Uroplasty Inc. (NSDQ:UPI) suffered a setback for insurance coverage of its Urgent PC Neuromodulation system.

After Jan. 3, use of the posterior tibial nerve stimulation device will no longer be paid for by National Government Services, a regional Medicare carrier that operates in Connecticut, Indiana, Kentucky and New York, the company revealed today.

The loss of the coverage for the device, which treats overactive bladder, goes against the trend of other Medicare carriers which have opted to pay for treatments with the device. According to the company, six regional carriers covering 17 different states pay for the treatment, which has been granted a reimbursement code from the American Medical Association. The treatment code was published in the federal register by the Centers for Medicare and Medicaid Services in November.

"This is the first negative coverage decision we have received since the publication of our SUmiT study and the announcement that the [AMA] would issue a CPT Category I Code to be effective January 1, 2011," Uroplasty CEO David Kaysen said in prepared remarks.

Kaysen said the company plans to meet with NGS representatives soon and will attempt to reverse the Medicare carrier’s decision. The company does not expect the coverage reversal to affect the device’s status with other payers, according to the CEO.

The company won 510(k) clearance from the Food & Drug Administration to begin selling and marketing the device in July 2007.