Medicare Finally Handcuffs the Birth Tissue Scammers

It’s taken several years of tracking the great birth tissue scam to see it finally come to some conclusion. When we last left off, the scammers who tried to get Medicare reimbursement for things like Wharton’s Jelly to treat knee arthritis had hit a serious snag. Now that little problem has turned into a massive brick wall. In addition, are criminal charges coming? Let’s dive in.

Since Our Last Episode

When we last left off, we had several companies making birth tissue products claim that they were selling young and live stem cells. When credible researchers looked into this claim, all of those cells turned out to be dead or dying. However, most of the interested buyers of these products were the elderly and they were expensive, so the scammers decided to use third parties to submit for Medicare reimbursement through Q product codes. They then cut deals with dishonest doctors to have Medicare pay big bucks for using these codes and provide those clinics with discounts below that rate, resulting in profit for the clinics. There was one little problem. Medicare never authorized these products for payment when used to treat arthritis and pain. That eventually led to Medicare paying about a billion dollars in error and then finding its self-created SNAFU. Medicare then suddenly ended reimbursement, which caused one of the companies to sue CMS. Medicare ultimately stated that instead of issuing a blanket non-coverage decision, it would deny these claims one by one.

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The MASSIVE Brick Wall

What Medicare needed to do was to create a specific LCD. That’s a Local Coverage Determination. This is a general guideline for what Medicare covers or doesn’t allow with the supporting documentation.

While its existing LCDs didn’t state that they covered amniotic and Wharton’s Jelly products for use in treating arthritis and pain, Medicare needed an LCD that was on this specific topic. Creating an LCD on government time isn’t quick. You have to convene experts, have meetings, review the literature, and then circulate an LCD through countless offices. Hence, more than a year later, we finally now have that new LCD:

Here’s the most important part:

“In conclusion, there is insufficient evidence-based literature to support coverage of amniotic and placental-derived products injected or applied, both non-operatively and intra-operatively in the treatment of musculoskeletal conditions or pain related to such. Therefore, this policy is a non-coverage policy as Medicare Reasonable and Necessary requirements have not been met.”

This is a brick wall that will prevent any birth tissue product or procedure from getting reimbursed by Medicare.

Nailing the Final Stake

Given that the birth tissue scammers created about a billion-dollar clawback problem for Medicare, you might expect that the feds were going to make this all VERY CLEAR. They recently authored this little number:

This is a list of Q-codes that now are no longer reimbursed for pain or arthritis. It’s essentially the modern CMS equivalent of a blackball list. Who got blackballed? You may recognize some of these players:

I have linked each company name to my blog on that code and product.

Is There Yet Another Big Shoe to Drop?

A regulatory attorney once told me that the feds move as slowly as a large battleship, but once they train their guns in your direction, you don’t want to be in the line of fire. So this all has taken quite a while. However, is another big criminal shoe about to drop?

You may remember a character called Beben Russel who used to work for one of the companies named above. On Jan 2nd, he posted this on Facebook:

What does this mean? A “federal injunction” and investigations by the FBI, FDA, HHS, and OIG? I reached out to Beeben via Facebook and this is his quote:

“Criminal component for the manufacturers? Absolutely. It’s already underway.” We do know that the justice department was involved which I reported back in Jan of 2023. 

What’s Next for Patients and Providers Who Were Duped?

As I have previously discussed, there is a massive clawback underway. That means that providers who billed for this stuff and got paid will be forced to return that money. For patients that means that many will be personally billed for these services, depending on what documents they signed when they had the treatment. That means some clinics owe millions in clawback payments and some elderly patients owe tens of thousands to those clinics.

The upshot? I told you this one wasn’t going to be pretty. Medicare has now placed a brick wall between itself and the bills for birth tissues when used to treat pain and/or arthritis or any other musculoskeletal application. It has also effectively blackballed the codes that made this scam work. Will we see criminal prosecutions this year? My guess is yes, but remember, the feds are never in a hurry. However, they do pack a big punch when they line up those big guns on individuals or companies.

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NOTE: This blog post provides general information to help the reader better understand regenerative medicine, musculoskeletal health, and related subjects. All content provided in this blog, website, or any linked materials, including text, graphics, images, patient profiles, outcomes, and information, are not intended and should not be considered or used as a substitute for medical advice, diagnosis, or treatment. Please always consult with a professional and certified healthcare provider to discuss if a treatment is right for you.