Medicare Begins Cracking Down on Amniotic Tissue Billing

Published on Feb 1, 2021

Can you get a “stem cell” treatment covered by Medicare? For the past 1-2 years, a handful of amniotic tissue companies have been trying to convince physicians to bill Medicare for their products. The problem? This is illegal. Now a new statement by one Medicare region lays a stick of dynamite at the feet of those companies and providers. Let’s dig in.

Myth #1-Stem Cells

Many companies selling dehydrated amniotic membrane or fluid have billed these products as stem cell therapies. That’s of course not true as there are no living and functional stem cells in any of these products. That’s now been confirmed by multiple university labs. For more information, see my video below:

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Myth #2-Medicare Reimbursement

This scam began about 1-2 years ago. It continues to this day with emails like these recently sent to me:

“This is Gordie Nelson with Biolab Sciences, a regenerative medicine company in Scottsdale, Arizona. We have an FDA registered amniotic liquid allograft that is used to treat pain, inflammation, joint disorders, and soft tissue injuries as it greatly enhances tissue regeneration, replacement, and reconstruction.

Unlike other liquid allografts, Fluid Flow is 100% pure amniotic fluid…Also, our product is accepted by Medicare, Medicaid, TriCare, and private insurance so you can provide treatment to more patients.”

The emails have even begun to recognize the fact that this is dangerous to bill Medicare for these products and incorporate that as part of their sales pitch (this one from Mike Tillman):

“Simply put, it isn’t safe to bill medicare for off label usage.” These are the exact words my healthcare attorney said to me. That is how I found Fluid Flow, with its very intentional description for orthopedic use. This is the only Amnio product that is directed at ortho use and has an LCD (Local Coverage Determination from Medicare) and a Redbook Value.

More importantly, Fluid Flow is covered by most Major Carriers, not JUST Medicare. Science is evolving and so should your practice.

From CMS.gov:
“The patient population indicated for use of Fluid Flow and Fluid GF include acute and
chronic wounds and soft tissue injury, muscle and meniscus tears, ligament and tendon sprains, degenerative tissue disorders and Inflammatory conditions (tendonitis and fasciitis).”

So is any of this actually true?

An LCD?

Mr. Tillman is confusing a Q-code description submitted by the company to CMS with a Local Coverage Determination (LCD). One is a gimme and the other is Mount Everest. Let’s dig deeper there.

A Q-code is a product reimbursement code. To get a Q-code, you submit a description for your product and state why it’s like another product that Medicare reimburses. For amniotic tissue companies, this was basically a rubber-stamping session, until recently. You see, FDA has a seat at this table, and regrettably, the agency let through many of these descriptions by these manufacturers that violated agency guidelines, including the one above submitted by Biolab Sciences for its product. We know this because other companies later tried to do the same thing and were denied by making claims that their products could be used for specific purposes. That doesn’t fit with the quickie 361 registration obtained by the company. Meaning to make specific product claims, like Mr. Tillman is making above, you need FDA drug approval with clinical trials. Biolab has done none of these trials. This brings us to the LCD.

An LCD is a scientific coverage document. While a Q-code allows a way for a product to get reimbursed, to actually get reimbursed that product must have scientific evidence that it’s safe and effective for that specific medical indication. That would require that the Biolab Fluid Flow product actually have multiple randomized controlled trials showing that it was effective in treating meniscus tears (one of the medical indications that Mr. Tillman mentions). Does that exist? Nope. Suffice it to say then that there is no medicare LCD document that approves the use of Fluid Flow to treat meniscus tears.

To learn more, see my video below:

So a Q-code without an LCD is worthless. There is one exception. You tie Medicare up in so many knots that they pay in error. The problem? That’s where Medicare can bring the pain.

The Midwest Region MAC

The first step in Medicare bringing the pain to all of the manufacturers playing this game is its individual regions beginning to speak out. That sets up providers who are doing this for criminal prosecution because they have been formally put on notice. That’s why this notice out of the Central US Medicare Administrative Contractor (CGS) is a big deal:

medicare amniotic tissue orthopedics

This basically is the beginning of the end for these companies pushing this Medicare payment scam. Or placing a stick of dynamite with a lit fuse at their feet.

The Hurt

Ever since multiple professional groups in this space got involved and notified Medicare and FDA that this was happening, the dominoes began to fall. Now Medicare fraud and abuse contractors are active in this space. They are clearly heading in the direction of shutting this down while they figure out who the big fish are and gather evidence. What can they do? They can get the justice department involved to prosecute manufacturers, sales reps, and the physicians who billed and violated federal laws. They can also begin sending clawback letters to providers who will easily owe Medicare repayments in the 5, 6, and7 figure range (plus attorneys fees).

The FDA has also been engaged. They can issue Warning Letters to these manufacturers for making claims that go beyond what’s allowed by their quickie 361 tissue registrations. They can also prosecute manufacturers via the justice department for selling unapproved drugs. Finally, they can also make sure that no other company gets to place claims that violate its regulations in a q-code description.

If You Billed this Stuff-What Should You Do?

If you fell for this, then if this were me, I would begin negotiating a payback schedule now. Given that you will still be out the amounts you paid for these products, that may mean that you will need to tap patients to pay for these therapies. Another option is to go back to the manufacturers for product refunds. Either way, it’s not fun, but better to realize your mistake and take ownership than getting financially blindsided in a pandemic.

The upshot? This new Medicare guidance is likely one of many that will be coming out here in the next few months. Medicare knows about this as does FDA, so it’s just a matter of time before both begin bringing the pain.