1. Presentation to CMS on OPPS Payment of Integra Skin Products December 14, 2005

2. Agenda Introductions and Background Dr. Cahn Clinical presentation Dr. Gottlieb OPPS Coding and Payment Issues Dr. Cahn Discussion

3. Participants Frederick Cahn, Ph.D. CEO, BioMedical Strategies LLC, La Jolla, CA Consultant to Integra Lifesciences Corporation Chairman of ASTM International subcommittee F04.41 on Tissue Engineering Marc Gottlieb, M.D. Plastic and Reconstructive surgeon from Phoenix, AZ Tom Tarca VP Marketing - Reconstructive Surgery, Integra Lifesciences Corporation, Plainsboro, NJ Judi O’Grady VP Regulatory Affairs, Integra Lifesciences Corporation, Plainsboro, NJ Stuart Langbein Hogan & Hartson, L.L.P., Washington, DC

4. Integra Skin Products Two Integra Products Are Identified by HCPCS Code J7343 Integra Dermal Regeneration Template PMA approval based on prospective clinical studies of life- threatening burn wounds and a retrospective study of scar revision surgery Integra Bilayer Matrix Wound Dressing 510(k) clearance as a wound dressing Except for labeling, the products are identical

5. Dermal Regeneration Template INTEGRA Dermal Regeneration Template® is indicated for the postexcisional treatment of life-threatening full- thickness or deep partial-thickness thermal injuries where sufficient autograft is not available at the time of excision or not desirable due to the physiological condition of the patient. INTEGRA Dermal Regeneration Template® is also indicated for the repair of scar contractures when other therapies have failed or when donor sites for repair are not sufficient or desirable due to the physiological condition of the patient.”

6. Bilayer Matrix Wound Dressing Bilayer Matrix Wound Dressing is indicated for the management of wounds including: partial and full thickness wounds, pressure ulcers, venous ulcers, diabetic ulcers, chronic vascular ulcers, surgical wounds (donor sites/grafts, post-Moh's surgery, post-laser surgery, podiatric, wound dehiscence), trauma wounds (abrasions, lacerations, second-degree burns, and skin tears) and draining wounds. The device is intended for one-time use.

7. Versitility of Integra Integra DRT and BMWD have clinical utility for a wide variety of skin wounds Burns Trauma Reconstructive surgery Chronic wounds Both come in a wide range of sizes 8 x 10 inch 4 x 10 inch 4 x 5 inch 2 x 2 inch The larger sizes are used entirely in the inpatient setting The smaller sizes can be used in either setting

8. Skin Substitute Differentiation ASTM Standard Guide F2311-03 A Classification of Skin Substitutes by Clinical Use Used by AMA in CPT 2006 revision of Skin Replacement Surgery Codes (15000-15431) Definition 5.3: Substitute for Skin Autograft for Skin Replacement Surgery Is applied to a clean surgical wound created by excision or incision (CPT 15000-15001) Wound healing by first intention Immediate wound closure Permanent skin replacement with intact healthy skin

9. Dr. Gottlieb’s Presentation Dr. Gottlieb’s presentation of clinical case studies comes here

10. HOPPS Payment Integra products are disadvantaged under OPPS APC classification for the procedure does not represent the resources required for a grafting procedure Separate payment for J7343 is inadequate 2006 CPT Expands skin grafting codes and differentiates skin substitute procedures An opportunity to rationalize APC payments?

11. Coding and OPPS Payment (2005) ProcedureCPT 2005APCPrice Excision 100 sq cm or less1500025$269 Grafting 100 sq cm or lessCPT 1534224$101 Separate payment for 25 sq cmHCPCS J7343C9206 $10.69 x 25 $267

12. Oct 2005 Addendum A CPT 2005ProcedureAPCPrice 15000Skin graft (excision)0025269.62 15100Skin split graft0027959.34 15120Skin split graft (face, etc)0027959.34 15342Cultured skin graft, 25 cm0024101.10 15350Skin homograft0686320.11 15400Skin heterograft0025269.62

13. 2006 CPT New title “Skin Replacement Surgery and Skin Substitutes” New codes differentiate “Acellular Dermal Replacement,” Epidermal Autograft, Tissue Cultured Epidermal Autograft, Tisue cultured allogeneic skin substitute Acellular Dermal Replacement codes: CPT 15170 Acellular Dermal Replacement, trunk, arms, leg, 100 sq cm or less CPT 15171 each additional 100 sq cm CPT 15175 Acellular Dermal Replacement, face, scalp, eyelids, mough, neck, ears, orbits, genitilia, hands, feet and or multiple digits, first 100 sq cm CPT 15176 each additional 100 sq cm

14. CPT 2006 “These codes are not intended to be reported for simple graft application alone or application stabilized with dressings without surgical fixation of skin subsitute/graft. The skin subsitute/graft is anchored using the surgeon’s choice of fixation.”

15. ASP Calculation (Q2 ’05) Product sq cmASP Units Sold price/sq cm DRT 8 x 10500$2,912.54390$5.83 DRT 4 x 10250$1,858.48174$7.43 DRT 4 x 5125$1,063.1269$8.50 DRT 2 x 225$625.001$25.00 BMWD 8.x 10500$3,054.91302$6.11 BMWD 4 x 10250$2,002.47245$8.01 BMWD 4 x 5125$1,551.59321$12.41 BMWD 2 x 225$563.17256$22.53 Average$10.09 106%$10.694

16. CMS Payment vs. ASP (Q2 ’05) Product sq cm per unit Average Sales PricePayment DRT 8 x 10500$2,912.54$5,347.05 DRT 4 x 10250$1,858.48$2,673.52 DRT 4 x 5125$1,063.12$1,336.76 DRT 2 x 225$625.00$267.35 BMWD 8.x 10500$3,054.91$5,347.05 BMWD 4 x 10250$2,002.47$2,673.52 BMWD 4 x 5125$1,551.59$1,336.76 BMWD 2 x 225$563.17$267.35

17. Skin Substitute Payments HCPCSProductPrice C9206Integra, per cm210.69 C9221Graftjacket Reg Matrix1307.48 C9123Transcyte, per 247 sq cm711.68 C9200Orcel, per 36 cm2991.85 C9201Dermagraft, per 37.5 sq cm529.54 C1305Apligraf1130.88

18. Conclusion Integra is a substitute for a skin autograft Enables closure of wounds where there are few alternatives Current HOPPS payment methodology Does not provide sufficient payment to cover procedure and product costs in the outpatient setting Provides incentives to use other products that do not share the wound closure abilities of Integra Provides incentives to utilize larger sizes inappropriately in the outpatient setting