Exact Sciences: Cologuard Plus Gets 16% Bump, Coverage Questions Remain
In a positive surprise relative to our initial expectations, CMS’s CY25 payment rate of $592 for EXAS’s Cologuard Plus represents a 16% premium to the legacy test’s $509. While this falls slightly shy of the $636 sought by the company, it can likely secure this Medicare rate through its anticipated Advanced Diagnostic Lab Test (ADLT) application, though the timing of that process and how commercial insurers may respond remains uncertain. Clarity on Medicare coverage of this test – and hence the revenue benefits of any rate increase – may not come until YE25-1Q26, as CMS appears to view “Cologuard Plus™” as distinct from the legacy “Cologuard™” described in its long-standing National Coverage Determination (NCD).
Upside Surprise on Rates
CMS appears to have split the difference between EXAS’s request for a 25% premium for Cologuard Plus billing code 0464U relative to the legacy product’s code (e.g., CPT 81528 x 1.25 = $636) and the agency’s initial proposal in September calling for a straight crosswalk (e.g., CPT 81528 x 1.0 = $509) and equivalent reimbursement.
As we noted at the time, so-called “fractional” crosswalks are atypical, and CMS instead decided to use a 3x multiplier for CPT 81327 [Sept9 (septin9) (e.g., colorectal cancer) promoter methylation analysis], paid at $192 ($192 x 3 = 576), and the addition of 1x for CPT 82274 [Blood, occult, by fecal hemoglobin determined by immunoassay, qualitative, feces, 1-3 simultaneous determinations], paid at $16, for a total of $592.
By way of explanation, the agency writes only that it “agrees with the combination of codes as a crosswalk that was submitted during the public comment period. We believe that this combination of codes adequately describes the new version of this test, instead of simply using a multiplier to estimate an increase of resources.”
We should note here that this reversal is something of a rare achievement, in that our review of more than 500 previous rate applications (2020-2024) shows that just 10% see a change in CMS’s decision between the preliminary and final rate postings. The premium reimbursement over legacy Cologuard is made somewhat more surprising in light of EXAS commentary that Cologuard Plus has “a lower cost of goods per unit,” coming as it does on top of the company’s ~70% gross margins.
Coverage Questions Persist
Importantly, tonight’s rate decision merely defines the reimbursement rate for Cologuard Plus, which has no bearing on whether or not any individual claim will actually be covered. While we are confident that the test will eventually be covered, we give ~55% odds to clarity on this issue being delayed until YE25 or 1Q26.
As we have previously noted, the current NCD for Colorectal Cancer Screening explicitly defines the policy as applying to “Cologuard™,” which is legally distinct from “Cologuard Plus™.” This is evidenced by the fact that the two tests are described by two different billing codes (81528 vs 0464U) with two different descriptions and – now – two different payment rates.
Medicare National Coverage Determination 210.3
We acknowledge that this may seem little more than a technicality, and would certainly agree that the underlying data for Cologuard Plus is sufficient for Medicare coverage. However, we also note that, despite the creation of unique Cologuard Plus Proprietary Laboratory Analyses (PLA) code 0464U on Apr. 1, its effective date of July 1, publication in the CPT code set on Sept. 1, and FDA approval of the test itself on Oct. 3, the code itself does not yet appear in either the list of covered codes outlined in the NCD [last updated Oct. 24] or CMS’s colorectal cancer screening summary tool [dated “November 2024”].
Simply put, if Cologuard Plus is covered under the established NDC, it would be in the absence of any published evidence, and we suspect Medicare Administrative Contractors (MACs) will hesitate to begin processing claims without CMS instructions.
This lack of clarity would also have implications for the company’s anticipated application for ADLT status from CMS, allowing for Medicare payment at a manufacturer-set list price, at least in terms of its timing. With a cash pay rate of $690 for the legacy version, this would imply as much as 17% additional upside from the CY25 crosswalk rate issued by CMS on Monday.
Investors will recall that, in addition to FDA approval, agency ADLT guidance requires that manufacturers provide “evidence of Medicare Part B coverage,” which must include one of the following items [our emphasis]:
- Payment for the test by a MAC
- Coverage determination under the MolDx program
- A local coverage determination (LCD) for the test
- A national coverage determination for the test
- Other documentation that demonstrates Medicare Part B coverage.
The agency goes on to say that “although evidence of Medicare Part B coverage is required for a test to receive ADLT status, approval of new ADLT status is not an indication of future coverage status. A Medicare coverage determination for a given Clinical Diagnostic Laboratory Test is a separate, independent process from the determination of ADLT status.”
More positively, if / when EXAS discloses submission of an ADLT application it would presuppose the availability of coverage, negating the above concerns and the likelihood of any prolonged delay. To formally establish that coverage, however, we see CMS as having two available options:
- Simply deem Cologuard Plus™ to be functionally / legally equivalent to the legacy Cologuard™ by including PLA 0464U in the NCD’s list of covered codes, likely through a transmittal directive to the MACs [published here], which can be done any time.
- This of course begs the question of why the agency has yet to do that, despite the nearly four months that had elapsed following the code’s effective date and the three weeks between the test’s FDA approval and CMS’s most recent update.
- Wait to address the Cologuard Plus™ vs Cologuard™ (81528 vs 0464U) dilemma through a full reconsideration of the Colorectal Cancer Screening NDC, which it has already signaled it intends to pursue following a coverage application from privately-held Geneoscopy for its mRNA ColoSense offering.
- With CMS having disclosed acceptance of that application in June, this would put the opening of that analysis sometime in 1Q25-2Q25, based on the average timeline of all 98 prior NCDs initiated from outside requests, though finalization would likely take until YE25 or 1Q26.
Between these two approaches we give slightly greater odds to (2) above, given that – despite the similarities in their proprietary names – all relevant information points to Cologuard Plus being distinct from the specific test outlined in the current NCD.
The counterpoint to this is of course that there is no real penalty for CMS exercising its authorities to correct what was likely an overly narrow policy construction dating back to 2014. The worst case scenario for the agency, in our view, would be for either competitors or Medicare Advantage insurers bound by the NCD to sue for a breach of established procedures, in which case the NCD reconsideration in (2) would likely be resolved prior to any litigation playing out.