Embla Medical hf: The Centers for Medicare & Medicaid Services (CMS) grants extended coverage in the U.S. for lower-limb active K2 amputee patients to access bionic prosthetic solutions

Rhea-AI Summary

Embla Medical (Nasdaq Copenhagen: EMBLA) announced that the Centers for Medicare & Medicaid Services has expanded access to high activity K3 knees for active K2 lower-limb amputees in the United States. This decision, effective September 1, 2024, allows a large patient group to access bionic knee technology, previously restricted to K3 and K4 functional level amputees.

The policy change follows extensive research showing that advanced prosthetic devices lead to significant clinical benefits for active K2 amputees, including reduced fall rates and improved mobility. To qualify, healthcare professionals must document that a bionic knee would improve the patient's functional health outcomes. The coverage may also include access to compatible high active K3 foot solutions.

Embla Medical's CEO, Sveinn Sölvason, welcomed the decision, stating it will greatly improve the lives of active K2 lower-limb amputees, helping them become more independent in daily activities.

Positive

• Expanded market access for Embla Medical's bionic knee products in the U.S.
• Potential increase in sales due to larger eligible patient population
• Embla Medical's products meet the new coverage standards with integrated stumble recovery feature

Negative

• Implementation of new policy delayed until September 1, 2024
• Not all K2 amputees will automatically qualify for coverage, potentially limiting market size

Financial Analyst

The extended coverage by the Centers for Medicare & Medicaid Services (CMS) represents a significant opportunity for Embla Medical. The inclusion of K2 amputees significantly broadens the potential customer base for Embla's bionic prosthetic solutions. This could lead to a notable increase in revenue, given that Medicare coverage often paves the way for other insurers to follow suit. Additionally, this move may provide a first-mover advantage to Embla Medical as they already have products that meet the new CMS standards.

From a financial perspective, the short-term implications are promising. Increased adoption rates could lead to higher sales volume and improved market penetration in the U.S., a key market for medical devices. In the long term, continued growth could be sustained by capturing a larger share of the prosthetic market and leveraging their technology to retain competitive advantage.

Potential drawbacks may include the need for substantial investment in marketing and patient education to drive awareness and adoption among the newly eligible K2 amputees. Additionally, there could be pricing pressures if competitors also seek to enter this expanded market segment.

Medical Research Analyst

From a clinical perspective, this CMS decision is a game-changer for K2 amputees. The expanded access to microprocessor-controlled knees (MPKs) and high-active K3 knees is supported by a decade of research showing significant clinical benefits. These devices are shown to reduce fall rates, improve mobility and increase patient confidence, which are critical for quality of life.

The requirement for integrated stumble recovery in MPKs ensures that only devices offering substantial safety improvements will be covered, potentially reducing costs associated with falls and related injuries. This could lead to better health outcomes and lower overall healthcare expenditures in the long run.

However, the need for healthcare professionals to provide rigorous medical documentation could create barriers to access for some patients. Proper training and streamlined documentation processes will be essential to fully realize the benefits of this policy change.

Market Research Analyst

From a market perspective, this policy change by CMS may have broad implications. Embla Medical, being a leading player in the mobility solutions sector, stands to benefit significantly as more K2 amputees become eligible for advanced prosthetic solutions. The U.S. market is a substantial segment for the company; gaining traction here can enhance brand recognition and market share.

This decision may also prompt competitors to accelerate their own product development and marketing strategies, potentially leading to a more competitive landscape. However, Embla's current compliance with CMS standards gives it a head start.

Moreover, this move could set a precedent for other countries to follow, expanding the market for advanced prosthetic solutions globally. Understanding market dynamics and being prepared for an uptick in demand will be critical for Embla Medical's long-term success.

REYKJAVIK, Iceland and COPENHAGEN, Denmark, July 18, 2024 /PRNewswire/ -- Embla Medical (Nasdaq Copenhagen: EMBLA), a leading global provider of innovative mobility solutions, today announced that the Centers for Medicare & Medicaid Services has finalized a proposal that will expand patients access to high activity K3 knees in the United States. The proposal enables a large patient group of active K2¹ functional level amputees to gain access to bionic knee technology. Previously, Medicare had restricted access to these knees to only high-active amputees classified as functional level K3 and K4. 

The decision follows a process initiated at the beginning of the year by the U.S. Durable Medicare Equipment Medicare Administrative Contractors (DME MACs). The DME MACs relied upon a substantial body of research spanning more than a decade establishing that more advanced prosthetic devices lead to significant clinical benefits for active K2 amputees, including reduced fall rates, improved mobility, and increased patient confidence while walking. These benefits, in turn, have the potential to positively reduce healthcare expenditures while simultaneously improving quality of life.

The finalized policy, which will take effect on 1 September 2024, does not automatically create access for every person currently classified as a K2 amputee. Treating healthcare professionals will have to establish through medical documentation that a bionic knee (MPK or microprocessor-controlled knee) or other K3 knee would improve the patient's functional health outcomes, help them accomplish activities of daily living, and that lower-level knee options have been considered and ruled out. In addition, to provide a K2 patient with an MPK, clinicians must use knees with integrated stumble recovery.

In addition, the extended coverage may also grant these active K2 functional level amputees access to a compatible high active K3 foot solution as a complement to the bionic knee when certain coverage criteria are met.

Sveinn Sölvason, President and CEO, comments

"The decision by U.S. Medicare to allow for extended coverage creates a pathway for K2 transfemoral amputees to utilize more functional knee and foot solutions than they have historically had access to. This is great news for active K2 lower-limb amputees as they account for a large part of the overall amputee population. We welcome this decision, which we believe will hugely improve these individuals' lives, helping them become more active and able to perform critical activities of daily living more independently.

We are also pleased that the MPK's sold by Embla Medical companies include integrated stumble recovery. This means that they are appropriate for certain K2 users and consistent with the final coverage standards published by Medicare.

As a leading global provider of innovative mobility solutions, we at Embla Medical believe we can be part of the solution needed to address this patient population suffering from chronic mobility challenges, helping them live a Life Without Limitations."

Link to news from US Medicare https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?lcdid=39777

For further information please contact
Klaus Sindahl
Head of Investor Relations
M: +45 5363 0134
E: ksindahl@emblamedical.com

Edda Heidrun Geirsdottir
VP of Corporate Communication
M: +354 664 1055
E: egeirsdottir@emblamedical.com

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About Embla Medical

Embla Medical (Nasdaq Copenhagen: EMBLA) is a leading global provider of innovative mobility solutions that help people live a Life Without Limitations®. Home to several leading brands, Embla Medical is dedicated to improving people`s mobility by providing prosthetics, neuro orthotics, bracing & supports and patient care through a global network of orthotic & prosthetic facilities. Embla Medical is committed to sustainable business practices renowned for positively impacting people`s health and well-being.

^[1] K2 amputees: K-levels are a rating system used by Medicare to indicate a person's rehabilitation potential. The system is a rating from 0 through 4 and it indicates a person's potential to use a prosthetic device if they had a device that worked well for them and they completed rehabilitation to use the device properly. K2 describes a "limited community ambulator" who has the ability (or potential) to traverse low level environmental barriers such as curbs, stairs, or uneven surfaces, while K3 and K4 amputees are unlimited community ambulators who can walk at different speeds and perhaps even engage in athletic activities(K4).

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SOURCE Embla Medical hf.

FAQ

What is the new Medicare coverage for lower-limb amputees announced on July 18, 2024?

The Centers for Medicare & Medicaid Services has expanded coverage to allow active K2 lower-limb amputees access to high activity K3 knees, including bionic knee technology, effective September 1, 2024.

How does the new Medicare coverage affect Embla Medical (EMBLA)?

The expanded coverage potentially increases Embla Medical's market for bionic knee products, as their devices meet the new standards with integrated stumble recovery features required for K2 amputees.

What are the clinical benefits of advanced prosthetic devices for K2 amputees?

Research has shown that advanced prosthetic devices lead to reduced fall rates, improved mobility, and increased patient confidence while walking for active K2 amputees.

When will the new Medicare coverage for K2 amputees take effect?

The new Medicare coverage policy for K2 amputees will take effect on September 1, 2024.