Inspire Medical Stock Tumbled 18% Today – Wall Street Flags Medicare Coding Shift As Catalyst Behind The Drop

• Stifel described the situation as taking a “merry-go-round” effect in the reimbursement environment “for the worse.”
• RBC Capital also pointed to the confusion over reimbursements as a key driver of the sell-off.
• RBC believes Inspire V fits the intent of the newer code structure and expects clarifications from CMS to improve coding consistency.

Analysts stated on Thursday that Inspire Medical Systems, Inc.’s (INSP) stock price drop could be attributed to the fact that two Medicare Administrative Contractors removed a key billing code for hypoglossal nerve stimulation procedures used with its Inspire V sleep apnea device.  

The firms remarked that this created confusion about reimbursement and eroded investor confidence, according to TheFly. 

Stifel’s Take

Stifel said the sudden removal of CPT code 64568 by Medicare contractors Noridian and CGS disrupted the favorable reimbursement landscape that had been boosting Inspire’s valuation. 

The firm described the situation as taking a “merry-go-round” effect in the reimbursement environment “for the worse,” noting that the market’s recent rally tied to better payor terms was effectively wiped out as investors re-evaluated the outlook.

Stifel maintained its ‘Buy’ rating on Inspire, but highlighted that the company is well-funded and positioned within its product cycle despite the current uncertainty.

Inspire Medical’s stock traded over 18% lower on Wednesday mid-morning. However, on Stocktwits, retail sentiment around the stock jumped to ‘bullish’ from ‘bearish’ territory the previous day. Message volume shifted to ‘high’ from ‘low’ levels in 24 hours.

 RBC Capital’s Perspective

RBC Capital also flagged the reimbursement confusion, noting that the CMS Local Coverage Determination showed CPT code 64568 had been removed from coverage because it was mistakenly included under Group 1 codes. 

While this raised short-term questions about Medicare billing, RBC believes Inspire V fits the intent of the newer code structure and expects clarifications from CMS to improve coding consistency.

Piper Sandler expressed surprise at how quickly Medicare contractors pulled the code, given that Inspire had previously coordinated the transition to CPT 64568 for its newer device. 

The Inspire V device is an implantable upper airway stimulation therapy designed to treat moderate-to-severe obstructive sleep apnea (OSA).

INSP stock has lost over 47% year-to-date. 

Also See: OpenAI’s ChatGPT Outpaces Microsoft Copilot In US Campus Adoption: Report

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