Healthcare Industry News:  Aspect Medical Systems 

Devices Monitoring Reimbursement

 News Release - February 23, 2006

Aspect Medical Systems Announces Expected Change in Reimbursement Rules for Patient Monitoring Products in Japan

NEWTON, Mass.--(HSMN NewsFeed)--Feb. 23, 2006--Aspect Medical Systems (NASDAQ: ASPM ) today announced that higher reimbursement rates for use of the company's BIS(TM) XP platform in Japan are expected to be discontinued as a result of a change in reimbursement rules for patient monitoring products, including BIS technology. The changes were announced by the Japanese Ministry of Health, Labour & Welfare (MHLW) and are expected to be effective April 1, 2006. On January 1 of this year, reimbursement increased from 1,000 yen (approx $8.30 US) for one-lead BIS patient monitoring systems to 2,400 yen (approx $20.00 US) for the two-lead BIS XP patient monitoring system that was approved by the MHLW last November. Following implementation of the new rules, reimbursement for both one-lead and two-lead BIS patient monitoring platforms will be at the rate of 1,000 yen. Approximately one half of all acute-care hospitals in Japan qualify for reimbursement under these rules.

"Aspect anticipated that the BIS XP monitoring system would be eligible for higher reimbursement in about half of Japan's hospitals based on the MHLW's system for reimbursing two-lead patient monitoring systems," said Nassib Chamoun, president and CEO of Aspect. "While the new reimbursement rules are not as favorable as we were expecting, this does not affect our previously-announced guidance for the first quarter of 2006, and we do not believe that it will have a material impact on product revenue for the balance of the year. Japan is an important market for BIS technology and we believe that the introduction of BIS XP technology that began at the start of this year will be well-received by Japanese anesthesia providers and hospitals." Japan represented approximately five percent of total worldwide product revenue for Aspect in 2005.

Aspect learned of the new reimbursement rule through a MHLW preannouncement to the Japanese medical device industry which detailed a series of reimbursement changes. An official announcement is expected in March.

About BIS Monitoring

Using a sensor placed on the patient's forehead, BIS monitoring translates information from the electroencephalogram (EEG) into a single number that represents each patient's level of consciousness. This number - the BIS value - ranges from 100 (indicating an awake patient) to zero (indicating the absence of brain activity). Using the BIS value to guide administration of anesthetic medication, in conjunction with other vital signs, allows clinicians to make better-informed decisions to achieve optimal anesthesia.

About Aspect Medical Systems, Inc.

Aspect Medical Systems, Inc. (NASDAQ: ASPM ) is a global market leader in brain monitoring technology. To date, the Company's BIS technology has been used to assess more than 14.5 million patients and has been the subject of approximately 2,300 published articles and abstracts. BIS technology is installed in approximately 69 percent of hospitals listed in the July 2005 U.S. News and World Report ranking of America's Best Hospitals and in approximately 45 percent of all domestic operating rooms. In the last twelve months BIS technology was used in approximately 14 percent of all U.S. surgical procedures requiring general anesthesia or deep sedation. BIS technology is available in more than 160 countries. Aspect Medical Systems has OEM agreements with seven leading manufacturers of patient monitoring systems. The company is also investigating how other methods of analyzing brain waves may aid in the diagnosis and management of neurological diseases, including depression and Alzheimer's disease. For more information, visit Aspect's Web site at http://www.aspectmedical.com.

Safe Harbor Statement

Certain statements in this release are forward-looking and may involve risks and uncertainties, including statements concerning expectations as to reimbursement levels in Japan, the demand for BIS XP technology and the Company's future operating results. There are a number of important factors that could cause actual results to differ materially from those indicated by these forward-looking statements, including changes in reimbursement in Japan, market acceptance of BIS XP in Japan, competition with new products or alternative techniques that may be developed by others, such as third-party anesthesia monitoring products approved by the FDA, regulatory risks relating to its ability to successfully develop and introduce enhancements and new products, the ability to manufacture and distribute products on a timely basis and market acceptance of the Company's products. There are additional factors that could cause the Company's actual results to vary from its forward-looking statements, including without limitation those set forth under the heading "Factors Affecting Future Operating Results" in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended October 1, 2005, as filed with the Securities and Exchange Commission. In addition, any forward-looking statements represent the Company's views only as of the date of this press release and should not be relied upon as representing the Company's views as of any subsequent date. While the Company may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if its expectations change. Therefore, you should not rely on these forward-looking statements as representing the Company's views as of any date subsequent to the date of this press release.

BIS, the BIS logo and Bispectral Index are trademarks of Aspect Medical Systems, Inc. and are registered in the USA, EU and other countries. All other trademarks, service marks and company names are the property of their respective owners.


Source: Aspect Medical Systems

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