Arthrocare Gets No Medicare Love

The federal government hasn't been Arthrocare's (ARTC Quote) friend.

The Centers for Medicare and Medicaid Services delivered the latest blow this week, when it issued a dreaded "non-coverage determination" for surgeries involving Arthrocare's best-selling spine device. Following a review, CMS determined that "the evidence does not demonstrate that thermal intradiscal procedures improve health outcomes." The agency specifically included percutaneous disc decompression (PDD) in that group.

Arthrocare sells its popular SpineWands for that very surgery.

The Austin, Texas, company has been struggling to secure routine coverage for PDD surgery for years. And in the past, the company could at least count on Medicare to review -- and sometimes approve -- the surgeries on a case-by-case basis.

Now that Medicare has issued a formal noncoverage decision, however, the agency can routinely deny payment for the operations -- and it can influence traditional health insurers to do the same.

"Although CMS is aware that other payers may choose to follow Medicare coverage policy, this is not a consideration in the NCD (national coverage determination) process," the agency stated. Besides, "many health insurance companies have already performed their own independent review of these procedures, and many came to a conclusion of non-coverage for their patient population" as well.

Arthrocare has managed to sell plenty of its $7,500 SpineWands. With health insurers reluctant to cover the devices, Arthrocare turned to nontraditional payers instead. By supplying SpineWands for surgeries performed on accident victims -- who rely on car insurers to foot the bill -- the company enjoyed phenomenal success.