have two different billing codes, payment rates, procedural methodologies, and proprietary names?
• Moreover, why is the Cologuard Plus billing code (0464U) not included in the NCD’s coding instructions or CMS’s CRC screening guide, which was last updated to include computed tomography (CT) colonography (CPT 74263) on Jan. 1, 2025?
• If not, do you believe a full NCD reconsideration will be necessary, given that CMS has already signaled its intention to reopen that policy for a review of Geneoscopy’s (private) ColoSense RNA test?
• Amid the backlog of seven other NCD requests that CMS must also address, what is your sense of when the agency might open this reconsideration and – more importantly – complete it to allow coverage of the Cologuard Plus™ billing code (0464U) and its higher payment amount?
• If a full NCD reconsideration is not required, when would you expect CMS to make that clear, and to what do you attribute the delay in including the Cologuard Plus billing code to either the NCD’s covered code list or CMS’s colorectal cancer screening guide?

Guardant Health (GH)

Context: We expect 2025 to bring three key policy-related catalysts for future revenue expectations: (A) CMS endorsement of the Shield CRC screening test as an Advanced Diagnostic Laboratory Test (ADLT), with payment at the company’s list price ($1,495), as early as 2Q25, representing a ~60% premium over current payments ($920); (B) inclusion of Shield in American Cancer Society (ACS) guidelines, likely by mid-2025, triggering mandatory commercial payer coverage in at least 13 states with 18M-27M eligible individuals; and (C) MolDx surveillance coverage of the Reveal minimal residual disease (MRD) test for CRC, likely by mid-2025.

(A) Shield ADLT Endorsement

• While management has guided towards ADLT endorsement by mid-2025, how likely do you view a nearer-term surprise in time for 2Q25 (i.e., announcement in March and effective date of Apr. 1)?
• With the American Medical Association (AMA) granting Shield a Proprietary Laboratory Analyses (PLA) code (0537U) on Dec. 31, effective Apr. 1, why couldn’t ADLT reimbursement ($1,495) be in place by that point as well?
• CMS guidelines allow for quarterly ADLT applications up through Jan. 31, with a decision announced in March and an effective date of Apr. 1, so what reasons might there be for delay out beyond that point?

(B) Shield Commercial Coverage & American Cancer Society (ACS) Guidelines

• It appears the most recent update to the ACS CRC screening guidelines were first published May 30, 2018, so would you expect them to follow a similar timeline in terms of the next update (i.e., late May 2025)?
• What gives you confidence that blood-based options are under consideration for 2025, beyond the fact that Shield is now an FDA-approved option and ACS guidelines are updated every 5-7 years?
• Which states do you count as having statutes in place that require commercial coverage of ACS-endorsed screening options, how many people would these laws apply to (e.g., commercial vs Medicaid populations)?
• Would such coverage mandates be automatically effectuated, or are additional steps needed, such as affirmative guidance from state health departments or the start of a new plan year?

(C) Reveal Coverage From MolDx

• For what reason did you withdraw your application for a unique PLA code for Reveal, given that it had appeared on the initial agenda for the AMA’s Nov. 14 meeting but is not on the list of new PLA codes published Jan. 1?
• Do you suspect a unique PLA code will be necessary before MolDx can grant coverage of Reveal for MRD surveillance, or can it be billed through assignment of a separate z-code and the unlisted molecular pathology procedure service code (81479) following a positive technical assessment (TA)?
• How do you view the clinical data supporting Reveal surveillance testing compared to that used for coverage of NTRA’s Signatera or Naveris’ (private) NavDx for tissue-naïve surveillance of HPV+ cancers?
• Where would you expect reimbursement to land relative to Naveris’ $1,800?
• Considering it has now been ~six months since your TA was submitted to MolDx, which compares to target review times of ~60 days, to what do you attribute the delay, and has MolDx asked for clarity on any specific topics?

Grail (GRAL)

Context: Before its omission in favor of a narrower YE24 spending bill lasting through Mar. 14, Congress sought to give CMS authority to cover currently excluded multi-cancer early detection (MCED) tests, along with significant limitations we suspect will be the baseline for any future congressional action. Performance criteria would need to be established through an NCD, eligibility limited to those aged 50-65 starting in 2029, the top end of that range would increase by just one year annually, and test reimbursement would be capped at $509 through 2031. In other words, most Medicare beneficiaries would remain ineligible up through ~2037, with coverage not reaching 75% until ~2044.

• While the effort to include statutory language creating a pathway for Medicare coverage of MCED testing is a step forward, do you expect Congress to return to this issue as part of the next government spending bill in mid-March?
• How do the guardrails regarding eligibility and reimbursement compare to your overall expectations for revenue growth?
• What performance characteristics do you think CMS would be likely to impose as part of any eventual NCD, assuming they are given authority by Congress, and how confident would you be in meeting those if they are similar those for CRC screening (e.g., sensitivity ≥ 74%, specificity ≥ 90%)?

Diagnostic Sector Issues

Context: The Affordable Care Act (ACA) requires commercial insurers and Medicaid expansion states to cover all services with a Grade A or B recommendation from the U.S. Preventive Services Task Force (USPSTF), though two federal courts have disputed the constitutionality of this mandate, with one imposing a national injunction. The Supreme Court will consider whether to hear the case of Braidwood v. Becerra at its Jan. 10 conference, with an announcement as early as the week of Jan. 13. Should the court agree to hear the case, oral arguments would likely take place in March / April, with a decision by early July. While not our base case, a ruling against the government would eliminate this coverage requirement, bringing uncertainty for current payment rates, patient cost-sharing, and – ultimately – screening volumes.

• Do you expect SCOTUS to agree to hear this case or to remand litigation back to the lower courts, considering that the 5^th Circuit Court of Appeals found that the district court erred in imposing a national injunction but agreed with the constitutional criticisms?
• If SCOTUS does agree to hear this case, how would you rate the likelihood of their allowing for a fix that preserves current USPSTF recommendation coverage mandates (i.e., severs language insulating Task Force members from oversight)?

• Should SCOTUS find USPSTF coverage mandates unconstitutional, would you expect any changes in commercial insurance contracts for plan year 2026, or might the implications take longer to play out?
• In that scenario, how would you view the distribution of likely responses from commercial insurers within the following possibilities?

LST Sector Issues

Context: With the LST space still trailing broader market moves following the Nov. 5 election, in part due to investor concerns over NIH funding, we continue to believe that significant budget cuts are unlikely. Investors will recall that, despite the first Trump White House having proposed meaningful reductions in each of his four years in office, ranging from -7% to -22%, NIH funding was actually increased by 3%-9% annually, closely following proposals from the GOP-controlled Senate. That said, flatter YoY adjustments are more probable going forward, but we would expect the Senate to hold the line on draconian budget cut proposals from the administration.

• There is clearly concern over government research funding as we look towards a new administration but – irrespective of how the current pressures play out – have you seen order disruptions during previous bouts of uncertainty, such as after Trump’s first budget proposal in 2017 that sought a 21% reduction YoY?
• Much has been made of a realignment of NIH research priorities from infectious to chronic disease, but: (A) do you view that as permissible / probable absent congressional direction; and (B) how would you view demand for your product portfolio in that eventuality?
• Trump’s nominee for NIH Director – Jay Bhattacharya – has been critical of the agency for a culture of intellectual stagnation that stymies investment in more innovative research, so do you agree with that and, if so, would a shift to more advanced research areas alter demand for your products?
• Bhattacharya has also suggested he may pursue new grant criteria for universities based on their degree of academic freedom – such as measurements from the Foundation for Individual Rights & Expression (FIRE) – so what is your exposure to some of the worst scoring institutes in their rankings?

• NIH funding has consistently been one of the few areas with bipartisan support, including throughout the first Trump administration, with Republicans in the House and Senate again endorsing a 2.7% and 3.8% increase for FY25, respectively, so would you expect that support to continue?
• That said, the House spending bill follows reforms to consolidate the number of NIH centers from 27 to 15, while incoming Senate HELP Chairman Bill Cassidy (R-LA) envisions greater transparency and oversight of contract awards, so if the aggregate funding levels stay relatively constant, would you view this as more of an administrative headwind, rather than a revenue risk?
• Much has also been made of the Elon Musk led Department of Government Efficiency (DOGE) and the risk of the White House refusing to spend congressional appropriations through impoundment, but the legality of such practices appear highly suspect, so would you be inclined to litigate if the administration were to purse that approach?