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Heart transplant test firm gets shock on reimbursement plan

This transplant test is facing a death sentence unless a rejection is on the horizon.

Its manufacturer warns that it will have to stop selling its commonly used blood test for detecting imminent organ rejection in heart transplant patients if a proposed 77 percent drop in the current Medicare reimbursement rate for the test is approved.

CareDx said that Medicare reimbursements for its AlloMap test would plunge from $2,821 per use now to what the company estimates would be just $644 per use under a proposed fee schedule released late last month by federal regulators.

That proposal is troubling transplant doctors and their patients, who get monitoring tests several times per year to see if they are on the verge of potentially fatal organ rejection.

The worry is that if AlloMap ceases being available, patients will instead be forced to rely on biopsies of transplanted hearts to monitor rejection, a process that is invasive, stressful and time-consuming. Such biopsies would actually cost Medicare significantly more than the rate being proposed for AlloMap, according to the company and transplant surgeons.

CareDx now is rallying doctors and patients to try to convince the Centers for Medicare and Medicaid Services to reverse its proposal to classify AlloMap at a new medical billing code. Comment on the proposal is open until Oct. 26.

California-based CareDx's stock plunged Sept. 28 from $6.24 to close at $4.11 on the heels of CMS' disclosure of its proposed change. The shares were near $4.50 early Thursday.

"It came as a complete surprise," said CareDx CEO Peter Maag about the rate-affecting proposal. "I personally think it's a mistake. It's just: somebody made a mistake."

"We cannot provide this test for $644," said Maag. His company gets about half of its annual revenue from Medicare reimbursement payments for the test.

If the proposed change goes into effect Jan. 1, and Medicare starts paying at the new rate, CareDx has projected it will go out of business sometime early next year.

The AlloMap test is administered to about 5,000 heart transplant patients each year. That includes people who received transplants in past years. AlloMap is used by 110 out of the nation's 130 heart transplant centers, according to the company.

Maag said that CareDx, whose stock began trading on the Nasdaq last year, has never been profitable. AlloMap is the only product CareDx currently sells, but the company has other ones in its development pipeline.

If the company's research and development expenses were not considered, CareDx would realize just a 5 percent profit from each AlloMap test, according to Maag.

CMS' proposed change uses a method that would set rates for lab tests at the same level as comparable technologies, as opposed to another method used to determine rates when no comparable technology exists. CMS compared AlloMap to an existing code for a genetic test for a certain kind of colorectal cancer.

Maag said that other test is not comparable to CareDx's AlloMap test. "There really is no good comparison," he said.

AlloMap
Source: CareDx

Dr. Jon Kobashigawa, who heads Cedars-Sinai Heart Institute in Beverly Hills, California, agreed, saying it was "not correct" for CMS to lump AlloMap in with the colorectal cancer test.

CMS "probably did not assess and evaluate the use of the AlloMap test, and how much it costs to actually do the testing," said Kobashigawa, whose institute does more than 100 heart transplants per year, making it the leading heart transplant center by volume in the United States.

He said that after CMS announced the proposed reimbursement level, "my colleagues ... emailed me that this was happening. And they were distraught, because this would affect their patients and my patients."

"I think this is a huge problem for patients who had heart transplants in the United States," Kobashigawa said. "By not reimbursing AlloMap adequately, the test will go away, and force Americans who have that heart transplant to undergo painful heart biopsies."

"You might imagine that getting stuck in the neck is not an easy thing to tolerate" by patients, he said, referring to one method in biopsy procedures that doctors use to get access to the new heart, and remove very small pieces of it to test it.

Biopsies as a rule are done in the first two months after transplant surgery. But AlloMap is often used in subsequent months to determine if a patient is on the path to rejection. Patients undergoing rejection are treated with steroids.

"We have used AlloMap routinely, and rely on this test heavily, and have found it to be very effective," Kobashigawa said.

He said he hoped "that this [rate proposal by CMS] is reversed."

So does heart transplant survivor Pat Sullivan, a 60-year-old Northborough, Massachusetts, resident, who received the AlloMap test several times after his November 2012 surgery.

Sullivan said the biopsies that he first received were "uncomfortable," and somewhat stressful.

"They're going into your brand-new heart just to get this, so that's a little concerning," said Sullivan. And because he had to be sedated, his wife had to drive him to the hourlong procedure, which was performed about hour away from their home, requiring her to take the day off from work.

AlloMap, in comparison, "was a simple blood test, which was great," Sullivan said. He was also able to drive himself to have his blood drawn.

Sullivan said that after hearing news of the proposed new reimbursement rate for AlloMap, "when I realized to the extent that it could affect the company, I was pretty upset."

"I just thought of what a big difference it's made, both to myself and to friends that I know," Sullivan said, referring to other transplant recipients. "If that went away, it'd be a sad thing."

CMS spokesman Aaron Albright declined to comment on the specifics of the proposed change that could affect reimbursement for AlloMap.

"We will consider public comments to the proposal in developing the final payment rule," Albright said.