Inspire Medical Systems (NYSE:INSP) experienced a significant drop in its stock price, falling 12.6% on Thursday due to a notable change by the Centers for Medicare & Medicaid Services (CMS). The regulatory body updated its policy to exclude obstructive sleep apnea (OSA) from the list of covered diagnoses for the CPT code 64568 under National Coverage Determination (NCD) 160.18.
The CMS clarification revealed that the ICD-10 diagnosis code for OSA (G47.33) had been mistakenly included as an approved indication for coverage and was subsequently removed. Consequently, coverage determinations for this condition are now delegated to individual Medicare Administrative Contractors (MACs), which will adjust claims affected by this modification accordingly.
This regulatory shift prompted multiple financial institutions to reassess their evaluations of Inspire Medical's prospects. Oppenheimer downgraded its rating on Inspire Medical from Outperform to Perform citing apprehensions related to reimbursement challenges. Similarly, Truist Securities revised their stance from Buy to Hold and decreased the price target from $120.00 to $96.00.
Truist analyst Richard Newitter explained that the downgrade stemmed from a "diminished confidence in estimated upside prospects without any pricing tailwinds now that INSP can no longer officially use the 64568 code." He also noted that the firm had previously upgraded Inspire Medical in late November based on anticipated price increases that are now considered unlikely.
In contrast, Evercore ISI maintained an Outperform rating with a price target of $125.00, arguing that the company's fiscal year 2026 guidance remains valid as "no significant reimbursement uplift was assumed." Evercore expects Inspire Medical’s reimbursement rates to effectively revert to those of 2025.
The CMS decision effectively reverses a prior adjustment made in November 2025 when CPT code 64568 had been reassigned to APC 1580, a move that would have raised reimbursements by approximately 50% in hospital and ambulatory surgical center settings.