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Defective Heart Devices Costing Medicare Billions

A report released last week by the Department of Health and Human Services (HHS) says Medicare has spent billions of dollars on defective heart devices implanted in thousands of Medicare beneficiaries.

The HHS report is based on an ongoing audit looking into three companies that make seven heart devices. While investigators have yet to identify the three cardiac device manufacturers, the devices in question have either been recalled or have high rates of unexpected failures.

According to the report, 375,991 Medicare beneficiaries were implanted with the defective devices over an unspecified amount of time. HHS subpoenaed the three unidentified cardiac device manufacturers in order to obtain a list of beneficiaries that received the defective devices and found that 72,721 beneficiaries had to have the defective heart devices replaced.

Replacing these defective heart devices resulted in 8.2 million Medicare claims, which cost the government a whopping $5.1 billion. In addition to the government money spent on procedures and services related to the defective devices, Medicare beneficiaries themselves were forced to spend $501 million out of their own pockets in coinsurance and deductible payments.

Using “complex audit procedures” to review individual claims, HHS was able to determine the total costs incurred due to recalls and device failures alone. According to the report, Medicare spent $1.5 billion and beneficiaries spent $140 million out of pocket on the defective heart devices. The remainder of the $5.1 billion costs went to necessary device upgrades and replacements resulting from infections.

Just over a week after HHS released its report, St. Jude Medical, one of the country’s largest heart device manufacturers, issued a warning to doctors and patients detailing a problem with one of its devices.

In a statement, the company said two deaths have been reported and 10 patients fainted after St. Jude devices stopped working due to a rare battery defect. According to St. Jude, the batteries in its Fortify, Quadra and Unify heart-shocking defibrillators need to be replaced immediately after patients receive a vibrating alert from the device. Under normal circumstances, patients have up to three months to replace the battery, but the company has indicated that some of its heart devices can fail within 24 hours after patients receive the vibrating alert.

According to a separate statement from the U.S. Food and Drug Administration (FDA), nearly 350,000 patients could be affected by defective heart devices. The FDA is not recommending that patients have the devices removed, as the risks associated with surgically removing the devices generally outweigh the potential harm of the defect. Nonetheless, the issue outlined by St. Jude underscores just how prevalent heart device defects have become.

FDA: Recalls of Medical Devices Nearly Doubled Between 2003 and 2012

Medical device recalls aren’t limited cardiac devices. According to data from the FDA, medical device recalls nearly doubled between 2003 and 2012. Studies have shown that defective medical devices of all types during these years cost Medicare billions of dollars to cover monitoring, hospital visits, surgeries, imaging, post-acute care, physician services, and a host of other related services.

Medicare beneficiaries are not just adversely affected by the health implications associated with defective devices; as evidenced by the HHS report, many are also forced to incur costs of meeting deductibles and paying coinsurance.

The magnitude of these costs to cover defective medical devices is a real cause for concern, and according to the HHS report, this concern didn’t happen overnight. The Centers for Medicare and Medicaid Services (CMS) started discussing the growing costs of defective medical devices back in 2007. Here we are 10 years later and things are just getting worse.

What Are We Doing to Stop the Fraud and Abuse Associated with Defective Heart Devices?

Senator Charles Grassley (R-IA) and Senator Elizabeth Warren (D-MA), both of whom backed the HHS audit, have endorsed a proposal that could put a stop government waste on defective devices.

The proposal would simply require hospitals and providers to include medical device tracking codes on Medicare claims forms, making it easier for CMS to easily identify poorly performing devices. This would improve patient care and lower costs to both the government and taxpayers. The proposal would also have the benefit of providing a way for CMS to identify unreported manufacturer credits from medical device companies, which can potentially signal Medicare fraud.

Cardiac devices that fail may be covered under the device manufacturer’s warranty. When hospitals receive a full or partial manufacturer credit for a medical device that is covered under warranty or replaced because of defects or recalls, Medicare generally requires a payment reduction. Hospitals and providers occasionally receive these credits from manufacturers, but fail to adjust beneficiary claims to reduce the cost, thus fraudulently overcharging the government for services related to the defective device.

“There’s a physical cost and a financial cost to patients when medical devices fail, and a big expense to taxpayers as well,” said Senator Grassley in a statement last week. “It makes sense to track medical devices on claims forms so flawed devices can be taken out of use and patients and taxpayers can be better protected.”

Hopefully, others agree and steps are taken to address the issue. It is unsustainable for the government to continue overpaying for medical devices that don’t work.

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