The fact that continuous glucose monitors for type 1 diabetes helps maintain better glycemic control and can be an important tool to prevent hypoglycemia is not disputed.
But counterintuitively the device has got no coverage from Medicare although most private insurers do. Continuous glucose monitoring systems (CGMs) measure blood glucose levels periodically and comprised of a sensor placed right underneath the skin near the stomach, a receiver and a transmitter.
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After not covering it for years, Medicare seems to have finally caught up.
In a landmark decision, the Centers for Medicare and Medicaid Services announced on Thursday that therapeutic CGMs that replace the need for using blood glucose strips and help to make treatment decisions will be recognized as durable medical equipment (DME) and be eligible for coverage.
“We are thrilled at JDRF,” said Aaron Kowalski, JDRF’s chief mission officer, in a phone interview. “It’s such an injustice that people who were the most susceptible to severe hypoglycemia had to pay out of pocket for these devices.”
Kowalski said that JDRF had debated the agency for years trying to convince them of the value of CGMs but to no effect.
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“There are several criteria that a DME needs to meet and what they disagreed was on, ‘Does it serve a medical purpose?’ Kowalski explained. “And we would say, ‘Of course it serves the medical purpose. It’s approved by the FDA to help people with diabetes manage their blood glucose levels.'”
But CMS countered that the labeling for most CGMs is an “adjunctive claim” meaning that people with diabetes still had to use fingerstick tests to confirm the CGM readings and could not make therapeutic decisions based on the CGM readings alone, Kowalski said.
However, what seems to have tipped the scales in favor of CGMs was the strategy Dexcom followed to obtain a specific dosing claim for their G5 Mobile that the FDA blessed thereby eliminating the need for fingerprick testing.
“Dexcom went to the FDA and an FDA panel reviewed the data and they got a label for dosing off of the data,” which is what CMS is calling a therapeutic CGM, Kowalski said.
In other words, no CGM currently on the market — other than Dexcom’s G5 Mobile — is being considered a DME and eligible for coverage.
“This landmark CMS Ruling will make available the most important technology in diabetes management to the Medicare population,” said Kevin Sayer, DexCom’s president and CEO, in a statement on Thursday. “We are pleased with this important step forward and we look forward to working with Medicare on implementing coverage in the coming months to ensure beneficiaries have access to this life-saving device.”
Analysts hailed the move as well, noting that such a decision was not expected until 2018.
“We aren’t surprised [Dexcom] gained the classification and coverage, but we are surprised how quickly CMS reached this decision,” wrote Sean Lavin, an analyst with BTIG in a research note on Friday. “The fact that the ruling was released so expediently demonstrates that CMS recognizes the benefits of CGM.”
Lavin pointed out that Dexcom “will need to contract with the regional MACs [Medicare Administrative Contractors] before patients can be reimbursed which may take a few months.” He views this decision by CMS as being good not only for the type 1 diabetics in the Medicare population – estimated to be about 150,00 – but for other patients whose doctors never considered the device because Medicare didn’t cover it.
“It’s a great step forward,” Kowalski noted of the many more patients who would be able to afford CGM.
An analyst from Leerink Partners noted that around 25% of type 1 patients are estimated to be in the Medicare population and had to pay a hefty amount to use CGMs.
“While Dexcom and other CGM manufacturers were not limited in their ability to market to these patients, but in order to get a CGM, these patients would have to pay out-of-pocket — a burdensome prospect at over ~$3000 per year,” wrote Danielle Antalffy in a research note Friday. “From a reimbursement perspective, our understanding is that CMS is stating that the durable piece of equipment (the receiver) will be reimbursed annually at $236-$277 (slightly lower for a used and/or rented receiver), plus $248.38 per month for the disposables, i.e., the transmitters and sensors. In total, this equates to just over $3200 per patient per year — in line with the ~$3000-$3400 per patient per year Dexcom receives today.”
She added that, “Based on our analysis, every 1% penetration into CMS patients could add just over $1M in sales to our current $728M 2017 sales estimate” for DexCom.
Photo: pongschole1, Getty Images
Correction: An earlier version of the story erred in estimating the percentage of the type 1 patients who fall under Medicare.
