Dr. Golladay presentation ICD-10-PCS Update 2/13/15 Thank you for the opportunity to present on this novel technology related to the performance of knee replacement. For purposes of disclosure I am a paid consultant for the company and have received research support as well as development and royalties. Slide 2 This new technology is an FDA cleared device. It’s a sterile, single use disposable tibial trial insert placed within the open compartment of the knee during total knee replacement. This is an intelligent instrument which is embedded with a micro processing chip, propriety sensors, an accelerometer and radio frequency technology. This enables the surgeon to quantify center of load and kinetic tracking of load during the trialing phase of KR. It assists the surgeon in establishing optimal implant rotation and relative rotation between the tibial and femoral components, and soft tissue balancing. This is currently available and compatible with 4 of the 5 major joint implant company knee implants. Slide 3 A recent poll of surgeons performing hip and knee arthroplasty identified ligament balancing techniques as an area that needs to be most urgently addressed to improve knee replacement outcomes. We know that approximately two-thirds of knee replacement revisions, which are costly and challenging to both the surgeon and the patient, occur within the first 3.5 years after the index procedure. Of these infection is the most common reason for revision and after that stiffness and instability are the 2 most common reasons for early revision. Slide 4 VERASENSE™ Intelligent Tibial Trial Detects and quantifies rotational congruency and intercompartmental load differential during TKA. Measures TKA kinematic performance. There is no other technology currently available in market that can provide similar quantitative metrics or product similar TKA results. The Verasense device allows us to detect a medical condition previously undetectable leading to improved knee replacement implant placement and patient outcomes. Historically surgeons used clinical feel and visual landmarking to identify proper component placement. This device allows the surgeon to quantify rotational congruency between the tibia and the femur, and determine the difference between the pressures in the medial and lateral sides of the knee which can help to improve knee replacement performance and kinematic tracking. The evidence is supported by more than 7 peer reviewed publications which validate the statically significant outcomes and improved patient satisfaction related to this device. Slide 5 These are intraoperative images which demonstrate the use of the surgeon inserting the Verasense TM intelligent tibial trial insert. After the initial bone cuts are made for the tibial and femoral components, trial components are placed, and the surgeon then inserts the intelligent tibial trial into the open tibial component. The intelligent tibial trial, or VerasenseTM is then activated. The surgeon will then respond to the information provided by adjusting the soft tissue or boney cuts. Slide 6 Correct insertion of the Verasense TM requires added surgeon work and training with no change in surgical workflow. There is no piercing of tissue or bone. With the implant in place and the medial side of the knee allowed to reduce, the tibial tracker insert allows us to quantify the load, the peak load, and kinematic tracking of the knee throughout a ROM. It is noteworthy that unlike typical CAS this technique is different in that it requires no additional piercing of soft tissue or bone and no change in the typical surgical work flow of knee replacement. Slide 7 This image displays the intelligent tibial trial insert in place and what the surgeon sees on a graphical user interface. The surgeon is provided with quantitative load and balance measurements through the full ROM to guide the surgeon’s tissue dissection. During the trialing phase of knee replacement the surgeon will apply varus and valgus stress to the knee to assess ligament tension. We have shown in cadaveric studies that surgeon inter and intra observer reliability in the load applied is quite variable. Slide 8 When the tracking modality is activated we can see where the peak load changes throughout the ROM. In an idealized sense the knee should rest in the center third of the tibia throughout the ROM with some anteroposterior sliding and symmetry. Excessive incongruence or excessive anteroposterior translation or excessively differential loads all lead to bad performance of the knee, patient symptoms, and the potential need for revision. Slide 9 Data provided by the inserted intelligent tibial trial provides data to the surgeon who he/she can react to improve their dissection and final component placement. The image on the left depicts a knee that during the trialing phase is seen to have significant imbalance between the medial and lateral compartments. Our studies have shown that simple adjustment of soft tissue tension is inadequate when the load differential exceeds 40 lbs. The image on the left shows that the lateral compartment loads were 88 lbs. and the medial compartment loads were 4 lbs. indicating a differential of 84 lbs. This indicated the need to do additional boney recutting which would not typically be thought to do during the course of the knee replacement procedure. After a minimal recut of only 3 degrees the compartment pressures are now within 10 lbs. of each other. Slide 10 Initial trialing identified tight medial soft-tissues causing elevated medial compartment pressures. Compartment pressures are more equalized after a medial soft-tissue release. This is another example of an intraoperative image demonstrating the surgeons’ view of the GUI as well as the surgical team. In this case prior to release there was excessive medial compartment pressures exceeding a 15 lb. load differential and fractional release of the medial soft tissue sleeve was done with a multiple puncture technique and you can see there is near equalization of the tensions between the medial and lateral sides of the knee. Slide 11 Our studies have shown that knees with less than 15 lbs. medial lateral pressure differential have highly statically higher Knee Society Function scores than unbalanced knees. This is 6 month data. You can see on the bottom line that the load differential of 5, 10, 15, and 20 lbs. shows that in the less than 15 lb. range the statistical significant difference in KSFS is dramatic even with only an increase increment up to 20 lbs. So this seems to be a substantial differentiating point. Slide 12 The Verasense TM procedure allows for standardized outcome measures for the first time in TKA. Looking at the course of recovery in patients who had both balanced and imbalanced knees, which again was defined as a load differential of less than 15 lbs., you can see that at each time point the balanced knees had better KSS pain, and function scores, higher activity levels, and higher WOMAC scores. Of note by 1 year the unbalanced knees had not achieved the function or activity levels of the patients at 6 months with balanced knees. Slide 13 These are highly statistically significant data with p values of less than 0.001 for activity level, functional outcomes, and patient satisfaction. And again these are at all time points 6 months, 1 year and 2 years. You may ask why the patients had imbalanced knees. And as it turns out, in the initial release of this trial surgeons were unsure how to interpret the data from the sensor. So we had data that was subsequently analyzed to be able to determine that this 15 lb. load differential seems to be physiologically important. Slide 14 Verasense Intra-compartmental Insertion and Surgeon’s Response to Load and Balance Metrics Leads to Improved TKA Implant Placement. Placement of the Verasense TM is added work by the surgeon during TKA. Indeed to become proficient the surgeon requires training on the appropriate method of placement for proper positioning and responding appropriately to the new metrics guiding us to recut either tissue and/or bone. The Verasense TM procedure allows us to diagnose a medical condition previously undetectable leading to improved knee replacement implant placement. Why is this? Prior to the introduction of this device quantitative load sensing was not available for knee replacement and the balance of the knee and the soft tissue tension was entirely in the hands of the surgeon. Over two-thirds of knee replacements in the U. S. are done by surgeons who do a low volume of surgery and even more of the revisions are done by surgeons who do low volume of surgery. This device will help the clinical feel be augmented by a quantitative data point that the surgeon can use to improve the performance of the procedure. There is no other device currently available that offers this ability. This novel device has led to improved patient outcomes and has helped to define what quantitatively constitutes a balanced knee replacement which is one of the hall mark goals of performance of this procedure. Over 3 years of clinical trials have led to multiple publications and presentations of this data. The Verasense TM procedure meets key criteria for a new ICD-10-PCS code. There is currently no current ICD-10-PCS code for this novel procedure performed during TKA, but distinctly separate from conventional TKA. This is an entirely new procedure with distinct beginning, middle and end. The device has novelty and leads to improved patient outcomes. The concept of “balanced” TKA able to prevent rotational incongruency is due to the Verasense TM Knee Balancer System. Slide 15 A distinct ICD-10-PCS code is needed to track the utilization and outcome of this novel procedure demonstrated to significantly improve clinical outcomes for a patient population as compared to currently available treatments. Rotational accuracy and avoidance of rotational incongruency can be achieved with the improved balance measurements. Data from some of the clinical trials have shown that over 90 percent of knees whether they are navigated or non- navigated using conventional techniques require additional adjustment based on the sensor data and over 35% of the knees with the initial trials placed have rotational incongruency that’s outside the limits of the target acceptable range. Correcting rotational incongruency resulted in reduction of anterior knee pain in as much as 35% of a conventionally treated patient group with incongruency greater than 6.2 degrees, this data has been accepted for publication. Slide 16 Barack in 2001 reported as little as 6.2 degrees of the internal rotation of the tibial component is associated with anterior knee pain, stiffness or potentially instability, these are small degrees of variation that are very difficult to detect with traditional feel and simple visual cues or navigation. With the use of this device patient complications were potentially avoided. We know that none of the patents in the balance cohort had unexpected return to operating room, unexpected return to EM, or additional office visits following the performance of the procedure. Using these findings we can compute cost savings due to improved patient outcomes estimating a reduction in the need for revision surgery. Slide 17 Balanced knees deliver cost effective TKA outcomes. As I mentioned previously the clinical trial evidence demonstrates the balanced cohort did not return for emergent or problem focused follow up visits and none had an unexpected return to the operating room or readmission. Improved component placement resulting in balanced knee having less pain and stiffness will reduce future 30 day readmissions and should decrease early knee revision. Reduction in the total volume of revision surgery approximates over $93 of savings to Medicare. Slide 18 VerasenseTM provides a cost effective solution when performing TKA. Between 1991 and 2010 Medicare knee replacement volume increased 161.5% to 243,802 cases. In 2010 there were 19,871 revision knees using a mean cost of $27,000 per case. Correction of malrotation [rotational incongruency] during the procedure, Roche reports 35% of rotational incongruency could reduce, or more when combined with the balanced data. Estimating a 50% reduction in the incidence of this could reduce up to 3,477 revision knee replacement procedures which is an annualized cost savings of over 93 million dollars to Medicare. Slide 19 The new Verasense TM insertion procedure results in the clinical improvement meeting the threshold for a new ICD-10 procedure code. We see patients achieving more rapid recovery with functional outcomes that are superior in the balanced group at 6 months than unbalanced knees even at 2 years. Decreased pain, stiffness instability and other quantifiable symptoms based on KSS reporting and continued functional improvement over time. We see that the balanced knees continue to show increased function between 6 12 and even 24 months while unbalanced knees tend to plateau at approximately 6 months. The patients with balanced knees achieve an activity level equivalent to moderate labor. Slide 20 Balance knee replacement at 2 years reports being satisfied to very satisfied 98% of the time vs 81% of the patients with unbalanced knees. Most studies report approx. 80% satisfaction or very good satisfaction with knee replacement, with up to 8% of patients reporting that they have a knee that looks good with no definite evaluable problem but feels bad, and we think this relates to ligament imbalance. This improvement in satisfaction up to 98% represents a 21% improvement in patient satisfaction. We have also shown that functional outcome levels including activity level have led to a reduction on average of 1 BMI class for patients in the balanced cohort at a year. This compares to historical data that shows that patients tend to gain an average of approximately 10 to 15 lbs. within the first year after their arthroplasty. Slide 21 This graph shows papers over the last 15 years that have discussed patient satisfaction rates after knee replacement with an overall average patient satisfaction of 81%, the best of which is less than 90% and the patients in our balanced cohort have a 97% patient satisfaction. Interestingly our unbalanced patients reach the mean. Slide 22 Outcome measures resulting from this new procedure are superior to conventional and/or CAOS as reported in the medical literature. This new procedure, inserting the VerasenseTM intelligent tibial trial has been well demonstrated to result in cost effective outcomes. When compared to conventional or navigated techniques we have demonstrated the patients experience a more rapid resolution of the disease process with a faster early recovery, decreased pain, bleeding and other quantifiable symptoms and overall reduced recovery time and potentially improved quality of life and a reduction in revision surgery. At 6 months patients with the “balanced” knee are 2.5 times more likely to have a 50 point improvement over “unbalanced” knees; are 1.3 times more likely to have an improved WOMAC score; and are 1.8 times more likely to have an improved activity level when compared to “unbalanced” TKA patients. A new, accurately worded ICD-10-PCS code at this time will aid tracking of the procedure aiding TKA registries. Enable doctors to compare their performance, and most of all meets the intent of ICD-10-PCS to accurately report medical procedures leading to improved documented patient outcomes. ICD-10-PCS 0Page 1