A recent announcement from Centers for Medicare & Medicaid Services (CMS) is "undoubtedly materially positive" for Lantheus Holdings (NASDAQ:LNTH) shares, an analyst noted.

The CMS proposed Wednesday Medicare payment rates for hospital outpatient and Ambulatory Surgical Center (ASC) services for 2025.

The proposal is part of the annual Hospital Outpatient Prospective Payment System (OPPS) and ASC Payment System Proposed Rule. A 60-day comment period will remain open until Sept. 9.

The final rule is expected in early November.

Under the OPPS, the costs of diagnostic radiopharmaceuticals are included in the payment for nuclear medicine tests.

While this generally supports efficient care, there are cases where the payment for these tests does not cover the cost of certain specialized radiopharmaceuticals.

To address this, the CMS proposes refining the packaging policy to improve payment accuracy.

Specifically, the agency says it will pay separately for any diagnostic radiopharmaceutical with a per-day cost over $630, removing their costs from the nuclear medicine test payments.

Radiopharmaceuticals costing $630 or less per day will remain included in the payment rates for these tests.

This change ensures patients can access necessary nuclear medicine tests involving higher-cost radiopharmaceuticals.

William Blair notes that by setting the $630-per-day threshold for a separate reimbursement system rather than a bundled payment, the agency has taken a stronger stance on managing the high costs of new diagnostic radiopharmaceuticals. This move aims to ensure continued patient access to these essential yet expensive imaging agents.

While the details pertaining to its proposed implementations are unknown, given the dramatic change in stance from last year's passive language to this year's more assertive language, investors likely have increased optimism regarding the reaching of a solution on reimbursement for high-cost diagnostic radiopharmaceuticals, which could materially mitigate potential revenue impact following Lantheus's Pylarify's pass-through expiry on January 1, 2025.

Pylarify (piflufolastat F18) Injection is a radioactive diagnostic agent indicated for positron emission tomography of prostate-specific membrane antigen-positive lesions in men with prostate cancer.

William Blair notes the uncertainty surrounding the impact of pass-through expiry on Pylarify sales starting in 2025. To fully realize the potential of radiopharmaceuticals, it is crucial to balance both diagnostics and therapeutics. The analyst awaits a more defined strategy from Lantheus management regarding their therapeutic approach.

Therefore, the analyst reiterates the Market Perform rating.

Price Action: LNTH shares are up 34.2% at $104.26 at last check Wednesday.

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