Volume of spine procedures, pushed down last year by reactions to prominent studies questioning the efficacy of some treatments, is expected to bounce back in 2011, according to Matthew O'Brien, an analyst at William Blair & Co. But Mr. O'Brien, speaking to Bloomberg on Jan. 3, warned that the sector still faces pressure from payors to keep coverage in check.
Last year was not kind to the spinal device industry, which showed a 1 percent decline in sales in the second quarter compared with 11 percent growth in 2008 and 2009, according to J.P. Morgan. The company cited the poor economy and pushback from payors.
As 2010 wound down, industry leaders were still far from optimistic about the spine market. Alex Lukianov, the Nuvasive chairman and CEO, told Fox Business in Sept. 2010 that "procedure volumes in the spine market slowed considerably in the current quarter and give us pause regarding the outlook for market growth going forward."
In Oct. 2010, Nuvasive missed expectations, even though it had just lowered them, and Synthes CEO Michel Orsinger warned that markets will remain tough. However, Mr. Orsinger said he was optimistic about the upcoming launch of Matrix Spine, which uses titanium and steel screws to treat back trauma, fracture or deformity cases.
Insurers denying some spinal fusion cases
Alarmed by the high cost of procedures and the findings of one study, insurers have recently been denying coverage for spinal fusion case related to degenerative disc disease. In November, NuVasive estimated that 10-20 percent of procedures were being canceled outright when degenerative disc disease was an indication.
An April 2010 study in the Journal of the American Medical Association concluded that patients who had a complex spinal fusion procedure were nearly three times as likely to develop a life-threatening complication and the surgeries didn't result in dramatically better outcomes.
Private payors have been focusing denials on procedures done for non-specific low back pain without concomitant indications, which are estimated to be the primary diagnosis in as many as one-third of all spinal fusion cases, according to a Benzinga report in Jan. 2011.
One example of insurers' new mood are new rules by Blue Cross and Blue Shield of North Carolina requiring preauthorization of spinal fusion surgery as of Jan. 1. In addition, the company will no longer cover for disc herniation, initial discectomy or initial laminectomy for neural structure decompression. The company said it covered 3,593 spinal fusion surgeries in 2009, up 22 percent from 2007, and paid $105 million in claims for the procedures, up 44 percent from 2007.
A coalition of nine medical societies, including the American Association of Neurological Surgeons and the North American Spine Society, sent a letter to the North Carolina Blues in December, urging it to reconsider the policy. "We acknowledge that the indications for lumbar fusion surgery for “degenerative disk disease” remain controversial," the Dec. 15 letter stated. "However, we feel that to completely omit this as a covered procedure under any circumstance is overly restrictive."
Rather than impose a ban, the societies recommended a set of criteria for lumbar fusion for patients with low back pain and degenerative disc disease. It said patients should have single or two-level disc degeneration, inflammatory endplate changes, moderate to severe disc space collapse, absence of significant psychological distress and failure to respond to at least one year of nonoperative care. The company has apparently not changed its policy, however.
Meanwhile, some members of Congress are calling for a review of Medicare coverage of spinal-fusion procedures. The Wall Street Journal reported that Medicare spent $2.24 billion on such procedures in 2008, up nearly 400 percent since 1997, after adjusting for inflation.
Studies put vertebroplasty into question
Insurers, regulators and referring physicians have been shying away from vertebroplasty, to the surprise of many surgeons using the procedure, following the results of two Aug. 2009 studies in the New England Journal of Medicine. The studies found no significant advantage for vertebroplasty, to the surprise of many surgeons using the procedure.
Within a few months after the articles appeared, the number of vertebroplasty and related vertebral augmentation procedures, including kyphoplasty, dropped 10 percent, due in large part to decreased patient referrals. In a Physician Forum survey of 245 physicians, only 30 percent of referring physicians disagreed with the studies' conclusions, compared with 70 percent of specialists who perform VCF treatments. Only 36 percent of the referring physicians said they would recommend vertebroplasty.
The spine sector is still feeling the fallout from those findings. As recently as Nov. 2010, Medtronic CEO Bill Hawkins acknowledged sales are still affected by the New England Journal studies.
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