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Regenarative Labs and Tempting The Flying Ginsu Missile

Published on Aug 29, 2021

Credit: Shutterstock

Last week was big in that Medicare and the Department of Justice began sending out Civil Investigative Demands (CIDs) to health care providers who had billed for amniotic injections to treat arthritis, orthopedic, or spine conditions. I was pretty sure that the birth tissues Medicare scam was dead in the water until of course, a colleague sent me a marketing email from Regenative Labs emailed this week. I call this email, tempting the flying Ginsu missile. What do a missile and IMHO this scam have in common? Let me explain.

What Is Regenative Labs?

I covered Regenative Labs last summer. They are based out of Pensacola, Florida, and sell two products made from umbilical cord Wharton’s Jelly. Back then, they claimed that one of the products that they called “Protext” had live mesenchymal stem cells (MSCs). Our recent publication in the American Journal of Sports Medicine on the lack of any living MSCs in umbilical cord products demonstrated that this was very unlikely to be true. Right now, that claim of live MSCs has been removed from their website and flyers.

Back in August 2020, the company announced that it had received a Q-code for its products. Like many companies that tried billing Medicare for orthopedic indications, they were able to insert language into the “Applicant’s Summary” that claimed that the product could be used for tissue repair in orthopedic conditions, despite no published clinical evidence that this product is effective for those problems. Peter Marks, head of FDA CBER has already addressed this issue, stating that the FDA screwed up by being asleep at the wheel when these CMS Q-code birth tissue applications went through. In fact, no such Q-code applications have gone through in a while and the FDA is unwinding and rescinding the ones that did go through. In the meantime, since there is no Medicare guideline that states that this or any other birth tissue product is covered to treat orthopedic problems, you have a weird perfect storm where billing companies and providers can cause Medicare to pay these claims in error. However, if there’s one hard and fast rule in medicine it’s, “Don’t screw with Medicare”.

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What Is a Clawback and CID?

When Medicare and the justice department come for you because you have billed stuff you never should have billed, it’s usually through a company called a “RAC”. These Reimbursement Audit Contractors get paid a percentage of every dollar they recover and that’s called a “clawback”. They usually send you a letter that says something like, “Based on a review of records, you inappropriately billed Medicare for [insert huge 5, 6, or even 7 figure sum] and you have 90 days to pay or you can take us to court, but if you lose you may end up in federal prison. Thank you, have a nice day.” Most clinic owners promptly soil themselves.

A CID is a Civil Investigative Demand. It’s basically a letter sent by Medicare and the Justice Department that has the full judicial weight of a subpoena. These tend to get sent when there are other things at stake, like civil or criminal violations of federal law. Basically, the last thing you want to find in the mail as a Medicare provider is a certified letter with a CID inside.

What Is the Flying Giunsu Missile?

If you’re an ISIS-K fighter holding your 1940s era AK-47, there is one thing you fear more than the hand of Allah, the AGM-114R9X (R9X) Hellfire missile. Why? Well, this thing can be dropped from a drone and pinpoint the front or back of a car or room in a house. To avoid collateral casualties, it doesn’t explode, but before impact 6 blades shoot out from the sides. It hits its target at almost 1,000 miles an hour and destroys only whatever it’s aimed at. You would never see it coming.

Why bring up this missile? Because getting tagged with a CID letter if you billed amniotic injections used to treat pain or orthopedic issues is like the flying Ginsu. Medicare’s RACs are ruthless. Once they target you, just like the Hellfire, they will destroy you and your practice. That’s doubly so if you went “all in” on the idea that you could bill for birth tissue injections as you likely owe hundreds of thousands to millions of dollars back to Medicare.

Why so much? The billing per patient for these products was in the $4,000-$20,000 range. If we take an average of 10K per patient at 10 patients a month (a low number), that’s 100K per month. If you’ve been doing this for 12 months, that’s a $1.2 million dollar demand letter!

To learn more, this legal site details how Medicare and the Justice Department are investigating many practices that got erroneously paid for amniotic injections.

Tempting the Ginsu Missile

I was dumbfounded this week when a colleague sent me this e-mail sent to him by a sales rep:

“Dear Dr.

Hope your day is off to a great start and is full of blessings.

I am very excited to share this amazing information with you about REGENATIVE LABS. You have already introduced regenerative interventional orthopedic procedures in your Pain Care. This would be of your practice’s interest Please go through the information in the attached Flyers.
Covered by Ins. (Federal & Commercial) Insurance Carriers for both Primary and Secondary
Payer Reimbursement and Billing Support
FDA Compliant Medication with specific Q Code (HCPCS: Q4246)
1.10% Cryopreserved
Generate over million dollar in income per practice per location on injections alone. (I can send you the income calculation if you are interested).
We are an Authorized Distributors for Rengenative Labs. It will be an honor and a privilege to serve your institution. I look forward to hearing from you.

PS: Covered by MEDICARE and other major commercial carriers. Recent EOBs can be shared.

Thanks and let me know if you have any questions!

Aaron“

Wow! If you read the legal blog linked above, you’ll see that not only is Medicare going to ask to be reimbursed for everything it paid for birth tissues injected for orthopedic indications, but there will also likely be Justice Department charges of violations of the anti-kickback statute. Meaning that this is a flying RX-9 Ginsu knife that’s speeding at 1,000 miles an hour towards anyone who bills this stuff and in the context, Regenative Labs is still sending out stuff like this?

As an example of how bad this situation is right now, this is an Internet ad for a law firm offering to defend these physicians who are targeted with these CID letters (for a hefty fee):

In the midst of that existential peril, this is the flyer that Aaron sent my colleague:

As of August 27th, 2021, Regenative’s sales rep was still advertising that you can bill Medicare for these clinical indications, which I confirmed on a call with Aaron. Yikes! Aaron also claimed via phone that Regenative is aware of the CIDs being sent about amniotic injections. In fact, he wanted to schedule a call with and the leadership of the company and I so Regenative could answer any Medicare billing concerns I had.

In addition, Aaron’s email claims you could add millions in revenue! Of course, Aaron doesn’t mention that the US Government is just lending you that money (plus interest, fines, and legal fees)! It may also be a down payment on a nice retro orange jumpsuit, 3 squares a day, and a new tiny home with bunk beds!

Aaron the Sales Rep

I often enjoy cold calling the sales reps who get mixed up with these companies just to see what they know and don’t know and Aaron didn’t disappoint. After a half-hour on the phone with him, like many, he knew very little about FDA regulations or how the Medicare billing system works. Hence, I’m pretty sure he just got pulled into this thing without the knowledge to challenge what the manufacturer told him. I did remind him that in the midst of a Justice Department investigation into clinics that billed Medicare for orthopedic injections of birth tissues, IMHO the last thing you probably want to be doing is to be sending out emails to providers telling them they can bill Medicare for orthopedic injections of birth tissues.

Summary

After months of speaking with Medicare Fraud and Abuse contractors and seeing that health care legal firms are confirming that clinics involved in this mess are under federal investigation, a sales rep for Regenative Labs continues to try to onboard new doctors to bill Medicare. In fact, he used the current focus on amniotic injections to try to push the sale of their umbilical cord product as Medicare-covered. What’s the difference between amniotic and umbilical tissue with regard to billing Medicare? Nothing. Both aren’t approved by Medicare for orthopedic indications.

While I’m no attorney, I would imagine that continuing to convince doctors to bill Medicare for this stuff when you clearly know that the billing practice is under federal investigation carries SERIOUS ADDITIONAL RISK. As I always say, you just can’t make this stuff up!

The upshot? Medicare has a flying Ginsu missile just like the US Military. Theirs also destroys anything it’s pointed at. Hence, please don’t fall for the song and dance that Wharton’s Jelly is Medicare reimbursable to treat orthopedic indications-it’s NOT.

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NOTE: On August 30th we got the following message from an attorney for Regenative Labs:

“Centeno’s most recent post on August 29, 2021, uses an unauthorized and un-sanctioned sales flyer from a contract salesperson named “Aaron.” This person was contracted by Regenative less than one week ago and was fired today for the false claims he made in this bogus sales flyer. Regenative Labs adheres to a zero-tolerance policy related to the promotion of off-label use of its products.”