Insurer Clarifies Policy, Seen As Win For Spinal Device Makers
January 28 2011 - 04:41PM
Dow Jones News
A North Carolina health insurer has modified--but is largely
maintaining--a restrictive policy on spinal-fusion surgery after
meeting with doctors, sparking questions about whether a
downtrodden spinal-device market has scored a victory.
The market for spinal surgery with devices from companies such
as NuVasive Inc. (NUVA) has been pressured as insurers raise
barriers amid views that certain procedures are over-used. New
restrictions from Blue Cross Blue Shield of North Carolina have
drawn attention because they're seen as particularly tough.
The insurer confirmed in a statement to Dow Jones Newswires that
it clarified its policy during a recent meeting with doctors but
didn't "back off" that policy. It said it will cover one type of
procedure and agreed to separate pediatric surgeries from these
guidelines.
But it didn't change its policy of not covering pure fusion
procedures for a condition known as degenerative disc disease,
which was a closely watched issue. It clarified it would consider
appeals.
The appeals point--whether new or merely clarification of an
existing policy--still sparked some hope following the doctors'
meeting. NuVasive Chief Executive Alex Lukianov called the outcome
"very positive."
"All eyes were on North Carolina," Lukianov said in an
interview. "What we were concerned with was this absurdly
restrictive policy could go nationwide."
But Mizuho Securities analyst Michael Matson called the news "a
negative for spine-exposed firms" including NuVasive and Orthofix
International (OFIX). Matson estimated degenerative disc disease
fusion procedures make up 10% to 20% of all spine fusions in the
U.S. While Blue Cross Blue Shield of North Carolina covers a small
fraction of the market, "we think its move may be representative of
where other insurers are headed," Matson said in a research
note.
NuVasive shares closed down 4.7% to $27.46 late Friday, while
Orthofix closed down 4.1% to $28.78. They declined amid a broad
downturn for the market and medical-device stocks.
The North Carolina insurer's new policy included detailed
descriptions of conditions for which fusion surgery in the lower
back should and shouldn't be covered. It also had a new requirement
for prior authorization before patients get surgery. The five-page
policy was reviewed with several spine surgeons before being
finalized and references several medical studies.
There was hope on Wall Street that doctors might influence a
change because they joined forces to argue against the policy. As
reported last month, a collection of nine medical associations sent
a detailed letter to the insurer suggesting less restrictive
language. That letter was followed up by the meeting last week.
On a web posting earlier this week, the International Society
for the Advancement of Spine Surgery described the results of the
meeting, saying the insurer "was not willing to modify their policy
of non-coverage for pure fusions" for degenerative disc disease.
But "they also didn't close the door on approvals for that on
appeal," the group said.
Blue Cross Blue Shield of North Carolina said the spine
surgeon's society described the meeting accurately. "We believe
that peer to peer discussions and appeals where needed are there to
address specific patient or physician concerns," the insurer said
in its statement. It said it will monitor and adjust its policy if
appropriate based on input on the process, as it normally does.
The insurer said it had a "good collaborative meeting with the
physicians."
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com
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