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CMS Guideline Edit Could Affect Myriad Genetics Revenues, Piper Jaffray Indicates

NEW YORK (GenomeWeb) – Investment bank Piper Jaffray said today in a research note that an edit to certain clinical labs procedure guidelines by the Centers for Medicare and Medicaid Services could have financial implications for Myriad Genetics.

Analyst William Quirk noted that CMS made an edit to its procedure-to-procedure (PTP) guidelines stating that labs should use code 81162, instead of combining 81211 and 81213. "We believe Myriad bills BRCA tests using the two codes," Quirk said, adding, "this move could have financial implications for Myriad as 81162 is paid [about 21 percent] lower than the combined 81211/81213 rate."

Myriad's billing of Medicare for BRCA testing using both 81211 and 81213 would have amounted to about $2,849 in revenues per test in 2018, but the alternative 81162 code will pay $2,253 in 2018, he noted, adding that payments under 81162 are further declining under PAMA by about 10 percent per year until 2021.

Quirk said that running the reimbursement impact through Piper Jaffray's model implies around a $9.8 million revenue headwind for Myriad in calendar-year 2018, and around an $.11 EPS headwind, though only 10 percent of Myriad's hereditary cancer business is affected by Medicare payments.

Myriad said recently that over the next fiscal year, it expects hereditary cancer revenues to be down by 9 percent, with a 3 percent increase in volume and a 12 percent decrease in price. However, the firm also noted that it is hoping to offset those declines with sales of its new products and cost-reduction initiatives.

In midday trading on the Nasdaq, Myriad's shares were down more than 5 percent to $32.04.