Why Are The Analysts So Concerned with NuVasive?

Yes, TSB readers, it's been an arduous week for NuVasive and Wall Street Analysts! Much of the last few days have been focused on NuVasive's XLIF technology and the potential of reimbursement issues. TSB believes that this has been "brewing" for some time considering that we researched articles related to this story, along with analyzing what surgeons were saying at that time. The one thing that TSB has learned during this process is that the Analysts are very meticulous about doing their due diligence when a company that boasts "that in due time, it will be the fourth largest spine company in the industry" starts to exhibit potential reimbursement challenges for its flagship procedural product. Our response to that is, let's wait and see!

During this past summer, NuVasive was a anadromous fish swimming against a tough economic current. Those platforms that spend their days "hyping the industry" with adulations were calling them the shining star! Yet, the majority of NuVa's revenue has been driven vis-a-vis a minimally invasive surgical approach called XLIF. Everyone in the industry knows that up until this point, they have hung their hat on XLIF. Pedicle Screws will never be NuVa's claim to fame based on past cross-threading issues. Osteocel is old technology that cries out the "new new thing" in marketing biologics, stem cells (I still want to know how many viable mesenchymal cells there are in each dose), and they are a few years away from having "the potential" to generate real revenue with a cadre of cervical discs, some old and some new.

But that was then and this is now! During the summer when word started to surface that there could be some changes in reimbursement on XLIF, NuVa's representatives were thumbing their nose. Lukianov is a master marketeer, unfortunately, sooner or later everyone stubs their toe because they begin to believe their own press clippings. In October, news surfaced that CMS was in the midst of considering revisions to codes for spine fusion procedures whose technologies had sprinted ahead of time. Modern medicine has a way of doing that. This potential backlash has nothing to do with a witch hunt, even CMS has an obligation to review and revise current codes to reflect the dynamics of an ever changing medical environment. At that time there were prospective revisions to acronyms like DLIF, XLIF and AxiaLIF that were being proposed for the Code 81.06. CMS staffers felt that these codes presented challenges as both "approach and technique no longer accurately apply in today's environment."

Yes, readers Payors can request changes in CPT Codes. If the insurance company will not cover a procedure, they will reject it based on the device being investigational, experimental or not proven. The potential for reimbursement may be that the payors feel that there is not sufficient evidence that the benefit outweighs the risk. TSB finds that hard to believe considering that there have been thousands upon thousands procedures done with this product. Nor does this issue have anything to do with the FDA's approval of the product. The fact remains that variations in coverage do exist. So why is XLIF being denied coverage?

Payors do audit and analyze surgeons post-op notes and can question whether the coding is accurate to make payment. A payor does have the right to drill down to ask pertinent questions regarding the procedure, considering XLIF comes in around $35-$45,000 per procedure, and payors are always looking to improve the process by reducing cost. The reality is that Spine is always on their radar screen. Surgeons do have a "legal and ethical" obligation to code properly. The onus is now on NuVasive to provide the payors with persuasive literature. Based on what Lukianov said, this is coming.

In closing, my grandfather who was a farmer, taught me that every cow can only produce so much milk, and then it's time to find another cow. Maybe it's time that NuVa start focusing on developing some newer technologies considering their stock has taken a hit, and that they carry an incredible amount of convertible debt. After awhile XLIF will become old hat, as more entrants are appearing in the market witnessed by DLIF, GLIF, Oracle, etc.... I am sure NuVa will weather this storm, but you know eventually everyone wants to know "where's the beef?" TSB wants to know what our readers think?