Friday, April 6, 2018

Medicare Nerdism and Heartflow's $240M Funding Round

Heartflow is a Bay Area medtech company with unique, advanced bioinformatics approaches that use CT scans to determine cardiac bloodflow. 

In November 2017, Heartflow reached a $1.4B valuation after a $150M funding round, and that round, its Series E, peaked at $240M by February 2018.   Total funding has reached circa $500M; see WSJ in February 2018 here.

In a June 2017 blog, I talked about a range of favorable events for Heartflow, but also discussed and linked to a spring 2017 Medicare Administrative Law Judge Decision that the company was not eligible to even enroll in Medicare - here.

What happened?   Here's a chain of events.  It's an important case study for the start/stop way that CMS is handling digital health and bioinformatics.   

From public data, at least through mid 2017, the company's Medicare contractor Noridian declined to enroll the company in Medicare as a provider, on the basis that its service (bioinformatics on the imaging) was not reimbursable.  See my June 2017 blog above.

But the company had several AMA Category III CPT codes.   These codes are always reviewed and categorized by CMS central office for the hospital outpatient system, the "Ambulatory Payment Classification" system.

CMS initially ruled the codes were not payable or not separately payable (and thus not classifiable into any payable APC).   In November 13, 2017, rulemaking, with four pages of discussion, CMS ruled that the Heartflow key codes were payable, and in fact priced them circa $1500.  See 82 Fed Reg 52422-52425, in the cloud here.

Heartflow's 9-page September 2017 comment letter is here.  Given that the CMS favorable ruling was rapidly followed by $240M of fundraising, one could joke that the comment letter was worth about $25M a page. 

Footnote:  In 2017, Heartflow lobbying spending was $170,000, according to OpenSecrets, most of which to Hogan Lovells.

Coverage, Coding, and Payment

Close readers of reimbursement policy will note that it includes "coverage, coding, and payment" and the CMS ruling in November is about "coding and payment."   I'm don't claim to know exactly what the status of Medicare coverage of Heartflow is and it could be evolving rapidly.  One LCD in the cardiac imaging topic area says simply that "it does not address Heartflow determinations" (Palmetto, L33423, here.)  But Heartflow CPT codes seem to be within a covered payment category in a large group of Category III codes in a Noridian article (A55607, here.)   

Heartflow regularly updates announcements on its covered population with major payers (e.g. see January 2018 update here.)


For an even nerdier view of the Heartflow policy and pricing sage, see a page of discussion and even more links, here.