Home 5 Clinical Diagnostics Insider 5 Foundation Medicine’s Reimbursement Woes May Signal Broader Industry Challenge

Foundation Medicine’s Reimbursement Woes May Signal Broader Industry Challenge

by | Dec 14, 2015 | Clinical Diagnostics Insider, Diagnostic Testing and Emerging Technologies, Reimbursement-dtet

Foundation Medicine (Cambridge, Mass.) candidly reported in quarterly financial filings that reimbursement challenges are stymieing the company’s growth. The company’s lack of Medicare coverage decisions and commercial payer contracts delays reimbursements and has led to a backlog of payments for more than 30,000 completed tests. The company acknowledged these backlogs are not only delaying revenue, but also leading to slower than anticipated growth in its clinical testing volumes, particularly in the community setting. Industry watchers are taking note and assessing the implications of these reimbursement challenges for other, less well-funded companies. For the third quarter (ending Sept. 30) Foundation Medicine’s revenue reached $25.4 million, 54 percent year-over-year growth for the period. This growth was driven by strong results from the company’s pharmaceutical business, which accounted for $11.7 million of the quarterly revenue, an increase of 75 percent. Pharmaceutical testing is negotiated on a set price per test. The third quarter pharmaceutical revenue was tied to 2,676 tests. (The company notes quarterly revenue is based on when reimbursement is actually collected, not when the tests were performed.) The company’s clinical testing revenue for the quarter also grew (40 percent yearover- year) to reach $13.7 million. This revenue reflected payment for 4,300 […]

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