Could One Company Be . . . Medtronic? St. Jude?

Replacing Faulty Heart Devices Costs Medicare $1.5 Billion in 10 Years

By FRED SCHULTE and CHRISTINA JEWETT   OCT. 2, 2017  The New York Times

WASHINGTON — Medicare paid at least $1.5 billion over a decade to replace seven types of defective heart devices, a government watchdog says. The devices apparently failed for thousands of patients.

A report released on Monday by the inspector general’s office for Health and Human Services said officials needed to do a better job tracking these costly product failures to protect patients from harm. More detailed reporting could lead to earlier recognition of serious problems with medical devices and faster recalls of all types of “poorly performing” ones, the inspector general’s office said.

The report marks the first effort by anyone in government to assess the losses to taxpayers and patients 65 and older from medical gear that proves faulty.

Officials said the $1.5 billion lost from the seven devices from 2005 through 2014 was a “conservative estimate.” Patients also paid $140 million in out-of-pocket costs for this care, the report noted.

The report found that nearly 73,000 people on Medicare had one of the seven devices replaced because of recalls, premature failures, medically necessary upgrades or infections. It did not outline specific injuries that patients suffered as a result.

The inspector general did not identify the manufacturers of the seven devices, but officials said they included implanted cardio defibrillators and a pacemaker that had either been recalled because of flaws or had “prematurely failed.” Pacemakers and implantable defibrillators are small devices placed under the skin to help treat irregular heartbeats.

How best to identify these defects and cut Medicare spending associated with fixing them has been under consideration at various times since 2007, according to the report. But it remains a contentious issue.

The inspector general recommended that hospitals and doctors be required to submit detailed information identifying failed devices, like serial and batch numbers, during the billing process.

“This could help reduce Medicare costs by identifying poorly performing devices more quickly, which could also protect beneficiaries from unnecessary costs and improve their chances of receiving appropriate follow-up care more quickly,” the report said.

David Lamir, an official in the inspector general’s Boston office, said the $1.5 billion figure represented a “drop in the bucket” of the true costs to Medicare from medical products that malfunction. He said device failures not only waste money, but also can expose patients to a “high risk of illness,” including needless surgeries.

The report said that medical device recalls nearly doubled from 2003 through 2012 and noted that they have probably cost Medicare billions of dollars. In the past five to six years, more than 200 cardiac devices have been recalled, according to the inspector general’s office. In most cases, manufacturers withdrew their products voluntarily after reports surfaced of injuries or malfunctions. Device makers are required to report problems they learn of, often from doctors and hospitals, to a database run by the Food and Drug Administration.

Diana Zuckerman, president of the National Center for Health Research who has testified before Congress on device safety, said her organization supports making hospitals report malfunctioning devices when they seek Medicare payments to cover an implant surgery. She said the change would help officials pinpoint faulty devices before issuing a recall for tens of thousands of products in patients.

“It would be much more obvious much more quickly which implanted devices were causing problems,” she said.

Ms. Zuckerman noted that the report did not touch on other high-profile device failures, like metal-on-metal hip implants or vaginal mesh.

Medical device companies and some doctors have opposed tighter reporting, arguing that it would be costly and difficult to integrate with existing payment claim forms and might not yield useful information.

“It is abundantly clear that data collected in electronic health records is a far superior and more cost-effective method for monitoring the performance of medical devices,” said Mark Leahey, who heads the Medical Device Manufacturers Association. The trade group represents nearly 300 device companies.

Mr. Leahey said that the electronic health record “captures the full clinical history of the patient, their changing health status and detailed information on their medical treatments,” including any surgically implanted devices.

A spokesman for the Centers for Medicare and Medicaid Services said the agency had not seen the report and would have no comment.

But in written remarks included in the report, Seema Verma, the agency’s administrator, said the tighter reporting requirement was “under consideration” and that the agency would “carefully evaluate the potential that this policy would impose a burden on physicians unnecessarily.”

This article was produced in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation. 

• https://www.nytimes.com/2017/10/02/health/heart-devices-medicare.html?_r=0

Criminal Fraud Prosecutions of Healthcare Corporations and Executives May Increase

Tenet probe shows feds' growing interest in criminal fraud cases 

By Lisa Schencker  | May 14, 2015  (FiDA highlight)

The U.S. Justice Department has launched a criminal investigation into previously disclosed allegations that Tenet Healthcare Corp. hospitals paid kickbacks for maternity referrals. The probe reflects a growing appetite among prosecutors to pursue criminal charges in corporate healthcare fraud cases. 

Tenet spokesman Donn Walker declined to comment on the issue, saying only, “We have disclosed this investigation in our public filings for some time.”

In a filing to the Securities and Exchange Commission this month, Tenet said four of its hospitals in Georgia and South Carolina are under criminal investigation related to a whistle-blower lawsuit filed in 2009. 

The Justice Department, meanwhile, recently adopted a procedure that ensures that its Civil Division shares all new whistle-blower complaints with its Criminal Division to allow the department to conduct parallel investigations. 

In Tenet's case, the civil complaint alleges that the hospitals paid kickbacks to a company called Hispanic Medical Management to send them pregnant women from the company's prenatal clinics to deliver their babies. Those patients—most of whom, according to the complaint, were in the country illegally—would then be eligible for emergency Medicaid services. 

The government also alleged the hospitals included those patients obtained from tainted referrals when seeking additional Medicare funds intended to support hospitals that treat large numbers of low-income patients. 

Tenet has countered in court documents that its hospitals' contracts with Hispanic Medical Management were meant to “create a culturally sensitive and attractive prenatal environment for women” who might deliver their babies at the hospitals. 

The management company provided translators and community outreach and helped families apply for emergency Medicaid coverage, according to Tenet. The government's allegations “rest on the hospitals' open desire to care for a deserving, but underserved population and the attractive solution they designed to do so,” the company said. 

Two individuals—a former Hispanic Medical Management owner and a former employee of one of the Tenet hospitals—have been charged criminally in the matter. The civil suit has been put on hold pending further proceedings in the criminal case, according to Tenet's SEC filing.

Tenet said the Justice Department informed the company on April 10 that the four hospitals named in the civil suit are also under criminal investigation. Those hospitals are Atlanta Medical Center; Hilton Head (S.C.) Hospital; North Fulton Hospital, Roswell, Ga.; and Spalding Regional Medical Center, Griffin, Ga.

Criminal investigations and charges in big Medicare and Medicaid fraud cases are becoming increasingly common, said Sheryl Skolnick, director of research and a healthcare analyst at Mizuho Securities USA. Historically, criminal prosecution was more common in smaller Medicare and Medicaid fraud cases, she said. It's more difficult to bring criminal charges because the standard of proof is higher than in civil cases.

“You have to prove intent, which at a corporate level means you have to have some level of senior management involved and some sort of pattern that you can essentially say this was not just a fluke of a one-off situation but rather this was part of a strategy or policy or intent of the organization to bill in this way,” Skolnick said.

But the Justice Department now seems to be extending those criminal investigations to large, publicly traded corporations, she said. “It was pretty much just a matter of time before they would move up the chain now that they have some success under their belt—see what's cooking at the corporate level." 

Leslie Caldwell, the Justice Department's assistant attorney general for the Criminal Division, said as much during an address in September 2014 when she called whistle-blower cases “a vital part of the Criminal Division's future efforts.”

Caldwell reiterated the division's commitment to fraud cases, including those by healthcare executives, during remarks Thursday at the American Bar Association's 25th Annual National Institute on Health Care Fraud.

Under a new policy, she said, all new whistle-blower complaints in the Civil Division are shared with her division. “Parallel investigations maximize the department's ability to secure the appropriate outcome in each matter—whether it be financial penalties, restitution, federal program exclusion or criminal prosecution of both corporations and individuals,” Caldwell said Thursday.

Caldwell pointed to convictions against more than 20 individuals in a fraud case against the American Therapeutic Corp. as an example of a recent complex criminal healthcare fraud case.

Patrick Burns, co-director of the Taxpayers Against Fraud Education Fund, a not-for-profit organization partly funded by whistle-blowers and law firms representing them, said prosecutors are seeking to maximize the financial returns for the government in large cases, especially as the recovery amounts climb. 

Whistle-blowers are entitled to a portion of whatever money the government is able to recover under the False Claims Act. That's not true in criminal cases. 

“As the amount of money has gone up, the Department of Justice has looked for a way to manage down whistle-blower awards,” Burns said.

Burns said he doesn't believe the approach has been much of a deterrent because the Justice Department rarely holds individuals accountable for the fraud by excluding them from Medicare and Medicaid and sending them to prison.

“Yes, we need to recover America's stolen billions but we also need to bring personal pain to the executives who design, operationalize and greenlight these massive frauds,” Burns said.

But Skolnick said the rise in criminal investigations means companies must be “increasingly vigilant." 

In a separate matter, Tenet also disclosed this month that it is in discussions with the Justice Department over a potential settlement involving its use of implantable defibrillators at 56 hospitals from 2002 to 2010. 

The government has spent years investigating suspected overuse of the devices at hospitals across the country. The investigation has yielded settlements with just a few hospitals so far: Irvine, Calif.-based St. Joseph Health; the now defunct MedCath; and Catholic Health Initiatives. None of those companies admitted liability as part of their settlements.

The investigation has been controversial among doctors, who say Medicare's coverage rules for the devices are not aligned with other medical guidelines.

http://www.modernhealthcare.com/article/20150514/NEWS/150519933?utm_source=modernhealthcare&utm_medium=email&utm_content=externalURL&utm_campaign=am

Lisa Schencker

Lisa Schencker

Lisa Schencker covers legal issues and enforcement agencies. Before joining Modern Healthcare in 2014, she was an education reporter for the Salt Lake Tribune and before that wrote for the Bakersfield Californian and the Scranton (Pa.) Times-Tribune. She has bachelor’s and master’s degrees in journalism from the University of Illinois at Urbana-Champaign.

Legal crime? Profit trumps patient harm.

http://www.nytimes.com/2012/11/27/business/st-jude-medical-suffers-for-redacting-a-product-name.html

NEWS ANALYSIS

A Name Blacked Out, a Reputation at Risk

By BARRY MEIER  FiDA highlight

Published: November 26, 2012

Peter Muhly for The New York Times

Dr. Ernest Lau holds a Durata lead from a St. Jude Medical Fortify ICD, an implanted heart defibrillator.

                       

IS covering a product’s name in a public document a sign that a company has something to hide? And how should doctors, patients and investors react if the product at issue is one on which peoples’ lives and a company’s fortunes depend?

Such questions now loom over St. Jude Medical after the disclosure last week that its executives had blacked out the name of a heart device component when they released a critical federal report involving the product. The value of St. Jude has since plummeted more than $1 billion, or 12 percent. But the company’s actions may have a more lasting impact on its reputation and the health of patients, some experts say.

Last week’s incident was the latest development in a controversy involving the component, an electrical wire that connects an implanted defibrillator to a patient’s heart. St. Jude officials say the wire, which is known as the Durata, is safe. But uncertainty about the company’s statements is growing, underscored by its handling of the report, which involved a Food and Drug Administration inspection of a plant that makes the Durata.

St. Jude released that report in October as part of a filing with the Securities and Exchange Commission. The F.D.A. provides device makers with the reports in an unaltered form, and they may contain criticisms of a company’s procedures.

But the version of the report that St. Jude filed with the S.E.C. left some doctors and analysts uncertain about which company product or products were at issue for a simple reason — St. Jude had redacted, or blocked out, all 20 references to the Durata in it.

Company executives said they had done so based on their “good faith” interpretation of how the F.D.A. would act if it publicly released the report under the Freedom of Information Act. But both an F.D.A spokeswoman and a lawyer who specializes in medical devices took exception with that view, saying that names of approved products typically do not qualify as the type of confidential business information that the F.D.A. would redact.

Among other things, F.D.A. inspectors found significant flaws in the company’s testing and oversight of the Durata. It was those revelations and the implications that the problems could lead to further F.D.A. action against St. Jude that led to the sharp fall last week in its stock price.

In 2005, Guidant, a device maker that no longer exists, also found itself under scrutiny. Back then, its executives decided not to tell doctors that one of its defibrillators could short-circuit when a patient needed an electrical jolt to save a life. The expert who brought the Guidant problem to light, Dr. Robert Hauser, a heart specialist in Minnesota, has also raised concerns about the St. Jude wires, adding that he believes that its executives have been less than forthright.

“Patients and physicians would appreciate more information,” Dr. Hauser said.

Craig Lassig for The New York Times

Dr. Robert Hauser, a cardiologist who studies heart devices, has raised concerns about wires in defibrillators from St. Jude.

In an earlier interview, St. Jude’s chief executive, Daniel J. Starks, said the company had hidden nothing about the Durata or another heart wire named the Riata, which it stopped selling in 2010.

“We’ve been more transparent than others,” said Mr. Starks, referring to company competitors like Medtronic.

Still, some Wall Street analysts share Dr. Hauser’s view. And if one St. Jude executive can claim credit for shaping their opinion, it would be Mr. Starks.

Earlier this year, he sought, among other things, to have a medical journal retract an article written by Dr. Hauser that was critical of the Riata. The publication refused.

Now, after St. Jude’s latest misfire, Wall Street analysts, who usually agree more than disagree, are placing wildly differing bets on St. Jude, with some valuing it at $48 a share and others at $30. On Monday, St. Jude closed at $31.86 on the New York Stock Exchange.

One of those bearish analysts, Matthew Dodds of Citigroup, said he thought the Food and Drug Administration might act soon on Durata. “I believe that a lot of their actions have made the situation worse, ” he said of the company’s executives.

A St. Jude spokeswoman, Amy Jo Meyer, reiterated the company’s stance that it had interpreted agency rules in “good faith” when releasing the redacted report about the Durata. An F.D.A. spokeswoman, Mary Long, said the agency did not consider the names of approved products to be confidential. And a lawyer, William Vodra, said that while device makers try to make a confidentiality argument for product data they consider embarrassing, like injury reports, they rarely succeed.

“In my experience, the F.D.A. consistently rejects” such arguments, Mr. Vodra wrote in an e-mail.

For patients, the dilemma may become more excruciating. The company’s earlier heart wire, the Riata, has begun failing prematurely in some of the 128,000 patients worldwide who received it. And those patients and their doctors face a difficult decision: whether to leave it in place or have it surgically removed, a procedure that carries significant risks.

St. Jude executives say that the Durata, which uses a different type of insulation than the Riata, is not prone to such problems.

And with the Durata already implanted in 278,000 people, many heart specialists certainly hope they are right.

Congress embraces Medical Device Lobby

LINK

House passes compromise FDA funding bill leaving important medical device safety provisions in the recycle bin

     

Posted by Suzanne Henry / Consumers Union / Safe Patient Project  (FiDA blog bold added)

The FDA Safety and Innovation Act passed the House Wednesday on a voice vote.  Consumer advocates had mixed reactions since the bill left out some critical patient safety protections but could have been a lot worse given the political muscle of medical industry lobbyists.

For Consumers Union, the most disturbing issue that was left unaddressed by the bill is a dangerous loophole in the FDA’s 510(k) clearance process, which is used to review over 90 percent of all medical devices.  By law, the FDA can only consider whether the new device is similar to one that has already been cleared and no evidence of clinical testing is required – even when the device it is based on is one that has been recalled by the manufacturer due to safety problems.  Representative Ed Markey of MA introduced an amendment to prohibit recalled devices from being used to clear new ones but opposition from the medical device industry kept it out of the bill.  We sent over 200,000 letters to Congress from their constituents and placed an ad in Politico to draw attention to the loophole.

On the plus side, the final bill included some stronger reforms that were included in the version of the bill passed by the Senate earlier this year.  But overall, the final bill more closely reflects the agenda of the medical device industry than what’s needed to protect patients.  Consumers Union’s Lisa McGiffert noted:

“This bill includes some important reforms that will improve the FDA’s ability to monitor medical devices on the market and to notify patients and require stricter testing when safety problems arise,” said Lisa McGiffert, director of Consumers Union’s Safe Patient Project. “But there is clearly more work that needs to be done to ensure that the FDA has all the tools it needs to ensure medical devices are safe and effective before they can be used on patients.”

With little enthusiasm for Rep. Markey’s amendment, we promoted a stripped down version amendment so the FDA would merely have the authority to require manufacturers of new devices to prove that the new device has fixed the flaws in a recalled predicate device that is used  for clearance based on its similarity to the flawed device. But industry lobbyists managed to block that too.

Consumers Union found early in the negotiations the formidable pressure on Congress from the device industry and the need for consumer voices and advocacy organizations to promote patient safety. We sponsored a lobby day in Washington D.C. where people who have been harmed by faulty medical devices (surgical mesh, joint replacements and defibrillators) lobbied their Representatives and Senators.

As the final bill was being negotiated by House and Senate leaders, Consumers Union sent these lawmakers a story a day about people who have been harmed by a medical device in an effort to keep the medical device safety provisions in the bill.

Good provisions in the bill include:

▪                a deadline for creating a Unique Device Identifier (UDI) system for implants and high-risk devices. It’s extremely important that the FDA implement a system to identify each individual device implanted in a patient so if a device is recalled, the patient can be notified quickly.

▪                gives the FDA the authority to more easily reclassify problematic devices so that subsequent, similar devices must undergo more safety scrutiny before they can be used on patients.

▪                adds some provisions to improve post-market oversight, including adding medical devices to the “Sentinel Initiative” which pulls together different databases to help the FDA analyze patterns and more quickly identify safety problems with a device.

Ultimately the law gives the drug and device industries what they wanted: to speed up the approval of new products, getting them on the market quicker. To counter balance the problems with medical devices that were not identified before approval, there are some new tools that the FDA can utilize to monitor the safety of devices once they are on the market.  Consumers Union would rather see life-saving and implantable devices thoroughly studied before they are allowed on the market to identify potential safety problems that can harm patients.

Throughout the course of our campaign, we’ve encountered many advocates who want to continue working with us to improve medical device safety. One of them is Dwight S. from Bellevue, Washington. Next week, Dwight is going to DC to attend an FDA advisory panel examining the safety of metal-on-metal hip implants and will share his wife’s story about her recalled metal-on-metal hip. The FDA received almost 16,800 adverse event reports about metal-on-metal hip implants from 2000-2011. Stay tuned for our blog post about the FDA meeting.

Joleen Chambers says:

June 22, 2012 at 6:04 pm

Thank you, Consumers Union, for providing this information and for vigorous advocacy on behalf of U.S. consumers!
 Congress must improve legislation on the patient harm that is imposed by such poor federal public policy. The public is uniformed because the implanted medical device industry does not have to provide clinical testing prior to FDA ‘approval’ or disclose post-market information about safety and effectiveness. There are not, however, reasonable restrictions on direct-to-consumer marketing. It is inevitable that aggressive surgeons/device CEO’s will continue to lobby Congress for fewer restrictions and the taxpayers and victimized consumers will be accountable for expensive revision surgeries and a life in medical and legal purgatory.