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Why iRhythm Technologies Stock Is Tanking Today

By Keith Speights - Dec 2, 2020 at 11:53AM

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Investors didn't like what they saw in new Medicare guidelines.

What happened

Shares of iRhythm Technologies ( IRTC -6.42% ) were tanking on Wednesday, down 18.5% as of 11:30 a.m. EST. The steep decline came after the Centers for Medicare and Medicaid Services (CMS) announced its 2021 Medicare Physician Fee Schedule (MPFS) Final Rule.  

So what

The MPFS Final Rule establishes the payment policies and rates that Medicare will use next year. Investors reacted negatively because iRhythm didn't get everything it wanted.

Electrocardiogram display

Image source: Getty Images.

iRhythm anticipated that the temporary Current Procedural Terminology (CPT) codes that it uses right now to file for reimbursement for its Zio XT remote cardiac monitoring service would be replaced. And that's exactly what happened. In 2021, there will be eight new CPT codes -- one set of four rates for wear-time of between 48 hours and seven days and another set of four rates for wear-time between seven days and 15 days.

However, CMS didn't finalize nationwide pricing for several other items that iRhythm hoped to get. These include extended external electrocardiogram (ECG) patches, medical magnetic tape recorder supplies, and four key CPT codes related to cardiac monitoring. 

Now what

iRhythm is holding a conference call tonight to discuss the CMS MPFS Final Rule in more detail. The company said that it plans to work with the Medicare Administrative Contractors to establish pricing for the CPT codes that CMS didn't finalize. 

Another key factor that could impact the healthcare stock over the next few months is the ongoing COVID-19 pandemic. iRhythm CEO Kevin King noted in the company's third-quarter update that Zio registration volumes are significantly affected by the degree of COVID-19 outbreaks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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