Healthcare Industry News:  St. Francis Medical Technologies 

Devices Neurosurgery Orthopaedic Reimbursement

 News Release - August 7, 2006

CMS Approves Add-On Payment for the X STOP Procedure, Providing Supplemental Hospital Reimbursement for Minimally Invasive Treatment for Lumbar Spinal Stenosis

St. Francis Medical Technologies' X STOP is the Only Medical Device to Receive Approval for FY 2007

SAN FRANCISCO--(HSMN NewsFeed)--Aug. 7, 2006--St. Francis Medical Technologies, Inc.® announced today that the Centers for Medicare and Medicaid Services (CMS) approved a special add-on payment for hospitals that offer surgery using the patented X STOP® Interspinous Process Decompression (IPD®) System ("X STOP"). This is only the third medical device company since 2000 to receive CMS approval for a new add-on payment and the only device to receive approval this year. The provision will enhance patients' access to the procedure.

The supplemental payments are intended to provide additional funding for new technologies that meet a cost threshold and demonstrate a substantial clinical improvement over existing treatment options. CMS historically has set a high standard in awarding new technology add-on payments, with only two previous device firms granted payments. CMS has awarded the X STOP with a maximum add-on payment of $4,400 per case, providing Medicare and Medicaid beneficiaries with greater access to a minimally invasive, lower risk surgical alternative to treat lumbar spinal stenosis (LSS), a degenerative disease experienced mainly by the middle-aged and elderly population. This is a payment policy decision applicable nationally.

"We applaud CMS's decision to approve an add-on payment for the X STOP procedure. With this favorable decision, CMS confirms that there is a significant need for a less invasive treatment for lumbar spinal stenosis," said Kevin Sidow, president and chief executive officer of St. Francis Medical Technologies. "This favorable decision ensures that Medicare and Medicaid patients who are suffering from this debilitating, painful disease, will have access to the most current and effective minimally invasive technology."

LSS is the most common reason for back surgery in people over the age of 50 in the United States. It is a common spinal problem that results from a narrowing in the lumbar spinal canal that carries nerves to the legs. As this space in the lower spine shrinks, the nerves are squeezed causing debilitating pain in the back, legs and buttocks. In 1995 it was reported that 1.2 million physicians' office visits were related to symptoms of LSS and this number was estimated to be over 2.3 million in 2003.

About the X STOP:

The X STOP® Interspinous Process Decompression (IPD®) System ("X STOP") is a titanium alloy implant that was approved by the FDA in November 2005 as the first and only non-fusion treatment for patients with LSS. X STOP fills a gap in the continuum of care for LSS sufferers that, until now, required patients to leap from conservative therapies, such as analgesics and injections, straight to laminectomy, an invasive procedure that is considered the current surgical standard of care. Clinically proven to relieve patients' symptoms and improve function, the X STOP procedure is well poised to become the first-line surgical intervention for LSS patients.

Inserted through a small incision, the X STOP is placed between two bones called spinous processes in the low back. The X STOP is designed to limit extension of the lumbar spine, and keep open the canal in the lower spine that carries nerves to the legs, thereby relieving symptoms.

The device is surgically implanted in a minimally invasive procedure that can be performed with local anesthesia in less than an hour. As it is not fixed to any bony structures, the X STOP procedure does not result in fusion and is completely reversible without compromising any therapeutic alternatives, including laminectomy.

The X STOP has been commercially available in Europe since 2001, and more than an estimated 11,000 X STOP devices have been sold worldwide.

About St. Francis Medical Technologies:

St. Francis Medical Technologies is a privately held company based in Alameda, CA., engaged in the discovery, development, manufacturing and marketing of novel treatments for degenerative spinal disorders worldwide. In November 2005, St. Francis received FDA approval for the X STOP, the first and only FDA-approved interspinous process implant to treat Lumbar Spinal Stenosis (LSS), a degenerative spinal disorder that may affect over two million Americans. As a result, patients and healthcare professionals finally have a safe and effective alternative to more aggressive, riskier procedures. For more information, please visit:

Source: St. Francis Medical Technologies

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