ANDOVER, Mass., Dec. 20, 2005 — The Centers for Medicare and Medicaid Services (CMS) is increasing reimbursement for the INTRADISCAL ELECTROTHERMAL^◊ (IDET^◊) Annuloplasty procedure and placing it in a more appropriate Ambulatory Payment Classification (APC). The IDET^◊ procedure is a minimally-invasive outpatient procedure that treats spinal discs, and is for patients suffering from chronic discogenic lower back pain.

The increase is part of an overall change in Medicare payment to hospitals for Percutaneous Intradiscal Annuloplasty procedures when performed in a hospital outpatient setting. As one of many changes effective January 1, 2006, CMS is placing the IDET^◊ procedure in an APC 50 – Level II Musculoskeletal Procedures classification group, which reflects the procedure’s clinical and resource features.

The procedure’s new reimbursement classification appears on the CMS Web site (www.cms.hhs.gov), and was announced in the final rule for the Medicare Hospital Outpatient Prospective Payment System (OPPS) for the 2006 calendar year. Under the re-classification, CMS will reimburse $1,424.50 for the procedure in 2006, in place of the 2005 payment level of $622.43.

“The increase in payment will help physicians and hospitals that previously faced the barrier of low payment to offer this important procedure for Medicare patients,” said Douglas Fenton, M.D., neuroradiologist of the Mayo Clinic in Jacksonville, Fla. “Physicians throughout the United States who understand the value of this procedure are pleased that both the panel and CMS are moving in the same direction to pay for intradiscal annuloplasties, such as the IDET^◊ procedure, in line with hospital costs.”

Dr. Fenton initiated the petition of the reimbursement payment change with the independent APC Advisory Panel. Following the petition, the APC Advisory Panel recommended that CMS put Percutaneous Intradiscal Annuloplasty in a more appropriate APC payment group.

A summary chart of the new reimbursement classification is provided below:

Smith & Nephew’s INTRADISCAL ELECTROTHERMAL^◊ Therapy (IDET^◊) is a minimally-invasive outpatient surgical procedure for patients suffering from chronic disc-related low back pain who have failed a program of aggressive non-operative therapy. During the procedure, controlled levels of thermal heat are applied directly to the affected disc. The heat contracts and thickens the collagen fibers within the disc wall, potentially closing the cracks and tears and cauterizing the tiny nerve endings that cause the pain.

The IDET^◊ procedure can be performed in less than one hour, is safe and has a low incidence of complications. Since 1998, over 60 peer-reviewed articles have been published on the IDET^◊ procedure supporting the procedure’s efficacy and safety.

About Smith & Nephew

Smith & Nephew (NYSE:SNN; LSE: SN) is a global medical technology business, specializing in Orthopaedics, Endoscopy and Advanced Wound Management products. Smith & Nephew is a global leader in arthroscopy and advanced wound management and is one of the fastest growing global orthopaedics companies.

Smith & Nephew is dedicated to helping improve people's lives. The company prides itself on the strength of its relationships with its surgeons and professional healthcare customers, with whom its name is synonymous with high standards of performance, innovation and trust. The company has over 8,500 employees and operates in 33 countries around the world generating annual revenue of $2.3 billion.

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