Cambridge Heart faces challenge from CMS changes

November 18, 2009 by MassDevice staff

The Tewksbury, Mass.-based company warns shareholders that changes in physician reimbursements could lead to a bumpy road ahead.

Officials at Cambridge Heart Inc. (CAMH) are watching Congress with great interest right now, and not only because of legislation that may create a tax on medical devices.

The Tewksbury, Mass.-based firm is warning shareholders that changes in the Centers for Medicare and Medicaid Services' 2010 Medicare Physician Fee Schedule (PDF) could result in steep cuts in reimbursement payments to cardiologists. The reduced reimbursements, they wrote, would "affect the demand for, price of, or utilization of our Heartwave II System and Micro-V Alternans Sensors, which may in turn have a material adverse effect on our business," according to an expanded earnings statement filed with the federal Securities and Exchange Commission earlier this week.

Back in August, CMS proposed a 21 percent decrease in reimbursement payments for physician services in 2010. In its final release earlier this month, the agency tried to soften the blow by spreading some of the cuts over four years, although the changes were still too late and too small for industry groups such as the American College of Cardiology.

"The impact of the cuts is still enormous both for 2010 and beyond," ACC officials said. "Cuts of this magnitude — whether enacted this year or spread over four years — cannot be absorbed and we will continue to fight the implementation of this data."

Edward Berger, founder of Larchmont Strategic Advisors and a blogger on reimbursement issues for MassDevice, held out hope the proposed changes may still be overruled, following a pattern Congress has followed in recent years.

A bid to cut the provisions died a couple weeks ago during debate on the healthcare reform bill because, Berger said, "Republicans and some Blue Dog Democrats wanted to include the cost of the fix in the calculated cost of the healthcare reform legislation, which would have destroyed efforts to make the reform bill deficit-neutral over 10 years, as promised."

Berger added that any legislative remedy likely will have to wait until after the reform bill is decided, meaning cardiologists will have to accept one-quarter of the mandated cuts before the system is fixed.

For Cambridge Heart, which has already had some reimbursement issues involving its Microvolt T-wave Alternans equipment, the lack of Congressional action would result in physicians who use the device getting 28 percent less next year, according to CMS.

On a more positive note, Cambridge Heart officials are officials are touting a recent clinical study indicating that its MTWA test is an accurate predictor for sudden cardiac arrest.

The study found that patients with abnormal MTWA tests were 4.4 times more likely to experience life-threatening arrhythmia or sudden cardiac arrest after 36 months. In addition, the company said the test's "negative predictive" value was 97 percent after three years.

The PREVENT-SCD trial, conducted at Kyoto University Hospital in Kyoto, Japan, involved 453 patients at 38 institutions. The results were unveiled in a prepared release to coincide with the American Heart Assn. Scientific Sessions in Orlando, Fla.