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Digital (Saas, AI, and ML) Pathology, Radiology, Cardiology, etc. Diagnostic Test Coding and Reimbursement Opportunity?
· Opportunity exists to meet with CMS staff and discuss the ongoing activity to categorize, code, and set reimbursement rates for diagnostic products in pathology, cardiology, etc. that use SaaS, AI, or ML.
· We think a pathway is finally trending in the right direction, but guidance is needed from industry at this critical time. LifeSci Consulting works with life science companies on all market access, reimbursement, and coding decision and can help improve your coding and reimbursement.
· CMS recognizes that its existing methodology (especially in the physician fee schedule (PFS)) does not sufficiently account for the costs, clinical value, or resource use of software/SaaS/AI. Therefore, they had a request earlier this year from physician associations, hospitals, etc. to collect better data to accurately reimburse.
· However, it is unclear if certain tests will be reimbursed in the PFS or clinical lab fee schedule (CLFS). If it is a digital pathology test, a solid case can be made to be in the CLFS, which is positive for industry. Fo other digital test with Saas< AI, or ML software, it is more unknown but there is an opportunity to provide valuable info to CMS.
· CMS is actively requesting ideas for alternative data sources that better reflect the software/AI cost base, suggesting that it knows the existing cost/expense surveys are deficient for these technologies.
· The AMA has been less clear and very inconsistent in guidance for digital diagnostic products for pathology, radiology, cardiology, and other fields. The AMA created a potential new coding category called the Clinically Meaningful Algorithmic Analyses (CMAA) and has been receiving feedback from industry, but the process has been inconsistent, unclear, and now delayed. CMS can drive this process and work with the AMA on feedback from the industry.
Continuous Glucose Monitors (CGM) and Insulin Pump Payment Decisions Ahead
· Earlier this year. CMS made a significant proposed change to how CGMs and insulin pumps will be paid. There is a direct impact on suppliers of both products but indirect impact on equipment cost could likely be 20-35% lower for CGM products and 20-45% for insulin pumps. This is estimated and does not include direct cost impact on suppliers.
· The final decision is expected around November 1st, and we think there is a chance of a delay in this decision until the next regulatory cycle next year.
· This is an opportunity for industry to present further challenges for CMS to implement a policy different than what has been proposed, and LifeSci Consulting can help you make an impact presenting a compelling case with quality data and patient support.
· The administration has been pushing for more changes to drive down costs in diabetes treatment, however this policy approach is not helping patients access critical technologies in order to manage their condition appropriately. The result will be meaningful additional costs to the system.
Medical Device Tariffs: What is Reality?
· We expect the Trump administration to use the 232-tariff investigation for medical device, robotic, and PPE products similar to what is happening in the pharmaceutical space. It will be used as a tool to negotiate moving manufacturing more to the U.S. However, this will take time, and we don’t expect any decisions until 2026 – likely mid-2026.
· Overall, we think this will be manageable for the majority of med tech companies, with likely various delays and scaled back impact.
o PPE products are the most at risk. The overwhelming amount of manufacturing for PPE products are in China or other parts of Asia and the administrations would like to shift some of this balance to the US or countries where trade relations are stable.
o Exemptions are very likely for all medical items being reviewed, especially if there are massive disruptions to the delivery of essential healthcare products. A delay in implementation of any policy is also likely but will differ by product/manufacturer.
o US based med tech companies that have shifted manufacturing to countries like Ireland, will have some pressure to shift manufacturing onshore. Large ortho and cardiac manufactures, some lab companies, and others will likely need to discuss with the administration details around current offshore manufacturing. This does not mean manufacturing will need to shift onshore immediately, but discussion will likely need to discuss the dynamics around the current manufacturing situation.
· First priority will be to completely eliminate the tariff risk to medical device companies, but we think chances are unlikely the tariff threat will be totally eliminated. That being said, we also believe any potential tariff implemented will be watered down and numerous companies/products will be exempt.
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