CardioNet says East Coast Medicare administrator is cutting reimbursement rate by 33 percent
Associated Press
09/01/09 9:50 PM PDT
NEW YORK — Shares of CardioNet Inc. skidded Tuesday after the company confirmed a Medicare administrator will slash the amount of money it gives to doctors who use CardioNet products.
Late Monday, CardioNet said Highmark Medicare Service confirmed it will reduce its reimbursement rate for mobile heart technology by 33 percent, to $754 per service from $1,123 per service. CardioNet, which makes wireless heart monitoring devices, said the change would have a significant effect on its business. It did not estimate the size of that change.
In morning trading, shares of the Conshohocken, Pa., company lost 57 cents, or 7.9 percent, to $6.63.
Highmark is a Medicare administrative contractor for Delaware, New Jersey, Pennsylvania, Maryland and the Washington, D.C., area. It told CardioNet of the planned reimbursement cut in mid-July, and CardioNet intends to ask for a review of the decision.
Amit Bhalla, an analyst for Citi Investment Research, said he does not expect the rate to be altered again. He rates the stock at "Hold" with a price target of $9 per share.
"Even though CardioNet is free to provide additional supporting information to HMS for review, we view this rate of $754 per service as more or less final," Bhalla wrote.
