Upcoded Surgical Procedures

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Device manufacturers have been accused of coaching healthcare providers to submit upcoded claim forms to Medicare in conjunction with the procedures for which their devices are intended. When such claims are submitted, the procedure is characterized as more complex, thus triggering a higher reimbursement rate.

For instance, kyphoplasty, a procedure used to treat certain kinds of spinal fractures usually caused by osteoporosis, can often be performed as outpatient procedures, and is reflected in INTERQUAL as such. Kyphon, a company that had been acquired by Medtronic Spine in 2007, allegedly advised hospitals to do inpatient kyphoplasties to bulk up their Medicare payments even though the procedures could have often been done on an outpatient basis. The hospitals involved in a related recent nationwide investigation (with accompanying settlements) kept patients in the hospital as inpatients with the result of larger payments from Medicare.

More recently, in February 2014, the United States recovered approximately $5.25 million from medical device manufacturer EndoGastric Solutions, Inc. EndoGastric Solutions manufactures and sells a device called EsophyX that is intended to treat gastroesophageal reflux disease. The device was developed as an alternative to a more invasive procedure that requires incisions in the abdomen. The government alleged that EndoGastric Solutions knowingly caused health care providers to bill for the less invasive EsophyX procedure using codes applicable to the more invasive procedure, which provided for a higher level of reimbursement. As a result, federal health care programs allegedly paid more than they should have for the procedures using EsophyX.

The government also alleged that EndoGastric Solutions knowingly paid illegal remuneration to certain physicians for participating in patient seminars and co-marketing agreements to induce them to use EsophyX, in violation of the Federal Anti-Kickback Statute.