Friday, July 21, 2023

Heartflow: Still Ground Zero for CMS Valuation of Digital Medicine

Heartflow is a Bay-area company that provides services based on highly sophisticated software that maps actual blood flow in impaired hearts, starting from static CT angiography data.  See website here.  The company has had a quartet of Category III CPT codes (0501T, full services; 0502T, data aggregation; 0503T, technical service, 0504T, physician sign-out.)*   This quartet of codes is being replaced by a single CPT code in CY2024 (with the -26, TC modifiers).

  • Its Medicare saga continues, as CMS just announced it disagrees sharply with valuation recomendations that merited extensive study and debate at the AMA RUC.   I'll present that after a brief history


You can find deep-dive tech articles on Heartflow as far back as 2011, over a decade (here).  By 2017, it had already raised over $200M.  (It raised Series F, $215M, a few months ago, April 2023.)

Its battles with CMS began early, when Noridian MAC refused to allow it to enroll as an IDTF, as witnessed by online court cases at CMS.  This denial-to-enroll was initially upheld by CMS in April 2017

Adding insult to injury, CMS OPPS rulemaking during 2017 initially ruled that Heartflow's codes were nonpayable, but reversed that position between July and Novmeber, in preparation for CY2018.  And, CMS accepted some invoice that resulting in a $1500 OPPS payment category.   Quickly thereafter, in February 2018, Heartflow landed a $240M round.   Along the path, it got involved in federal lobbying investments, which tallied $200K in 2017, $260K in 2018, $290K in 2019 and 2020, about $450K in 2021, 2022.

But it wasn't all good news,  In July 2019 rulemaking, finalized in November 2019, CMS cut that OPPS price to around $900 based on initial hospital discounted-charge data.  It's still at about $900 in the OPPS setting now in 2023.

CMS rarely prices Category III codes, but in July 2021, proposed to set the Heartflow Part B price at about $900 by crosswalk, but that crosswalk target was chosen by CMS directly because it matched the OPPS price.  Here.  (CMS garnered a lot of extra authority to set Part B prices in PAMA Section 220 in 2014).   

As one of the only priced Cat III codes, 0503T, in Part B, is crosswalked to the near-$900 price of 93475.  93475 being priced by an RVU resource stack that is irrelevant to 0503T, but reaches the desired price taken from the OPPS schedule. 

What's New Summer 2023 - RUC Signs Off on $1100 Per Click Software

In rulemaking comments, AMA regularly disputes CMS's wisdom in using OPPS price categories to set Part B pricing, preferring  that CMS work with AMA-valued RUC work and practice inputs.   In the case of Heartflow, AMA CPT has created a new Category I code for the service for CY2024, which brought the topic to a RUC meeting in January 2023.   This RUC meeting left behind extensive data, argumentation, and notes.   (See RUC home page here, see February 2023 records here.  Heartflow is Chapter 11, new code "7X005", starting page 1525/2272).

The main upshot I'm calling out, RUC valued the Heartflow software service, per patient or per click, at $1100.   The new code is, Noninvasive estimate of coronary fractional flow reserve derived from augmentative software analysis of the data set from a coronary computed tomography angiography, with interpretation and report by a physician or other qualified health care professional.  Concurrently, RUC created a new supply code, "FFRCT Software Analysis," noting "the software is not owned by the physician" and "the software is not resuable" (aka it is expensed not amortized).

CMS Says No

On July 13, 2023, CMS released OPPS and PFS rulemaking for CY2024, in "inspection form" or typescript, so I don't have final Fed Reg pagination.  But, the discussion of pricing 7X005 starts at page 158/1920, and CMS explains why it is uncomfortable with per-click software pricing (software as a service) and why it prefers to continue to use 93475 as a crosswalk price (about $900), because, the APC OPPS price based on discounted hospital charge data (charge-to-cost) is about $900.   CMS mentions it is not adopting the AMA RUC valued software, but CMS does not mention explicitly that th the AMA had priced that software at $1100.

Not Just Heartflow: Case Study for Digital Medicine

I've put this much effort into this blog because how CMS prices AI or advanced software is a critical issue, and Heartflow (and new code 7X005) are just "case studies" for how that process is playing out between the AMA RUC and CMS policy staff.


CMS payment data for CY2021 is available, cross-matching code and supplier/physician.  Here.  I pulled services starting with 050-- which includes 0501T, 0502T, 0503T, 0504T, the Heartflow codes (I manually deleted other codes with that beginning.)  

Here's what we get for 0504T data - Physician Interpretation:

Since there are 6000 interpretations, and only 729+280 technical component billings (about 1000), this suggests that most technical component billings of Heartflow are seen not here, but in the OPPS APC system (pass through charges at hospitals, and paid about $900 to the hospital, depending on geography).  The Part B data above total just under $1M for 2021.

Back at the provider/code crossmapped data, the most-reimbursed cardiologist got $34,323 for 46 services of 0501T (Monroe, NC). Allowed amounts for the "T" codes at different MACs seemed to be all over the map.  I've put the spreadsheet in the cloud here.

* Nerd note.  I recall there is a phrase somewhere in statute that requires cardiology tests to have a separate interpretation code, and this is why many tests like EKGs have a separate interpretation code rather than the simpler structure of one code plus -26 and TC modifiers.