Organogenesis Applauds Decision to Withdraw Medicare Local Coverage Determinations; Decision Eliminates Reimbursement Uncertainty for Company’s Wound Care Products
Organogenesis Holdings Inc., a prominent player in the regenerative medicine field, has welcomed a recent decision by three Medicare Administrative Contractors (MACs) to withdraw the final local coverage determinations (LCDs) related to Skin Substitute Grafts and Cellular/Tissue-Based Products for treating Diabetic Foot Ulcers (DFU) and Venous Leg Ulcers (VLU). The scheduled implementation date for these LCDs was October 1, 2023.
On August 3, three Medicare administrative contractors (MACs) published local coverage determinations (LCDs) concerning skin substitute grafts, cellular and/or tissue-based products (CTP) for treating diabetic foot ulcers (DFU) and venous leg ulcers (VLU) in the Medicare population. These LCDs specified that covered products must qualify as skin substitutes and be legally marketed.
Over 130 products, including five produced by Organogenesis, were identified as not covered by these LCDs. Organogenesis believes that these five products were improperly excluded from the list of covered products and is actively working with relevant parties to rectify this situation before the LCDs take effect on September 17, 2023.
The proposed LCD’s from the MACs had two major requirements for coverage. One of the requirements for covered products in the issued LCD was that they must be considered skin substitutes, which Organogenesis asserted its products met and provided evidence and information to Medicare regarding their function as skin substitutes. The second requirement was that the products were legally marketed in the U.S., a condition Organogenesis also provided evidence it met. Organogenesis noted on its 2nd quarter earnings call that it was preparing a legal memo outlining procedural violations and process issues by Medicare in implementing the policy.
The LCD’s had caused Organogenesis to withdraw their financial guidance on their 2nd quarter earnings call in early August. At the time, Gary S. Gillheeney, Sr., President, Chief Executive Officer and Chair of the Board of Organogenesis stated “The recently published local coverage determinations (LCDs) from Novitas, First Coast Services and CGS to limit coverage for treatment of diabetic foot ulcers (DFU) and venous leg ulcers (VLU) to include only Apligraf and Dermagraft, presents a significant amount of uncertainty regarding the revenue outlook for a number of our products in these regions. Further uncertainty remains as it relates to potential impact on demand for our products when used for treatment of non-DFU/VLU wounds. As such, we are withdrawing the fiscal year 2023 guidance, previously provided on May 10, 2023. We believe that the five commercialized products that were listed as ‘not covered’ were improperly excluded from the list of ‘covered’ products and we are engaging with all relevant parties in advance of the effective date of these LCDs on September 17, 2023.”
The company had noted on its 2nd quarter earnings call that the five products affected by the LCD changes had a current annualized revenue run rate of between $70-$80 million. The company had guided on its first quarter earnings call for total FY23 revenue of $454 to $466 million and has not issued updated guidance following the removal of the LCDs.