Medicare Claws Back Money for Dubious Birth-Tissue Stem Cell Shots

Medicare is clawing back money it paid doctors for dubious birth tissue injections — a move that likely could put some clinics out of business, an orthopedic surgeon told MedPage Today.

In late February, seven U.S. regional Medicare Administrative Contractors (MACs) announced that they will seek to recover losses from claims going back more than 2 years, for shots that cost some $2,000 apiece. For clinics that injected patients in multiple joints with at least two doses per joint, that could total thousands of dollars per day.

“Any claims processed and paid for dates of service on or after Dec. 6, 2019 will be adjusted and payment will be recouped,” stated the announcement from WPS Government Health Administrators, which covers the Midwest region. “Impacted providers will receive an overpayment demand letter identifying the amount of overpayment.”

The notice applies to amniotic, placental, and umbilical cord injectables, which the WPS notice describes as “experimental exosome biologic products that have not proven to be safe and effective for any medical use.”

Despite this lack of evidence, some companies were able to secure “Q codes” from the Centers for Medicare & Medicaid Services (CMS), which in turn were marketed to physicians as being reimbursable, Don Buford, MD, director of Texas Orthobiologics in Dallas, told MedPage Today.

Buford shared an email he received from a sales representative on June 9, 2020, about the birth tissue injectable Fluid Flow by BioLab Sciences, which uses code Q4206. “CMS assigned BLS it’s [sic] very own billable Q-code for this product,” the email states.

Another email he received from Regenerative Labs on Dec. 21, 2020 states “Regenerative is proud to offer the industry’s first Wharton’s Jelly allografts to be recognized as a 361 HCT/Ps [human cells, tissues, and cellular and tissue-based products] and granted a new level II HCPCS code from [CMS].” Wharton’s Jelly is an injectable made from a gelatinous substance within the umbilical cord.

“The issue is, a Q code does not equate to being cleared by the FDA for sale and use in humans,” Buford said. “The only entity in our country that has the ability to approve a drug to be sold for human use is the FDA.”

The claw back date of Dec. 6, 2019 appears to be tied to an FDA public safety notification on exosome products, following a spate of adverse events in Nebraska among patients treated with the unapproved products. The exosome products were derived from birth tissue, and some of the patients who received the injections developed sepsis, Nebraska health officials told MedPage Today at the time.

Birth tissue and exosome products have been marketed to patients for an array of indications, such as “anti-aging,” pain treatment, chronic inflammation, autoimmune disease, and Lyme disease, as well as other chronic degenerative diseases.

Buford said each 1-cc injection of amniotic fluid could be reimbursed for $2,000 using the Q code. “You can do a whole knee replacement and only get $1,400,” Buford told MedPage Today. “The injection was more than the actual surgery.”

In addition, most patients would receive at least two injections per injured site, he said. Clinics that saw multiple patients a day, and injected multiple joints, may have billed tens of thousands of dollars per day — amounting to a staggering total to have to return to Medicare. It’s probably enough to shutter some practices, Buford said.

He also said he suspects the Department of Justice will get involved, opening the door to criminal prosecutions as well.

“[Companies] appealed to the lowest common denominator, to the greed of some clinicians,” Buford said, adding the practice was widely adopted by chiropractors. “Anyone whose scope of practice allows them to do injections was able to do this.”

The FDA has long been trying to put a lid on unapproved stem cell therapies. In 2017, the agency issued guidance on regenerative medicine products, with a November 2020 deadline for full compliance. That deadline was extended due to the pandemic and went into effect in June 2021. Now, manufacturers must meet the FDA investigational new drug (IND) and premarket approval requirements for certain products before promoting them to patients.

The BioLab Sciences product still appears to be available — albeit under a new name, Fluid GF — and the company continues to advertise its reimbursement eligibility using the same code, Q4206, which is promoted in a video linked from one of its distributor’s websites.

The video claims that the FDA conducted an audit and found the company was in compliance with FDA’s homologous use/minimal manipulation criteria for human cells, tissues, and cellular and tissue-based products (HCT/Ps), also known as “361 products” that don’t require strict agency oversight.

However, MedPage Today could not confirm that statement, and neither BioLab Sciences nor its distributor EMS Bio returned a request for comment.

Neither the FDA nor CMS returned requests for comment as of press time.