California medical diagnostics company shutters after Medicare rescinds coverage of its test

CardioDx, a 16-year-old medical diagnostics company based in Redwood City, Calif., is shutting down after the federal Medicare program rescinded coverage of its heart disease blood test in several states, according to the San Francisco Chronicle.

Medicare was one of the largest purchasers of the company's flagship blood test Corus CAD.

The federal insurance program started rescinding coverage of the test in November, after it was found to be unnecessary and of little use to patients.  

Before Medicare's decision, CardioDx sold millions of dollars worth of the test for six years. About 175,000 patients used it. In 2016 and 2017 alone, Medicare and patients together spent nearly $52 million on the test, although it is unclear how much of the test was paid for out of pocket by patients and how much of the cost Medicare was responsible for.

In December, CardioDx submitted a notice to a California agency that it planned to lay off 110 employees as it winds down business operations. The notice did not include a reason the company would cease operations.

However, around the same time as the notice, a federal court unsealed a whistle-blower lawsuit brought by former employees who claimed CardioDx defrauded Medicare by knowingly selling an unnecessary test. Prosecutors charged that the company had sold a test it knew was medically unnecessary since 2015.

Medicare revoking its coverage after several years because of the lack of value of the test is unusual, but it could cause a company to close its doors, according to Tim Bajarin, president of market research firm Creative Strategies.

Copyright © 2022 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.