Deerfield
About Deerfield

Launched in 1994, Deerfield Management Company is an investment firm dedicated to advancing healthcare through information, investment, and philanthropy—all toward the end goal of cures for disease, improved quality of life, and reduced cost of care.

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Investment

Supporting companies across the healthcare ecosystem with flexible funding models…

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Information

Delivering market research to the Deerfield team, its portfolio companies and other partners.

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Philanthropy

A New York City-based not-for-profit devoted to advancing innovative health care initiatives.

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Portfolio Companies

Deerfield generally maintains a combined portfolio of more than 150 private and public investments across the life science, medical device, diagnostic, digital health and health service industries at all stages of evolution from start-up to mature company.

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Research Collaborations

Deerfield partners with leading academic research centers, providing critical funding and expertise to further sustain and accelerate the commercialization of discoveries toward meaningful societal impact by advancing cures for disease.

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Strategic Partners

As a strategic partner, Deerfield offers capital, scientific expertise, business operating support, and unique access to innovation.

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Deerfield Foundation

The Deerfield Foundation is a New York City-based not-for-profit organization whose mission is to improve health, accelerate innovation and promote human equity.

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Cure Campus

Cure is a 12-story innovation campus in New York City that intends to bring together innovators from academia, government, industry, and the not-for-profit sectors to advance human health and accelerate the fight against disease.

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Cure Programming

Cure has a series of expert lectures intended to advance thought in healthcare, management, innovation, policy, and other relevant subjects. This fosters growth and education for those at Cure and its guests.

Events at the Cure

Labs Recalibrate To New Normal Under Pama Prices

As of January 1st of this year, the rate-setting scheme for nation-wide payment rates from the Centers for Medicare & Medicaid Services (CMS) has been rejiggered in an attempt at allowing CMS to benefit from the type of rate contracting that private payers have long been able to do. While CMS has historically set rates for laboratory tests, with private payers then typically using that price as a starting point for negotiation, the new system, as established by the Protecting Access to Medicare Act of 2014 (PAMA), flips the roles of the two, and instead uses the private-payer rates to set Medicare pricing. PAMA is one attempt to cut CMS in on the action and allow it to benefit from free-market based negotiations that private payers do as a natural course of business. 

Despite the four-year lead time from the passage of PAMA to implementation of the rule (which was even one year later than it was supposed to be, by statute), there were still surprises once the final rates were released, and perhaps more importantly, leaves questions about what the new status quo could and/or should be with respect to the elaborate choreography of rate setting, negotiating, and contracting. 

Under PAMA, labs are required to report to CMS the private payer rates they pay for particular tests. CMS then determines a weighted median amount by test in order to set the new prices. This is not a one-time submission – labs will be required to continue submitting payment data in future years. However, rates cannot be reduced by more than 10% each year for the first few years, and no more than a 15% reduction in the following few years, as a means of setting a floor on pricing expectations to protect labs. CMS has by and large been excluded from negotiating with manufacturers of all kinds on cost, and instead has had to accept list prices across the board.

One of the biggest criticisms around the implementation of PAMA is the criteria used to determine exactly which labs are meant to submit their data to CMS. One estimate has only 34% of the lab market represented, with two major labs representing 80% of the volu