How to Commit Billing Fraud by Injecting Amniotic Products 101

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While the single biggest medical scam of the 21st century to date is clinics that offer umbilical cord “stem cell” therapy and instead inject dead cells, a close second is the mounting billing fraud happening in amniotic injections used to treat arthritis. Right now, we likely have hundreds of physician offices risking federal prison time because a sales rep told them that these procedures were reimbursed by Medicare. Let’s dig in.

Amniotic Products

This billing scam usually begins with amniotic membrane products. These are made from the sac that covers the baby called the amnion which is freeze-dried and chopped up into squares or small bits for injection. The later is then placed into a bottle and sold to doctors for injection after they rehydrate the bits with saline.

Amniotic membrane has traditionally been used by neurosurgeons to patch the covering of the spinal cord called the dura or to treat corneal defects in ophthalmology. A number of years ago it also got Medicare approval for use in wound healing. These are typically non-healing skin wounds in diabetics or similar patients. However, the billing scammers soon realized that they could drive a proverbial truck through that “wound healing” indication. Let me explain.

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First: Does Medicare Actually Cover Amniotic Tissue Injection to Treat Arthritis?

NOPE. How about this Medicare Blue Advantage LCD document (1):

“Blue Advantage will treat injection of micronized or particulated human amniotic membrane and/or amniotic fluid for all indications as a non-covered benefit and as investigational.”

Second: Illegal Amniotic Injection Billing in Three Easy Steps

You too can get reimbursed by Medicare and other federal programs to inject amnion for any pretty much any clinical indication involving arthritis and pain if you follow these three simple steps:

  1. Tell the patient that you can get Medicare to cover an amniotic “stem cell” injection procedure for their knee arthritis. No matter that there are no living cells in what you’re injecting, the patient won’t know the difference anyway.
  2. After the clinic performs the injection, submit the HCPCS code assigned by Medicare for that specific amniotic product.  This is basically a product reimbursement code that Medicare will pay for wound healing applications. However, you’re not going to be using the product for that purpose, which is where the real trick comes in for this scam.
  3. The switcheroo. For this example, we’ll use a knee arthritis patient. Next, submit to Medicare a diagnosis code of knee osteoarthritis (M17.9) as the patient has that problem. However, Medicare won’t reimburse for the amniotic product with that diagnosis. Hence, instead, also submit a wound healing diagnosis code or something else that the Medicare system will then associate with the amniotic product. Any ICD-10 diagnosis code that will allow the amniotic product to be paid will do.

Next, you can just wait for the checks to roll in. While you’re sipping your rum drink on the beach of your own private island paid for with all of that Medicare cash, you may want to also put a few hundred grand away for legal defense. Why? This plan as described above is billing fraud. That’s punishable by a 10-year federal prison sentence per offense.

Is What I Just Described Happening?

A colleague sent me the billing instructions given to him by a sales rep who claimed that the Medicare program covered their amniotic “stem cell” product to treat everything from knee arthritis to herniated discs. What I found in those materials was this interesting disclaimer:

“Important To Note
“• You must state all relevant diagnoses in every claim. Osteoarthritis and General Pain (M25) cannot be a primary diagnosis, instead you must state the underlying cause of OA or General Pain as the primary diagnosis.
• A predetermination must be included with every claim. A predetermination showing the patient has undergone conservative treatments in the past 12 months includes but is not limited to: letter of medical necessity, physician notes, imaging documentation.
• Pain and stiffness diagnoses or OA diagnoses cannot be the only diagnosis. They must be combined together or with another diagnosis.
• Must include all relevant injection codes and office codes with every claim.”

Huh? The rep clearly stated in the email that his amniotic product was covered for knee osteoarthritis, but here he says it’s not? What does “the underlying cause of OA” mean? You can’t tell Medicare the underlying cause was trauma, that clearly won’t work. Do they mean diagnoses like diabetes?

What’s the magic code that we need to enter here in addition to the primary diagnosis of knee arthritis? While this sales rep wasn’t stupid enough to outline the scam as I did above, after decades in medicine, it’s not too hard to read between the lines above. Meaning the diagnosis code they want you to use is one that will trick Medicare into thinking that you’re using this stuff for a covered indication.

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Billing Companies

Doctors will often hire billing companies to do the hard work of submitting claims to insurance companies and going after the money until it’s paid. However, the doctor assumes all of the risks of that billing. Meaning if the billing company is playing games with Medicare to get things paid, then the doctor is the one who goes to federal prison and not the biller.

Are there billing companies running this scam? Well, I found one that instead of charging 3-6% as is customary, wanted to charge a curious 18%. They claim the increased charge is because they need to get these amniotic “stem cell” injections for knee arthritis approved by calling Medicare. However, why would Medicare approve an injection that is not covered by Medicare? How easy would it be for the company to tell Medicare whatever they wanted to hear to get the claim approved and paid?

The upshot? If you follow my 3 easy steps to billing Medicare for amniotic injections as stem cell therapy to treat arthritis you’re sure to get rich and eventually catch the eye of a Medicare fraud contractor. However, if you’ve socked away money for a legal defense, you may be able to leave the country before the feds show up at your office with the yellow tape and guns. Or to quote the recording artist Warren Zevon, “Send lawyers, guns, and money. The shit has hit the fan”

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(1) Blue Cross Blue Sheild of Alabama. Amniotic Membrane and Amniotic Fluid Injections. Accessed 8/2/20

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