Billing Medicare for investigational devices: what's OK, what's not

In 1993-1994, the Office of Inspector General (OIG) conducted an investigation of allegations that numerous hospitals had fraudulently billed the Medicare program for investigational cardiac devices. OIG found evidence of fraud related to these devices as well as to certain investigational procedures. Partly as a result of this probe, Senate hearings were held in 1996 to ascertain whether fraud and abuse in Medicare billing was a widespread problem. Investigational devices and procedures received particular attention during these proceedings. Hospitals involved in the 1993-1994 OIG investigation maintained that the Federal government previously sanctioned billing for the use of some investigational or experimental devices, that the devices and procedures in question had already been proven to be safe and effective, and that the devices or procedures resulted in better patient care or shorter lengths of stay. For these and other reasons, the hospitals contended, billing Medicare for these devices was appropriate. Although HCFA has allowed the Medicare program to pay for the use of some investigational devices and procedures since November 1995, Federal fraud and abuse investigators continue to scrutinize the billing practices of hospitals engaged in clinical trials. Financial managers in healthcare organizations that use investigational devices--even those not engaged in clinical trials--need to carefully review their organizations' compliance with Medicare billing requirements.