Misleading coding advice causes financial troubles, liabilities for unsuspecting anesthesia, pain offices Beware of medical device companies selling spinal decompression tables with the promise that Medicare and private payers will reimburse the services. At least 1,000 of the physical therapy tables are in operation nationwide. They’re often sold with the assurance they can generate hundreds of thousands in annual revenue, in part from insurance reimbursement. But Medicare and most private insurers don’t cover the therapy – a fact many coders and doctors don’t know. So practices bill for the services anyway, using codes meant for physical therapy and in some cases, surgery. The claims they wrongly submit for payment could cost the Medicare program and private insurance companies more than $67 million this year, according to an exclusive Coder’s Pink Sheet analysis. Private payers have launched probes into the billing practices of offices that own the tables. And if recent audits and carrier updates are any indication, Medicare is more interested in the tables today than it was a year ago. Anesthesia and pain practices that bill for the services run the risk of expensive Medicare audits, repayments, penalties, and even criminal prosecution, the Coder’s Pink Sheet investigation found. "Our whole focus here is not to go on witch hunts, but to identify people who are trying to beat the system," says Karl Krieger, a Montana Blue Cross Blue Shield investigator. The Montana BC/BS investigative unit recently issued a "fraud alert" for physicians who use any code besides S9090 (vertebral axial decompression) when billing therapy services with the VAX-D, DRS, DRX-9000 or Accu-Spina decompression tables. The insurer denies payment for this code. In August, federal prosecutors in Georgia indicted two chiropractors on health care fraud charges after they allegedly used "inapplicable codes" to submit $1 million in claims to BC/BS for patients who used the VAX-D machine. The Centers for Medicare & Medicaid Services issued a coverage decision denying payment for vertebral axial decompression (VAX-D) in 1997, based on an informal discussion at a federal advisory committee meeting. But as new devices hit the market, CMS never updated its policy, leading to confusion over whether it applies to one trademarked device or a type of therapy. (See page 9 for ways to stay current on your Medicare carrier’s stance on the national policy.) Still, CMS officials say decompression therapy is not reimbursable. "It is absolutely not supposed to be billed," a CMS spokesperson says. But three quarters of practices that answered a Coder's Pink Sheet survey say they were given advice on how to bill Medicare when they purchased the tables, which can cost as much as $150,000. The device companies all deny wrongdoing, saying they don't give out specific codes to bill. The coding advice often comes from third-party contractors who say they are working on behalf of the vendors, the Coder's Pink Sheet found. Customers say they receive faxes, letters and even phone calls about how to bill for the procedures - either before they buy the table or after they sign the sales contract. In Florida, attorney Robert Rappel of Rappel & Rappel, Vero Beach, says he has been contacted by 10 doctors across the country who purchased machines after being told by vendors that Medicare would cover spinal decompression services. Much to their surprise, their claims are being rejected. "They're upset at the companies that are selling the machines," says Rappel, who is an osteopathic physician as well as an attorney. "It's fraudulent inducement," he alleges. (Rappel is also defending a former independent sales agent of the DRX-9000 decompression table, who was sued by the manufacturer in October.)< Dubbed VAX-D, the therapy consists of a month's worth of daily physical therapy sessions on a computer-controlled table. It treats back pain by alternating between cycles of tension and relaxation, which supposedly "decompress" damaged vertebral discs and release pressure on spinal nerves. According to the CMS's Coverage Issues Manual (35-97) and National Coverage Determinations Manual (160.16), "There is insufficient scientific data to support the benefits of this technique. Therefore, VAX-D is not covered by Medicare." Major private payers, including Aetna, Cigna, Oxford, Wellpoint and the BC/BS Assn., have also issued national policies calling the therapy "investigational" and not medically necessary, regardless of the name of the particular device used. "For efficiency's sake, we consider them similar," explains Robert McDonough MD, senior medical director of Aetna's Clinical Policy Unit, Hartford, Conn. "There may in fact be differences between the machines," but it's "the burden of manufacturers to prove those differences. We're at a point where none of them have that evidence." The Coder's Pink Sheet investigation, which was launched after a coding inquiry from a subscriber, found that some vendors are distributing information that appears to disregard those policies. The investigation included interviews with lawyers, doctors, insurers and vendors and a review of lawsuits, audits, internal company documents and correspondence, and government records obtained through the Freedom of Information Act. Anesthesiologist audited after billing Medicare Vendors stand to profit when potential customers believe that Medicare and other payers reimburse for services using the decompression tables. Few physicians could afford to recoup the cost of investing in these machines without receiving insurance reimbursement. Indiana anesthesiologist and pain management specialist Carolyn Kochert MD bought a $125,000 machine in 2003 from Atlanta-based manufacturer North American Medical Corp. The company's distributor, Adagen Medical International, told her in writing that she would be reimbursed by Medicare, according to a letter from Adagen in court files. The same Adagen employee who sent that letter also told her orally to bill Medicare for physical therapy codes 97110, 97112 and 97140, a complaint filed in court on Kochert's behalf later alleged. But after paying these claims in error, Medicare carrier AdminaStar Federal conducted an audit, concluded she had a "billing error rate of 100%" for the services, and demanded more than $26,000 in repayments and penalties. Kochert said North American Medical told her to appeal the audit, and referred her to Mark Sullivan, an attorney in Indianapolis. Sullivan later acknowledged that he could not produce documentation that Medicare was paying for the therapy in other states and suggested she get it from North American Medical. "I have been informed on numerous occasions by representatives of NAM that such reimbursements have been made," Sullivan wrote her, according to a letter from him in court files. "I wasted that money," Kochert said in an interview.She says she has spent about $100,000 in repayments, additional penalties, appeals and legal fees. She feels misled by the vendors. "I specifically asked for coding information. They gave me that information. It turned out to be false. Obviously the company has to know there's an issue." Since many of her practice's patients are elderly or out of work, Kochert adds that "I would not have bought it if I had to charge everyone cash." She is debating whether or not to sell the machine. Payers ultimately place the legal responsibility for proper code submission with physicians, says her attorney Miles Zaremski of Kamensky Rubinstein Hochman & Delott in Lincolnwood, Ill. In June, Zaremski filed a fraudulent inducement lawsuit against North American Medical and Adagen Medical International on Kochert's behalf in federal court in Indiana. The lawsuit alleged that the companies were "reckless" when a sales agent assured Kochert that the therapy is a procedure "reimbursed by Medicare and private insurance." The case was dismissed in October, based on a clause in the contract that requires customers to settle contract-related disputes through mediation. Zaremski is appealing the dismissal. When a manufacturer or its sales agents tell doctors to bill an insurer like Medicare for non-covered decompression services, "We can't say to Medicare - 'Look at the manufacturer' - because the manufacturer doesn't participate in Medicare," says Zaremski. Adagen, the distributor whose employees gave Dr. Kochert coding advice in writing, referred all questions from a reporter to North American Medical, the manufacturer. North American Medical says it does not give that kind of advice. Given the price of the tables, claims denied by Medicare and other payers may contribute to a practitioner's financial ruin - even without an audit. Consider what happened to chiropractor Richard Housewright, formerly of Lubbock, Texas. In 1996, less than a year after purchasing a VAX-D table, the chiropractor defaulted on his lease for the machine. He couldn't afford the $2,300 monthly payments, he said in a sworn statement, because Medicare and private payers denied every claim he submitted under codes recommended by the machine's distributor and sales agents. When the leasing company sued him for default, Housewright countered that, by being promised insurance reimbursement that never materialized, he was fraudulently induced into purchasing the machine. The judge agreed that there were "genuine questions of material fact as to whether there was fraud in the inducement to enter the lease." He nonetheless ruled against the chiropractor for $171,697. Housewright and his wife declared bankruptcy in 2001, and completed the process last year. Besides mortgages on two properties, the largest single debt the couple listed was for the VAX-D table, still owed in full to the leasing company, according to documents filed in federal bankruptcy court in Lubbock, Texas. After practicing in Texas since 1988, Housewright left his clinic in late 2004 and moved to Colorado to start a new practice. He did not return phone calls from the Coder's Pink Sheet. Just a few weeks after her case against the company was dismissed, Dr. Kochert was shocked to receive a document faxed to her office regarding the Accu-Spina table. Incredulous, she called and reached a different sales rep. She asked the salesperson to tell her how to bill for the services and which insurers pay. "I kind of acted like I didn't know." The sales rep told her to bill Medicare for the same codes she was audited for last year, Kochert says. "I asked four times if Medicare paid. They said yes." Before she bought the table, she says a vendor also gave her the names of two other physicians who had been reimbursed by Medicare. She says she found out recently that each of those doctors has since been audited and asked to repay Medicare the money. Look inside the spinal decompression industry "The spinal and cervical decompression market has proven to be a very cut-throat industry," wrote James J. Gibson, Jr., president of DRX-9000 manufacturer Axiom Worldwide, in an affidavit sworn on Nov. 8 as part of a $5 million breach of contract suit recently filed against a former employee. In the affidavit, Gibson blamed the industry at large for using such "unscrupulous business practices" as encouraging salespeople to defect to rival vendors, where they disclose trade secrets. In fact, major vendors of decompression tables are connected by executive insiders whose business relationships span a decade and often end in litigation. The following table provides inside info about the major players in the spinal decompression industry - including corporate insiders, annual sales figures and treatment recommendations. Sources: Insider information compiled from business filings with the Fla. Division of Corporations and the Ga. Secretary of State Corporations Division, and court documents; business information compiled from interviews, literature from vendors, court documents and infoUSA US Business Directory; treatment instructions reproduced from manufacturers’ literature and Web sites.
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