Third-party payor reluctance to reimburse for Johnson & Johnson/DePuy's Charité total artificial disc could hinder its adoption, the device's principal investigator, Scott Blumenthal, MD, Texas Back Institute, contends.

"We've had incredibly slow adoption by the third-party payors," particularly by the "biggies - BlueCross, United [and] Aetna," Blumenthal stated. "They all, at this point, have policies that say, 'Well, we're looking at it, but it's not a covered benefit.'"

"That's been our biggest challenge post-FDA approval," Blumenthal stressed in a keynote address entitled "The Revolution in Spine" at the JPMorgan Healthcare Conference in San Francisco on Jan. 12.

Reimbursement difficulties have affected spine surgeons' ability to treat patients, according to Blumenthal. "I have over 80 patients that are indicated for artificial discs, and their insurance companies have said, 'No.'" Patients "can't afford to spend $30,000 to $40,000 to have it done," he said.

Charité also has encountered reimbursement obstacles with Medicare. The 2005 hospital inpatient prospective payment system final rule placed the device in a lower-paying DRG than the firm desired, which is "going to be appealed this year," Blumenthal confirmed (¹ Also see "FY 2005 Medicare Inpatient Payment Rule In Brief" - Medtech Insight, 9 August, 2004., p. 7).

Private payor denial for Charité also is affecting payment for artificial discs still in clinical trials. Although payors reimbursed for first and second-generation artificial discs, they now are rejecting claims, according to Blumenthal.

"When we pre-sort a surgery in a trial, insurers are smart - they'll say, 'Is this an artificial disc? Is this an FDA study?' We say, 'Yes,' and they say, 'No.' It's very difficult now to get those funded," he explained.

The shift has forced the orthopedic industry to adopt a clinical trial budget similar to those used in pharmaceutical studies. "The hospital has to get paid, [as well as] the surgeon, the anesthesiologist and the device. If a company will not do that, their enrollment will be so slow [that] they won't be able to compete."

The net effect of insurers denying artificial disc claims has raised the cost-per-patient by five to ten times - contributing to Texas Back Institute's decision to "turn down" a study from a company that had not accounted for device costs in its overall trial budget.

Despite the current reimbursement atmosphere, spine surgeons are particularly interested in learning how to implant Charité, with waiting lists extending to August and courses being run every week, Blumenthal said.

The spine surgeon predicts reimbursement will improve. "On one hand, my decision to be a total disc doctor, based on current insurance reimbursement, doesn't look like a good decision. But by 2008, it's a really good decision," he quipped.

Blumenthal forecasted that artificial discs will help the burgeoning spine market become a $10 bil. industry by 2010 or 2014. "There are multiple aggressive spine companies, it's the highest-growth segment in orthopedics, there's significant innovation, new product opportunity and a favorable market for new technology," he summarized.

An influx of technology, including "miniaturization, genetics, image guidance, robotics and biologics, cell regeneration, disc regeneration and biomaterials" will burgeon the spine market to $10 bil., he predicted.

Spine arthroplasty - consisting of spinal motion preservation technologies, such as total disc replacement, nucleus replacement/partial disc replacement and dynamic posterior stabilization - also will play a major role, Blumenthal noted.

Nucleus replacement is designed to prevent or delay space collapse and can be an adjunct to discectomy. The spine doctor cited nucleus replacements, such as Disc Dynamics' Dascor and Raymedica's PDN-Solo , as having the potential to help patients that currently cannot be treated.

For dynamic stabilization, a device is attached to the posterior side of the spine to help stabilize the motion segment while leaving the intervertebral discs intact. An example is Zimmer's Dynesys , which Blumenthal said received FDA clearance Jan. 12.

The spine surgeon also noted that St. Francis' X-Stop non-fusion lumbar device, which received a negative FDA panel vote in September "will still be the first of its kind to market." Blumenthal said the company is almost finished responding to FDA's "laundry list" of concerns (² Also see "FDA Panel Doubts Lumbar Fusion Alternative’s Imaging Data" - Medtech Insight, 6 September, 2004., p. 7).

Reimbursement Woes Could Impact Charité Sales – Spine Surgeon Blumenthal

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