BioSphere Medical Provides Update on Physician UFE Reimbursement Based on the Centers for Medicare and Medicaid Services (CMS) Preliminary Rule.

ROCKLAND, Mass. -- BioSphere Medical, Inc. (NASDAQ: BSMD) ("BioSphere"), a medical device company that pioneered the use of bioengineered microspheres to treat uterine fibroids, hypervascularized tumors and vascular malformations, today provided an update on physician reimbursement for the uterine fibroid embolization procedure (UFE). On November 1, 2006, the Centers for Medicare and Medicaid Services (CMS) issued its preliminary rule providing for a single, all-inclusive Category I CPT code for UFE. Assuming that this preliminary rule becomes final as written, starting in 2007 a new CPT code will be designated for UFE, which is inclusive of all services occurring on the day of the procedure. The new physician reimbursement rate is expected to be lower than the rate generally received by physicians today. As previously disclosed by the company, the Society of Interventional Radiology (SIR) has been pursuing a single, all-inclusive Category I CPT code for UFE to supplant the multiple component coding currently utilized by physicians. The decision to pursue a new, single physician reimbursement code was made by the SIR's Economics Committee and supported by their Executive Council. According to Robert Vogelzang, M.D., a leading UFE practitioner and RVS Update Committee (RUC) advisor, "UFE has become more prevalent and uniform and because the current literature confirms the clinical efficacy of the procedure, it is time to recognize this procedure with its own code to allow tracking of the procedures and outcomes." This preliminary rule is not anticipated to change the reimbursement currently received by the hospital.

Background

Many years ago when the current uniform CPT code system of description of medical, surgical, and diagnostic services was implemented by the American Medical Association and adopted by the Centers for Medicare and Medicaid Services in the U.S., the relative value units, or RVUs, for the component CPT codes currently used to bill for the UFE procedure were merely assigned and not determined by a standardized methodology. For approximately a decade, component coding has been under attack by AMA's expert panel on the Relative Value Scale Update Committee (also known as the RUC) because component coding can inflate procedural valuation, which in turn slows or threatens other applications which have been submitted for new codes for new services. In addition, some payers have objected to component coding and billing.

Over the years, the American College of Radiology and the SIR have worked with AMA's CPT Editorial Panel to aggregate various radiological and image-guided component procedure codes into a single procedural code for uniformly performed procedures like UFE. They have also worked with the RUC to establish procedure RVUs through the standard RUC survey process.

Current Update

A recent SIR update to its membership states, "it is very clear that UFE is an effective, minimally invasive option to treat patients with symptomatic fibroids." It also states that the "decision to apply for the new code was several years in the making, and was the result of SIR's analysis of the many forces at work in the physician payment system." In addition, it was also SIR's strategic priority to obtain reimbursement for members practicing in the freestanding setting, emphasizing that "manyC*members [were] moving towards providing these and other services in freestanding centers, [and] SIR has been working to increase the number of procedures that can be performed and to improve reimbursement in this setting. The UFE code is an example of this effort."

Richard Faleschini, president and chief executive officer of BioSphere Medical, commented, "Earlier this year we became aware that SIR was pursuing this single, all-inclusive code for UFE. Our own physician survey data shows that a high percentage of SIR members that perform UFE procedures are not receiving the computed reimbursement under the current practice of component coding, and are receiving a wide range of reimbursement rates. Some of the Society's key physicians have stated their belief that a single Category I CPT code for UFE, with RVUs more reflective of actual work time and intensity, will simplify and standardize coding and billing, improve reimbursement outcomes, and thus lower a barrier to the adoption of UFE. While we don't welcome lower physician reimbursement, UFE's reimbursement will continue to be clustered among the high volume interventional procedures like kyphoplasty, vertebroplasty, femoral artery angioplasty and vein ablation. UFE will also be among the highest reimbursed procedures on a dollar per unit of physician's time basis, exceeding aortic stent grafting, kyphoplasty, and non-coronary stent placement."

Faleschini continued, "We intend to continue to promote UFE's many attributes, which, for many symptomatic women who qualify for a UFE procedure, include effective, long-term control of fibroid-related symptoms without the need for a myomectomy or hysterectomy, fewer complications, a shorter outpatient hospital stay, and a quick return to work and the other activities of daily living. We believe for providers, payers, and employers, these compelling and measurable patient benefits translate into lower costs. All of these characteristics are positives for women with fibroids seeking alternatives to surgery, gynecologists recommending treatment alternatives to their patients, hospitals seeking to build women's health brand strength in their communities, and interventional radiologists performing the procedure. Thus, we will press ahead with our strategy to have UFE included among first line therapy options for women with symptomatic fibroids."

About the CMS Preliminary Rule

The preliminary rule was issued by the Centers for Medicare and Medicaid Services (CMS) on November 1, 2006. The preliminary rule is not final until the comment period has lapsed which will be on December 31, 2006. During the comment period, input is gathered and evaluated by CMS from various stakeholders before final reimbursement codes and rates are set. Based on stakeholder input, CMS may adjust the reimbursement code. On January 1, 2007 the final rule is expected to be in effect and become law.

About BioSphere Medical, Inc.

BioSphere Medical, Inc., a medical device company based in Rockland, Massachusetts, has pioneered and is commercializing minimally invasive diagnostic and therapeutic products based on its proprietary bioengineered microsphere technology. The Company's core technologies, patented bioengineered polymers and manufacturing methods, are used to produce microscopic spherical materials with unique beneficial properties for a variety of medical applications. BioSphere's principal focus is the treatment of symptomatic uterine fibroids using a procedure called uterine fibroid embolization, or UFE. The Company's products continue to gain acceptance in this emerging procedure as well as in a number of other new and established medical treatments.

Cautionary Statement Regarding Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding the expected positive impact of a single CPT code on coding and billing, reimbursement outcomes, and on the adoption of UFE and the expected timing of the final CMS rule on UFE reimbursement. The Company uses words such as "plans," "seeks," "projects," "believes," "may," "anticipates," "estimates," "should," "intend," and similar expressions to identify these forward-looking statements. These statements are subject to risks and uncertainties and are based upon the Company's beliefs and assumptions. There are a number of important factors that may affect the Company's actual performance and results and the accuracy of its forward-looking statements, many of which are beyond the Company's control and are difficult to predict. These important factors include, without limitation, risks relating to:

* the failure of the Company to successfully develop, commercialize and achieve widespread market acceptance of its products, including, without limitation, widespread market acceptance of QuadraSphere Microspheres;

* the impact of CMS's expected reimbursement rate reductions on market acceptance of the UFE procedure and on sales of the Company's products for UFE, including its Embosphere Microspheres and ancillary devices;

* the absence of, or delays and cancellations of, product orders;

* delays, difficulties or unanticipated costs in the introduction of new products, including, without limitation, the Company's Quadrasphere Microspheres and its other microsphere and ancillary device products that have recently been approved for marketing and sale;

* the failure of the Company to achieve or maintain necessary regulatory approvals, either in the United States or internationally, with respect to the manufacture and sale of its products and product candidates;

* competitive and reimbursement pressures;

* the Company's ability to obtain and maintain patent and other proprietary protection for its products and product candidates;

* the inability of the Company to raise additional funds in the near term to finance the development, marketing, and sales of its products;

* general economic and market conditions; and

* the risk factors described in the section titled "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, as filed by the Company with the Securities and Exchange Commission, and described in other filings made by the Company from time to time with the Securities and Exchange Commission.

In addition, the forward-looking statements included in this press release represent the Company's estimates as of the date of this release. The Company anticipates that subsequent events and developments may cause its forward-looking statements to change. The Company specifically disclaims any obligation or intention to update or revise these forward-looking statements as a result of changed events or circumstances after the date of this press release.