Abbott’s dilemma; Absorbing the Absorb

March 17, 2016 – 3:58 PM | By Mark McCarty | No comments yet
Costello and that other guy

Costello and that other guy 

Now that Abbott Vascular has pulled out a resounding win at an FDA advisory committee for its Absorb bioresorbable scaffold, it’s time to ask what the coverage and reimbursement pictures look like. The coverage part looks easy – perhaps easier than it really is – but it may be more helpful to ask who will be first to give the Absorb a look via the reasonable and necessary lens.

CPT + MAC = OMG

The easy part of the Absorb situation is the diagnostic-related group discussion because it presumably folds neatly into the same category as drug-eluting stents. Medicare does not have to reinvent any wheels here, and so neither does Abbott.

Consequently, Abbott is likely to appeal to the Centers for Medicare and Medicaid Services for a new technology add-on payment (NTAP) for the Absorb. However, the deadline has passed for the NTAP for fiscal year 2017, so the company will have to wait for FY 2018 to get a payment the company will likely need to cover the cost of the device, which is almost certainly more expensive than drug-eluting stents.

One way of looking at this is to ask what happens when the American Medical Association meets to come up with a CPT code for the device. It seems likely that the Absorb will end up with a category III CPT code, and device makers seem to be of the view that this is the beginning of trouble where Medicare administrative contractors (MACs) are concerned.

It has been argued that MACs are inclined to see anything with a category III code as non-coverable because this category is applied to devices that are investigational and/or experimental, and the problem is pronounced enough that the 21st Century Cures bill (H.R. 6) has provisions that would change how MACs handle such situations. This all goes a long way to explaining why the Absorb’s Medicare problems may start with the CPT-MAC discussion.

Costello to Abbott; You throw it to who?

Before we dismiss this as an entirely speculative line of thinking, lets not forget the fate of the CardioMEMS device by St. Jude Medical. St. Jude had picked up both an NTAP and a new technology pass-through payment for the system to cover both the implant and the out-patient follow-up, but that did not prevent First Coast Service Options from declaring the device investigational and thus non-covered. Another MAC, Novitas Solutions, has offered clinical trial coverage for the CardioMEMS, but that’s probably not what St. Jude Medical had in mind when it acquired the device from its namesake company of origin.

It may be premature to say that FDA will give the Absorb a nod in the near term, especially when one considers that the agency clearly demonstrated an interest in more data from the pivotal trial, but let’s assume for the moment that FDA will approve the device before the end of the year.

In this scenario, the AMA committee charged with assigning CPT codes will surely get to the Absorb long before CMS has a shot at the NTAP question, which leaves the field open for the MACs. If recent history is any indication, this is where the real coverage headaches will begin for Abbott, which may have to absorb a lot more costs associated with this device before it can generate any ROI in the U.S. market.

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