Insurer Clarifies Policy, Seen As Win For Spinal Device Makers

Date : 01/28/2011 @ 4:41PM
Source : Dow Jones News
Stock : Nuvasive, Inc. (MM) (NUVA)
Quote : 53.71  0.0 (0.00%) @ 8:31AM

Insurer Clarifies Policy, Seen As Win For Spinal Device Makers

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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;


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