Does Medicare cover stem cell therapy? Mostly no & it’s poised to recoup tens of millions

Does Medicare cover stem cell therapy?

Readers of The Niche have regularly asked this question. They’re curious about insurance coverage too.

The answer is “no” in almost every case, with some notable exceptions I’ll get to at the end of the post.

Still, clinics appear to have already been charging Medicare for what collectively adds up to millions and perhaps tens of millions of dollars for regenerative therapies. These aren’t scientifically proven or okayed by the FDA as drugs.

Early last year a Medicare announcement likely sent shivers through a large segment of the unproven perinatal “stem cell” and regenerative sphere. The agency said it would take back money spent there on unproven offerings. It’s now going through each potential case.

Unlike the FDA, Medicare is often decisive with oversight.

Regenative labs, does Medicare cover stem cell therapy?
A Regenative Labs product marketing.  A recent screenshot from firm website still shows the Q code in the marketing. Does Medicare cover this product when sold by clinics? I don’t know that it’s clear at this point, but I have questions about it and this area more generally.

The clawback

This kind of taking back of money spent is sometimes called a Medicare clawback. Kristina Fiore over at MedPage Today had a nice story on the Medicare clawback on stem cells. The headline and subheader are, “Medicare Claws Back Money for Dubious Birth-Tissue Stem Cell Shots — Government seeks to recoup more than 2 years of payments for unproven treatments.” Note that many products in this space likely don’t actually contain living cells or specifically living stem cells, still that phrase is often used as an umbrella term.

The perinatal “stem cell” or regenerative arena has been the largest growing part of the unproven stem cell clinic arena in recent years. In my opinion, most of its products are both scientifically unproven and unapproved drugs. While the FDA has been too quiet on regulating the stem cell clinic sphere more generally, it has been relatively more active in this perinatal space. Letters have been going out to both clinics and suppliers.

Now the Medicare clawback means many clinics of this type may be put out of business. Why? The clinics determined by Medicare to have charged for something that’s not allowed likely must by law pay back the money spent. This includes payments for things like supposed perinatal stem cells and associated products like exosomes and Wharton’s jelly.

Why do I think this could add up to tens of millions of dollars or even hundreds?

Given that there are hundreds of clinics each selling this perinatal stuff to potentially hundreds of patients each per year at about $2,000 or more a pop (or more), the clawback totals could go very high over the approximately 2-year period in question.

Payback is not fun

From Fiore’s article:

“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 codesopens in a new tab or window” 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 Regenative Labs on Dec. 21, 2020 states “Regenative 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.”

Per Fiore and other sources including stem cell clinic doc Chris Centeno, some suppliers of the largely unproven products apparently were telling clinics that Medicare would pay. It did for a while.

At some point Medicare realized this whole area wasn’t FDA approved and now wants that money back from the clinics. Something tells me that few clinics will get their money back from suppliers to then pay Medicare.

Will suppliers have any responsibility here?

It’d be nice if the FDA and Medicare were more in a groove on this kind of stuff on an ongoing basis. It seems they’ve gotten in synch now on this issue at least.

Suppliers including Regenative Labs

Note that I don’t know firsthand if the two firms mentioned by Fiore (BioLab Sciences and Regenative Labs) are facing or going to face Medicare reimbursement issues or not.

By the way, the latter’s name is not “Regenerative Labs”. It’s Regenative without the “er”.

This area includes other suppliers as well that produce exosomes and additional products. It’s not clear what suppliers might be under the Medicare microscope versus those that aren’t. The agency may also determine some firms don’t have to pay back what they collected.

Much of it may come down to the Q code-based marketing along with specific claims and products.

‘Does Medicare cover stem cell therapy?’ will have a different answer in the future

This Medicare situation is very complicated. Hopefully things will get clearer by the end of this year. For sure, it points to tons of people getting unproven perinatal products.

For me, the silver lining here is that this clawback may effectively shut down many unproven clinics in this space. Both clinics and suppliers here may have a tough road ahead. In my view that’s better for patients and the field.

Circling back, what are the rare exceptions to the general “no” answer to the question of “Does Medicare cover stem cell therapy?” mentioned at the top of the post? Medicare sometimes covers bone marrow or hematopoietic stem cell transplants for cancers and possibly other conditions. These are proven effective and are kosher with the FDA.

What lies ahead with Medicare and cell therapies?

With an optimistic eye to the future, Medicare is likely to cover some newly proven stem cell and regenerative therapies in the coming decade. While insurance does not cover unproven stem cells now, I believe it will cover some newly proven therapies in the future too.

We just don’t know for sure right now which therapies those will be. You’ve got to have great data.

Sometime this year I will do a post on what I think are the most promising emerging regenerative therapies that may get approval first. There are many reasons to be hopeful and even optimistic despite challenges like the unproven clinic arena.

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