NxStage Medical (NSDQ:NXTM) shares are on the rise this morning after the Centers for Medicare & Medicaid Services announced Friday that it will boost the training rate for home hemodialysis.
NXTM shares were trading at $9.98 apiece as of about 10 a.m. today, up 3.5%.
The federal health insurer also said it’s scrapping plans for the 9.3% cut to the dialysis reimbursement rate it announced last July.
Medicare also raised the payment for a single home hemodialysis training session from $33.44 to $50 for 25 sessions.
Leerink Swann analyst Danielle Antalffy said the increase alone isn’t enough to accelerate adoption of NxStage’s System 1 device.
"While the training payment increase is certainly a step in the right direction, we do not see this as the driver of the adoption ramp inflection point. Rather, we continue to believe NXTM has the right strategic growth initiatives in place to drive this acceleration in HHD growth, including: (1) direct-to-consumer (DTC) advertising campaigns, now expanding to 54 in 4Q from 37; (2) a solid product pipeline entering the market in 4Q; and (3) ramping Clinical Centers of Excellence, including the already-established St. Louis center. Still, we’re inclined to think the ramp toward 15% HHD growth will be a bit longer than previously expected and more back-end loaded in 2014 as these strategic growth initiatives take hold," Antalffy wrote in a note to investors this morning. "Following the release of the final rule, NXTM noted that—while a step in the right direction—the increase in the HHD training payment to $50 still covers only a fraction of the cost to provide HHD. And the company emphasized that it will continue to lobby CMS for further improvements to training reimbursement from here. NXTM has historically noted that the HHD training payment would likely need to exceed $100 per session—well above the now-higher $50 level. Still, the training payment increase being implemented in 2014—while not likely meaningful from an adoption perspective given the still relatively unfavorable economics to fund an HHD program—does seem to validate the benefits of HHD in the eyes of CMS."
