Medicare :: Kinetic Concepts responds to Medicare Bidding Rule

Kinetic Concepts, Inc. (NYSE:KCI), a global medical technology company with leadership positions in advanced wound care and therapeutic surfaces, issued a statement on the recently-released final competitive bidding rule by the Centers for Medicare and Medicaid Services (“CMS”).

The rule establishes Medicare competitive bidding procedures for durable medical equipment used in the home for ten designated metropolitan areas and includes the category of Negative Pressure Wound Therapy, including related accessories and supplies (collectively, “NPWT”), in the initial phase of competitive bidding, which is scheduled to take effect in April 2008.

The Company estimates that V.A.C.(R) rentals and sales to Medicare beneficiaries in the ten designated metropolitan areas represented approximately $14 million or 1.7% of KCI’s total U.S. V.A.C.(R) revenue, or approximately 1% of KCI’s total revenue, in 2006. The competitive bidding rule calls for the addition of 70 other metropolitan areas to the competitive bidding program beginning in April 2009.

“KCI remains confident that our proprietary V.A.C.(R) Therapy, coupled with our clinical support network, provides Medicare and its beneficiaries superior outcomes at the lowest possible cost. Wound-care physicians and care-givers understand that the total cost of treatment is a function of reduced healing times and fewer complications and that V.A.C.(R) Therapy remains the only clinically proven NPWT therapy,” said Catherine M. Burzik, President and CEO of KCI. “We will closely evaluate the CMS competitive bidding framework and the appropriate level of KCI’s participation in the bidding program. We believe that the rule as published may unfortunately reduce access to KCI’s life- and limb-saving V.A.C.(R) Therapy for the nation’s elderly and disabled. We favor an outcomes-based reimbursement strategy for the NPWT category and will continue dialog with CMS on this alternative to competitive bidding.”

Ms. Burzik concluded, “Going forward, KCI is committed to continuing to differentiate the efficacy of V.A.C.(R) Therapy and the importance of clinical support in the healing process. V.A.C.(R) technology has been a breakthrough therapy across care settings. In fact, in the last few years, we know that our therapy has transformed treatment of war wounds in Iraq and Afghanistan, saving lives and limbs of hundreds of wounded military personnel.”

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