In a departure from an August proposal, CMS did not finalize national pricing for extended external EKG patches, which would have been a boon to the Zio product from iRhythm, in its 2021 Physician Fee Schedule (PFS) rule released late Tuesday.
iRhythm’s next steps are now to work with local Medicare Administrative Contractors (MACs) to establish pricing for the new permanent CPT codes that cover the company’s service. Zio had previously been reimbursed under temporary codes. iRhythm also plans to work with medical groups like the American College of Cardiology and Heart Rhythm Society to achieve broad society endorsement before continuing its push for national pricing.
Shares in iRhythm — which rose 33% when the proposed rule was released four months ago — fell 24% overnight following CMS’ change of direction.
On a conference call Wednesday morning, iRhythm CEO Kevin King broadly attributed the CMS shift back to local contractors as a result of the "rigid" doctor-focused PFS model not being built for a vertically integrated digital health model.
Analysts at J.P. Morgan suggested CMS' reversal on national pricing seems less a reflection on iRhythm and its technology, and more a sign that the agency is still wrestling with how to fit digital health services into PFS reimbursement structures. The analysts noted that CMS similarly failed to approve a code for diabetic retinopathy imaging and diagnosis using artificial intelligence in the PFS rule.
In the rule text, CMS cited “conflicting information and assertions provided by commenters.” The agency said that putting contractors in charge of 2021 pricing will allow additional time to receive more pricing information. "We welcome the submission of additional invoices or other pricing information to assist us to determine the most accurate values for these services," CMS wrote.
While it's "disappointing we didn't get across the finish line," King said, the company intends to continue collaborating with CMS and medical societies. King called out cardiac imaging and INR monitoring as examples of services that had longer paths to national coverage.
As for when iRhythm may be able to achieve national pricing, King said the company expects it will likely be around two years before that could be a reality, given that CMS work for 2022 is already underway. In the meantime, working with local contractors is an "attractive and familiar option for the company," King said. Medicare reimbursement affects around a quarter of iRhythm's business.
Even with this week’s setback, iRhythm is still far ahead of where it was at the start of 2020, in part thanks to a new emphasis on remote monitoring tools during the pandemic.
“I don’t think we’re back at ground zero at all,” King said on the call, pointing to the replacement of temporary codes with permanent codes as a win. King also noted that while the company did not secure price increases, it's also not necessarily facing rate cuts.
The hesitation from CMS comes on the heels of the U.K. embracing iRhythm's technology, with the National Institute for Health and Care Excellence (NICE) on Tuesday recommending the Zio service for people with suspected cardiac arrhythmias who may benefit from EKG monitoring beyond 24 hours.