Medicare will cover continuous glucose monitors for a broader group of patients, starting in April, according to an updated policy published by the Centers for Medicare and Medicaid Services.
The policy change included broader language and also came earlier than expected, making it a “welcome surprise,” and could double the market for the devices, J.P. Morgan analyst Robbie Marcus wrote in a research note.
Dexcom and Abbott Laboratories had expected coverage to start in mid-year.
In an earlier draft of coverage guidelines, CMS had suggested covering the devices for people with diabetes who take daily insulin, or who have a history of problematic hypoglycemia. Now, the policy includes people with non-insulin treated diabetes and a history of recurrent level 2 or at least one level 3 hypoglycemic event.
“At first glance, it seems that the finalized CMS language is broader and no longer includes daily insulin language,” Marcus wrote.
The policy change could open up a bigger opportunity for broader coverage by commercial insurers over the next year or two, he added.
Currently, just 25% of people with Type 2 diabetes who are intensive insulin users (taking multiple shots per day) use a CGM. Covering people who take basal (daily) insulin could double the U.S. market opportunity of about 2 million people with Type 1 diabetes and 2 million people with Type 2 diabetes who are intensive insulin users, a group currently covered by CMS, Marcus wrote.
Dexcom executives expected the expanded group of users to contribute about 1% of the company’s 2023 revenue, they said in a recent earnings call. That amounts to roughly 12,000 patients, William Blair analyst Margaret Kaczor wrote in a research note.
Assuming the policy goes into effect on April 16, and Dexcom is able to accelerate its commercial efforts accordingly, it could add at least another 5,000 patients, she added.
“While Abbott provides less detailed guidance for its Libre franchise, similarly we believe that the segment can now grow faster than expected,” Kaczor wrote.
This article has been updated with analyst comments on the potential opportunity for CGM makers.
