Organogenesis, Advanced Biohealing stand to benefit from CMS proposal

July 6, 2010 by MassDevice staff

A temporary proposal from the Centers for Medicare and Medicaid Services could be a boon for Organogenesis Inc. and Advanced BioHealing Inc. and their artificial skin treatments for diabetic foot ulcers.

Organogenesis Inc. and Advanced BioHealing Inc. may win a new reimbursement code for their skin regenerating systems.

The Centers for Medicare and Medicaid Services proposed temporary, updated coding for artificial skin products in treating diabetic foot ulcers, slated to take effect in 2011.

The proposal would standardize the reimbursement codes for the Apligraf product made by Canton, Mass.-based Organogenesis and Advanced BioHealing's Dermagraft, which now are reimbursed according to different schemes.

"Several stakeholders have expressed concern about the appropriateness and equity of the coding and payment for these services, given their similar uses and the office resources required when the products are applied repeatedly over a number of weeks for treatment of lower extremity ulcers. They are concerned that current coding, with the associated payment policies and relative values, does not provide for appropriate payment for the services based on how they are furnished," according to the CMS proposal (PDF). "In addition, some stakeholders believe that the current coding and payment provides a financial incentive for the selection of one tissue-cultured product over another, rather than facilitating clinical decision-making based solely on the most clinically appropriate product for the patient’s case."

That's because, under the current reimbursement codes, doctors using the Dermagraft product must treat their patients for 90 days but are paid only once; for doctors using the Apligraf product, that so-called "global period" is only 10 days. The new, temporary proposal would set the global period to zero days, meaning doctors would be reimbursed for each treatment regardless of which product they choose.

"That's very advantageous for the doctors using the products and therefore very good for the companies," said reimbursement expert and MassDevice blogger Edward Berger of Larchmont Strategic Advisors.

CMS is seeking public comment on the proposed rule until August 24 and will respond by Nov. 1.

Westport, Conn.-based Advanced BioHealing launched a Phase III clinical trial of the Dermagraft bio-engineered tissue regeneration therapy in patients with venous leg ulcers in November 2009. For its part, Organogenesis is looking beyond its flagship Apligraf product, filing for pre-market approval from the Food & Drug Administration late last year for its CelTx oral tissue regeneration product and last year inking a licensing deal with Integra LifeSciences Corp. for its FortaFlex tendon repair system.