Cooking the Books with the Pot and the Kettle

As the neurotechnology industry matures, it will continue to attract attention from clinicians, investors, the media, and the public. For good or for bad, we can also expect that more neurotech firms will draw the attention of the government.

As we report in our article on page 1 of this issue, Advanced Neuromodulation Systems is the latest neurotech vendor to draw scrutiny from the Federal government. We don’t know much about the subject of the subpoena that company received from the Office of the Inspector General of the Department of Health and Human Services, only that it requested documents relating to sales and marketing, reimbursement, and Medicare and Medicaid billing. Similarly, not much is known about an investigation begun last year by the Department of Justice into Cochlear Americas, except that that too seems to relate to Medicare and Medicaid reimbursement. In the past, Medtronic, Johnson & Johnson, and other medical device firms have been the subject of Federal inquiries.

It’s important to stress that the commencement of an investigation is not in and of itself evidence of any wrongdoing and both ANS and Cochlear have committed to cooperating fully with the government. But if specific instances of illegal activities can be shown to have taken place, these firms would be well advised to acknowledge the events and take steps to ensure that they do not occur again. The neurotechnology industry offers too much promise for healthy financial success to rely on shady business practices. Each company in our industry has a responsibility to deal honestly with investors, the public, and the government.

At the same time, the U.S. government has an equal responsibility to deal honestly with the industry and with the American public. Sadly, this has not always been the case, particularly in relation to Medicare, Medicaid, and Social Security. The Administration and the Congress have too often played accounting games of their own when it comes to disclosing costs and benefits, a point that becomes clear after comparing the President’s Medicare and Medicaid estimates before and after the election.

The Centers for Medicare and Medicaid Services also needs to be more honest with patients, clinicians, and suppliers. When CMS says it is going to reimburse costs for critically needed procedures such as cochlear implants or deep brain stimulation for treatment of Parkinson’s disease, it should mean what it says. Unfortunately, reimbursement rates for DBS procedures are reported to be only a third of that for spinal surgery and reimbursement for cochlear implant procedures frequently leaves hospitals, clinicians, or patients holding the bag.

This is not an excuse for doctoring the books when reimbursement is requested, but we find it highly ironic that the government is looking for abuse so closely in an industry sector that it has abused the most.

James Cavuoto
Editor and Publisher