NuVasive’s CEO and chairman Alex Lukianov held a quickly organized conference call with Wall Street analysts on November 30 to address questions about the future of reimbursement for the company’s XLIF (extreme lateral interbody fusion) procedure.
NuVasive Fights Back
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Alex Lukianov, NuVasive CEO and
Chairman/sbonline.comOver the last couple of years, three major insurance carriers, Aetna, CIGNA and United Health, issued national recommendations to local and regional carriers defining the XLIF procedure as investigational and would therefore not cover the procedure. The local and regional carriers have however continued to pay for the procedure.
One of the carriers, CIGNA is scheduled to review their 2008 recommendation on December 15.
Wall Street analysts, responding to a November 23 report by Potomac Research Group Senior Analyst, David Blaszczak, which said that coverage decisions may be heading in the wrong direction for NuVasive, notified their investors and the company’s stock began to tumble from around $40 to below $30.
NuVasive Fights Back
NuVasive and Lukianov struck back quickly with the November 30 call.
Lukianov reminded analysts that there were no coding or reimbursement issues around the procedure. He pointed to a 2006 NASS proclamation clarifying for surgeons how they should code for the XLIF procedure. That proclamation directed surgeons to code XLIF procedures as ALIFs (anterior lumbar interbody fusion) under CPT code 22558.
Specifically Lukianov noted:
- XLIF is properly coded as an anterior approach to spinal fusion
- Surgeons are working successfully with payers and are successful in obtaining reimbursement
- Management has a clear long-term strategy to reverse national payer decisions
- The outlook for growth is unchanged
Lukianov said that national insurance carriers do not understand correctly that the XLIF procedure is equivalent to other anterior approaches. Once access has been created to the spine, NuVasive’s procedure is the same as any other anterior procedure.
“The anterior lateral approach is decades old, ” said Lukianov, “and we’ve improved on it.”
Coding Confusion
Apparent confusion about coding is not limited to insurance carriers. There was enough confusion by physicians about how to code XLIF for reimbursement that NASS issued a proclamation in 2006.
William Mitchell, M.D., then Chair of NASS’ Operative Coding Committee, wrote in the July/August 2006 SpineLine:
While a surgeon can anteriorly approach the lumbar spine from a ventral or lateral approach both are described in CPT as an anterior/anterolateral procedure. XLIF merely describes an alternative lateral approach to the anterior spine.
“Although the surgeon is using an anatomically ‘extracavitary’ (i.e., extraperitoneal) approach to the spine, this procedure is an anterolateral rather than a lateral extracavitary approach based on the trajectory as well as the target. Perhaps this is where many providers have become confused.”
Lukianov said this basically means that once access has been created to the spine, the fusion procedures are all the same.
No Coding or Reimbursement Issues
According to Lukianov, there is no coding issue with NASS regarding the XLIF and there is nothing new regarding insurance provider coverage. None of NuVasive’s customers have reported significant problems in getting reimbursed. He noted the company is aware of fewer than 10 XLIF procedures that have been denied on appeal and procedure volume hasn’t changed.
Still, Wells Fargo analyst Mike Matson wrote on Dec 4, “While our checks have confirmed the reality that insurance coverage issues are not hurting NuVasive currently, the perception that NuVasive will be hurt seems to be winning.”
Short Sales
One has to wonder where the pressure is coming from on NuVasive’s stock.
We found that since August 3, 2009, over 14.4 million shares of NuVasive have been shorted. With an average daily trading volume of just under 1 million shares, this is almost three weeks worth of trading days. That’s a lot.
Since October 20, NuVasive’s stock has dropped from $44 to $29 on December 4. There has been a $573 million drop in market cap in the past 4 weeks ($15 decline on 38.22 million shares outstanding).
Payer Motives
Asked during the call with analysts, what the motivations are for the carriers to deny coverage, Lukianov responded that he doesn’t believe in a conspiracy theory and that the issue is simply coming up as surgeons are saying XLIF in their notes when they should be saying ALIF.
When asked if his sales staff was advising physicians how to code, Lukianov said the company was, “just making sure that everyone has the same information as given by NASS.” He continued, “We are not involved in coding or reimbursement processes between surgeons and payers. Surgeons are saying XLIF and insurers don’t know what that is.”
Lukianov does not believe any surgeons are going to get into trouble by reporting ALIFs. “This confusion can be easily resolved, ” added Lukianov.
NASS Holds Steady
William Mitchell, M.D., told OTW that NASS has no plans to change its coding recommendations. It is not without precedent that NASS changes codes. NASS recommended that AxiaLIF be given its own code recently. The society made that recommendation because it felt that procedure was, “distinctly different from an ALIF for many reasons and that is why a code proposal was brought forward, ” said Mitchell.
Insurer Strategy
Moving forward, Lukianov said the company plans to work with insurers to reverse the non-coverage decisions by presenting data from the 8 peer-reviewed articles and 100 scientific posters presentations and white papers on the XLIF.
“We expect a positive outcome, ” Lukianov told analysts. He believes the company has a unique advantage in approaching national insurers because of NASS’ strong coding recommendation. Local and regional payers are continuing to pay surgeons for the procedure and NuVasive will be able to clear up the national carriers’ confusion.
Lukianov does not believe that any additional data will be needed to remove the investigational label from the procedure. “It’s pretty straight forward, fusion is taking place.”
“For us, nothing has changed, we don’t have a reimbursement issue, ” concluded Lukianov. “The procedure is just being misunderstood.”
If Lukianov is right and the investigational label is removed from the XLIF procedure, there will be a new strong wind in NuVasive’s sails and some short sellers will be taking it you know where.
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Discussion
This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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