Device Maker Pays $2.8 Million to Settle False Claims Allegations
Even though Medtronic Inc. does not bill Medicare, the Department of Justice (DOJ) alleges it caused others to submit claims based on coding and billing information it provided for a procedure that was experimental and not reimbursable. In a Feb. 6 DOJ press release, the Minnesota-based device manufacturer is accused of off-label marketing of a procedure known as SubQ Stimulation in order to increase its sales of various related products used to perform the procedure. The initial lawsuit was brought by a whistleblower, former sales representative Jason Nickell, who claims in the complaint to have witnessed and participated in the improper promotion of the procedure. Medtronic denied any wrong doing as part of the settlement agreement. Complicated Scheme In a complicated arrangement involving 20 different states and involved dozens of physicians and health care entities, Medtronic is alleged to have used a variety of inducements to persuade physicians to use its spinal cord and nerve stimulation devices in an off-label manner and bill for it using an improper Current Procedural Terminology (CPT) code. The Food and Drug Administration (FDA) approved uses for Medtronic’s products involved placing epidural leads directly on nerves or in the spine itself. SubQ stimulation is a […]
Even though Medtronic Inc. does not bill Medicare, the Department of Justice (DOJ) alleges it caused others to submit claims based on coding and billing information it provided for a procedure that was experimental and not reimbursable. In a Feb. 6 DOJ press release, the Minnesota-based device manufacturer is accused of off-label marketing of a procedure known as SubQ Stimulation in order to increase its sales of various related products used to perform the procedure.
The initial lawsuit was brought by a whistleblower, former sales representative Jason Nickell, who claims in the complaint to have witnessed and participated in the improper promotion of the procedure. Medtronic denied any wrong doing as part of the settlement agreement.
Complicated Scheme In a complicated arrangement involving 20 different states and involved dozens of physicians and health care entities, Medtronic is alleged to have used a variety of inducements to persuade physicians to use its spinal cord and nerve stimulation devices in an off-label manner and bill for it using an improper Current Procedural Terminology (CPT) code. The Food and Drug Administration (FDA) approved uses for Medtronic’s products involved placing epidural leads directly on nerves or in the spine itself. SubQ stimulation is a procedure where leads are placed just under the skin, a much simpler and easier procedure that takes about 15 minutes to perform but is not considered safe and effective for chronic pain. Physicians were reimbursed thousands of dollars for performing the procedures and Medtronic sold thousand of dollars of the products it provided for physicians performing the procedure.
SubQ Stimulation is part of a rapidly growing and evolving medical science known as neuromodulation. Neuromodulation involves the bionic implantation of electrical devices that deliver low-voltage electrical stimulation to different parts of the nervous system and is being touted as a potential treatment for many neurological and emotional conditions. In addition to chronic pain, neuromodulation may be used for treating conditions such as Parkinson’s disease, Alzheimer’s disease, migraine headaches, epilepsy, depression, obsessive-compulsive disorder, obesity and sexual dysfunction, among others. Medtronic is a neuromodulation industry leader.
According to the complaint, the suggested CPT code is not the correct code for this procedure. Since the procedure is not FDA-approved for use in this manner, the correct code would be an unlisted procedure code. Most unlisted codes, codes ending in “-99,” are not reimbursable under the Medicare and Medicaid programs.
The physician could profit if they followed instructions Medtronic provided. Physician were allegedly instructed on how to use the Medtronic products in trial procedures supposedly to insure the SubQ Stimulation was appropriate for particular patients before referring the patient to other facilities for permanent implantation. Some physicians were also allegedly paid to allow other physicians to watch them perform the procedure. According to the court documents, the procedure took 5 to 15 minutes for which the physician could reap profits of $10,000 or more.
In the Laboratory Industry, Innovation is the Word of the Day
This case is important for the laboratory compliance officer as the laboratory industry evolves and reimbursement amounts and coverage policies change. More routine laboratories and some specialty laboratories are developing new tests, or novel uses for existing tests or combinations of tests, to garner referrals. This can also be the case for laboratory developed tests or genetic tests designed for screening purposes for which Medicare will not reimburse. It can be difficult to get physicians to order new tests, or test combinations, if there is little peer review evidence that they are medically necessary for the treatment or diagnosis of their patients.
Some laboratories may turn to sales and marketing techniques to promote these new services. But some sales and marketing strategies can raise questions concerning medical necessity and Anti-Kickback issues. If carried out in a manner consistent with the requirements of the Anti-Kickback and Stark statutes, these techniques may be legal. If not, the referrals that result from them are false claims waiting to be discovered.
We have already seen allegations that physicians were paid for collection and handling of specimens as a means to induce referral of tests having dubious medical necessity value (see the September 2014 issue of G2 Compliance Advisor).
Bogus clinical trial registries and unsanctioned test trials are another activity that can give rise to liability. In these cases, a provider or supplier such as a laboratory, pays the referring physician to report allegedly medically useful information on the tests they refer. The government addressed this kind of activity in a special fraud alert (see OIG, Special Fraud Alert: Laboratory Payments to Referring Physicians, June 25, 2014). For a review of this fraud alert, see the July issue of G2 Compliance Advisor.
Another suspect strategy is using speaker bureaus and paying thought leaders to promote their tests or services at educational events. If the cost for travel and lodging for attendees of these seminars or workshops are paid by the company, the events are held in exotic locations or as a supplement to an expensive dinner, they could be deemed improper inducements to physicians to order their tests or services.
Laboratories need to carefully evaluate sales techniques and ensure they understand the laws and regulations governing them or they may find themselves the subject of a government investigation or false claims case.
Takeaway: Laboratories must ensure they employ sales and marketing techniques and programs that do not result in violations of Stark and Anti-Kickback laws.
The initial lawsuit was brought by a whistleblower, former sales representative Jason Nickell, who claims in the complaint to have witnessed and participated in the improper promotion of the procedure. Medtronic denied any wrong doing as part of the settlement agreement.
Complicated Scheme In a complicated arrangement involving 20 different states and involved dozens of physicians and health care entities, Medtronic is alleged to have used a variety of inducements to persuade physicians to use its spinal cord and nerve stimulation devices in an off-label manner and bill for it using an improper Current Procedural Terminology (CPT) code. The Food and Drug Administration (FDA) approved uses for Medtronic’s products involved placing epidural leads directly on nerves or in the spine itself. SubQ stimulation is a procedure where leads are placed just under the skin, a much simpler and easier procedure that takes about 15 minutes to perform but is not considered safe and effective for chronic pain. Physicians were reimbursed thousands of dollars for performing the procedures and Medtronic sold thousand of dollars of the products it provided for physicians performing the procedure.
SubQ Stimulation is part of a rapidly growing and evolving medical science known as neuromodulation. Neuromodulation involves the bionic implantation of electrical devices that deliver low-voltage electrical stimulation to different parts of the nervous system and is being touted as a potential treatment for many neurological and emotional conditions. In addition to chronic pain, neuromodulation may be used for treating conditions such as Parkinson’s disease, Alzheimer’s disease, migraine headaches, epilepsy, depression, obsessive-compulsive disorder, obesity and sexual dysfunction, among others. Medtronic is a neuromodulation industry leader.
According to the complaint, the suggested CPT code is not the correct code for this procedure. Since the procedure is not FDA-approved for use in this manner, the correct code would be an unlisted procedure code. Most unlisted codes, codes ending in “-99,” are not reimbursable under the Medicare and Medicaid programs.
The physician could profit if they followed instructions Medtronic provided. Physician were allegedly instructed on how to use the Medtronic products in trial procedures supposedly to insure the SubQ Stimulation was appropriate for particular patients before referring the patient to other facilities for permanent implantation. Some physicians were also allegedly paid to allow other physicians to watch them perform the procedure. According to the court documents, the procedure took 5 to 15 minutes for which the physician could reap profits of $10,000 or more.
In the Laboratory Industry, Innovation is the Word of the Day
This case is important for the laboratory compliance officer as the laboratory industry evolves and reimbursement amounts and coverage policies change. More routine laboratories and some specialty laboratories are developing new tests, or novel uses for existing tests or combinations of tests, to garner referrals. This can also be the case for laboratory developed tests or genetic tests designed for screening purposes for which Medicare will not reimburse. It can be difficult to get physicians to order new tests, or test combinations, if there is little peer review evidence that they are medically necessary for the treatment or diagnosis of their patients.
Some laboratories may turn to sales and marketing techniques to promote these new services. But some sales and marketing strategies can raise questions concerning medical necessity and Anti-Kickback issues. If carried out in a manner consistent with the requirements of the Anti-Kickback and Stark statutes, these techniques may be legal. If not, the referrals that result from them are false claims waiting to be discovered.
We have already seen allegations that physicians were paid for collection and handling of specimens as a means to induce referral of tests having dubious medical necessity value (see the September 2014 issue of G2 Compliance Advisor).
Bogus clinical trial registries and unsanctioned test trials are another activity that can give rise to liability. In these cases, a provider or supplier such as a laboratory, pays the referring physician to report allegedly medically useful information on the tests they refer. The government addressed this kind of activity in a special fraud alert (see OIG, Special Fraud Alert: Laboratory Payments to Referring Physicians, June 25, 2014). For a review of this fraud alert, see the July issue of G2 Compliance Advisor.
Another suspect strategy is using speaker bureaus and paying thought leaders to promote their tests or services at educational events. If the cost for travel and lodging for attendees of these seminars or workshops are paid by the company, the events are held in exotic locations or as a supplement to an expensive dinner, they could be deemed improper inducements to physicians to order their tests or services.
Laboratories need to carefully evaluate sales techniques and ensure they understand the laws and regulations governing them or they may find themselves the subject of a government investigation or false claims case.
Takeaway: Laboratories must ensure they employ sales and marketing techniques and programs that do not result in violations of Stark and Anti-Kickback laws.
Subscribe to view Essential
Start a Free Trial for immediate access to this article