4DMedical (ASX: 4DX) shares are up 70% today on the basis that the Federal Government in the US will now pay for those lung scans. Given that those scans will now be free to a significant number of patients it’s therefore expected that there will be more of such lung scans - a pretty obvious piece of logic that is.
The announcement itself: “U.S. Centers for Medicare & Medicaid Services (CMS) assigns US$299 as reimbursement benefit for XV LVAS® From 1 January 2024, XV LVAS® scans conducted in a U.S. hospital outpatient facility for Medicare patients can be billed to CMS XV LVAS® now has a benchmark payment level set for hospital outpatient procedures, serving as a guide for private health insurers in determining their pricing levels. CMS reimbursement will accelerate utilisation of XV LVAS® under 4DMedical’s existing Category III CPT code, a key criterion for the AMA when considering granting a Category I CPT code”
That all seems a bit complicated but Medicare is the government paid health care system for the old in the US. Some 70 million people on it. When Medicare agrees to pay for a treatment it therefore becomes available to those 70 million. And, roughly enough, if Medicare covers it then all the private insurance companies will also cover it.
4DMedical share price from Google Finance
This doesn’t then mean that 70 million people are going to have the scans. But it does mean that no one is going to be dissuaded from having one by the cost of it. It also doesn’t mean that doctors are going to start using the scans. That’s a medical decision, obviously. But it does mean that motors are not going to not use them on the grounds of cost. “Respiratory imaging technology company 4DMedical (ASX: 4DX) has confirmed that its XV LVAS procedure is to be included in a key medical treatment reimbursement program in the United States.” As we say, this is about who is willing to pay for the scan. As it’s now to be the government then there’s no sticker shock to prevent people from having one. This significantly increases the fair value of 4DX of course.
Now, whether that value increase is quite 70% or not is another matter. But it’s certainly true that this is a key stage in being able to generate significant volume business on the US market.
