DexCom (NSDQ:DXCM) said yesterday that the Centers for Medicare & Medicaid classified therapeutic continuous glucose monitors as durable medical equipment under Medicare Part B. The company’s Dexcom G5 Mobile is the only CGM system that falls under this classification, according to San Diego, Calif.-based DexCom, since patients can make treatment decisions using the device.

DXCM shares were down -2.1% at closing yesterday, but came back 12.3% this morning in pre-market trading.

“This landmark CMS Ruling will make available the most important technology in diabetes management to the Medicare population,” Dexcom’s president & CEO Kevin Sayer said in prepared remarks. “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.”

The coverage decision is ahead of schedule, as analysts anticipated the move to be made later this year or early 2018. Nearly 25% of patients with type I diabetes fall under Medicare, so analysts expect that DexCom could exceed its recently-issued 2017 sales guidance of $710 – $740 million.

Previously, patients were paying about $3000 annually, out-of-pocket, for CGMs.

Leerink analyst Danielle Antalffy wrote in a note to investors today that CMS will reimburse the durable piece of equipment, the receiver, at $236-$277, plus $248.38 each month for the disposable transmitters and sensors. Annually, CMS will reimburse each patient over $3200.

The ‘therapeutic’ requirement for CGMs means that DexCom has a potentially meaningful competitive advantage, Antalffy wrote. Abbott Laboratories (NYSE:ABT) is seeking a dosing claim for it’s FreeStyle Libre sensor, but Antalffy said that they believe that the sensor accuracy will need to improve before it can be classified as ‘therapeutic’.

Other companies that market CGMs saw their shares fall yesterday. Senseonics (NYSE:SENS) shares were down -6.7%, while Tandem Diabetes Care (NSDQ:TNDM) shares fell -4.4% to $2.20 per share.

“AdvaMed applauds CMS’s decision to recognize certain continuous glucose monitoring devices approved for use in making diabetes treatment decisions as durable medical equipment,” AdvaMed president & CEO Scott Whitaker said in prepared remarks. “This significant step will allow Medicare to cover these particular life-changing devices for people with diabetes. With this decision, CMS has opened the door for millions of beneficiaries to better manage their condition and experience improved quality of life. CGM devices are already covered by nearly all private health plans, and CMS’s ruling follows years of advocacy efforts by AdvaMed and allied organizations to improve patient access to these advanced technologies. CGMs improve diabetes management and patients’ lives by helping to manage insulin therapy. CMS’s decision to cover certain therapeutic CGMs will ensure that America’s seniors will have access to a CGM technology that can simplify and improve diabetes management and overall health. However, it is important to ensure that this decision also leads to coverage for other CGM-augmented systems that use sensor readings to automatically and continuously adjust insulin delivery for patients with diabetes.”

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