Spinal fusion implants enter market amid growing skepticism from insurers
With more than 15 510(k)s obtained in 2014, spinal fusion devices rank among the leaders. But new entrants such as Titan Spine and Expanding Orthopedics are entering the market just as insurers are beginning to crack down on reimbursement for the invasive procedure that costs an average of $27,600 per hospital stay.
Becker's Spine Review reports that Cigna restricted its coverage after finding 15% of spinal fusion patients needed a subsequent surgery, compared to 8 to 10% for non-fusion spinal decompression surgery. Becker's says other insurance companies have made similar moves over the last year so, and Medicare reimbursement is down due to changes in coding procedures; the government estimates that $200 million was spent on unnecessary spinal fusion procedures in 2011.
"Originally, insurers issued reimbursement payments as long as the hospital coded the procedure properly," said GlobalData analyst Joseph Gregory in a May 2014 release. "Now, the payers require extensive documentation to validate the medical necessity of the procedure, including well-documented attempts at conservative care and radiographic imaging to record the source of pain."
According to a recent analysis by the federal Agency for Healthcare Research and Quality, spinal fusion surgery increased 70% between 2001 from 2011, or from 288,000 to 488,000 procedures per year.
"One of the primary reasons for this rapid growth is expansion in the indications for which spinal fusion surgery is performed. The original intent of spinal fusion was to treat severe scoliosis and spinal tuberculosis, but its indication profile has since increased significantly. Now there are 14 conditions for which the procedure is deemed medically indicated, including degenerative disc disease and stenosis," Gregory said in the release.
Indeed, Gregory believes a market correction is under way, and wrote in a research report that the volume of procedures will increase at a compounded annual growth rate of 5% through 2020, instead of the previous 10%.
But that still represents a 40% increase from 2013 to 2020. In addition, makers of spinal fusion implants can also look abroad for growth. Gregory estimates that by 2020 the spinal fusion market will be worth $4.4 billion in the U.S., $684 million in Japan and $665 million in China.
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