UPDATED: 450+ hospitals pay DOJ $250M for overuse of ICDs, but some of the implantations met clinical guidelines

Boston Scientific's S-ICD lead system--Courtesy of Boston Scientific

Under a blockbuster legal settlement, more than 450 hospitals in 43 states have agreed to pay the Department of Justice more than $250 million for installing implantable defibrillators within 40 days of a heart attack or 90 days of bypass surgery or angioplasty--a violation of Medicare reimbursement protocol.

"The settlements announced today demonstrate the Department of Justice's commitment to protect Medicare dollars and federal health benefits," said U.S. Attorney Wifredo Ferrer of the Southern District of Florida, in a statement. "Guided by a panel of leading cardiologists and the review of thousands of patients' charts, the extensive investigation behind the settlements was heavily influenced by evidence-based medicine. In terms of the number of defendants, this is one of the largest whistleblower lawsuits in the United States and represents one of this office's most significant recoveries to date. Our office will continue to vigilantly protect the Medicare program from potential false billing claims."

And the list of offending hospitals could grow larger, as the DOJ said it's investigating additional hospitals and health systems.

In reaction to the agreement, the Heart Rhythm Society released a statement saying, "The large scope of this investigation, apparent by the list of 457 hospitals included in the settlements, highlights the prevalent gap that exists between Medicare coverage requirements and current evidence-based clinical practice."

Its 2013 guidelines on ICD usage concur that the devices should not be implanted within 40 days of a heart attack (with some exceptions), but say they should be implanted in many, but not all patients patients within 90 of a revascularization procedure (such as a bypass or angioplasty).

"Today, we have a situation where physicians use their best clinical judgment to reduce patients' risk of life-threatening arrhythmias, while faced with the difficult task of meeting Medicare coverage requirements that do not properly reflect current clinical practice. Collectively, we must work together to solve this issue and adapt to a changing environment that aims to optimize patient care," said Dr. John Day, president of the Heart Rhythm Society, in a statement.

Although they are not part of the agreement, device bigwigs Medtronic ($MDT), St. Jude Medical ($STJ) and Boston Scientific ($BSX) could also take a financial hit from decreased usage of ICDs as a result of the crackdown, although the agreement says the violative implantations occurred between 2003 and 2010, making it unclear whether the practice is ongoing.

The federal Centers for Medicare & Medicaid Services sets National Coverage Decisions for certain devices categories based on clinical trials and stakeholder input, including providers, medical societies, manufacturers and patient advocates. An NCD is a sought after payment policy because it ensures Medicare reimbursement and eliminates regional variations in federal payments.

The DOJ said the NCD for ICDs pays about $25,000 per device. It mandates waiting periods of 40 or 90 days following treatment "to give the heart an opportunity to improve function on its own to the point that an ICD may not be necessary," adding, "the NCD expressly prohibits implantation of ICDs during these waiting periods, with certain exceptions."

"While recognizing and respecting physician judgment, the department will hold accountable hospitals and health systems for procedures performed by physicians at their facilities that fail to comply with Medicare billing rules," said principal deputy assistant attorney general Benjamin Mizer, head of the Justice Department's civil division in a statement. "We are confident that the settlements announced today will lead to increased compliance and result in significant savings to the Medicare program while protecting patient health."

Whistleblowers Beatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a healthcare reimbursement consultant, have received more than $38 million from the settlements.

The largest individual payment was for $15.8 million. It was made by the Hospital Corporation of American and 42 affiliated hospitals in various states.

Medical device companies increasingly complain of tightening Medicare reimbursement, which they say often does not adequately pay for new technologies.

As the latest settle makes clear, another prong of the federal effort to control the program's finances is tougher enforcement by the so-called Health Care Fraud Prevention and Enforcement Action Team. The DOJ boasts that since 2009 the team has recovered more than $16.4 billion in cases of fraud committed at the expense of Medicare and other federal healthcare programs.

- read the DOJ release and see the list of affected hospitals
- here's the statement from the Heart Rhythm Society 

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