CBL lifts on NeuroNode’s approval as reimbursable medical device in US

Control Bionics to benefit from new HCPCS code in US identifying NeuroNode as reimbursable medical device
New code will enable reimbursement of almost US$4300, marking a significant milestone in enhancing accessibility to device
Company says once code becomes effective on October 1 it will result in a material benefit to US operations, accelerate growth and represent a substantial opportunity to build a new wholesale distribution model for the US.

Special Report: Control Bionics is up almost 20% intraday after announcing its NeuroNode has been approved as a reimbursable medical device in the US under a new coding system by the Centers for Medicare and Medicaid Services (CMS).

Control Bionics Ltd (ASX:CBL) says the CMS has approved a new Healthcare Common Procedure Coding System (HCPCS) code, which allows the NeuroNode a more appropriate and specific identification with a reimbursement of almost US$4300.

CBL says the approval marks a significant milestone in enhancing the accessibility and insurance coverage of NeuroNode for users with impaired speech and motor function in the US.

Once the HCPCS becomes effective on October 1, 2024, CBL says it will result in a material benefit to the company’s US business operations.

NeuroNode is a class I medical device, providing non-invasive, electromyographic (EMG) mediated computer access, communication, and environmental control capabilities for people with conditions such as amyotrophic lateral sclerosis/motor neurone disease (ALS/MND), cerebral palsy, spinal muscular atrophy, and certain traumatic brain injuries.

By detecting the body’s EMG signals or 3D spatial movements, CBL says its trademarked NeuroNode empowers users to send coherent, unambiguous commands to their AAC devices.

The company says the functionality is crucial for those who cannot use standard input devices, offering a transformative solution for communication and control.

Breakthrough in AAC technology

CBL says the newly established HCPCS Level II code E2513 – worded as an “accessory for speech generating device, electromyographic sensor” – recognises the unique functionality and benefits of NeuroNode as a cutting-edge augmentative and alternative communication (AAC) device.

The company says unlike traditional input devices such as joysticks and buttons, NeuroNode EMG signals and 3D spatial movements provide precise control over speech-generating devices.

CBL says the new code will enable healthcare providers to accurately report the use of NeuroNode, making it simpler to process claims and enhancing patient access to its revolutionary technology.

CBL says the Centers for Medicare & Medicaid Services (CMS) in the US have categorised NeuroNode under the Durable Medical Equipment (DME) benefit, recognising its role as a critical accessory for speech generating devices.

The company says the Medicare fixed fee schedule amount has been set at US$4,299.75.

Improving the gross margin

CBL says while the company and its US customers have been reimbursed for the NeuroNode for many years, this has been done through an ‘accessories’ code, which resulted in reduced gross margin for the business.

The introduction of the new HCPCS code will now allow for the direct billing of all the components provided as part of its solutions.

CBL says it will improve the credibility and marketability of NeuroNode enabling the company to expand its reach within the healthcare sector and improve the lives of individuals with severe speech and motor impairments.

The company says the complexity of the US healthcare reimbursement system is such that deriving the future financial impact is difficult to project.

CBL says the scale of the impact is dependent on a multitude of factors, many of which are outside of the company’s control.

The company says were the code and reimbursement in place from July 1, 2023, and all insurers (public and private) paid out to the maximum recommended by Medicare, it would have resulted in an additional ~US$400k (~A$615k) in revenue and margin ie 100% flow through to EBITDA for FY24.

The company expects the separation of the NeuroNode into its own code, rather than being bundled in the existing accessory code, will result in increased sales of the device through its existing sales channels.

CBL says the far more substantial opportunity provided through the new HCPCS code is to build a wholesale distribution model for the US – as part of its previously explained ‘NeuroNode Only’ strategy.

More than 16,000 individuals in the US are diagnosed with either ALS/MND or cerebral palsy each year.

The company says the two disease groups form ~50% of its current customers annually in the US.

On the assumption the annual addressable market is 50% of those diagnosed then CBL says this would represent ~US$30m market for ALS/MND and cerebral palsy customers alone that has been created through the new code.

Negotiations with private insurers

CBL says it and existing US partners can immediately apply for the ~US$4,300 reimbursement from Medicare and Medicaid for a customer covered by either of the insurers once the new E2513 code comes into effect on October 1, 2024.

With the code now approved, CBL plans to also immediately start negotiations with private US insurers for the NeuroNode to be covered as an in-network device with reference to the HCPCS code. The company expects its existing partners will do likewise.

The company says the process of securing these in-network agreements can be time consuming and it can’t provide guidance as to the time it will take to reach full coverage for the US states for which it currently operates.

‘Validates groundbreaking innovation’

CEO Jeremy Steele says the introduction of the new HCPCS code for NeuroNode marks a “significant milestone”, not just for the company but for the countless individuals who rely on its technology to communicate and regain control of their lives.

“This recognition will greatly enhance accessibility, making it easier for patients to obtain the necessary support and devices through their insurance provider,” he says.

“The new HCPCS code not only validates the groundbreaking innovation behind NeuroNode but also positions Control Bionics for accelerated growth.

“This code will expand our market reach, enabling us to bring our life-changing technology to a larger audience, and driving our mission to enhance communication and independence for those with severe disabilities.”

In a further boost to CBL, NorthStar Impact Funds – the only Aussie equities impact fund certified by Responsible Investment Association Australasia – recently invested $525k.

This article was developed in collaboration with Control Bionics, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.