St. Jude's CardioMEMS heart failure monitor denied Medicare coverage in 11 states

CardioMEMS's HF System for monitoring heart failure--Courtesy of St. Jude Medical

Medicare administrative contractor Novitas said it would not cover St. Jude Medical's ($STJ) implantable CardioMEMS heart failure monitor, dealing the device another reimbursement setback. Last, year First Coast Medicare denied coverage of the device in Florida, Puerto Rico and the Virgin Islands.

Novitas covers Medicare patients in Pennsylvania, New Jersey, Maryland, Delaware, Washington DC, Colorado, Oklahoma, New Mexico, Texas, Arkansas, Louisiana, and Mississippi, as well as those who receive insurance from the Indian Health Service or Department of Veterans Affairs.

The Lancet in November published an update on the device's pivotal trial. A follow-up analysis found that the device improved medication management by real-time monitoring of heart conditions reduced heart failure hospitalization by 48% among trial patients formerly in the control group during the random access period.

But that wasn't enough to convince Novitas. "Given the information made available in the public domain, there appears to be limitations with lack of long-term clinical outcomes, specific study limitations, and need for additional studies. At this time, Novitas considers this device investigational and considers this non-covered unless in an approved clinical trial," the MAC wrote on its website.

It also said there were "issues" related to gender and increased interaction with nursing staff among patients in the trial's treatment group, and pointed out that the FDA is collecting more information via a postapproval trial.

St. Jude officials have described CardioMEMS, which costs about $18,000, as the linchpin of the company's heart failure franchise, but blame challenging reimbursement for its poor financial performance so far. St. Jude estimated 2016 CardioMEMS sales will be $65 million, lower than the $80 million projected for 2015.

To get around negative local coverage decisions, St. Jude is applying for applying for a National Coverage Decision from the Centers for Medicare & Medicaid Services. Leerink equity analysts Danielle Antalffy and Puneet Souda are optimistic about a positive decision from CMS by year-end. They said coverage would likely be restricted to Class 3 New York Heart Association patients who have suffered a rehospitalization within 12 months, resulting in a reimbursable market of more than 350,000 patients.

"In the near term, we believe STJ's ~$65M 2016 sales guidance for CardioMEMs reflects a non-coverage decision from Novitas," they wrote in an analyst note. "While this decision leaves little room for near-term upside in our view, we continue to believe our 'base case' scenario for adoption is achievable--limited by ongoing reimbursement uncertainties in 2016 with ramping adoption in 2017 and beyond and reaching ~$200-$250M within five years postlaunch. And to us, this adoption ramp could ultimately prove conservative assuming a successful NCD as more physicians and payers gain experience with the device given what we believe is a large and underpenetrated long-term market opportunity facilitating better therapy for Class 3 heart failure patients."

- read the decision