Share prices fizzled for a few orthopedic device makers in the days following news of the Centers for Medicare & Medicaid Services’ pre-reimbursement review project.
Last week CMS unveiled plans to launch a new pre-payment review program, asking doctors to provide up-front justification for certain medical equipment and types of claims, especially for orthopedic and cardiac devices.
On Friday, Dec. 2, before the news went public over the weekend, SNN shares opened at $46.56, Stryker opened at $49.78 and Zimmer opened at $51.24.
By the end of that day all three stocks had dwindled, with SNN closing at $46.07 (down about 1 percent), Stryker sinking to $47.85 (down about 4 percent) and Zimmer coming in at $49.26 (down about 4 percent).
The news may have also had a hand in sending share prices down among cardiac device makers, even as the major indices capped off a week of growth. Over last weekend, shares of Medtronic Inc. (NYSE:MDT) dropped 6 percent to $34.61; Boston Scientific Corp. (NYSE:BSX) lost 6.8 percent, landing at $5.50. St. Jude Medical Inc. (NYSE:STJ) fell 7 percent to $35.83.
The CMS program, set to launch in 11 states next month, will flip the reimbursement system from the agency’s existing "pay-and-chase" method of looking for improper payments after they’ve already been made.
The measures come as the agency continues to weather charges of excessive waste, most recently from ex-CMS chief Dr. Donald Berwick, who claimed that 20 to 30 percent of health care spending at the agency was wasted on over-treatment, uncoordinated care, an administrative labyrinth, overbearing rules and fraud.