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8 biggest stories in 2016's spine market — Acquisitions, lawsuits, bundled payments & more Featured

Written by  Megan Wood | Thursday, 06 October 2016 00:00
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The spine industry saw the effects of transitioning to a value-based environment, a slew of merger and acquisition activity, some dramatic lawsuits and continued growth of outpatient spine, among many other market changes in 2016.

Here is a recap of the year through the spine lens.

 

1. Acquisitions. The spine device industry saw a flurry of M&A activity in 2016. Here are a few major acquisitions that made headlines:

 

  • Warsaw, Ind.-based Zimmer Biomet acquired Austin, Texas-based LDR for $1 billion. 
  • Zimmer Biomet plans to acquire majority stake in MedTech, a France-based company focused on the ROSA Robotic System for brain and spine surgery. 
  • Smith & Nephew has completed the acquisition of Blue Belt Technologies.
  •  NuVasive will acquire Ellipse for $380 million upfront cash payments and the potential for $30 million more payable in 2017 for reaching specific revenue targets. 

 

2. Lawsuits. Major lawsuits plagued the spine industry, involving allegations of spine surgeon negligence, undisclosed relationships, False Claims Act violations and more.

 

For example, a patient filed a $22 million lawsuit against Portland-based Oregon Health & Science University and an orthopedic spine surgeon for allegedly paralyzing him by dropping a tool on his back. 

 

Another included the University of Pittsburgh Medical Center paying the federal government more than $2.5 million to settle a case alleging violation of the False Claims Act. The deal came into fruition after whistleblowers accused some of UPMC's neurosurgeons of billing Medicare for surgeries in which they did not participate in full. 

 

The University of California also paid $8.5 million to settle multiple lawsuits alleging undisclosed financial ties between a former UCLA spine surgeon and Medtronic. 

 

3. Spine device companies. Here's a glimpse of the spine device powerhouses' current positioning and where they're headed:

 

  • Medtronic's revenue was up in the third quarter, but the spine revenue declined 5 percent. In the United States there was double-digit growth among BMP products, which partially offset the low-single digit decline in the company's core spine platform. Medtronic also invested $20 million in Mazor Robotics as well as a 15-system order of Mazor X.
  • DePuy Synthes, a Johnson & Johnson company, is looking to innovate beyond the operating room. The company's worldwide orthopedic sales were down 0.7 percent in the fourth quarter, but United States orthopedic sales grew 7.4 percent. Worldwide spine sales were down 5.5 percent, but United States spine sales grew 3 percent to $2.2 billion.
  • Stryker reported net sales growth in the first quarter of 4.9 percent, reaching $2.5 billion. The neurotechnolgy and spine business increased 12 percent from the same period in 2015, reaching $480 million. Spine sales for the quarter hit $1.79 million, up 1.1 percent over the same period last year. However, spine sales dropped 12 percent internationally. 
  • NuVasive reported first quarter revenue of $215.1 million, up 11.8 percent over the same period last year. However, the company still experienced a net loss of $8.9 million for the quarter. 
  • Globus Medical reported worldwide net sales increased 10.7 percent last year and the company launched 14 new products. The company is also working on a robotic technology product, which made steady progress last year. 
  • Zimmer Biomet reported $1.93 billion in fourth quarter revenue and total net sales last year were up 28.3 percent, reaching $5.9 billion. Spine sales were up 95.2 percent to $404 million. 


4. MACRA. Originally, CMS had two options under MACRA — Merit-Based Incentive Payment System and Advanced Alternative Payment Models. Now, physicians will be able to choose among four options:

 

  • The first option entails physicians participating in MIPS while avoiding the 2019 penalty as they can report "some" quality and cost data. 
  • The second option allows physicians in MIPS to submit quality and cost data for a portion of 2017, with the performance period under MIPS beginning no later than Jan. 1, 2017.
  • Physicians partaking in the third option can submit performance data for the full 2017 calendar year. 
  • With the fourth option, physicians can join an Advanced APM. Both the third and fourth options have been options for physicians since CMS launched MACRA.

 

5. MIS. Minimally invasive spine surgery is gaining popularity with the flow of new research espousing its benefits. Society for Minimally Invasive Spine Surgery President Greg Anderson, MD, of Philadelphia-based Rothman Institute, offered key insights on MIS spine's promising future: "There are still skeptics, as well, which is healthy because as physicians we should always hold ourselves to asking for proof of benefit when we consider changing our standards of care." Research supporting MIS spine has boosted the technique's reputation, highlighting potential benefits: less pain; lower infection and complication rates; less blood loss; shorter hospital stays; and quicker recovery.

Frank Phillips, MD, director of the division of spine surgery at Rush University Medical Center and co-founder of the Minimally Invasive Spine Institute at Rush, also shared his take on the state of MIS spine: "Five years ago there were a few companies heavily focused on it, but now most companies have robust minimally invasive platforms to address the increasing interest and demand."

6. Outpatient spine. Payers have posed as obstacles for spine in ambulatory surgery centers, but the recent additions and proposals of ASC payable codes for spine procedures should ease up some of the difficulties surgery centers face.

 

In August, CMS proposed these eight new spine codes for the ASC payable list in 2017:

 

  • Autograft for spine surgery (20936) — (includes harvesting the graft); local (eg, ribs, spinous process or laminar fragments) obtained from the same incision (List separately in addition to code for primary procedure)
  • Autograft for spine surgery only (20937) — (includes harvesting the graft); morselized (through separate skin or fascial incision) (List separately in addition to code for primary procedure) 
  • Autograft for spine surgery only (20938) — (includes harvesting the graft); structural biocortical or tricortical (through separate skin fascial incision)
  • Arthrodesis, anterior interbody (22552) — including disc space preparation, discectomy, osteophytectomy and decompression of spinal cord and/or nerve roots; cervical C2, each additional interspace (List separately in addition to code for separate procedure) 
  • Posterior non-segmental instrumentation (22840) — (eg, Harrington rod technique, pedicle screw fixation across one interspace, atlantoaxial transarticular screw fixation, sublaminar wiring at C1, facet screw fixation) 
  • Posterior non-segmental instrumentation (22842) — (eg. Harrington rod technique, pedicle fixation across one interspace, atlantoaxial transarticular screw fixation, subliminar wiring at C1, facet screw fixation)
  • Anterior instrumentation; two to three vertebral segments (22845)
  • Application of intervertebral biomechanical device(s) (22851) — (eg, synthetic cage(s), methlmethacrylate) to vertebral defect or interspace (List separately in addition to code for primary procedure)

 

7. Bundled payments. Bundled payment programs are receiving a lot of buzz in the value-based arena, but developing a bundled product is no straightforward task. Once an ASC understands its capabilities, it can build a bundled spine surgery product by calculating an accurate facility cost combined with the surgeon payment.

Providers who are early adopters of bundled payments can increase patient volumes from payers, according to a Spine study. Fee-for-service reimbursement accounts for a majority of revenue, but several organizations expect 30 percent to 45 percent of their spine volume to be covered under bundled payments within three years. Organizations cite new patient volume, increased surgical yield and financial benefits from efficiency improvements as reasons for adopting bundled payments.

8. PODs. The Senate Finance Committee released a new report on May 10, addressing physician-owned distributorships with a focus on spine surgeons. The report said PODs "present an inherent conflict of interest that can put the physician's medical judgment at odds with the patient's best interests."

 

The POD surgeons saw 24 percent more patients than non-POD surgeons. In absolute numbers, POD surgeons performed fusion surgery on nearly twice as many patients (91 percent more) than the non-POD surgeons. POD surgeons also performed a higher rate (44 percent higher) than non-POD surgeons as a percentage of patients seen.

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Last modified on Thursday, 06 October 2016 14:01
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